UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 24, 2021 (
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Acquisition of W.S. Badcock
On November 22, 2021 (the “Closing Date”), Franchise Group Newco BHF, LLC, a Delaware limited liability company (“Purchaser”), which is a newly formed wholly-owned subsidiary of Franchise Group, Inc., a Delaware corporation (the “Company”), entered into and completed certain transactions (the “Closing”) contemplated by a Stock Purchase Agreement (the “Purchase Agreement”) with the holders of 100% of the issued and outstanding capital stock (collectively, the “Sellers”) of W.S. Badcock Corporation, a Florida corporation (“W.S. Badcock”), and William K. Pou, Jr., solely in his capacity as representative of the Sellers (the “Seller Representative”). Certain transaction beneficiaries have entered into a joinder to the Purchase Agreement for the purposes of agreeing to certain matters with respect to the obligations of certain of the Sellers under the Purchase Agreement.
Pursuant to the terms and provisions of the Purchase Agreement, on the Closing Date, Purchaser purchased from the Sellers 100% of the issued and outstanding capital stock of W.S. Badcock (the “Shares” and such transaction, the “Acquisition”) in exchange for the payment by Purchaser to the Sellers of an aggregate amount of $581,402,834 in cash, subject to certain customary adjustments set forth in the Purchase Agreement, including a working capital adjustment (subject to an upward and downward collar and cap) and transaction expenses (collectively, the “Purchase Price”). A portion of the Purchase Price was placed in escrow to fund payment obligations of the Sellers with respect to post-Closing Purchase Price adjustments and post-Closing indemnification obligations of the Sellers, and another portion of the Purchase Price was deposited into an account to reimburse the Seller Representative for any fees and expenses incurred by the Seller Representative in performing his duties under the Purchase Agreement as the representative of the Sellers.
The Purchase Agreement contains customary representations, warranties and covenants for a transaction of this type, including without limitation, representations and warranties by (a) W.S. Badcock and the Sellers, as applicable, regarding, among other things, (i) W.S. Badcock’s corporate organization and capitalization, (ii) the accuracy of W.S. Badcock’s financial statements provided to Purchaser, (iii) the absence of certain changes or events relating to W.S. Badcock since June 30, 2021, (iv) compliance with law and (v) title to their respective Shares and (b) Purchaser regarding, among other things, its corporate organization. Subject to the provisions of the Purchase Agreement, the Sellers have agreed to indemnify Purchaser and its affiliates for losses resulting from breaches of representations, warranties and covenants of the Sellers and W.S. Badcock in the Purchase Agreement and for certain other specified matters (including pre-Closing taxes). The Sellers’ indemnification obligations are subject to various limitations, including, among other things, a deductible, caps, and time limitations.
In connection with the Acquisition, Purchaser has obtained a customary buyer’s representation and warranty insurance policy (the “R&W Insurance Policy”) providing for up to $55,000,000 in coverage in the case of breaches of representations and warranties of the Sellers contained in the Purchase Agreement, subject to certain exclusions and an initial $4,360,521 retention, which drops down to $2,907,014 after 12 months following the Closing Date. Purchaser, on the one hand, and the Sellers, on the other hand, each bore one-half of the cost of obtaining the R&W Insurance Policy.
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In consideration for their receipt of the Purchase Price, on the Closing Date, certain of the Sellers have each entered into a restrictive covenant agreement providing for certain customary restrictive covenants, including customary non-competition, non-solicitation, no hire, and non-disparagement covenants for a period of five (5) years following the Closing Date and customary confidentiality covenants.
The representations, warranties, covenants and agreements of each Seller, Purchaser and W.S. Badcock, as applicable, contained in the Purchase Agreement have been made solely for the benefit of Purchaser. In addition, such representations, warranties and covenants: (i) have been made only for purposes of the Purchase Agreement; (ii) have been qualified by disclosures made to Purchaser in the disclosure schedules delivered in connection with the Purchase Agreement; (iii) are subject to certain materiality or other customary qualifications contained in the Purchase Agreement, which may differ from what may be viewed as material by investors; and (iv) were made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement. Accordingly, the Purchase Agreement is included with this filing only to provide investors with information regarding the terms of the Purchase Agreement, and not to provide investors with any other factual information regarding Sellers, Purchaser, W.S. Badcock, their respective subsidiaries or their respective businesses. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Purchase Agreement.
The foregoing summary of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, qualified in its entirety by, the full text of the Purchase Agreement, which is filed as Exhibit 2.1 and incorporated herein by reference. The Purchase Agreement has been included as an exhibit hereto solely to provide investors and security holders with information regarding its terms. It is not intended to be a source of financial, business, or operational information about the Purchaser or the Sellers.
Amendments to Company’s Existing Credit Agreements
First Amendment to First Lien Credit Agreement
On the Closing Date, the Company, Franchise Group Newco PSP, LLC, a Delaware limited liability company and a subsidiary of the Company (“Newco PSP”), Valor Acquisition, LLC, a Delaware limited liability company and an indirect subsidiary of the Company (“Valor”), and Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company and an indirect subsidiary of the Company (“FG Newco Intermediate AF” and, together with the Company, Newco PSP, and Valor, the “Borrowers”), and each of the Company’s other direct and indirect domestic subsidiaries (other than certain excluded subsidiaries) (collectively, the “FRG Guarantors”) entered into the First Amendment to First Lien Credit Agreement (the “First Lien Amendment”), which amends the First Lien Credit Agreement, dated as of March 10, 2021, by and among the Borrowers, the FRG Guarantors, and JPMorgan Chase Bank, N.A. as administrative agent and collateral agent (in such capacity, the “Existing First Lien Agent”) (as amended, the “Existing First Lien Credit Agreement” and the loans outstanding thereunder, the “Existing First Lien Loans”). The First Lien Amendment amends the Existing First Lien Credit Agreement, among other things, to permit the Acquisition, allow for the incurrence of indebtedness under the Badcock Credit Agreements (as defined below) and amend certain negative covenants to limit the Company’s and certain of its subsidiaries’ ability to take certain actions for so long as the indebtedness under the Badcock Credit Agreements remains outstanding.
First Amendment to Second Lien Credit Agreement
On the Closing Date, the Borrowers and FRG Guarantors entered into the First Amendment to Second Lien Credit Agreement (the “Second Lien Amendment”), which amends the Second Lien Credit Agreement, dated as of March 10, 2021, by and among the Borrowers, the FRG Guarantors, and Alter Domus (US) LLC, as administrative agent and collateral agent (in such capacity, the “Existing Second Lien Agent” and together with the Existing First Lien Agent, the “Existing Agents”) (as amended, the “Existing Second Lien Credit Agreement” and the loans outstanding thereunder, the “Existing Second Lien Loans” and together with the Existing First Lien Loans, the “Existing Term Loans”). The Second Lien Amendment amends the Existing Second Lien Credit Agreement, among other things, to permit the Acquisition, allow for the incurrence of indebtedness under the Badcock Credit Agreements (as defined below) and amend certain negative covenants to limit the Company’s and certain of its subsidiaries’ ability to take certain actions for so long as the indebtedness under the Badcock Credit Agreements remains outstanding.
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First Amendment to Third Amended and Restated Loan and Security Agreement (ABL)
On the Closing Date, the Company, Valor (together with its subsidiaries that are also borrowers, the “TVS Borrowers”), FG Newco Intermediate AF (together with its subsidiaries that are also borrowers, the “AFG Borrowers”) and Newco PSP (together with its subsidiaries that are also borrowers, the “PSP Borrowers” and, together with the Company, the TVS Borrowers and the AFG Borrowers, the “ABL Borrowers”) entered into the First Amendment (the “ABL Amendment” and together with the Second Lien Amendment and First Lien Amendment, the “Credit Agreement Amendments”) to the Third Amended and Restated Loan and Security Agreement (as amended, the “FRG ABL Revolver Agreement” and the senior secured revolving loan facility thereunder, the “ABL Revolver”) by and among the ABL Borrowers, the guarantors from time to time party thereto (together with the ABL Borrowers, the “ABL Loan Parties”), the lenders and issuing bank from time to time party thereto and JPMorgan Chase Bank, N.A., as agent (the “ABL Agent”). The ABL Amendment amends the FRG ABL Revolver Agreement to, among other things, permit the Acquisition, allow for the incurrence of indebtedness under the Badcock Credit Agreements, and amend certain negative covenants to limit the Company’s and certain of its subsidiaries’ ability to take certain actions for so long as the indebtedness under the Badcock Credit Agreements remains outstanding.
Joinders of Sylvan Learning Group
On the Closing Date, the Company caused certain of its direct and indirect subsidiaries acquired in the September 27, 2021 acquisition of Sylvan Learning to be joined as loan parties under each of the Existing First Lien Credit Agreement, the Existing Second Lien Credit Agreement, the FRG ABL Revolver Agreement, and the Badcock Credit Agreements.
Intercreditor Agreements
In connection with entry into the Badcock Credit Agreements (as defined below), the Borrowers, the ABL Borrowers, the FRG Guarantors, and the Badcock Guarantor (as defined below) have acknowledged, as applicable, (1) the Four Lien Intercreditor Agreement, by and among the Existing Agents and the Badcock Agents (as defined below), (the “Four Lien Intercreditor Agreement”), (2) the First Lien Pari Passu Intercreditor Agreement, by and among the Existing First Lien Agent and the First Lien Badcock Agent (as defined below) (the “First Lien Pari Passu Intercreditor Agreement”), (3) the Second Lien Pari Passu Intercreditor Agreement by and among the Existing Second Lien Agent and the Second Lien Badcock Agent (the “Second Lien Pari Passu Intercreditor Agreement”), (4) the Amended and Restated 1L/2L Intercreditor Agreement, by and among the Existing Agents and the Badcock Agents (the “Amended and Restated 1L/2L Intercreditor Agreement”), and (5) the Amended and Restated ABL Intercreditor Agreement by and among the ABL Agent, the Existing Agents, and the Badcock Agents (the “Amended and Restated ABL/Term Loan Intercreditor Agreement” and together with the Four Lien Intercreditor Agreement, the First Lien Pari Passu Intercreditor Agreement, the Second Lien Pari Passu Intercreditor Agreement, and the Amended and Restated 1L/2L Intercreditor Agreement, the “Intercreditor Agreements”).
The Intercreditor Agreements collectively set forth the relative priorities of the Existing Agents, the ABL Agent, and the Badcock Agents: (i) the Four Lien Intercreditor Agreement sets forth the relative priorities of the Existing Agents and the Badcock Agents with respect to the Badcock Collateral (as defined below), (ii) the First Lien Pari Passu Intercreditor Agreement sets forth the relative priorities of the Existing First Lien Agent and the First Lien Badcock Agent with respect to the Collateral pledged by the Borrowers and FRG Guarantors to secure the Existing First Lien Credit Agreement and First Lien Badcock Credit Agreement, (iii) the Second Lien Pari Passu Intercreditor Agreement sets forth the relative priorities of the Existing Second Lien Agent and the Second Lien Badcock Agent with respect to the Collateral pledged by the Borrowers and FRG Guarantors to secure the Existing Second Lien Credit Agreement and the Second Lien Badcock Credit Agreement, (iv) the Amended and Restated 1L/2L Intercreditor Agreement sets forth the relative priorities with respect to the Collateral pledged by the Borrowers and FRG Guarantors granted with respect to the Existing Term Loans and the Badcock Term Loans (as defined below), and (v) the Amended and Restated ABL/Term Loan Intercreditor Agreement sets forth the relative priorities of the security interests granted in the Collateral pledged with by the Borrowers and FRG Guarantors with respect to the ABL Revolver and those granted with respect to the Existing Term Loans and the Badcock Term Loans.
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The foregoing descriptions are subject to, and qualified in their entirety by, the full texts of each of the First Lien Amendment, the Second Lien Amendment, the ABL Amendment, the Four Lien Intercreditor Agreement, the First Lien Pari Passu Intercreditor Agreement, the Second Lien Pari Passu Intercreditor Agreement, the Amended and Restated 1L/2L Intercreditor Agreement and the Amended and Restated ABL/Term Loan Intercreditor Agreement, each of which is incorporated herein by reference to Exhibits 10.1-10.8 to this Current Report on Form 8-K, respectively.
Entry into Badcock Credit Agreements
First Lien Badcock Credit Agreement and First Lien Badcock Term Loan
On the Closing Date, the Borrowers entered into a First Lien Credit Agreement (the “First Lien Badcock Credit Agreement”) with the various lenders from time to time party thereto (the “First Lien Badcock Lenders”) and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (“First Lien Badcock Agent”). The First Lien Badcock Credit Agreement provides for a $425.0 million senior secured term loan (the “First Lien Badcock Term Loan”), made by the First Lien Badcock Lenders to one or more of the Borrowers.
The Borrowers’ obligations under the First Lien Badcock Credit Agreement are guaranteed by the Borrowers, the FRG Guarantors and W.S. Badcock (also referred to as the “Badcock Guarantor”) and collectively with the Borrowers and FRG Guarantors, the “Loan Parties”) pursuant to the First Lien Guarantee Agreements (collectively, the “First Lien Guarantee Agreements”), by and among the Loan Parties party thereto and the First Lien Badcock Agent, and are required to be guaranteed by each of the Company’s direct and indirect domestic subsidiaries (other than certain excluded subsidiaries) that may be formed or acquired after the Closing Date. The obligations of the Borrowers under the First Lien Badcock Credit Agreement are secured on a first priority basis by liens on substantially all of the assets of the Badcock Guarantor (the “Badcock Collateral”) and substantially all assets of the Loan Parties, pursuant to certain First Lien Collateral Agreements (collectively, the “First Lien Collateral Agreements”), by and among the Loan Parties party thereto and the First Lien Badcock Agent, and are required to be secured by such assets of each of the Company’s direct and indirect domestic subsidiaries (other than certain excluded subsidiaries) that may be formed or acquired after the Closing Date. The proceeds of the First Lien Badcock Term Loan, together with the proceeds of the Second Lien Badcock Term Loan (as defined below) and certain cash on hand of the Company and its subsidiaries, have been or will be used to consummate the Acquisition, to prepay certain existing indebtedness of the Loan Parties and their subsidiaries, and to pay fees and expenses incurred in connection therewith and with certain related transactions, including the entry into the Credit Agreement Amendments.
The First Lien Badcock Term Loan will mature on November 22, 2023, unless the maturity is accelerated subject to the terms set forth in the First Lien Badcock Credit Agreement. The First Lien Badcock Term Loan will, at the option of the Borrowers, bear interest at either (i) a rate per annum based on Term SOFR for an interest period of one, three or six months (or under certain circumstances, twelve months or less than one month), plus an interest rate margin of 4.75% (each, a “Badcock First Lien SOFR Loan”), or (ii) an alternate base rate determined as provided in the First Lien Credit Agreement, plus an interest rate margin of 3.75% (each, a “Badcock First Lien ABR Loan”), with an effective 1.00% alternate base rate floor. Interest on Badcock First Lien SOFR Loans is payable in arrears at the end of each applicable interest period (and, with respect to an interest period of longer than three months, at three-month intervals during such interest period), and interest on Badcock First Lien ABR Loans is payable in arrears on the last business day of each calendar quarter.
The First Lien Badcock Term Loan will not be subject to amortization payments. The Borrowers are required to prepay the First Lien Badcock Term Loan with 100% of the net cash proceeds of certain customary events, including certain asset sales of Badcock Collateral. Subject to certain exceptions, repayments of the First Lien Badcock Term Loan within six months after the Closing Date in connection with a refinancing to reduce the pricing with respect to the First Lien Term Loan are subject to a prepayment premium of 1.00%. The Borrowers may also be required to pay SOFR breakage and redeployment costs in certain limited circumstances.
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The First Lien Badcock Credit Agreement, the First Lien Collateral Agreements and the First Lien Guarantee Agreements collectively include customary affirmative, negative, and financial covenants binding on the Loan Parties, including delivery of financial statements and other reports. The negative covenants limit the ability of the Loan Parties to, among other things, incur debt, incur liens, make investments, sell assets, pay dividends and enter into transactions with affiliates. The financial covenants set forth in the First Lien Badcock Credit Agreement include a maximum total leverage ratio (net of certain cash) and a minimum fixed charge coverage ratio, in each case with respect to the Company and its subsidiaries determined on a consolidated basis, to be tested at the end of each fiscal quarter commencing with the first full fiscal quarter ending after the Closing Date. In addition, the First Lien Badcock Credit Agreement includes customary events of default, the occurrence of which may require the Borrowers to pay an additional 2.00% interest on the First Lien Badcock Term Loan and/or may result in, among other consequences, acceleration of the payment obligations with respect to the First Lien Badcock Term Loan, calling on the guarantees, or exercise of remedies with respect to the collateral.
The foregoing descriptions are subject to, and qualified in their entirety by, the full texts of each of the First Lien Badcock Credit Agreement, each First Lien Collateral Agreement and each First Lien Guarantee Agreement, each of which is incorporated herein by reference to Exhibits 10.9 - 10.13 to this Current Report on Form 8-K, respectively.
Second Lien Badcock Credit Agreement and Second Lien Badcock Term Loan
On the Closing Date the Borrowers entered into a Second Lien Credit Agreement (the “Second Lien Badcock Credit Agreement” and together with the First Lien Badcock Credit Agreement, the “Badcock Credit Agreements”) with the various lenders from time to time party thereto (the “Second Lien Badcock Lenders”) and Alter Domus (US) LLC, as administrative agent and collateral agent (“Second Lien Badcock Agent” and together with the First Lien Badcock Agent, the “Badcock Agents”). The Second Lien Badcock Credit Agreement provides for a $150.0 million senior secured term loan (the “Second Lien Badcock Term Loan” and together with the First Lien Badcock Term Loan, the “Badcock Term Loans”), made by the Second Lien Badcock Lenders to one or more of the Borrowers.
The Borrowers’ obligations under the Second Lien Badcock Credit Agreement are guaranteed by the Borrowers and the other Loan Parties pursuant to the Second Lien Guarantee Agreements (collectively, the “Second Lien Guarantee Agreements”), by and among the Loan Parties party thereto and the Second Lien Badcock Agent, and are required to be guaranteed by each of the Company’s direct and indirect domestic subsidiaries (other than certain excluded subsidiaries) that may be formed or acquired after the Closing Date. The obligations of the Borrowers under the Second Lien Badcock Credit Agreement are secured on a second priority basis by liens on the Badcock Collateral and substantially all assets of the Loan Parties, pursuant to certain Second Lien Collateral Agreements (collectively, the “Second Lien Collateral Agreements”), by and among the Loan Parties party thereto and the Second Lien Badcock Agent, and are required to be secured by such assets of each of the Company’s direct and indirect domestic subsidiaries (other than certain excluded subsidiaries) that may be formed or acquired after the Closing Date. The proceeds of the Second Lien Badcock Term Loan, together with the proceeds of the First Lien Badcock Term Loan and certain cash on hand of the Company and its subsidiaries, have been or will be used to consummate the Acquisition, to prepay certain existing indebtedness of the Loan Parties and their subsidiaries, and to pay fees and expenses incurred in connection therewith and with certain related transactions, including the entry into the Credit Agreement Amendments.
The Second Lien Badcock Term Loan will mature on November 22, 2023, unless the maturity is accelerated subject to the terms set forth in the Second Lien Badcock Credit Agreement. The Second Lien Badcock Term Loan will, at the option of the Borrowers, bear interest at either (i) a rate per annum based on Term SOFR for an interest period of one, three or six months (or under certain circumstances, twelve months or less than one month), plus an interest rate margin of 7.50% (each, a “Second Lien SOFR Loan”), or (ii) an alternate base rate determined as provided in the Second Lien Badcock Credit Agreement, plus an interest rate margin of 6.50% (each, a “Second Lien Badcock ABR Loan”), with an effective 1.00% SOFR floor and a 2.00% alternate base rate floor. Interest on Second Lien Badcock SOFR Loans is payable in arrears at the end of each applicable interest period (and, with respect to an interest period of longer than three months, at three month intervals during such interest period), and interest on Second Lien Badcock ABR Loans is payable in arrears on the last business day of each calendar quarter.
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The Second Lien Badcock Term Loan will not be subject to amortization payments. The Borrowers are required to prepay the Second Lien Badcock Term Loan with 100% of the net cash proceeds of certain customary events, including certain asset sales of Badcock Priority Collateral. The Second Lien Badcock Term Loan may be voluntarily prepaid at any time without premium or penalty. The Borrowers may also be required to pay SOFR breakage and redeployment costs in certain limited circumstances.
The Second Lien Badcock Credit Agreement, each Second Lien Collateral Agreement and each Second Lien Guarantee Agreement collectively include customary affirmative, negative, and financial covenants binding on the Loan Parties, including delivery of financial statements and other reports. The negative covenants limit the ability of the Loan Parties to, among other things, incur debt, incur liens, make investments, sell assets, pay dividends and enter into transactions with affiliates. The financial covenants set forth in the Second Lien Credit Agreement include a maximum total leverage ratio (net of certain cash) and a minimum fixed charge coverage ratio, in each case with respect to the Company and its subsidiaries determined on a consolidated basis, to be tested at the end of each fiscal quarter commencing with the first full fiscal quarter ending after the Closing Date. In addition, the Second Lien Credit Agreement includes customary events of default, the occurrence of which may require the Borrowers to pay an additional 2.00% interest on the Second Lien Badcock Term Loan and/or may result in, among other consequences, acceleration of the payment obligations with respect to the Second Lien Badcock Term Loan, calling on the guarantees, or exercise of remedies with respect to the collateral.
The foregoing descriptions are subject to, and qualified in their entirety by, the full texts of each of the Second Lien Credit Agreement, the Second Lien Collateral Agreement and the Second Lien Guarantee Agreement, each of which is incorporated herein by reference to Exhibits 10.14 - 10.18 to this Current Report on Form 8-K, respectively.
Cautionary Statement Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, without limitation, those that contain, or are identified by, words such as “outlook”, “guidance”, “believes”, “expects”, “potential”, “continues”, “may”, “will”, “should”, “predicts”, “intends”, “plans”, “estimates”, “anticipates”, “could” or the negative version of these words or other comparable words. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact, including the Company’s expectations regarding its financial condition, statements relating to the Acquisition and the financing transactions described herein, anticipated benefits resulting from the Acquisition, estimates regarding expected W.S. Badcock systemwide revenue, Company revenue and Adjusted EBITDA and expectations of the Company’s revenue and Adjusted EBITDA in the future, the performance of W.S. Badcock and the success of W.S. Badcock’s strategic growth plans following the consummation of the Acquisition and the financing transactions described herein, which are subject to various significant risks and uncertainties, many of which are outside of the control of the Company and the effects of the coronavirus (COVID-19) pandemic and/or any supply chain disruptions on economic conditions and the industry in general and the financial position and operating results of the Company. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company or its management about future events. Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any projected future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, many of which are beyond the control of the Company. Additional factors that could cause actual results to differ materially from forward-looking statements include, among others, the effect of the announcement of the Acquisition and/or the financing transactions described herein on the ability of the Company and W.S. Badcock to retain and hire key personnel and maintain relationships with their franchisees, dealers, customers, suppliers, partners and others with whom they do business, or on their respective operating results and business generally; risks associated with the diversion of management’s attention from ongoing business operations due to the Acquisition and/or the financing transactions described herein; legal proceedings related to the Acquisition and/or the financing transactions described herein; costs, charges or expenses resulting from the Acquisition and/or the financing transactions described herein; growth of the dealer base at W.S. Badcock; the strength of the economy; changes in the overall level of consumer spending; the performance of the products and services of the Company and W.S. Badcock within the prevailing retail or other business environments; implementation of the strategy of the Company and W.S. Badcock; maintaining appropriate levels of inventory; or changes in tax policy. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020, and comparable sections of the Company’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov, including the risk factors described in this report. All of the forward-looking statements made in this report are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on the Company or its business or operations. Readers are cautioned not to rely on the forward-looking statements contained in this report. Forward-looking statements speak only as of the date they are made and the Company does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
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| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information contained in “Item 1.01 Entry into a Material Definitive Agreement” is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The description of the terms of the Existing Credit Agreement Amendments and the Badcock Credit Agreements set forth above in Item 1.01 is incorporated herein by reference.
| Item 8.01 | Other Events. |
On November 22, 2021, the Company issued a press release announcing the Acquisition. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.
In connection with the execution of the Purchase Agreement and the consummation of the Acquisition, the Company sets forth the following information to supplement the risk factors described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020. The following risk factors should be read in conjunction with the risk factors described in such Annual Report on Form 10-K.
The ownership of significant amounts of real estate exposes W.S. Badcock and us to possible liabilities incidental to such ownership.
W.S. Badcock owns the land and buildings for 38 of its 383 stores, as well as for its three distribution centers and its headquarters. Accordingly, W.S. Badcock is subject to all of the risks associated with owning real estate. In particular, the value of W.S. Badcock’s real estate assets could decrease, and the operating costs for such real estate could increase, because of changes in the investment climate for real estate, demographic trends and, in the case of its store locations, supply or demand for the use of such stores, which may result from competition from similar stores in the area. Additionally, W.S. Badcock is subject to potential liability for environmental conditions on the property that it owns. In the case of owned stores, if any such store is not profitable, and the Company decides to close it, the Company may be required to record an impairment charge and/or exit costs associated with the disposal of such store.
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The Company’s failure to operate W.S. Badcock’s dealer network in a manner which remains outside the purview of federal and state franchise laws may adversely affect its and our business, prospects, results of operations, financial condition and cash flows.
As operated now, W.S. Badcock’s dealer program is not a franchise subject to franchise laws and regulations enacted by a number of states and rules promulgated by the U.S. Federal Trade Commission (collectively, the “Franchise Laws”). However, if the relationship between W.S. Badcock and its dealers should be deemed to constitute a franchise under the Franchise Laws or otherwise violate one or more of the Franchise Laws, W.S. Badcock’s and our operations could be negatively affected including requiring W.S. Badcock to incur substantial additional costs which could adversely affect its and our business, prospects, results of operations, financial condition and cash flows. Additionally, W.S. Badcock could face the prospect that discontented dealers could use such violations as the basis for seeking to terminate its dealership agreement or to initiate claims against W.S. Badcock for alleged prior failure to comply with the Franchise Laws. W.S. Badcock may also face enforcement actions by the U.S. Federal Trade Commission and state governmental agencies, which may seek fines and other remedies available to these agencies under such Franchise Laws. If W.S. Badcock’s dealer program were determined to be a franchise subject to the Franchise Laws, as a franchisor, W.S. Badcock would be more susceptible to the risk of adverse legislation or regulations being enacted in the future and we cannot predict how existing or future laws or regulations will be administered or interpreted. Additionally, we cannot predict the amount of future expenditures that may be required in order to comply with any such laws or regulations. Companies that operate franchise systems may be subject to claims arising out of violations of laws and regulations at their franchised locations, including, without limitation, for allegedly being a joint employer with a franchisee. Litigation may lead to a decline in the sales and operating results of W.S. Badcock’s stores and divert management resources regardless of whether the allegations in such litigation are valid or whether W.S. Badcock is liable.
Operational and other failures by dealers may adversely impact W.S. Badcock’s and our business, prospects, results of operations, financial condition and cash flows.
Qualified dealers who conform to W.S. Badcock’s standards and requirements are important to the overall success of its business. W.S. Badcock’s dealers, however, are independent businesses and not employees, and consequently W.S. Badcock cannot and does not control such dealers to the same extent as W.S. Badcock’s company-operated stores. W.S. Badcock’s dealers may fail in key areas, or experience significant business or financial difficulties, which could slow W.S. Badcock’s and our growth, reduce our W.S. Badcock’s revenues, damage W.S. Badcock’s reputation, expose W.S. Badcock and us to regulatory enforcement actions or private litigation and/or cause W.S. Badcock and us to incur additional costs. If W.S. Badcock’s dealers experience business or financial difficulties, including, for example, in connection with the COVID-19 pandemic, we could suffer a loss of revenues and profits derived from sales of merchandise to dealers, and could suffer write-downs of outstanding receivables those dealers owe W.S. Badcock if such dealers fail to make those payments. If we fail to adequately mitigate any such future losses, W.S. Badcock and our business, prospects, results of operations, financial condition and cash flows could be adversely impacted.
W.S. Badcock’s industry is highly regulated. Existing and new laws and regulations could have a material adverse effect on W.S. Badcock and adversely affect W.S. Badcock’s and our business, prospects, results of operations, financial condition and cash flows and failure to comply with these laws and regulations could subject W.S. Badcock and us to various fines, civil penalties and other relief.
W.S. Badcock’s business is subject to extensive regulation, supervision and licensing under various federal, state, and local statutes, ordinances, regulations, rules and guidance. We must comply with federal laws, such as The Truth In Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act, The Gramm-Leach-Bliley Act and Regulation P, and Title X of the Dodd-Frank Act, among others. In addition, the Consumer Financial Protection Bureau (the “CFPB”) has regulatory and enforcement powers over providers of consumer financial products and services under many federal consumer protection laws and regulations. Included in the CFPB’s authority is the power to prohibit unfair, deceptive or abusive acts or practices (“UDAAP”) and to investigate and penalize financial institutions. In addition to assessing financial penalties, the CFPB can require remediation of practices, pursue administrative proceedings or litigation and obtain cease and desist orders (which can include orders for restitution or rescission or reformation of contracts). Also, if a company has violated Title X of the Dodd-Frank Act or related CFPB regulations, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions to remedy violations. In addition, state attorneys generals and/or other state regulators have the authority to prohibit unfair and deceptive acts and practices under state law (“UDAP”), as well as a wide variety of state consumer protection laws and regulations. If the CFPB or state attorneys general or state regulators believe that W.S. Badcock has violated any laws or regulations, they could exercise their enforcement powers which could adversely affect W.S. Badcock’s and our business, prospects, results of operations, financial condition and cash flows.
| -9- |
Accordingly, regulatory requirements, and the actions W.S. Badcock must take to comply with regulations, vary considerably by jurisdiction. Managing this complex regulatory environment requires considerable compliance efforts. It is costly to operate in this environment, and it is possible that those costs will increase materially over time. This complexity also increases the risks that W.S. Badcock will fail to comply with regulations which could adversely affect W.S. Badcock’s and our business, prospects, results of operations, financial condition and cash flows. These regulations affect W.S. Badcock’s business in many ways, and include regulations relating to:
| · | the terms of consumer loans (such as interest rates, finance and other charges, fees, durations, repayment terms, maximum loan amounts, renewals and extensions and repayment plans), the number and frequency of loans and reporting and use of state-wide databases; |
| · | underwriting requirements; |
| · | collection and servicing activity, including initiation of payments from consumer accounts; |
| · | licensing, reporting and document retention; |
| · | unfair, deceptive and abusive acts and practices and discrimination; |
| · | disclosures, notices, advertising and marketing; |
| · | requirements governing electronic payments, transactions, signatures and disclosures; |
| · | privacy and use of personally identifiable information and consumer data, including credit reports; and |
| · | posting of fees and charges. |
There are a range of penalties that governmental entities could impose if W.S. Badcock fails to comply with the various laws and regulations that apply to its business, including:
| ● | ordering corrective actions, including changes to compliance systems, product terms and other business operations; |
| ● | imposing fines or other monetary penalties, which could be substantial; |
| ● | ordering restitution, damages or other amounts to customers, including multiples of the amounts charged; |
| ● | requiring disgorgement of revenues or profits from certain activities; |
| ● | imposing cease and desist orders, including orders requiring affirmative relief, targeting specific business activities; |
| ● | subjecting W.S. Badcock’s operations to monitoring or additional regulatory examinations during a remediation period; |
| ● | revoking licenses required to operate in particular jurisdictions; and/or |
| ● | ordering the closure of one or more stores. |
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Accordingly, if W.S. Badcock fails to comply with applicable laws and regulations, it could adversely affect W.S. Badcock’s and our business, prospects, results of operations, financial condition and cash flows.
Certain judicial or regulatory decisions may restrict or eliminate the enforceability of certain types of contractual provisions, such as mandatory arbitration clauses.
To attempt to limit costly and lengthy consumer and other litigation, including class actions, and to provide a streamlined, faster and less expensive method of dispute resolution, W.S. Badcock requires customers to sign arbitration agreements and class action waivers, many of which offer opt-out provisions. Recent judicial and regulatory actions have attempted to restrict or eliminate the enforceability of such agreements and waivers. If W.S. Badcock is not permitted to use arbitration agreements and/or class action waivers, or if the enforceability of such agreements and waivers is restricted or eliminated, W.S. Badcock and, as a result thereof, the Company, could incur increased costs to resolve legal actions brought by customers and others as W.S. Badcock would be forced to participate in more expensive and lengthy dispute resolution processes, including class actions.
| Item 9.01. | Financial Statements and Exhibits |
| (a) | Financial Statements of Business Acquired. |
The financial statements required by this item with respect to the Acquisition will be filed as soon as practicable, and in any event not later than 71 days after the date upon which this Current Report on Form 8-K is required to be filed pursuant to Item 2.01.
| (b) | Pro Forma Financial Information. |
The pro forma financial information required by this item with respect to the Acquisition will be filed as soon as practicable, and in any event not later than 71 days after the date upon which this Current Report on Form 8-K is required to be filed pursuant to Item 2.01.
| (d) | Exhibits. |
The following exhibits are filed with this Current Report on Form 8-K:
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| -13- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
FRANCHISE GROUP, INC.
| ||
| Date: November 24, 2021 | By: | /s/ Eric Seeton |
| Eric Seeton | ||
| Chief Financial Officer | ||
-14-
Exhibit 2.1
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
BY AND AMONG
W.S. BADCOCK CORPORATION,
WILLIAM K. POU, JR.,
AS SELLER REPRESENTATIVE,
THE SHAREHOLDERS OF W.S. BADCOCK CORPORATION
LISTED ON ANNEX I ATTACHED HERETO,
AND
FRANCHISE GROUP NEWCO BHF, LLC,
DATED AS OF NOVEMBER 22, 2021
TABLE OF CONTENTS
Page
| Article 1 | DEFINITIONS | 1 |
| 1.1 | Definitions | 1 |
| 1.2 | Cross References | 18 |
| Article 2 | PURCHASE AND SALE OF PURCHASED SHARES | 21 |
| 2.1 | Purchase and Sale of Purchased Shares | 21 |
| 2.2 | Purchase Price for Purchased Shares | 21 |
| 2.3 | Closing Transactions | 23 |
| 2.4 | Estimated Closing Statement; Post-Closing Adjustment | 26 |
| 2.5 | Withholding | 30 |
| Article 3 | REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY | 30 |
| 3.1 | Organization and Power | 30 |
| 3.2 | Authorization; Execution; Enforceability | 31 |
| 3.3 | Capitalization; No Subsidiaries or Joint Ventures; Indebtedness | 31 |
| 3.4 | Absence of Conflicts; Consents and Approvals | 32 |
| 3.5 | Financial Statements | 33 |
| 3.6 | Absence of Certain Developments | 35 |
| 3.7 | Real Property | 38 |
| 3.8 | Tangible Assets; Sufficiency of Assets | 40 |
| 3.9 | Material Contracts | 40 |
| 3.1 | Proprietary Rights | 43 |
| 3.11 | Governmental Licenses | 45 |
| 3.12 | Litigation; Proceedings | 46 |
| 3.13 | Compliance with Laws | 46 |
| 3.14 | Labor and Employees | 47 |
| 3.15 | Employee Benefit Plans | 48 |
| 3.16 | Tax Matters | 51 |
| 3.17 | Environmental Matters | 53 |
| 3.18 | Company Affiliated Transactions | 54 |
| 3.19 | International Trade Laws; Anti-Corruption; Industry Certifications | 55 |
| 3.2 | Key Business Relationships | 56 |
| 3.21 | Product Warranty and Product Liability | 57 |
| 3.22 | COVID-19 Matters | 57 |
| 3.23 | Privacy and Data Security | 58 |
| 3.24 | Bank Accounts | 59 |
| 3.25 | Brokerage | 59 |
| 3.26 | Insurance | 59 |
| 3.27 | Dealer Matters | 60 |
| 3.28 | LaGrange Transaction | 61 |
| 3.29 | Disclaimer | 61 |
i
| Article 4 | REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS | 62 |
| 4.1 | Ownership | 62 |
| 4.2 | Organization; Power; Authorization of Transactions | 62 |
| 4.3 | Absence of Conflicts; Consents and Approvals | 63 |
| 4.4 | Litigation | 63 |
| 4.5 | Brokerage | 63 |
| Article 5 | REPRESENTATIONS AND WARRANTIES OF THE PURCHASER | 64 |
| 5.1 | Organization and Power | 64 |
| 5.2 | Authorization | 64 |
| 5.3 | Absence of Conflicts | 64 |
| 5.4 | Governmental Authorities and Consents | 64 |
| 5.5 | Litigation | 65 |
| 5.6 | Brokerage | 65 |
| 5.7 | Due Diligence Review | 65 |
| 5.8 | Restricted Securities | 66 |
| 5.9 | Solvency | 66 |
| 5.1 | Purchaser Entity | 66 |
| Article 6 | COVENANTS AND AGREEMENTS | 66 |
| 6.1 | Public Announcements | 66 |
| 6.2 | Proration of Taxes | 67 |
| 6.3 | Use of Name | 67 |
| 6.4 | R&W Insurance Policy | 68 |
| Article 7 | Indemnification | 68 |
| 7.1 | Survival | 68 |
| 7.2 | Indemnification by the Sellers | 68 |
| 7.3 | Indemnification by the Purchaser | 69 |
| 7.4 | Certain Limitations | 69 |
| 7.5 | Indemnification Procedures | 70 |
| 7.6 | Exclusive Remedies | 71 |
| 7.7 | No Multiple Recoveries | 71 |
| 7.8 | Escrow Arrangements | 71 |
| Article 8 | ADDITIONAL AGREEMENTS AND COVENANTS | 72 |
| 8.1 | Expenses | 72 |
| 8.2 | Further Assurances | 72 |
| 8.3 | Transfer Taxes; Recording Charges | 72 |
| 8.4 | Directors and Officers Indemnification; Releases | 72 |
| 8.5 | Disclosure Schedules | 75 |
| 8.6 | Retention of Books and Records | 75 |
| Article 9 | MISCELLANEOUS | 76 |
| 9.1 | Seller Representative | 76 |
ii
| 9.2 | Amendment and Waiver | 78 |
| 9.3 | Notices | 79 |
| 9.4 | Assignment | 79 |
| 9.5 | Severability | 80 |
| 9.6 | No Strict Construction; Interpretation | 80 |
| 9.7 | Captions | 81 |
| 9.8 | No Third-Party Beneficiaries | 81 |
| 9.9 | Complete Agreement; Counterparts | 81 |
| 9.1 | Governing Law and Jurisdiction | 81 |
| 9.11 | Attorney-Client Privilege and Conflict Waiver | 82 |
| 9.12 | Waiver of Jury Trial | 83 |
| 9.13 | Specific Performance | 83 |
| 9.14 | Consent of the Company and the Sellers | 83 |
| 9.15 | No Vicarious Liability | 83 |
LIST OF EXHIBITS AND SCHEDULES
| Exhibits | ||
| Exhibit A | R&W Insurance Policy | |
| Exhibit B | Estimated Closing Statement | |
| Exhibit C | Accounting Principles |
| Schedules | Referenced in: |
| D&O Indemnification Agreement Schedule | Section 1.1 |
| Governmental Licenses Schedule | Sections 1.1 and 3.11 |
| Permitted Liens Schedule | Section 1.1 |
| Pro Rata Share Schedule | Section 1.1 |
| Split Dollar Life Insurance Schedule | Section 1.1 |
| Taxes Schedule | Sections 1.1 and 3.16(a) |
| Transaction Expenses Schedule | Section 1.1 |
| Working Capital Schedule | Section 1.1 |
| Allocation Schedule | Section 2.2(a) and 2.2(b) |
| Permitted Company Affiliate Agreements Schedule | Sections 2.3(b)(v) and 8.4(e) |
| RCA Seller Schedule | Section 2.3(b)(xii) |
| Indebtedness Schedule | Sections 2.3(b)(xiv) 3.3 |
| Specified Employee Schedule | Section 2.3(b)(xv) |
| Repaid Indebtedness Schedule | Section 2.4(e) and 2.2(e) |
| Entity Organization Schedule | Section 3.1 |
| Capitalization Schedule | Sections 3.3 and 4.1 |
| Material Restrictions Schedule | Sections 3.4(a) and 3.4(b) |
iii
| Schedules | Referenced in: |
| Financial Statements Schedule | Section 3.5(a) |
| Disclosed Liabilities Schedule | Section 3.5(c) |
| Delinquent Accounts Receivable Schedule | Section 3.5(d) |
| Schedule of Rewards Liabilities | Section 3.5(h) |
| Developments Schedule | Section 3.6 |
| Modified Financing Practices Schedule | Section 3.6(vi) |
| Tangible Property Schedule | Section 3.8 |
| Owned Real Property Schedule | Sections 3.7(a) and 3.7(c) |
| Leased Real Property Schedule | Sections 3.7(b) and 3.7(c) |
| Contracts Schedule | Sections 3.4, 3.9(a) and 3.9(b) |
| Proprietary Rights Schedule | Sections 3.10(a), 3.10(b), 3.10(c) and 3.10(e) |
| Litigation Schedule | Section 3.12 |
| Compliance Schedule | Section 3.13 |
| Labor and Employment Schedule | Section 3.14(d) |
| Employee Benefits Schedule | Sections 3.15(a), 3.15(b), 3.15(f) and 3.15(h) |
| Environmental Matters Schedule | Section 3.17 |
| Company Affiliated Transactions Schedule | Section 3.18 |
| Key Business Relationships Schedule | Section 3.20(a) and 3.20(b) |
| Rebates Schedule | Section 3.20(c) |
| Product Warranty and Product Liability Schedule | Section 3.21(b) |
| COVID-19 Matters Schedule | Section 3.22(a) |
| Bank Accounts Schedule | Section 3.24 |
| Company Brokerage Schedule | Section 3.16 |
| Insurance Schedule | Section 3.26 |
| Dealer Schedule | Section 3.27(a), 3.27(b), 3.27(g) and 3.27(h) |
| Ownership Schedule | Section 4.1 |
| Seller Brokerage Schedule | Section 4.5 |
| Purchaser Brokerage Schedule | Section 5.6 |
| Permitted Usage of Name Schedule | Section 6.3 |
iv
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of November 22, 2021, by and among W.S. Badcock Corporation, a Florida corporation (the “Company”), the shareholders of the Company set forth on Annex I attached hereto (each a “Seller” and collectively, the “Sellers”), William K. Pou, Jr. (the “Seller Representative”), and Franchise Group Newco BHF, LLC, a Delaware limited liability company (the “Purchaser”). In addition, each Transaction Beneficiary joins this Agreement solely for the purposes of agreeing to the matters set forth in the Transaction Beneficiary Joinder that follows the signature pages hereto (the “Transaction Beneficiary Joinder”). Capitalized terms used in this Agreement without definition shall have the respective meanings given to such terms in Article 1 hereof.
RECITALS
A. WHEREAS, the Sellers hold, beneficially and of record, (i) 100% of the Company’s issued and outstanding shares of Class A common stock, par value $100.00 per share (the “Class A Common Stock”), and (ii) 100% of the issued and outstanding shares of Class B common stock, par value $1.00 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Shares”);
B. WHEREAS, subject to the terms and conditions of this Agreement, the Purchaser desires to purchase from each Seller and each Seller desires to sell to the Purchaser, all of the Shares owned by such Seller;
C. WHEREAS, immediately following the consummation of the transactions contemplated by this Agreement, the Purchaser shall hold 100% of the issued and outstanding shares of capital stock of the Company; and
D. WHEREAS, the Company, the Sellers and the Purchaser desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated by this Agreement, as set forth in, and subject to the provisions of, this Agreement.
NOW, THEREFORE, in consideration of the premises, representations, warranties, covenants, agreements and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Article
1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms have the meanings set forth below.
“Accounting Principles” means the accounting principles, practices, procedures, policies and methods, classifications, conventions, categorizations, definitions, judgments, elections, assumptions, inclusions, exclusions, techniques and valuation and estimation methods used to calculate Working Capital and other items as set forth in Exhibit C.
| 1 |
“Accounts Receivable” means all accounts, notes, accounts receivable, contract rights, drafts and other forms of claims, demands, instruments, receivables and rights to the payment of money or other forms of consideration, whether for goods sold or leased, services performed or to be performed, or otherwise owned by the Company or in which the Company has any interest, together with all guarantees, security agreements, mortgages and rights and interests securing the same.
“Action” means any demand, claim, litigation, action, hearing, arbitration, mediation, investigation, audit, complaint, suit, cause of action, proceeding, examination, counterclaim, cross-claim, inquiry, review, hearing, condemnation, charge, notice, Order or other proceeding of any kind or nature, at law or in equity, before or by, public or private, commenced, brought, conducted or otherwise involving any Governmental Authority.
“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms “controlled” and “controlling” have meanings correlative thereto.
“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax Law) of which the Company is or has been a member.
“Affordable Care Act” means the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, and the guidance and regulations issued thereunder.
“Ancillary Agreements” means the Escrow Agreement, the Restrictive Covenant Agreements and any other Contract, document or certificate which is or is to be delivered by any party hereto or any of their respective Affiliates, or entered into by or among the parties hereto or any of their respective Affiliates, at the Closing or otherwise pursuant to or in connection with this Agreement or the transactions contemplated hereby or thereby.
“Badcock Dealer Network” means the Company’s network of Dealers operating under the Dealer Agreements.
“Business” means the business of the Company as currently conducted as of the date hereof or at any time during the 12-month period prior to the date hereof (including, for the avoidance of doubt, the origination of consumer credit transactions and the sale of ancillary products thereto, including credit insurance and debt protection), in each case in the ordinary course of business.
“Business Day” shall mean any day other than a Saturday, Sunday or any day on which banks in New York, New York are authorized or required by Law to close.
| 2 |
“Cash” means the aggregate amount, without duplication, of (a) all cash and cash equivalents held by the Company (including marketable securities that are convertible into cash within 30 days, cash in transit with respect to products that the Company has shipped or caused to be shipped as of immediately prior to the Closing to the extent there has been a corresponding reduction of a related accounts receivable that is included in the calculation of Working Capital and excluding, for the avoidance of doubt, any outgoing cash in transit to the extent there has been a corresponding reduction in any related accounts payable that is included in the calculation of Working Capital), and (b) the amount of any received and uncleared checks, wires or drafts payable to the Company that have not either been cashed or cleared (but only to the extent (i) such checks are fully paid and not dishonored and (ii) there has been a corresponding reduction of a related accounts receivable that is included in the calculation of Working Capital), less the amount of any issued but uncleared checks, wires or drafts from the Company that have not been cashed or cleared (but only to the extent there has been a corresponding reduction of a related accounts payable that is included in the calculation of Working Capital). For purposes of calculating Estimated Cash, Actual Cash and Final Cash, the amounts described in clauses (a) and (b) of this definition shall be reduced dollar-for-dollar by the amount of any Cash used to pay any Repaid Indebtedness pursuant to Section 2.2(e)(i). Notwithstanding the foregoing, (i) “Cash” shall not include any amounts included in Working Capital (including, for the avoidance of doubt, any amounts owed to the Company under any promissory notes (including the Gulfport Promissory Note)) and shall not include any Restricted Cash, Store Cash or the cash surrender value of any insurance policy held by the Company and (ii) in no event shall Cash exceed $5,000,000 in the aggregate (after taking into account any Cash used to pay any Repaid Indebtedness pursuant to Section 2.2(e)(i)). Cash shall be determined in accordance with the Accounting Principles.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collar Amount” means $100,000.
“Company Articles” means the Articles of Incorporation of the Company as currently in effect.
“Company Bylaws” means the Bylaws of the Company as currently in effect.
“Company IT Systems” means the information technology and computer systems (including all software, hardware, and firmware, and including all network, information technology and telecommunication hardware and other equipment) of the Company relating to the transmission, storage, maintenance, organization, presentation, generation, processing or analysis of data and information (whether or not in electronic format) used in the conduct of the Business, including as part of any product.
“Compliance Look-Back Period” means the five-year period prior to the date hereof.
“Consumer Credit Receivables” means all outstanding Accounts Receivable arising or resulting from consumer credit, consumer financing or similar transactions or arrangement originated by the Company, including any retail charge agreements with outstanding balances.
“Contracts” or “contracts” means all legally binding contracts, leases, licenses, instruments, grants, sub-grants, arrangements, sublicenses, indentures, promises, undertakings, understandings, commitments, subleases, mortgages, bonds, notes and other binding agreements or obligations (including any amendments, restatements, supplements and other modifications thereto), whether written or oral and whether express or implied.
| 3 |
“COVID-19” means SARS-CoV-2 or COVID-19, any mutation, strain or variation thereof (including the Delta variant) and any related or associated disease outbreaks, epidemics, pandemics or health conditions.
“COVID-19 Law” means the Coronavirus Aid, Relief, and Economic Security Act of 2020, the Families First Coronavirus Response Act of 2020, the Paycheck Protection Program Flexibility Act of 2020, and any other Law intended to address the consequences of COVID-19, in each case, as may be amended, restated, modified or supplemented, together with all rules and regulations promulgated thereunder and guidance issued by any Governmental Authority.
“COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester, return to work, employment or human resources law, safety or similar Law, directive, guideline or recommendation promulgated by any applicable industry group or Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19.
“D&O Indemnification Agreement” means each director and officer indemnification agreement to the extent in effect as of the date hereof and as set forth on the “D&O Indemnification Agreement Schedule.”
“Data Protection Laws” means all applicable Laws pertaining to data protection, data privacy, data security, cybersecurity, data loss, cross-border data transfer, and general consumer protection Laws as applied in the context of data privacy, data breach notification, electronic communication, telephone and text message communications, marketing by email or other channels, consumer finance, and other similar Laws, including but not limited to the Fair Credit Reporting Act, as may be amended, restated, modified or supplemented, together with all rules and regulations promulgated thereunder and guidance issued by any Governmental Authority.
“Data Systems” means computer, electronic or telecommunications or network systems of any variety (including databases, websites, hardware, software, storage, switching and interconnection devices and mechanisms), whether on-premises or provided as a service by a third party.
“Dealer” means each Person, other than the Company, who is granted a right to (a) develop or operate a retail business identified by the trade names and service marks “Badcock Home Furniture & more” or “Badcock Home Furnishings Center” and (b) sell certain home furnishings, appliances and other durable goods consigned by the Company to such Person, in each case, pursuant to a Dealer Agreement.
“Dealer Agreement” means the W.S. Badcock Corporation Dealership Agreement entered into by and between the Company and each of its Dealers (together with all exhibits, addenda, ancillary agreements and amendments thereto), and under which the Company licenses its Dealers to operate a retail business identified by the trade names and service marks “Badcock Home Furniture & more” or “Badcock Home Furnishings Center” and sell certain home furnishings, appliances and other durable goods consigned by the Company to such Dealer.
| 4 |
“Designated Premises” means, with respect to each Dealer, the location of such Dealer’s retail business as set forth in the introductory paragraph of such Dealer’s Dealer Agreement.
“Dollars” or “$,” when used in this Agreement or any other agreement or document contemplated hereby, means United States dollars unless otherwise stated.
“Environmental Claim” means any Action, by any Person alleging actual or potential liability for Losses (including actual or potential liability for Losses for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, attorneys’ fees, or penalties) arising out of, based on or resulting from or relating to (a) the presence, Release of, or exposure to, any Hazardous Materials, (b) circumstances forming the basis of any violation or alleged violation of any Environmental Law, or (c) any other matters for which liability for Losses is imposed under Environmental Laws.
“Environmental Laws” means any applicable Law related to (a) the protection of the natural environment, including natural resources, (b) the protection of worker health and safety as it pertains to exposure to Hazardous Materials, (c) the manufacture, registration, distribution, formulation, packaging or labeling of Hazardous Materials or products containing Hazardous Materials, or (d) the handling, use, presence, generation, treatment, storage, disposal, or Release of or exposure to Hazardous Materials.
“Environmental Permit” means any Governmental Licenses required or issued in connection with any Environmental Law.
“Equity Interests” means, with respect to any Person, (i) shares of capital stock, voting securities, membership interests, partnership interests or other equity or similar interests or securities of such Person, including any securities convertible into or exercisable or exchangeable for any of the foregoing, or (ii) options, warrants, contracts, pledges, puts, subscription rights, calls, restricted shares, share or equity appreciation rights, phantom shares or units or other rights, agreements, Contracts or commitments to which such Person is a party or which is binding upon such Person providing for the issuance, disposition or acquisition of any of its capital stock, voting securities, membership interests, partnership interests or other equity or similar interests of such Person or securities convertible into or exercisable or exchangeable for any of the foregoing (including any equity or equity-based awards).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder and guidance issued by any Governmental Authority.
“ERISA Affiliate” means each entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the Company, or that is, or was at the relevant time, a member of the same “controlled group” as the Company pursuant to Section 4001(a)(14) of ERISA.
“Escrow Agent” means Citibank, N.A.
“Escrow Agreement” means the escrow agreement, dated as of the date hereof, by and among the Purchaser, the Escrow Agent and the Seller Representative.
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“Escrow Amount” means the sum of the Indemnification Escrow Amount and the Post-Closing Adjustment Escrow Amount.
“Existing Credit Facilities” means, collectively, that certain (a) Loan Agreement, dated March 6, 2013, as amended by that certain First Amendment to Loan Agreement, dated as of October 31, 2014, that certain Second Amendment to Loan Agreement, dated as of April 28, 2017, and that certain Third Amendment to Loan Agreement, dated as of June 26, 2018, in each case, by and among the Company, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent; (b) Loan Agreement, dated as of March 23, 2018, as amended by that certain, First Amendment to Loan Agreement, dated as of June 26, 2018, by and among the Company and South State Bank, N.A. (f/k/a CenterState Bank, N.A.), as bank; (c) Credit Agreement, dated June 26, 2018, as amended by that certain First Amendment to Credit Agreement, dated as of May 14, 2019, and that certain Second Amendment to Credit Agreement, dated as of August 17, 2021, in each case, by and among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent; and (d) Construction Loan Agreement, dated March 27, 2015, as amended by that certain First Amendment to Loan Agreement, dated as of December 1, 2015, that certain Second Amendment to Loan Agreement, dated as of March 25, 2016, that certain Third Amendment to Loan Agreement, dated as of May 18, 2016, that certain Fourth Amendment to Loan Agreement, dated as of August 18, 2016, that certain Fifth Amendment to Loan Agreement, dated as of December 20, 2016, that certain Sixth Amendment to Loan Agreement, dated as of April 28, 2017, that certain Seventh Amendment to Loan Agreement, dated as of March 28, 2018, that certain Eighth Amendment to Loan Agreement, dated as of June 26, 2018, that certain Ninth Amendment to Loan Agreement, dated as of July 31, 2018, and that certain Tenth Amendment to Loan Agreement, dated as of August 17, 2018, in each case, by and among the Company, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (the “Construction Loan Agreement”).
“Franchise” means any grant by one party to another party of the right to engage in or carry on a business, or to sell or offer to sell any product or service, under or in association with any trademark, which constitutes a “franchise,” as that term is defined under the FTC Rule.
“Franchise and Dealer Relationship Laws” means any Laws governing the relationship of the parties to a franchise or dealer agreement, including in the areas of terminating, failing to renew, and transferring such arrangement or agreement.
“Franchise Sales Laws” shall mean the FTC Rule and any other Laws (including the Laws of any state in the United States or any other country) governing the offer and sale of Franchises, business opportunities, seller-assisted marketing plans or similar arrangements or governing the relationship of the parties to a Franchise arrangement.
“Fraud” means an intentional and willful misrepresentation of a material fact with respect to any representation or warranty contained in Article 3, Article 4 or Article 5 of this Agreement, the Schedules, the Transaction Beneficiary Joinder or any Ancillary Agreement, that constitutes actual common law fraud under the common law of the State of Delaware and specifically excludes any form of constructive fraud or other claims based on constructive knowledge, negligence, recklessness, equitable fraud or similar theories.
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“FRG” means Franchise Group, Inc. a Delaware corporation.
“FTC Rule” means the Federal Trade Commission trade regulation rule entitled “Disclosure Requirements and Prohibitions Concerning Franchising,” 16 C.F.R. Section 436.1 et seq.
“Fundamental Representations” means Sections 3.1 (Organization and Power), 3.2 (Authorization; Execution; Enforceability), 3.3 (Capitalization; No Subsidiaries or Joint Ventures; Indebtedness), 3.4(a)(i)(B), (ii)-(iii) (Absence of Conflicts; Consents and Approvals), 3.18 (Company Affiliated Transactions), 3.25 (Brokerage), 4.1 (Ownership), 4.2 (Organization; Power; Authorization of Transactions), 4.3(a)(ii)-(iii) (Absence of Conflicts; Consents and Approvals) and 4.5 (Brokerage) and the representations and warranties set forth in the Transaction Beneficiary Joinder.
“GAAP” means generally accepted accounting principles in the United States as in effect at the relevant dates thereof.
“Governmental Authority” means any government, governmental agency or other quasi-governmental entity (including any body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, self-regulatory or taxing authority or power of any nature, and any industry association), department, bureau, office, commission, authority, or instrumentality, or court of competent jurisdiction, in each case whether foreign, federal, provincial, state or local.
“Governmental Licenses” means all permits, licenses, franchises, registrations, certificates, approvals, consents, ratifications, waivers, notifications and other authorizations obtained from any Governmental Authority, including those listed on the “Governmental Licenses Schedule.”
“Gulfport Promissory Note” means that certain Promissory Note, dated June 24, 2019, in a principal amount of $300,000, made by R&E Enterprises, LLC, in favor of the Company.
“Hazardous Materials” means any chemicals, materials, wastes or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “pollutants,” or “toxic pollutants,” under, or for which liability or standards of conduct may be imposed pursuant to, any Environmental Law, including petroleum or petroleum by-products, asbestos or asbestos-containing materials or products, greenhouse gases, per- and polyfluoroalkyl substances, polychlorinated biphenyls (PCBs) or materials containing same, lead or lead-based paints or materials, radon, fungus, mold in quantities or concentrations that may adversely affect human health or materially affect the value or utility of the building(s) in which it is present, or other substances that may have an adverse effect on human health or the environment.
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“Indebtedness” with respect to any Person at any date, means, without duplication, the aggregate amount of (a) any obligations of such Person for any outstanding principal amount of, accrued and unpaid interest on, and other payment obligations (including, in the case of Indebtedness of the type described in the following clauses (i) and (ii), any prepayment, early termination, exit or other penalties, fees, premiums, costs, breakage or other amounts payable upon the discharge thereof at or otherwise in connection with the Closing) arising under, any obligations of such Person of (i) indebtedness for borrowed money (including amounts due and owing under existing credit facilities or in connection with the payoff or termination thereof) whether or not evidenced by loan agreements, bonds, debentures, notes or other similar instruments (including any letter of credit, banker’s acceptance or related reimbursement agreement, to the extent drawn, and any notes issued in connection with any acquisition or divesture undertaken by such Person and including any promissory note or other indebtedness owing by such Person) and (ii) other obligations evidenced by any note, bond, debenture or other debt security including, for the avoidance of doubt, the Related Party Notes, (b) guarantees of any indebtedness of the type described in the foregoing clauses (i) or (ii) or guarantees of any obligations of the type described in the other clauses of this definition, (c) any obligations of such Person of the types described in the other clauses of this definition secured by any Lien on any property or asset of such Person, (d) any capitalized lease obligations of such Person and any obligations of such Person relating to any Contract that is required to be classified as a capital lease in accordance with GAAP (but without regard to ASC 842 and the lease accounting standard thereunder), including any breakage costs, prepayment penalties or fees or other similar amounts payable in connection therewith, (e) any obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of business and, with respect to the Company, included in the calculation of Working Capital), including all “earn-out,” contingent purchase price, deferred purchase price, conditional sale, title retention agreement or similar contingent payment obligations under any Contract, in each case determined based on the maximum amount payable in respect thereof, (f) any obligations of such Person in respect of accrued or declared but unpaid dividends or other distributions, (g) any obligations of such Person under any interest rate, commodity, basis, equity or currency swap transactions, caps, collars, option, exchange, repurchase or other hedging transactions (valued on a market quotation basis), (h) any obligations of such Person for reimbursement of any letters of credit, performance bonds, surety bonds, banker acceptances or similar instruments under which advances or other amounts have been drawn, (i) any obligations of such Person with respect to unfunded or underfunded liabilities pursuant to any pension or nonqualified deferred compensation plan or arrangement (including all amounts payable as a result of, or in connection with, the termination of the Terminated Deferred Compensation Arrangements in accordance with Section 2.3(b)(xiv)), any unpaid severance obligations of such Person with respect to employees, consultants or directors terminated, in the case of the Company, prior to the Closing, and any earned but unpaid compensation (including salary, bonuses, paid time off, 401(k) distributions and matching contributions, profit sharing distributions and other incentive arrangements) for any period prior to the Closing, in each case, together with the employer portion of any withholding, payroll, employment or similar Taxes, if any, associated therewith, (j) any obligations of such Person in respect of any contingent liabilities or other obligations or other longer-term liabilities or obligations under GAAP, (k) any customer deposits or prepayments held by or on behalf of such Person, (l) any deferred revenue of such Person, (m) any obligations of such Person with respect to deferred rent or unpaid rent obligations, or other deferred payment obligations owing to vendors of such Person, (n) any obligations of such Person with respect to “off-balance sheet arrangements” within the meaning of Item 303 of Regulation S-K of the Securities Act of 1933, as amended), (o) Unpaid Pre-Closing Taxes, (p) any obligations relating to or arising out of Rewards Liabilities, (q) any amounts payable, or required to be paid, by the Company to the Development Authority of LaGrange or any Affiliate thereof (the “Authority”) in order for the Company to acquire good and valid legal and beneficial title, free and clear of all Liens (other than Permitted Liens), to the 505 Pegasus Pkwy, LaGrange, GA (the “LaGrange Property”) pursuant to the Lease Agreement between the Authority and the Company, dated as of December 1, 2015, including the exercise of the “purchase option” set forth therein, the Short Form Lease Agreement between the Authority and the Company, dated as of December 1, 2015, the Development Authority of LaGrange Taxable Industrial Development Revenue Bond (W.S. Badcock Corporation Project), Series 2015, issued by the Authority to the Company, dated December 17, 2015, the Bond Purchase Loan Agreement between the Authority and the Company, dated as of December 1, 2015, the Payment in Lieu of Taxes Agreement between the Authority and the Company, dated as of December 1, 2015, and the Memorandum of Understanding between the Authority and the Company, dated as of November 18, 2014, and any other related Contract (collectively, the “LaGrange Bond Documents”), (r) the Split Dollar Life Insurance Amount and the Specified Promissory Note Amount, (s) any liabilities or obligations in respect of claims that are incurred, including claims incurred but not reported, in respect of any group insurance or self-insurance arrangements or programs, and (t) any accrued interest, fees, costs, expenses, penalties and any other amounts related to any of the foregoing. Notwithstanding the foregoing, “Indebtedness” shall not include any (x) except to the extent otherwise provided in clause (m) of this definition, obligations under operating leases that are required to be classified as operating leases in accordance with GAAP (but without regard to ASC 842 and the lease accounting standard thereunder), (y) letters of credit to the extent undrawn (including any that are outstanding under existing credit facilities) or (z) with respect to the Company, amounts to the extent included as Transaction Expenses. Indebtedness shall be calculated in accordance with the Accounting Principles and for purposes of calculating Estimated Indebtedness, Actual Indebtedness and Final Indebtedness, the amount of Indebtedness shall be reduced dollar-for dollar by the amount paid in respect of any Repaid Indebtedness pursuant to Section 2.2(e)(i)).
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“Indemnification Escrow Amount” means cash in the amount of $2,750,000.
“Indemnification Escrow Fund” means the Indemnification Escrow Amount deposited into escrow pursuant to the Escrow Agreement.
“International Trade Laws” means applicable Laws governing import and export controls and economic sanctions, including, but not limited to, the Export Controls Act of 2018, the Export Administration Regulations, the Arms Export Control Act, the International Traffic in Arms Regulations, the International Emergency Economic Powers Act, the United States Trading with the Enemy Act, the United States Customs Laws, the Laws and executive orders implemented by the Office of Foreign Assets Controls, United States Department of the Treasury, and applicable Laws governing imports and customs, including the U.S. customs regulations at 19 C.F.R. Chapter 1, and any regulations or Law or Order issued thereunder.
“Inventory” means all raw materials, works in process, by-products, finished goods and production, packaging and other materials and supplies of the Company, including any such items consigned to others.
“Knowledge” means (i) in the case of the Purchaser, the actual knowledge of Brian Kahn, Andrew Laurence, Andrew Kaminsky and Eric Seeton, in each case, after reasonable due inquiry of such individual’s direct reports with responsibility for the matter at hand, (ii) in the case of the Company, the actual knowledge of William K. Pou, Jr., Robert Burnette, Mitchell Stiles, Phillip Bayt, Clara Arrington, Shannon Collins, Charles Bowden and Keith Staddon, in each case, after reasonable due inquiry of such individual’s direct reports with responsibility for the matter at hand, (iii) in the case of an individual, the actual knowledge of such individual or the applicable custodian or guardian, as applicable, after reasonable due inquiry, and (iv) in the case of any other Person that is not the Purchaser, the Company or an individual, the actual knowledge of the chief executive officer, president and chief financial officer (or persons serving in similar capacities), or each trustee or custodian of such Person, in each case, after reasonable due inquiry of such individual’s direct reports with responsibility for the matter at hand.
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“Law” means any domestic or foreign, federal, state, provincial or local statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, ruling, determination, act, authorization, directive, determination, other requirement, binding action or rule of law of any Governmental Authority (including any COVID-19 Law and any laws, rules, regulations, statutes, ordinances or directives, relating to consumer protection, consumer financing, advertising and marketing) and, in each case, any amendment, supplement, restatement or modification thereto. For the avoidance of doubt and without limitation, the term “Law” includes all applicable consumer protection laws including, but not limited to, Section 5 of the Federal Trade Commission Act and its implementing regulations, 12 U.S. Code § 5531 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Truth in Lending Act and Regulation Z, the Truth in Leasing Act and Regulation M, the Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act and Regulation V, the Gramm-Leach-Bliley Act and Regulation P, the Telephone Consumer Protection Act, and state laws concerning usury, lending, lease-to-own, and unfair and deceptive acts or practices.
“Leased Real Property” means all of the right, title and interest of the Company under all Real Property Leases.
“Liability” means any liability, obligation, indebtedness or claim (whether known, unknown, asserted unasserted, absolute, contingent, direct, indirect, accrued, unaccrued, liquidated, unliquidated, due, to become due, or otherwise).
“Liens” means any mortgage, deed of trust, pledge, security interest or any nature, encumbrance, lien, claim, restriction, option, easement, right of first refusal, right of first offer, preferential purchase rights, preemptive rights, restrictions, options, or conditional sales contracts, servitude or adverse interest or charge.
“Look-Back Period” means the three-year period prior the date hereof.
“Losses” means any and all losses, damages, liabilities, deficiencies, interest, judgments, costs, Taxes, expenses, awards, fines, assessments, obligations, sanctions, payments, charges and penalties, in each case, of whatever kind, together with all interest thereon (including court costs, costs of defense, reasonable attorneys’ fees and other reasonable costs and expenses incurred in connection with or relating to enforcing, compromising or settling any Action), and for the avoidance of doubt, including any of the foregoing (including expenses of litigation) incurred with respect to seeking or pursuing any right to indemnification hereunder or seeking or pursuing coverage under any insurance policy the cost of pursuing any insurance providers, and including any exemplary or punitive damages.
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“Material Adverse Effect” means any event, circumstance, change, occurrence, condition, fact, state of facts, development or effect (collectively, “Events”) that, individually or in the aggregate, (a) has had or would reasonably be expected to have a material and adverse effect upon the business, assets, properties, liabilities, condition (financial or otherwise), operating results of the Company, or (b) prevents or materially delays, or would reasonably be expected to prevent or materially delay, the consummation of the transactions contemplated hereby by the Company or any of the Sellers.
“Multiemployer Plan” means each Employee Plan that is a “multiemployer plan” as defined in Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code.
“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement in the form of a letter agreement dated on or about August 25, 2021, from Mann, Armistead & Epperson, Ltd., as agent for the Company, and agreed to and accepted by FRG, an affiliate of and agent for the Purchaser on or about August 25, 2021, as amended, restated or modified from time to time.
“Order” means any order, writ, judgment, injunction, decree, stipulation, determination, decision, ruling or award promulgated or entered by or with, or any settlement or other agreement under the jurisdiction of, any Governmental Authority.
“Owned IP” means all Proprietary Rights owned (or purported to be owned) by the Company.
“Permitted Liens” means (i) mechanics’, materialmens’, carriers’, workmens’, repairmens’, contractors’ and warehousemens’ Liens arising or incurred in the ordinary course of business and for amounts which are not yet due and payable or are being contested in good faith and for which adequate reserves have been established on the Stub Period Balance Sheet and that are not, individually or in the aggregate, material, (ii) easements, covenants, conditions, rights-of-way, restrictions and other similar charges and encumbrances of record not interfering materially with the conduct of the Business in the ordinary course of business or detracting materially from or interfering materially with the use, occupancy, value or marketability of title of the assets subject thereto, (iii) Liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith and for which adequate reserves have been established on the Stub Period Balance Sheet and that are not, individually or in the aggregate, material, (iv) Liens identified on current title searches or preliminary title reports or other documents or writings included in the public records, each to the extent delivered to the Purchaser, (v) other Liens on Leased Real Property in favor of the landlord of such Leased Real Property arising in the ordinary course of business and not incurred in connection with the borrowing of money, to the extent the same does not affect tenant’s use and occupancy of the Leased Real Property, (vi) Liens granted to any lender at the Closing to the extent such Liens were granted in connection with any financing by the Purchaser of the transactions contemplated hereby, (vii) any right, interest or Lien of a licensor, sublicensor, licensee, or sublicenses, under any non-exclusive license, sublicense or similar agreement granted in the ordinary course of business and which do not, individually or in the aggregate, materially interfere with the conduct of the Business, in any material respect, or detract from or interfere with the use, occupancy, value or marketability of title of the assets subject thereto, in each case, in any material respect, and (viii) any other Liens set forth on the “Permitted Liens Schedule.”
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“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, agency or other entity or Governmental Authority.
“Personal Data” means information that identifies, relates to, describes, is reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular individual, and when referring to a Data Protection Requirement, has the same meaning as the similar or equivalent term defined thereunder.
“Post-Closing Adjustment Escrow Amount” means cash in the amount of $10,000,000.
“Post-Closing Adjustment Escrow Fund” means the Post Closing Adjustment Escrow Amount deposited into escrow pursuant to the Escrow Agreement.
“PPP” means the Paycheck Protection Program as described in the CARES Act and modified by the Small Business Administration and Department of Treasury guidance documents and FAQs, subsequent interim final rules, and the Paycheck Protection Program Flexibility Act of 2020.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion ending on and including the Closing Date of any Straddle Period.
“Pre-Closing Taxes” means any Liability for Taxes of the Company (or that the Company is liable for) for any Pre-Closing Tax Period and any Taxes resulting from the transactions contemplated by this Agreement and the Ancillary Agreements.
“Proprietary Rights” means all intellectual property or industrial property rights, and all other proprietary and other rights, existing anywhere in the world including all rights in, to, or under: (i) patents and patent applications, including continuations, divisionals, continuations-in-part, reissues or reexaminations and patents issuing thereon, (ii) trademarks, service marks, trade names, service names, brand names, corporate names, certification marks, trade dress, logos, internet domain names, and other indications of source or origin, together with all goodwill associated therewith (collectively, “Trademarks”), (iii) copyrights, works of authorship, content, compilations, design rights, mask works, and all derivative works, moral rights, renewals, extensions, reversions associated with such copyrights or works of authorship, (iv) all information, inventions (whether or not patentable), improvements, trade secrets, proprietary information, knowledge, practices, techniques, methods, procedures, processes, protocols, algorithms, formulae, models, results, data, designs, drawings, specifications, materials, customer lists, supplier lists, and any other information related to the development, marketing, pricing, distribution, cost, sales and manufacturing of products and any registrations of any of the foregoing or applications therefor (collectively, “Trade Secrets”), (v) Software, techniques, ideas, inventions, research and development, specifications, apparatus, tools, and other similar materials and technology, (vi) rights of privacy, publicity and in social media, (vii) any other intellectual property or proprietary rights of any kind, nature or description, (viii) any tangible embodiments of the foregoing (in whatever form or medium), and (ix) all registrations, issuances and applications for any of the foregoing.
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“Pro Rata Share” means, with respect to any Seller, such Person’s ownership interest in the Company as of immediately prior to the Closing, determined by dividing (a) the number of Shares (including both voting and nonvoting Shares) owned of record by such Seller as of immediately prior to the Closing, by (b) the total number of Shares (including both voting and nonvoting Shares) owned of record by all Sellers. The Pro Rata Share of each Seller is set forth on the “Pro Rata Share Schedule”.
“Purchase Price” means (i) $581,402,834, plus (ii) the aggregate amount of all Cash held by the Company as of immediately prior to the Closing (after taking into account any Cash used to pay any Repaid Indebtedness pursuant to Section 2.2(e)(i)), minus (iii) the aggregate amount of all Transaction Expenses outstanding as of immediately prior to the Closing, minus (iv) the aggregate amount of all Indebtedness of the Company outstanding as of immediately prior to the Closing (after taking into account the payment of any Repaid Indebtedness pursuant to Section 2.2(e)(i)), minus (v) the amount, if any, by which Working Capital as of immediately prior to the Closing, is less than Target Working Capital, but only if such difference exceeds the Collar Amount (a “Downward Closing Working Capital Adjustment”), and plus (vi) the amount, if any, by which Working Capital as of immediately prior to the Closing, is greater than Target Working Capital, but only if such difference exceeds the Collar Amount (an “Upward Closing Working Capital Adjustment”).
“Purchaser Representatives” means, with respect to the Purchaser, its Affiliates and any and all directors, officers, employees, consultants, financial advisors, counsel, accountants, financing sources and other advisors, representatives and agents of the Purchaser and its Affiliates.
“R&W Insurance Policy” means the buyer-side representations and warranties insurance policy obtained by the Purchaser (or an Affiliate thereof) attached hereto as Exhibit A.
“Real Property Lease” means all Contracts, including all guarantees relating thereto, pursuant to which the Company holds a leasehold or sub-leasehold estate in, or is granted the right to use or occupy, any land, buildings, improvements, or other interest in real property as of the date hereof.
“Related Party Notes” means, collectively, (a) that certain Subordinated Promissory Note, dated April 28, 2017 in a principal amount of $4,250,802.56, made by the Company in favor of Richard B. Comiter, as trustee of the James C. Baber, III Revocable Trust U/A/D January 24, 2017, as amended (including each of the separates trusts established pursuant to Section 5.2(a) of such trust), (b) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $937,595.45, made by the Company in favor of John Baber, (c) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $4,250,427.77, made by the Company in favor of Janet Baber Parasmo 2010 Irrevocable Trust dated 12/21/10, (d) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $2,013,888.45, made by the Company in favor of James C. Baber Revocable Trust, (e) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $4,250,802.56, made by the Company in favor of Sharon B. Turner 2010 Irrevocable Trust dated 12/21/10, (f) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $2,792,923.48, made by the Company in favor of Janet Baber Parasmo, (g) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $4,250,247.77, made by the Company in favor of John Baber 2010 Irrevocable Trust dated 12/21/2010, (h) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $949,800.83, made by the Company in favor of Richard B. Comiter, as Personal Representative of the Estate of James C. Baber, III, (i) that certain Subordinated Promissory Note, dated April 28, 2017, in a principal amount of $1,441,344.96, made by the Company in favor of Sharon B. Turner, and (j) any other promissory note or other similar instrument issued by the Company to any Related Person of the individuals described in clauses (a) through (i) of this definition.
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“Related Person” means (a) any Affiliate of the Company, (b) any individual related by blood, marriage, domestic partnership (or equivalent) or adoption to any Seller or any equity holder or beneficiary of any Seller, (c) any Person in which any Seller, any equity holder or beneficiary of any Seller, any Affiliate of any of the foregoing or the spouse or domestic partner (or equivalent), or relative by blood, marriage, domestic partnership (or equivalent) or adoption, of the foregoing, directly or indirectly holds five percent (5%) or more of the Equity Interests in such Person, (d) if a Seller is a trust or similar estate planning vehicle or entity, then any beneficiary or custodian of such Seller, (e) any trust for the benefit of (i) any Seller or any equity holder or beneficiary of a Seller, (ii) the spouse or domestic partner (or equivalent) of any Seller or any equity holder or beneficiary of a Seller or (iii) any individual related by blood, marriage, domestic partnership (or equivalent) or adoption to any Seller or any equity holder or beneficiary of a Seller, (f) any Affiliate of any of the foregoing Persons, (g) any Person who serves as a director, officer, partner, executor, or trustee of any of the foregoing Persons (or in a similar capacity), or (h) any Person with respect to which any of the foregoing Persons serves as a general partner or a trustee (or in a similar capacity).
“Release” means any actual or threatened release, spill, emission, discharge, leaking, pumping, injection, deposit, placing, disposal, dispersal, leaching or migration into the environment (including ambient air, vapor, surface water, groundwater and surface or subsurface strata) or into or out of any property, including the movement of Hazardous Materials through or in the ambient air, vapor, surface water, groundwater, surface or subsurface strata or property.
“Restricted Cash” means any cash or cash equivalents that (i) are subject to restrictions or limitations on use, distribution, or repatriation or otherwise restricted for a particular use, purpose or event and not available for general corporate use, including escrows (except for such cash as would be released from such restrictions upon repayment of the Repaid Indebtedness), (ii) would trigger Taxes on use, distribution, or repatriation, or (iii) are held in respect of securing rent or lease payments, held in respect of customer deposits, prepayments, letters or credit or surety bonds, or otherwise held as collateral or security in respect of any Liabilities of any Person, calculated in accordance with the Accounting Principles (except for such cash as would be released from such restrictions upon repayment of the Repaid Indebtedness).
“Rewards Liabilities” means all Liabilities of the Company for points or rewards that have accrued under any stored value or prepaid physical or virtual card (including single use set amounts cards, if any) which when activated can be used or redeemed to purchase or discount any goods or services from the Company or any of its Affiliates.
“Seller Representative Expense Amount” means cash in the amount of $1,000,000.
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“Seller Representative Expense Fund” means the Seller Representative Expense Amount delivered to the Seller Representative by the Purchaser, and which will be held in an account designated by the Seller Representative to cover and reimburse the fees and expenses incurred by the Seller Representative for his obligations in connection with this Agreement and the transactions contemplated herein, and released to the Sellers in accordance with Section 9.1(d).
“Software” means all (i) computer software, whether in object code or source code; (ii) data, databases, compilers, higher level or “proprietary” languages, data files, application programming interfaces, and compilations, including metadata, whether machine readable or otherwise; (iii) algorithms, tool sets, user interfaces, descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, interfaces, report formats, firmware, development tools, templates, menus, buttons and icons; and (iv) all documentation related to any of the foregoing and all know-how related thereto, including web sites, HTML code, and firmware and other software embedded in hardware devices, developed or currently being developed, in each case, including all copyrights therefor.
“Specified Promissory Note” means that certain Promissory Note with a principal amount of $30,000.00 from Mitchell P. Stiles, Jr. issued to the Company, dated May 29, 2008.
“Specified Promissory Note Amount” means the aggregate amount of all principal, interest, fees, expenses, penalties and other amounts outstanding as of immediately prior to the Closing under the Specified Promissory Note.
“Specified Promissory Note Seller” means Mitchell P. Stiles, Jr.
“Split Dollar Life Insurance Agreements” means, collectively, the Contracts entered into between the Company, on the one hand, and each Split Dollar Life Insurance Seller, on the other hand, relating to the Company’s and such Split Dollar Life Insurance Seller’s arrangement to share in the costs and benefits of one or more life insurance policy(ies) insuring the life of such Split Dollar Life Insurance Seller.
“Split Dollar Life Insurance Amount” means, without duplication, the aggregate amount of (i) all premiums, taxes, costs and expenses incurred or paid by the Company as of immediately prior to the Closing under or in respect of the Split Dollar Life Insurance Agreements, plus (ii) all amounts, including principal and interest, that are outstanding under the Split Dollar Life Insurance Promissory Notes as of immediately prior to the Closing. To avoid double counting, to the extent any amounts described in clause (i) of this definition are actually paid by the Company prior to the Closing and such amounts are payable by the applicable obligor under the applicable Split Dollar Life Insurance Promissory Note as described in clause (ii) of this definition, then such amounts payable by such obligor will not be counted as a Split Dollar Life Insurance Amount to the extent actually paid by the Company prior to the Closing.
“Split Dollar Life Insurance Promissory Notes” means the promissory notes issued by the Split Dollar Life Insurance Sellers in favor of the Company and set forth on the “Split Dollar Life Insurance Schedule.”
“Split Dollar Life Insurance Sellers” means each of the individuals set forth on “Split Dollar Life Insurance Schedule.”
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“Stock Restriction Agreement” means that certain Amended and Restated Stock Restriction Agreement, dated November 15, 1999, by and among the Company and the Sellers, as amended by a First Amendment, dated July 15, 2010, and by a Consent to Stock Redemption, Ratification of Consent to Stock Transfers and Second Amendment to Amended and Restated Stock Restriction Agreement, dated April 27, 2017.
“Store” means any retail location operated by the Company as of immediately prior to the Closing, which, for the avoidance of doubt, excludes retail locations operated by Dealers.
“Store Cash” means all cash and cash equivalents (including all petty cash) located at the Stores.
“Straddle Period” means any taxable period that includes (but does not end on) the Closing Date.
“Subsidiary” means, with respect to any Person, any partnership, limited liability company, corporation or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof.
“Target Working Capital” means $554,276,909.
“Tax” means any foreign, federal, state or local charges, fees, imposts, levies or other assessments, including all income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, real property, personal property, escheat, unclaimed property, capital stock, social security, unemployment, disability, payroll, license, or employee or other withholding tax, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing.
“Tax Return” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting schedule, statement or information and including any amendment thereof) filed or required to be filed in connection with the determination, assessment or collection of any Tax of any party or the administration of any Laws relating to any Tax.
“Transaction Beneficiary” means, with respect to each Trust Seller, the primary adult beneficiary of such Trust Seller.
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“Transaction Expenses” means, collectively, the aggregate amount of the unpaid fees, costs, commissions or expenses that have been incurred on or prior to the Closing Date in connection with or in anticipation of the preparation, negotiation and execution of this Agreement, the Ancillary Agreements or the consummation or performance of any of the transactions contemplated hereby or thereby that are payable, incurred by, billed to or otherwise reimbursable by the Company, including (i) the fees and expenses of Trenam Law and all broker, investment banker or financial advisor, any legal, accounting and consulting fees and expenses, (ii) all transaction, success, exit, monitoring, management, consulting fees or similar fees or payments, or any related costs or expenses, payable to any direct or indirect equity holder of the Company or any Affiliate of such equity holder as a result of, or in connection with, this Agreement, the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, (iii) all stay, retention, sale, transaction, change of control, severance or similar payments (including pursuant to all severance and retention agreements between the Company and any of its employees) made or required to be made to any current or former director, officer, employee, contractor, consultant or agent by the Company as of or after the Closing Date as a result of, or in connection with, this Agreement and the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, and in each case plus the employer portion of all withholding, payroll, employment or similar Taxes attributable thereto, (iv) the amounts set forth on the “Transaction Expenses Schedule”, (v) the D&O Tail Policy premiums, fees, costs, Taxes and expenses, and (vi) 50% of all premiums, fees, costs, Taxes and expenses incurred by the Purchaser in connection with obtaining the R&W Insurance Policy, which premiums, fees, costs Taxes and expenses shall not exceed $3,063,206, in the aggregate.
“Trust Seller” means each Seller that is not a natural person.
“Unpaid Pre-Closing Taxes” means an amount equal to the sum of, without duplication (a) the amount of all unpaid Taxes (whether or not due or payable) of the Company (or that the Company is liable for) attributable to any Pre-Closing Tax Period, which shall not be an amount less than zero and shall not account for any Tax attributes, (b) any Taxes resulting from the transactions contemplated by this Agreement (including any Transfer Taxes), (c) the amount of Tax Liabilities associated with deferred revenue or other deferred amounts, including any Taxes deferred pursuant to any COVID-19 Law or otherwise existing as of immediately prior to the Closing, (d) any Taxes (for any taxable period) resulting from any change in method of accounting on or prior to the Closing Date, including any Taxes described in item (o) of the “Taxes Schedule” and any accounting method changes relating to credit card fees, (e) any sales, use, and insurance premium Taxes attributable to any Pre-Closing Tax Period, (f) any Tax liability associated with officer compensation or payments to shareholders of the Company attributable to any Pre-Closing Tax Period and (g) any Liability in respect of escheat or unclaimed or abandoned property.
“Working Capital” means an amount equal to (a) the current assets of the Company as of immediately prior to the Closing (excluding Cash, but including Store Cash, and excluding all tax assets), minus (b) the current liabilities of the Company as of immediately prior to the Closing, in each case calculated in accordance with the Accounting Principles; provided, however, that, for the avoidance of doubt and, for the purpose of avoiding double counting, items included in the calculation of Working Capital shall not include any items included in the calculation of Transaction Expenses or Indebtedness hereunder. The calculation of Working Capital shall be presented on a consistent basis with the illustrative calculation of Working Capital as of November 21, 2021 set forth on the “Working Capital Schedule”; provided, that in the event of any conflict between such illustrative calculation and the Accounting Principles, the Accounting Principles will govern.
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1.2 Cross References. Each of the following terms shall have the meaning specified in the Section of this Agreement set forth opposite such term:
| Term | Section |
| 1933 Act | 2.1 |
| 409(A) Arrangements | 2.3(xiv) |
| Accounting Arbitrator | 2.4(c)(ii) |
| Actual Cash | 2.4(b) |
| Actual Indebtedness | 2.4(b) |
| Actual Transaction Expenses | 2.4(b) |
| Actual Working Capital | 2.4(b) |
| Adjusted Purchase Price | 2.4(d)(i) |
| Agreement | Preamble |
| Allocation Schedule | (b), 2.2(a) |
| Anti-Corruption Laws | 3.5(g) |
| Approved Landlord Lien | 3.7(b) |
| Authority | 1.1 |
| Bank Accounts Schedule | 3.24 |
| Benefits and Recoveries | 7.4(b) |
| Capitalization Schedule | 4.1, 3.3 |
| Class A Common Stock | Recitals |
| Class B Common Stock | Recitals |
| Closing | 2.3(a) |
| Closing Date | 2.3(a) |
| Closing Payment Amount | 2.2(b) |
| Company | Preamble |
| Company Affiliated Transactions | 3.18 |
| Company Affiliated Transactions Schedule | 3.18 |
| Company Brokerage Schedule | 3.25 |
| Company Names | 6.3 |
| Compliance Schedule | 3.13 |
| Contracts Schedule | 3.9(b), 3.9(a) |
| Contributor | 3.10(g) |
| COVID-19 Matters Schedule | 3.22(a) |
| D&O Indemnification Agreement Schedule | 1.1 |
| D&O Indemnitees | 8.4(a) |
| D&O Tail Policy | 2.3(b)(viii) |
| Data Protection Requirements | 3.23(a) |
| Dealer Schedule | 3.27(a) 3.27(h), 3.27(a)(g), 3.27(a) |
| Deductible | 7.4(a) |
| Deferred Compensation Plan Termination Date | 2.3(xiv) |
| Delinquent Accounts Receivable Schedule | 3.5(d) |
| Developments Schedule | 3.6 |
| Disclosed Liabilities Schedule | 3.5(c) |
| Dispute Notice | 2.4(c)(i) |
| Downward Closing Working Capital Adjustment | 1.1 |
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| Employee Benefits Schedule | 3.15(j), 3.15(h), 3.15(f), 3.15(b), 3.15(a), 3.6(d)(viii) |
| Employee Plan | 3.15(a) |
| Employee Welfare Plans | 3.15(a) |
| Entity Organization Schedule | 3.1 |
| Environmental Matters Schedule | 3.17 |
| Estimated Cash | 2.4(a) |
| Estimated Closing Statement | 2.4(a) |
| Estimated Indebtedness | 2.4(a) |
| Estimated Transaction Expenses | 2.4(a) |
| Estimated Working Capital | 2.4(a) |
| Events | 1.1 |
| FCPA | 3.5(g) |
| Final Cash | 2.4(c)(iii), 2.4(c)(ii), 2.4(c)(i) |
| Final Indebtedness | 2.4(c)(iii), 2.4(c)(ii), 2.4(c)(i) |
| Final Transaction Expenses | 2.4(c)(iii), 2.4(c)(ii), 2.4(c)(i) |
| Final Working Capital | 2.4(c)(iii), 2.4(c)(ii), 2.4(c)(i) |
| Financial Statements | 3.5(a) |
| Financial Statements Schedule | 3.5(a), 3.5(a) |
| Funds Flow | 2.4(a) |
| General Enforceability Exceptions | 3.2 |
| Governmental Licenses Schedule | 3.11, 1.1 |
| Indebtedness Schedule | 3.3, 2.3(xiv) |
| Indemnified Party | 7.4(c) |
| Indemnifying Party | 7.4(c) |
| Insurance Schedule | 3.26 |
| Interim Financial Statements | 3.5(a) |
| IP Agreements | 3.10(b) |
| Key Business Relationships Schedule | 3.20(b), 3.20(a) |
| Key Dealer | 3.20(a) |
| Key Vendor | 3.20(a) |
| Labor and Employment Schedule | 3.15(a) 3.14(d) |
| LaGrange Bond Documents | 1.1 |
| LaGrange Property | 1.1 |
| LaGrange Transaction | 3.28 |
| LaGrange Transaction Documents | 3.28 |
| LaGrange Transaction Documents Schedule | 3.28 |
| Leased Real Property Schedule | 3.7(c), 3.7(b) |
| Licensed IP | 3.10(b) |
| Litigation Schedule | 3.12 |
| Majority Holders | 9.1(c) |
| Material Contracts | 3.9(a) |
| Material Governmental Licenses | 3.11 |
| Material Restrictions Schedule | 3.4(b), 3.4(a) |
| Modified Financing Practices Schedule | 3.6(vi) |
| Other Plans | 3.15(a) |
| Owned Real Property | 3.7(a) |
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| Owned Real Property Schedule | 3.7(c), 3.7(a) |
| Ownership Schedule | 4.1 |
| Permitted Company Affiliate Agreements Schedule | 8.4(e), 2.3(b)(v) |
| Permitted Liens Schedule | 1.1 |
| Pro Rata Share Schedule | 1.1 |
| Product Warranty and Product Liability Schedule | 3.21(b) |
| Proprietary Rights Schedule | 3.10(e) |
| Proprietary Rights Schedule | 3.10(c), 3.10(a) |
| Proprietary Rights Schedule | 3.10(b) |
| Proprietary Software | 3.10(a) |
| Purchased Shares | 2.1 |
| Purchaser | Preamble |
| Purchaser Brokerage Schedule | 5.6 |
| Purchaser Released Claims | 8.4(f) |
| Purchaser Releasing Person | 8.4(f) |
| RCA Seller Schedule | 2.3(b)(xii) |
| Real Property | 3.7(a) |
| Rebates Schedule | 3.20(c) |
| Registered Proprietary Rights | 3.10(a) |
| Released Claim | 8.4(e) |
| Repaid Indebtedness | 2.2(e) |
| Repaid Indebtedness Schedule | 2.2(e) |
| Representative Losses | 9.1(d) |
| Restrictive Covenant Agreements | 2.3(b)(xii) |
| Schedule | 8.5 |
| Schedule of Rewards Liabilities | 3.5(h) |
| Scheduled Insurance Policies | 3.26 |
| Schedules | 8.5 |
| Seller | Preamble |
| Seller Brokerage Schedule | 4.5 |
| Seller Released Parties | 8.4(f) |
| Seller Representative | Preamble |
| Sellers | Preamble |
| Shares | Recitals |
| Solvent | 5.9 |
| Specified Employee Schedule | 2.3(xv) |
| Split Dollar Life Insurance Schedule | 1,1, 1.1 |
| Stub Period Balance Sheet | 3.5(a) |
| Tangible Property Schedule | 3.8 |
| Taxes Schedule | 3.16, 1.1 |
| Terminated Deferred Compensation Arrangements | 2.3(xiv) |
| Third Party Claim | 7.4(c) |
| Trade Secrets | 1.1 |
| Trademarks | 1.1 |
| Transaction Beneficiary Joinder | Preamble |
| Transfer Taxes | 8.3 |
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| Trenam Law | 9.11(a) |
| Upward Closing Working Capital Adjustment | 1.1 |
| Working Capital Schedule | 1.1 |
Article
2
PURCHASE AND SALE OF PURCHASED SHARES
2.1 Purchase and Sale of Purchased Shares. Upon the terms and conditions set forth herein and on the basis of the representations, warranties, covenants and agreements contained herein, the Sellers hereby sell, transfer, assign, deliver and convey to the Purchaser, and the Purchaser hereby purchases from the Sellers, all of the Shares (the “Purchased Shares”), free and clear of all Liens (other than any transfer restrictions under the Securities Act of 1933, as amended (the “1933 Act”), and state securities Laws).
2.2 Purchase Price for Purchased Shares.
(a) The aggregate purchase price to be paid by the Purchaser to the Sellers for the Purchased Shares shall be an amount equal to (i) the Purchase Price, as adjusted pursuant to Section 2.4 below, less (ii) any amounts paid to any Indemnified Party from the Indemnification Escrow Fund pursuant to this Agreement. The Purchase Price (as may be adjusted pursuant to clauses (i) through (ii) of the immediately preceding sentence) shall be allocated among the Sellers as set forth on the “Allocation Schedule”.
(b) At the Closing, the Purchaser shall pay, or cause to be paid, an amount equal to (such amount, the “Closing Payment Amount”) (i) the Purchase Price (as adjusted pursuant to Section 2.4(a)) less (ii) (A) the Escrow Amount, and (B) the Seller Representative Expense Amount, to the Seller Representative (for the benefit of the Sellers) by wire transfer of immediately available funds to an account designated by the Seller Representative to the Purchaser in the Estimated Closing Statement for subsequent disbursement by the Seller Representative among the Sellers as set forth on the “Allocation Schedule”. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that the Sellers shall be deemed to have received the Seller Representative Expense Amount at the Closing as part of the Closing Payment Amount and immediately thereupon contributed the Seller Representative Expense Amount to the Seller Representative. For income tax purposes, the Seller Representative Expense Amount shall be treated as having been received and voluntarily set aside by the Sellers at the time of the Closing. Notwithstanding anything to the contrary herein, for purposes of allocating the payment of the Closing Payment Amount among the Sellers, the portion of the Closing Payment Amount that is payable to any Split Dollar Life Insurance Seller and the Specified Promissory Note Seller shall be reduced by the portion of the Split Dollar Life Insurance Amount attributable to the Split Dollar Life Insurance Agreement under which such Split Dollar Life Insurance Seller is the insured and the Specified Promissory Note Amount, respectively, and the Funds Flow and the “Allocation Schedule” shall reflect the foregoing, and upon such reduction the Split Dollar Life Insurance Promissory Notes and the Specified Promissory Note, respectively, shall be satisfied in full.
(c) At the Closing, the Purchaser shall deposit the Escrow Amount with the Escrow Agent. The Escrow Amount shall be held in trust by the Escrow Agent pursuant to the terms of the Escrow Agreement and shall be released in accordance with the terms of this Agreement and the Escrow Agreement. The Post-Closing Adjustment Escrow Amount will only be available to satisfy any amounts owed by the Sellers to the Purchaser pursuant to Section 2.4, and the Indemnification Escrow Amount will only be available to satisfy any amounts owed by the Sellers to the Purchaser pursuant to Section 7.2, in accordance with the terms of this Agreement and the Escrow Agreement.
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(d) At the Closing, the Purchaser shall pay the Seller Representative Expense Amount to the Seller Representative by wire transfer of immediately available funds to an account designated by the Seller Representative in the Estimated Closing Statement, to be held and used in accordance with the provisions hereunder.
(e) At the Closing, the Sellers agree that in addition to the payments under clauses (b), (c) and (d) of this Section 2.2, all Indebtedness of the type referred to in clauses (a), (g) and (q), and (t) with respect to each of clauses (a), (g) and (q), of the definition of Indebtedness, including any Indebtedness encumbering any Real Property or the Company’s interest in and to the Real Property Leases (including all such amounts listed on the “Repaid Indebtedness Schedule”) as of immediately prior to the Closing (the “Repaid Indebtedness”), will be fully repaid and that such repayment will be funded (i) through the use or application of the portion of the Cash held by the applicable lender as specified in the Repaid Indebtedness Schedule, on behalf of the Company, to pay a portion of the Repaid Indebtedness owed to such lender as of immediately prior to the Closing and (ii) on behalf of the Company, by or on behalf of the Purchaser (after taking into account any such payments of Repaid Indebtedness described in the immediately preceding clause (i)). The Repaid Indebtedness Schedule will set forth the amounts of Repaid Indebtedness to be paid at the Closing pursuant to clauses (i) and (ii) of the immediately preceding sentence. Such Repaid Indebtedness so funded shall be based on such applicable amounts taken into account in the calculation of Estimated Indebtedness hereunder. In order to facilitate such repayment, the Company has delivered to the Purchaser (A) payoff letters for the Repaid Indebtedness (which reflect the payments described in clause (i) of the first sentence of this Section 2.2(e)) and (B) releases of any mortgage, security agreement, financing statement or other similar agreement that evidences or secures the Repaid Indebtedness, each in form and substance reasonably satisfactory to the Purchaser, and which (1) are effective upon repayment of the Repaid Indebtedness at the Closing, (2) specify the aggregate amount of Indebtedness required to be paid to fully satisfy all principal, interest, fees or other amounts outstanding as of the Closing under the Related Party Notes and the Existing Credit Facilities, (3) provide for the release of all Liens and other security over the properties and assets of the Company that secure all such amounts upon payment of the Repaid Indebtedness, including pursuant to UCC-3 termination statements, intellectual property Lien releases or otherwise and (4) provide for the delivery of any physical collateral of the Company that is in the direct or indirect possession of the holders of the Repaid Indebtedness to the Purchaser or its designee.
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(f) At the Closing, the Sellers agree that all of the Transaction Expenses as of immediately prior to the Closing will be fully paid, and that such payment will be funded on behalf of the Company by or on behalf of the Purchaser. Such Transaction Expenses so funded shall be based on the amounts included in the calculation of Estimated Transaction Expenses hereunder. In order to facilitate such payment, the Company has delivered to the Purchaser invoices and payoff letters from lawyers and other service providers in respect of the payment of such Transaction Expenses in form and substance reasonably acceptable to the Purchaser, and which include (i) wire instructions for each such Person, and (ii) the amounts to be paid to each such Person.
2.3 Closing Transactions.
(a) Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place by conference call and electronic exchange or transmission (including by email, “portable document format” or DocuSign) of counterpart signature pages to this Agreement and the Ancillary Agreements, each of which will be deemed to be an original (provided, that any original documents or signatures required or requested in connection with the Closing will be delivered to the offices of Willkie Farr & Gallagher LLP at 787 Seventh Avenue, New York, NY 10019), at 8:00 a.m. Eastern Time, on the date hereof (the “Closing Date”). Except as otherwise expressly provided herein or in any Ancillary Agreement, all proceedings to be taken and all documents to be executed and delivered by all parties at the Closing shall be deemed to have been taken and executed simultaneously and no proceedings shall be deemed to have been taken nor documents executed or delivered until all have been taken, executed and delivered.
(b) Closing Deliveries by the Company, the Sellers and the Seller Representative. At the Closing, the Company, the Sellers and the Seller Representative shall deliver to the Purchaser:
(i) from the Seller Representative, the Escrow Agreement duly executed by the Seller Representative and the Escrow Agent;
(ii) from each Seller, stock transfer powers in form and substance reasonably satisfactory to the Purchaser duly executed by such Seller in blank to effect the transfer of such Purchased Shares held by such Seller, free and clear of all Liens (other than any transfer restrictions under the 1933 Act and state securities Laws);
(iii) an executed certificate from an officer of the Company certifying and attaching thereto (A) the Company Articles and the Company Bylaws as in effect at the Closing Date, (B) a certificate of active status with respect to the Company from the Department of State of Florida, dated not more than five Business Days prior to the Closing Date, and (C) an incumbency certificate of the Company;
(iv) from the Company, written resignations, or other evidence of removal, of all officers and directors of the Company as requested by the Purchaser, in each case in form and substance reasonably satisfactory to the Purchaser and effective as of the Closing;
(v) from the Company, documentation in form and substance reasonably acceptable to the Purchaser evidencing the termination in full of each Company Affiliated Transaction (other than those on the “Permitted Company Affiliate Agreements Schedule”) without any cost to or other liability to or obligations of the Purchaser or, following the Closing, the Company, or any of their respective Affiliates;
(vi) from the Company, certified copies of the resolutions duly adopted by the Company’s board of directors authorizing the execution, delivery and performance of this Agreement, the Ancillary Agreements and the consummation of all transactions contemplated hereby and thereby;
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(vii) from each Seller, a validly executed IRS Form W-9 of such Seller;
(viii) from the Company, evidence that a customary director’s and officer’s “tail” insurance policy, in form and substance reasonably acceptable to the Purchaser with a six-year term, is in full force and effect as of the Closing (the “D&O Tail Policy”);
(ix) from the Company, duly executed copies of the payoff letters pursuant to Section 2.2(e) and release of any mortgage, security agreement, financing statement or other similar agreement that evidences or secures indebtedness of the Sellers encumbering the Real Property or any Seller’s interest in and to the Real Property Leases;
(x) from the Company, the invoices and duly executed payoff letters pursuant to Section 2.2(f);
(xi) customary documentation reasonably requested by the Purchaser’s title company, including owner’s affidavits, affidavits of non-foreign status, gap affidavits and indemnities, a non-imputation affidavit and indemnity, any applicable broker lien waivers, certificates of status or good standing and due authorization and articles of incorporation, and any other customary certificates or instruments reasonably required by such title company in order to remove the standard exceptions (including any exceptions relating to mechanic’s liens) from the Purchaser’s owner’s or lender’s policy(ies) of title insurance;
(xii) executed copies of restrictive covenant agreements, in form and substance reasonably acceptable to the Purchaser (collectively, the “Restrictive Covenant Agreements”), from each Seller listed on the “RCA Seller Schedule” in favor of the Purchaser and the Purchaser’s Related Persons;
(xiii) evidence satisfactory to the Purchaser of either (i) a written consent executed by such number of eligible stockholders as is required by the terms of Section 280G(b)(5)(B) of the Code so as to render the parachute payment provisions of Section 280G of the Code inapplicable to any and all accelerated vesting payments, benefits, options and/or stock provided pursuant to agreements, contracts, Employee Plans or arrangements that might otherwise result, separately or in the aggregate, in the payment of any amount and/or the provision of any benefit that would not be deductible by reason of Section 280G of the Code, with such stockholder approval or non-approval obtained in a manner which satisfies all applicable requirements of Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder, including Q&A-7 of Section 1.280G-1 of such Treasury Regulations or (ii) that no payments or benefits which could reasonably be construed, individually or in combination with any other such payment, to constitute an “excess parachute payment” (as defined in Section 280G(b)(1) of the Code) shall be paid or payable or provided to any “disqualified individual” (as such term is defined in Treasury Regulations Section 1.280G-1);
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(xiv) evidence satisfactory to the Purchaser that the Company has taken or has caused to be taken all actions necessary or appropriate to cause each Employee Plan or other arrangement subject to Section 409A of the Code (the “409A Arrangements”) (including any agreements with individuals and the W.S. Badcock Corporation Nonqualified Deferred Compensation Plan) and each of the “Deferred Compensation Arrangements” set forth on the “Indebtedness Schedule” (collectively, with the 409A Arrangements, the “Terminated Deferred Compensation Arrangements”) to be terminated and liquidated with respect to all participants, effective as of or immediately prior to the Closing (the date of such termination (the “Deferred Compensation Plan Termination Date”); provided, that, all resolutions, notices, participant communications or other documents issued, adopted or executed in connection with the termination of such Terminated Deferred Compensation Arrangements were subject to the Purchaser’s prior review and approval, and, for the avoidance of doubt, all amounts payable in respect of such Terminated Deferred Compensation Arrangements that have not yet been paid as of the Closing Date shall constitute Indebtedness for purposes of this Agreement;
(xv) evidence satisfactory to the Purchaser that the Company has taken or has caused to be taken all actions necessary or appropriate to terminate the employment of each of the individuals set forth on the “Specified Employee Schedule”, in each case, effective as of a date prior to the Closing;
(xvi) from the Company, documentation in form and substance reasonably acceptable to the Purchaser evidencing (A) the transfer of the Company’s obligations to pay any and all premiums, Taxes, costs and expenses under each Split Dollar Life Insurance Agreement after the Closing to the applicable insured under such Split Dollar Life Insurance Agreement and (B) the repayment in full to the Company of all amounts due, payable or owing under the Split Dollar Life Insurance Promissory Notes and the Specified Promissory Note; and
(xvii) from the Company, (A) duly executed copies of (1) that certain Termination of Bond Documents between the Company and the Authority, (2) that certain Limited Warranty Deed from the Authority to the Company, and (3) that certain Bill of Sale from the Authority to the Company, each in form and substance reasonably acceptable to the Purchaser, evidencing the termination of the LaGrange Bond Documents in order for the Company to acquire good and valid legal and beneficial title, free and clear of all Liens (other than Permitted Liens) to the LaGrange Property, and (B) (1) that certain UCC-3 termination statement terminating Bk. 01813 Pg. 0232-0236, filed in Troup County, Georgia Real Estate Records and (2) that certain UCC-3 termination statement terminating file number 1412015002586, filed in the Georgia Central UCC Index, and any other instrument necessary to terminate the Liens granted by the Company to the Authority.
(c) Closing Deliveries by the Purchaser. At the Closing, the Purchaser shall:
(i) deliver to the Seller Representative the Escrow Agreement duly executed by the Purchaser and the Escrow Agent;
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(ii) deliver to the Seller Representative a final copy of the R&W Insurance Policy; and
(iii) deliver to the Seller Representative certified copies of the resolutions duly adopted by the sole member of the Purchaser authorizing the execution, delivery and performance of this Agreement, the Ancillary Agreements and the consummation of all transactions contemplated hereby and thereby.
2.4 Estimated Closing Statement; Post-Closing Adjustment.
(a) Determination of Closing Adjustment. The Company has provided the Purchaser with a written statement attached hereto as Exhibit B (the “Estimated Closing Statement”) setting forth (i) its good faith estimate of (A) Working Capital as of immediately prior to the Closing (“Estimated Working Capital”), (B) the aggregate amount of all Cash of the Company as of immediately prior to the Closing (“Estimated Cash”), (C) the aggregate amount of all Indebtedness of the Company as of immediately prior to the Closing (“Estimated Indebtedness”), and (D) the aggregate amount of all Transaction Expenses as of immediately prior to the Closing (“Estimated Transaction Expenses”), (ii) a funds flow spreadsheet (the “Funds Flow”) setting forth (A) each Seller’s allocation of the Closing Payment Amount based on such Seller’s Pro Rata Share (as adjusted pursuant to the last sentence of Section 2.2(b)), and (B) true, complete and correct account and wire information for the Seller Representative and for each (1) third-party lender with respect to whom payment will be made pursuant to Section 2.2(e), and (2) service provider with respect to whom payment will be made pursuant to Section 2.2(f), in each case of the foregoing clauses (i) and (ii), reasonably detailed supporting documentation and information. The parties agree that the Purchaser will be entitled to rely fully on the Funds Flow and, upon transfer of such funds pursuant to the Funds Flow, the Purchaser will have no further Liability for the payment of any portion thereof from and after the Closing.
(b) Determination of Post-Closing Adjustment. No later than ninety (90) days following the Closing Date, the Purchaser shall deliver to the Seller Representative a written statement setting forth its good faith calculation of (i) the actual Working Capital as of immediately prior to the Closing (“Actual Working Capital”), (ii) the actual aggregate amount of all Cash of the Company as of immediately prior to the Closing (“Actual Cash”), (iii) the actual aggregate amount of all Indebtedness of the Company as of immediately prior to the Closing (“Actual Indebtedness”), and (iv) the actual aggregate amount of the Transaction Expenses as of immediately prior to the Closing (“Actual Transaction Expenses”), together with reasonably detailed supporting documentation and information.
(c) Disputed Final Adjustment.
(i) No later than forty-five (45) days following the delivery by the Purchaser of the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness and Actual Transaction Expenses, the Seller Representative shall notify the Purchaser in writing whether he accepts or disputes the accuracy of the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness and Actual Transaction Expenses. During such forty-five (45) day period, the Seller Representative and his agents shall be provided with reasonable access during regular business hours, without undue interruption to the Company or the Business and upon advance written request (subject to Seller Representative and such agents entering into any access letters required by accountants), to the financial books and records of the Purchaser and the Company as well as any relevant work papers and such employees, agents, representatives and advisors of the Company involved in such calculations as the Seller Representative may reasonably request to the extent that, such work papers, books and records and employees, agents, representatives and advisors are necessary for the Seller Representative and his agents to confirm the calculations of Actual Working Capital, Actual Cash, Actual Indebtedness and Actual Transaction Expenses prepared by the Purchaser. If the Seller Representative accepts the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness and Actual Transaction Expenses determined pursuant to Section 2.4(b), or if the Seller Representative does not, within such forty-five (45) day period, deliver to the Purchaser a written notice of any dispute with respect thereto (a “Dispute Notice”), then the calculation of Actual Working Capital determined pursuant to Section 2.4(b) shall be the “Final Working Capital” the calculation of Actual Cash determined pursuant to Section 2.4(b) shall be the “Final Cash,” the calculation of Actual Indebtedness determined pursuant to Section 2.4(b) shall be the “Final Indebtedness,” the calculation of Transaction Expenses determined pursuant to Section 2.4(b) shall be the “Final Transaction Expenses” and such items shall in each case be deemed final and conclusive and binding upon all parties in all respects.
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(ii) If the Seller Representative disputes the accuracy of the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness or Actual Transaction Expenses, the Seller Representative shall deliver to the Purchaser a Dispute Notice no later than forty-five (45) days following the delivery by the Purchaser to the Seller Representative of the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness and Actual Transaction Expenses, setting forth in reasonable detail (together with reasonable supporting documentation and information) those items that the Seller Representative disputes. During the thirty (30) day period following delivery of a Dispute Notice, the Purchaser and the Seller Representative shall negotiate in good faith and use commercially reasonable efforts to resolve their disagreements over any such disputed items set forth in such Dispute Notice. During such thirty (30) day period and until the final determination of Actual Working Capital, Actual Cash, Actual Indebtedness or Actual Transaction Expenses in accordance with this Section 2.4(c)(ii) or Section 2.4(c)(iii), as the case may be (as so determined, or as determined pursuant to Section 2.4(c)(i) above, “Final Working Capital,” “Final Cash,” “Final Indebtedness” and “Final Transaction Expenses,” respectively), the Purchaser and the Purchaser Representatives, on the one hand, and Seller Representative and his agents, on the other hand, shall reasonably cooperate with each other and shall be provided copies of the relevant portion of their respective books and records and work papers used, in the case of the Purchaser and the Purchaser Representatives, in the calculation of Actual Working Capital, Actual Cash, Actual Indebtedness, Actual Transaction Expense and, in the case of Seller Representative and his agents, in preparing such Dispute Notice, in each case, during regular business hours, without undue interruption to their respective businesses or the Business, as applicable, and upon advance written request (subject to entering into any access letters required by their respective accountants) for the purpose of resolving, and only to the extent required for the resolution of, such disputed items. If the parties resolve their differences over such disputed items in accordance with the foregoing procedure, Final Working Capital, Final Cash, Final Indebtedness or Final Transaction Expenses shall be the amounts agreed upon by them. If the parties fail to resolve their differences over such disputed items within such thirty (30) day period, then the Purchaser and the Seller Representative shall forthwith jointly request that Kroll, LLC (formerly known as Duff & Phelps, LLC), and if Kroll, LLC is unable to serve, the Purchaser and the Seller Representative shall appoint by mutual agreement the office of an impartial nationally recognized independent public accounting firm that is reasonably acceptable to the Purchaser and the Seller Representative (the “Accounting Arbitrator”) to make a binding determination as to such disputed items in accordance with this Agreement (including the applicable definitions and the Accounting Principles, where applicable).
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(iii) The Accounting Arbitrator will under the terms of its engagement have no more than thirty (30) days from the date of referral and no more than ten (10) Business Days from the final submission of information and testimony by the Purchaser and the Seller Representative within which to render its written decision with respect to the disputed items (and only with respect to any unresolved disputed items set forth in a Dispute Notice) and the final calculation of Actual Working Capital, Actual Cash, Actual Indebtedness or Actual Transaction Expenses shall be based solely on the resolution of such disputed items. The Accounting Arbitrator shall review such submissions of information and testimony by the Purchaser and the Seller Representative as the Accounting Arbitrator reasonably requires in order to reach a decision with respect to such disputed items referred to it, including such reasonable independent review as the Accounting Arbitrator may require (including written submissions by the Purchaser or the Seller Representative to the Accounting Arbitrator) and base its determination solely thereon. No party will have ex parte meetings, teleconferences or other communication with the Accounting Arbitrator, as it is intended for each Party to be included in all discussions and communication with the Accounting Arbitrator. The Accounting Arbitrator shall act as an accounting expert and not an arbitrator. In resolving any such disputed item, the Accounting Arbitrator may not assign a value to any item greater than the maximum value for such item claimed by either party or less than the minimum value for such item claimed by either party. Absent fraud or manifest error, the decision of the Accounting Arbitrator shall be deemed final and binding upon the parties and enforceable by the parties in any court of competent jurisdiction and the Accounting Arbitrator’s final calculation of Actual Working Capital shall be deemed the “Final Working Capital,” the Accounting Arbitrator’s final calculation of Actual Cash shall be deemed the “Final Cash,” the Accounting Arbitrator’s final calculation of Actual Indebtedness shall be deemed the “Final Indebtedness,” or the Accounting Arbitrator’s final calculation of Actual Transaction Expenses shall be deemed the “Final Transaction Expenses.” The fees, costs and expenses of the Accounting Arbitrator shall be borne by the Purchaser, on the one hand, and the Sellers, on the other hand, based on the percentage which the portion of the disputed amount was not awarded to each party bears to the amount actually contested by such party. For example, if the Purchaser claims Actual Working Capital is $1,000 less than the Estimated Working Capital, and the Seller Representative disputes only $500 of the amount claimed by the Purchaser, and if the Accounting Arbitrator ultimately resolves the dispute by awarding the Purchaser with $300 of the $500 contested, then the fees, costs and expenses of the Accounting Arbitrator will be allocated 60% (i.e., $300/$500) to the Sellers and 40% (i.e., $200/$500) to the Purchaser. In connection with the Accounting Arbitrator’s determination of any unresolved disputed items, the Accounting Arbitrator shall also determine the allocation of its fees, costs and expenses between the parties in accordance with the preceding two sentences, taking into account all fees, costs and expenses of the Accounting Arbitrator already paid by each of the Purchaser and the Seller Representative, as of the date of such determination, and such determination of such allocation shall be conclusive and binding on the parties and enforceable by the parties in any court of competent jurisdiction. The parties agree that prior to the time at which the calculations of Final Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses become final under this Section 2.4, any statement, calculation or notice delivered by any party pursuant to this Section 2.4 is being delivered by such party for settlement purposes only and will be treated as evidence of an offer to compromise pursuant to Rule 408 of the Federal Rules of Evidence.
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(d) Payment Following Calculation of Final Working Capital, Final Cash, Final Indebtedness and Final Transaction Expenses.
(i) Following the determination of the Final Working Capital, the Final Cash, the Final Indebtedness and the Final Transaction Expenses pursuant to Section 2.4(c), the Purchase Price shall be recalculated by substituting the Final Working Capital for the Estimated Working Capital in Section 2.4(a), the Final Cash for the Estimated Cash in Section 2.4(a) the Final Indebtedness for the Estimated Indebtedness in Section 2.4(a) and the Final Transaction Expenses for the Estimated Transaction Expenses in Section 2.4(a) (the “Adjusted Purchase Price”) and if (after taking into account any Upward Closing Working Capital Adjustment or Downward Closing Working Capital Adjustment at the Closing, if any) (A) the Adjusted Purchase Price exceeds the Purchase Price set forth in the Estimated Closing Statement, then (1) the Purchaser shall pay to the Seller Representative the amount of such excess by wire transfer of immediately available funds (provided that notwithstanding anything to the contrary contained herein, the aggregate amount payable by the Purchaser pursuant to this clause (A)(1) in respect of such excess shall in no event exceed an amount equal to the Post-Closing Adjustment Escrow Amount) within five Business Days after such determination and (2) the entire amount of the Post-Closing Adjustment Escrow Fund shall be released to the Seller Representative (for the benefit of the Sellers); (B) the Purchase Price set forth in the Estimated Closing Statement is greater than the Adjusted Purchase Price, then (1) such difference shall be paid from the Post-Closing Adjustment Escrow Fund to the Purchaser (provided that such amount paid pursuant to this clause (B)(1) shall not exceed the amount of the Post-Closing Adjustment Escrow Fund) and (2) the funds remaining (if any) in the Post-Closing Adjustment Escrow Fund, after giving effect to clause (B)(1), shall be released to the Seller Representative (for the benefit of the Sellers), and (C) the Purchase Price set forth in the Estimated Closing Statement is equal to the Adjusted Purchase Price, the entire amount of the Post-Closing Adjustment Escrow Fund shall be released to the Seller Representative (for the benefit of the Sellers). In the event that the full amount (if any) by which the Purchase Price set forth in the Estimated Closing Statement exceeds the Adjusted Purchase Price is greater than the Post-Closing Adjustment Escrow Fund, the Purchaser shall have no recourse against any of the Sellers, the Seller Representative, or any other Person. Each of the Seller Representative and the Purchaser agrees to execute and deliver to the Escrow Agent a joint written instruction instructing the Escrow Agent to release the Post-Closing Adjustment Escrow Fund to the applicable party or parties in accordance with this Section 2.4(d).
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(ii) All payments pursuant to this Section 2.4(d) shall be made by wire transfer of immediately available funds to an account designated in advance by the Seller Representative or the Purchaser, as applicable, and all such payments and releases from the Post-Closing Adjustment Escrow Fund, as applicable, shall be made on or prior to the fifth (5th) Business Day following: (A) the forty-five (45) day period following the Purchaser’s delivery of the calculation of the Actual Working Capital and Actual Cash pursuant to this Section 2.4(d) if the Seller Representative does not timely dispute either of such amounts pursuant to Section 2.4(c)(i); (B) the date of the Seller Representative’s and the Purchaser’s mutual determination of Final Working Capital and Final Cash in the event the Seller Representative timely disputes either of such amounts pursuant to Section 2.4(c)(i) and the Seller Representative’s and the Purchaser’s differences are resolved without the engagement of an Accounting Arbitrator pursuant to Section 2.4(c)(ii); and (C) the date of the Accounting Arbitrator’s determination of Final Working Capital or Final Cash pursuant to Section 2.4(c)(iii) in the event the Seller Representative timely disputes either of such amounts pursuant to Section 2.4(c)(i) and the Seller Representative and the Purchaser are unable to resolve their differences pursuant to this Section 2.4.
(e) Tax Treatment. Any payments made to the Purchaser or Seller Representative (for the benefit of Sellers) pursuant to this Section 2.4 as an adjustment to the Closing Payment Amount will be deemed for Tax purposes as an adjustment to the cash consideration received by the Sellers under this Agreement, unless otherwise required by applicable Law.
2.5 Withholding. The Purchaser, the Sellers, the Seller Representative and the Company shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Agreement any amounts as may be required to be deducted and withheld in connection with or with respect to the making of such payment under the Code, or any provision of state, local or foreign Law. Any amount so deducted or withheld shall be treated as though it had been paid to the Person in respect of whom such amount was deducted or withheld.
Article
3
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
As a material inducement to the Purchaser to enter into this Agreement and consummate the transactions contemplated hereby, the Company hereby represents and warrants to the Purchaser as follows:
3.1 Organization and Power. The Company is a corporation duly incorporated, validly existing and in active status under the Laws of the state of Florida. The Company is qualified to transact business as a foreign entity and is in good standing or of active status, as applicable, in each jurisdiction listed on the attached “Entity Organization Schedule” which jurisdictions constitute all of the jurisdictions in which the properties or assets owned, leased or operated by the Company, or the nature of the Business requires the Company to be so qualified, except to the extent the failure to qualify would not, individually or in the aggregate, reasonably be expected to be material to the Company. The Company has all requisite power and authority to own, operate and lease the assets and properties that it purports to own, operate or lease and to carry on the Business. The Company has made available to the Purchaser accurate and complete copies of the Company Articles, the Company Bylaws and any other organizational documents of the Company. The Company has all requisite corporate power and authority to execute and deliver this Agreement and each other Ancillary Agreement and to perform its obligations hereunder and thereunder.
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3.2 Authorization; Execution; Enforceability. The Company has the requisite corporate power, authority and legal capacity to execute and deliver this Agreement and each of the Ancillary Agreements to which the Company is a party. The execution, delivery and performance by the Company of this Agreement, the other Ancillary Agreements to which the Company is a party, and each of the transactions contemplated hereby or thereby have been duly and validly authorized by all requisite action on the part of the Company and the Sellers and no other act or proceeding on the part of the Company or the Sellers (other than the waiver of the restrictions in the Stock Restriction Agreement pursuant to Section 9.14) is necessary to authorize the execution, delivery or performance by the Company of this Agreement or any Ancillary Agreement or the consummation of any of the transactions contemplated hereby or thereby. This Agreement, and each of the Ancillary Agreements to which the Company is a party, has been duly and validly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement and the other Ancillary Agreements by the other parties hereto and thereto, this Agreement constitutes, and the other Ancillary Agreements constitute, a valid, legal and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability hereof or thereof may be limited by (a) any applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally and (b) the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity) (collectively, the “General Enforceability Exceptions”). The Board of Directors of the Company has unanimously determined that this Agreement and the Ancillary Agreement and the transactions contemplated hereby and thereby are fair to and in the best interest of the Company and the Sellers, and adopted written resolutions (i) approving, authorizing and ratifying this Agreement, each Ancillary Agreement and the transactions contemplated hereby and thereby, and (ii) declaring this Agreement, each Ancillary Agreement and the consummation of the transactions contemplated hereby and thereby advisable and in the best interests of the Company and the Sellers, which resolutions have not been subsequently withdrawn or modified in a manner adverse to the Purchaser.
3.3 Capitalization; No Subsidiaries or Joint Ventures; Indebtedness. The issued and outstanding capital stock of the Company consists solely of 4,400 shares of Class A Common Stock and 168,896 shares of Class B Common Stock, all of which are collectively owned beneficially and of record by the Sellers. All of the issued and outstanding Shares have been duly authorized, are validly issued, fully paid and nonassessable, and no such Shares were issued in violation of the Company Articles or Company Bylaws, any applicable Laws, or any preemptive right, purchase option, call or right of first refusal or offer or similar right, or restriction on transfer and are owned of record and beneficially by the Sellers as set forth next to each Seller’s name on the attached “Capitalization Schedule”. Except for the Shares, there are no issued, outstanding or authorized Equity Interests of the Company. Except for the Stock Restriction Agreement, there are no outstanding options, warrants, rights, contracts, pledges, calls, puts, rights to subscribe, conversion rights, voting trusts, equity holders’ agreement, registration rights or other Contracts or commitments to which the Company is a party or which is binding upon the Company providing for the issuance, disposition or acquisition of any of its Equity Interests. No Equity Interests of the Company (including any Shares) are certificated. Except as imposed under the 1933 Act and the terms of the Stock Restriction Agreement, there are no Liens on any Shares or otherwise affecting the rights of any holder of Shares. The Company does not have any Subsidiaries and, except as set forth on the “Capitalization Schedule,” does not, directly or indirectly, hold beneficially or of record any Equity Interests of any other Person. The Company does not sponsor or maintain any option plan, equity plan, restricted stock plan or any other plan or agreement providing for equity compensation or profit participation features (whether contingent or otherwise) to any Person. There are no officers, employees, independent contractors or directors with an offer letter or other Contract or Employee Plans that contemplates a grant of, or right to purchase or receive options or other equity awards with respect to any Equity Interests or other securities of the Company. All Indebtedness of the Company as of immediately prior to the Closing is set forth on the “Indebtedness Schedule”, which schedule identifies for each item of Indebtedness set forth thereon, the debtor, principal amount outstanding as of the date hereof, the creditor and the maturity date.
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3.4 Absence of Conflicts; Consents and Approvals.
(a) Except as set forth on the attached “Material Restrictions Schedule”, the execution, delivery and performance by the Company of this Agreement and the Ancillary Agreements and the covenants, agreements and obligations hereunder and thereunder and the consummation of each of the transactions contemplated hereby or thereby do not and will not, with or without the giving of notice, the passage of time, or both, (i) conflict with, or result in any material violation or material breach of, or material default under, or give rise to a right of acceleration, termination, loss of benefits or rights, or cancellation, require novation or the consent or approval of or provision of notice to any third party or result in any Lien on any of the Shares or any Equity Interests or assets or properties of the Company, give rise to any material additional payment by, or obligation of, the Company or trigger the right of any Person to acquire all or any part of the Shares or any Equity Interests of the Company pursuant to a preferential purchase right, preemptive right, right of first refusal or offer, buy-sell arrangement or otherwise, in each case, under any provision of (A) any Material Contract or Governmental License, (B) the Company Articles, the Company Bylaws or any other organizational or governing documents of the Company, (C) any Law or Order, or otherwise, except with respect to Permitted Liens, (ii) result in the creation of any material Lien upon any of the properties or assets of the Company (except for Permitted Liens), or (iii) result in the creation of any material Lien upon any of the Shares or Equity Interests of the Company.
(b) Assuming the truth and accuracy of the representations and warranties contained in Section 5.4, except as set forth on the “Material Restrictions Schedule”, no notices to, filings with, or authorizations, consents, approvals, exemptions, Orders, permits, clearances or declarations of any Person or Governmental Authority are required or necessary on the part of, or with respect to, the Company for the execution or delivery by the Company of this Agreement or any Ancillary Agreement, or the performance by the Company of its obligations hereunder or thereunder or the consummation by the Company of the transactions contemplated hereby or thereby.
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3.5 Financial Statements.
(a) The attached “Financial Statements Schedule” contains accurate and complete copies of the following financial statements (the “Financial Statements”): (i) the audited balance sheet of the Company as of June 30, 2021, June 30, 2020 and June 30, 2019 and the related audited statement of income and operations, shareholders’ equity, and cash flows for the annual periods then ended; and (ii) the unaudited balance sheet of the Company as of September 30, 2021 (the “Stub Period Balance Sheet”) and the related unaudited statement of income, operations, member equity, and cash flows for the three (3)-month period then ended (collectively, the “Interim Financial Statements”).
(b) Each of the foregoing Financial Statements (i) presents fairly, in all material respects, the financial condition, results of operations and cash flows of the Company as of the dates thereof and throughout the periods covered thereby, (ii) has been prepared in accordance with GAAP consistently applied throughout the periods indicated subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments and the absence of notes that are not material, individually or in the aggregate, and (iii) is consistent with and was prepared from the books and records of the Company (which, in turn, are accurate and complete in all material respects).
(c) The Company does not have and has not incurred any Liabilities except: (i) Liabilities that are fully reserved against in the Stub Period Balance Sheet, (ii) except as set forth on the “Financial Statements Schedule,” Liabilities of the type that are fully reserved against on the Stub Period Balance Sheet and which have arisen since the date of the Stub Period Balance Sheet that were incurred in the ordinary course of business (none of which Liabilities in each of clause (i) or (ii) include Liabilities arising from breach of Contract, breach of representation or warranty, or violation of Law or involves a tort, infringement, misappropriation, Action, claim, lawsuit, warranty or environmental, health or safety matter), and (iii) Liabilities for Transaction Expenses to the extent included in the final calculation of Final Transaction Expenses pursuant to Section 2.4(c) and (iv) those Liabilities set forth on the “Disclosed Liabilities Schedule”. The Company does not maintain any “off-balance sheet arrangements” within the meaning of Item 303 of Regulations S-K of the Securities Act of 1933, as amended.
(d) All Accounts Receivable (i) resulted from bona fide sales in the ordinary course of business, and (ii) represent the genuine, valid and legally enforceable obligations of the account debtor, payable on trade terms granted in the ordinary course of business. Except as would not reasonably be expected to be, individually or in the aggregate, material to the Company, no portion of the Accounts Receivable is not current or subject to any valid defense, set off or counterclaim. There has been no written assertion or, to the Company’s Knowledge, threat (written or verbal) to the validity of any Accounts Receivable by any debtor thereof that has not been resolved or if unresolved, the failure of which to be a valid Account Receivable would not reasonably be expected to be, individually or in the aggregate, material to the Company. Except as set forth on the “Delinquent Accounts Receivable Schedule”, no Account Receivable is delinquent by 30 days or more or in default.
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(e) Without limiting the generality of the foregoing Section 3.5(d), all Consumer Credit Receivables have been originated, serviced, and collected in compliance in all material respects with the Company’s underwriting, servicing and collection policies, true, complete and correct copies of which have been made available to the Purchaser. All Consumer Credit Receivables originated by Dealers following January 2019 and all Consumer Credit Receivables originated by the Company were originated based on true and accurate underwriting information in all material respects, including information submitted by Dealers. Each finance charge disclosed, billed, charged or received by the Company and each Dealer in connection with all Consumer Credit Receivables is calculated in all material respects in accordance with the methodology for determining such finance charge contained in the Contract between the account debtor, on the one hand, and the Company or such Dealer, on the other hand, under which such account debtor is obligated to make a payment therefor to the Company or such Dealer.
(f) All Inventory, whether or not reflected in the Financial Statements, consists of a quality and quantity usable and salable in the ordinary course of business and are not excessive, but are reasonable in the present circumstances of the Company, subject to allowances in accordance with GAAP, if any, to the extent expressly reflected in the Financial Statements for obsolete, damaged, defective, excess or slow-moving items. The reserve for such obsolete, damaged, defective, excess of slow-moving Inventory is adequate and calculated consistently with past practices of the Company. All such Inventory is owned by the Company free and clear of all Liens, other than Permitted Liens. All Inventory is located at premises owned or leased by the Company or at premises owned or leased by the Company’s Dealers or in transit to any such premises. No Inventory is held by the Company on a consignment basis. All Inventory was purchased for use in the Business in the ordinary course of business.
(g) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and with the books of account and other financial records of the Company (except as may be indicated in the notes thereto), and to maintain accountability therefor, (iii) access to assets is permitted only in accordance with management’s authorization, (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, (v) the obligations of the Company are satisfied in a timely manner and as required under the terms of any applicable Contract and (vi) the Company is in compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), or any other applicable U.S. or non-U.S. law relating to fraud, conflicts of interest, bribery, gratuities, or corruption (including mail or wire fraud, honest services fraud, or commercial bribery), or any rules or regulations promulgated thereunder (collectively, “Anti-Corruption Laws”).
(h) As of October 30, 2021, the Company does not have any Rewards Liabilities except as set forth on the “Schedule of Rewards Liabilities”. The Financial Statements fairly present the Rewards Liabilities on a GAAP basis. All Rewards Liabilities of the Company included in the Stub Period Balance Sheet resulted from bona fide sales in the ordinary course of business and represent genuine, valid and legally enforceable Indebtedness of the Company and are redeemable by customers of the Company in the ordinary course of business.
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(i) As of the date hereof, the amount of Store Cash is not less than $69,100.
(j) The cash prices for all furniture, merchandise, and other goods sold by the Company is the same for all consumers in both cash and credit transactions, and there is no hidden finance charge or other increase to the cash price for consumers in financed transactions; for purposes of clarity and without limiting, this representation applies to sales effected by Dealers.
3.6 Absence of Certain Developments. Except as set forth on the “Developments Schedule”, since June 30, 2021, (a) the Company has conducted the Business in the ordinary course of business, (b) there has not been any Event that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect, (c) the Company has not suffered any material casualty loss, and (d) the Company has not:
(i) amended, restated, supplemented, waived or otherwise modified any provision of either the Company Articles, the Company Bylaws, the Stock Restriction Agreement or any other organizational documents of the Company (whether by merger, consolidation or otherwise);
(ii) (A) entered into any rent deferral arrangement in connection with any Real Property Lease, or (B) modified or amended the terms of any rent concession arrangement or agreement;
(iii) sold, leased, assigned, licensed, sublicensed, transferred, abandoned, dedicated to the public domain, surrendered, pledged, encumbered, granted or disposed to any Person any Owned IP, Real Property or other assets or properties or portion thereof or mortgage, pledgee or subject any of the foregoing to any additional Lien, except for Permitted Liens and sales of inventory in the ordinary course of business;
(iv) disclosed any Trade Secrets or proprietary source code to a third party;
(v) made or committed to make any capital expenditures in excess of $100,000, or, with respect to any capital expenditures in excess of $100,000 included in any annual budget or similar strategic budgetary plan approved by the board of directors of the Company, failed to make such capital expenditures in accordance with such annual budget or similar strategic budgetary plan;
(vi) (A) created, incurred, assumed, guaranteed or otherwise become liable or responsible for (whether directly, contingently or otherwise) any Indebtedness, (B) made any loans, advances or capital contributions to, or investments in, any Person, (C) amended or modified any terms or Contracts in respect of any Indebtedness of the Company, or (D) except as set forth on the “Modified Financing Practices Schedule”, amended or modified any policies, procedures or practices for underwriting consumer credit or consumer credit amount limits;
(vii) purchased or otherwise acquired (whether by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, Equity Interests, properties (including real property), interests, businesses or divisions thereof, other than purchases of inventory and supplies in the ordinary course of business;
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(viii) other than as required by an Employee Plan set forth on the “Employee Benefits Schedule” or as explicitly contemplated hereunder, (A) increased the compensation or benefits of any employee, independent contractor or director, other than such increases in the ordinary course with respect to employees below the level of Vice President and that result in increases in compensation on an annualized basis of less than ten percent (10%) relative to such Person’s compensation as of June 30, 2021, (B) accelerated the vesting or payment of any compensation or benefits of any employee, independent contractor or director, (C) entered into, amended or terminated any Employee Plan (or any plan, program, agreement or arrangement that would be an Employee Plan if in effect on the date hereof) or grant, amend or terminate any awards thereunder, or (D) funded any payments or benefits that are payable or to be provided under any Employee Plan; provided that for the avoidance of doubt the restrictions set forth in this Section shall not apply to sale, success, change of control or similar bonuses granted or agreed to be granted to employees of the Company to the extent such items would be included in the calculation of Transaction Expenses;
(ix) (A) terminated without “cause” any employee, key independent contractor or director, (B) hired or engaged any new employee, key independent contractor or director, in each case, other than terminations, new hires or engagements in the ordinary course with respect to employees below the level of Vice President, or (C) promoted any employee to a level at or above Vice President;
(x) (A) made any loan to any employee, independent contractor or director (other than advancement of expenses in the ordinary course of business or under and in accordance with any qualified retirement plan), or (B) entered into, amended or terminated any collective bargaining agreement or other agreement with a labor union, works council or similar organization;
(xi) issued or sold, granted or authorized the issuance, sale or grant of, any of the Company’s Equity Interests or become a party to or bound by any subscriptions, rights, options, convertible securities or other agreements or commitments of any character relating to the Company’s issued or unissued Equity Interests;
(xii) made or changed any material Tax election, settled or compromised any Action in respect of Taxes, entered into any closing agreement or other agreement relating to any Tax with any Governmental Authority, entered into any Tax sharing, Tax indemnity or Tax allocation agreement or other agreement relating to Taxes, amended any Tax Return, consented to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment, changed any Tax accounting period, changed any material method of accounting for Tax purposes, surrendered any right to claim a Tax refund, failed to pay any Tax when due, or taken any other action outside the ordinary course of business if any such action would give rise to a material Tax liability or deferred gain;
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(xiii) made or declared any dividend or distribution in respect of its Equity Interests;
(xiv) commenced or instituted any Action, or waived, released, assigned, compromised or settled any pending or threatened Action or waived or released any material right or claim in respect thereof (A) involving payments in excess of $100,000 individually or $250,000 in the aggregate or (B) which imposes any restrictions on the Business or assets, properties or operations of the Company or any injunctive relief on the Company;
(xv) split, combined, redeemed or reclassified, or purchased or otherwise acquired, any of the Company’s Equity Interests;
(xvi) made any material change in the policies and practices of the Company with respect to the payment of accounts payable or accrued expenses or the collection of the Accounts Receivable or other receivables, including with respect to the timing thereof;
(xvii) made any change in its cash management practices or in the financial or tax accounting methods, principles or practices used by the Company, except as required by GAAP, as applicable;
(xviii) made any material change in the manner in which the Company extends discounts, rebates or credits to customers or to any loyalty, points or rewards program;
(xix) amended, modified, renewed or failed to renew, enter into or terminated or rescinded any Material Contract or Scheduled Insurance Policy (other than any termination occurring from the expiration of the term of such Material Contract or Scheduled Insurance Policy) or exercised, waived, released or assigned any rights, claims or benefits under any Material Contract or Scheduled Insurance Policy, in each case, except in the ordinary course of business;
(xx) transferred Store Cash out of the Stores, except in the ordinary course of business;
(xxi) entered into, renewed, modified or revised any Company Affiliated Transaction, except for the termination of any such Company Affiliated Transaction pursuant to Section 2.3(b)(v);
(xxii) adopted or effected a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
(xxiii) waived or released any non-competition, non-solicitation, non-disclosure, non-interference, non-disparagement or other restrictive covenant obligation of any current or former employee, independent contractor or other service provider or entered into any agreement that restricts the ability of the Company to engage or compete in any line of business;
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(xxiv) entered into any new line of business or exit any existing line of business;
(xxv) sought relief pursuant to any COVID-19 Law, including incurring any indebtedness pursuant to any COVID-19 Law, or sought forgiveness for any such indebtedness or any Taxes deferrals;
(xxvi) implemented or announced any employee layoffs, plant closings, reductions in force, furloughs, temporary layoffs, salary or wage reductions, work schedule changes or other such actions that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state or local Law; or
(xxvii) committed or agreed (whether verbally or in writing) to do any of the foregoing.
3.7 Real Property.
(a) Owned Real Property. The attached “Owned Real Property Schedule” sets forth a true, complete and correct list of (i) all real property owned as of the date hereof by the Company (all such property, the “Owned Real Property”, and, together with the Leased Real Property, the “Real Property”), and (ii) each street address applicable to such Owned Real Property. The Company has made available to the Purchaser true, complete and correct copies of all deeds and other instruments (as recorded) by which the Company acquired such Owned Real Property, and copies of all title insurance policies (together with copies of any documents of recorded listed as exceptions on such policies), opinions, abstracts, surveys, third-party environmental reports, zoning reports, property condition reports, or other similar reports, in each case, to the extent in the possession or control of the Company and relating to the Owned Real Property. The Company has good and valid title to all of the Owned Real Property free and clear of all Liens, other than Permitted Liens. The Company has no Liabilities arising from or in connection with those real properties that have been disposed of by the Company, except for any Liability that would not, individually or in the aggregate, reasonably be expected to be material to the Company. The Company has not received notice of any proposed condemnation or eminent domain proceeding and, to the Company’s Knowledge, there is no condemnation or eminent domain proceeding threatened, with respect to any Owned Real Property. Except as set forth on the “Owned Real Property Schedule,” all buildings, structures, fixtures and other improvements included in the Owned Real Property (i) are in all material respects structurally sound, in good operating condition and repair (ordinary wear and tear excepted), free from latent and patent defects, and suitable for the purposes for which they are currently being used and for the operation of the Business, and have been maintained in all material respects in accordance with normal industry practice, and (ii) comply in all material respects with all applicable Laws, including those pertaining to health and safety, zoning, building and construction requirements and the disabled. There are no options, rights of first refusal, rights of first offer, or first opportunity rights or other similar rights with respect to any portion of any Owned Real Property. Except as would not reasonably be expected to be, individually or in the aggregate, material to the Company, (A) there is no breach or default by any party under any easements or restrictive covenants affecting any Owned Real Property which breach or default has not yet been cured, (B) the Company has not received notice of any default under any easements or restrictive covenants affecting the Owned Real Property which default has not yet been cured, and (C) there does not exist any condition or event that with the lapse of time or the giving of notice, or both, would constitute such a breach or default under any easements or restrictive covenants affecting any Owned Real Property.
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(b) Leased Real Property. The attached “Leased Real Property Schedule” sets forth all Real Property Leases relating to each Leased Real Property of the Company. Except as set forth in the attached “Leased Real Property Schedule”, with respect to each Real Property Lease: (i) such Real Property Lease is a legal, valid, binding and enforceable against the Company and is in full force and effect and has not been modified, (ii) the transactions contemplated hereby do not require the consent of any other party to such Real Property Lease and will not result in a breach of or default under such Real Property Lease, and (iii) the Company is not in material breach or material default under any such Real Property Lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default or permit the termination, modification or acceleration of rent under such Real Property Lease. The Company has not received any notice of any default under any Real Property Lease that has not been cured or any other termination notice with respect thereto. The Company has made available to the Purchaser true, complete and correct copies of the Real Property Leases relating to the Leased Real Property. The Company has good and valid leasehold estates in all the Leased Real Property free and clear of all Liens, other than Permitted Liens. No Real Property Lease is subject to any material defenses, setoffs, or counterclaims, and no material obligations of any landlords or sublandlords thereunder are delinquent. The “Leased Real Property Schedule” contains a true, correct and complete list of each mortgage, deed of trust or other superior Lien granted to any third party by the applicable landlord under each Real Property Lease, in each case, which have been approved by the Company (each, an “Approved Landlord Lien”). Except for (A) Approved Landlord Liens or (B) mortgages, deeds of trust and other superior Liens granted to third parties by the applicable landlord under each Real Property Lease, in each case of this item (B), which have not been approved by the Company, the Real Property Leases are not subject to any ground lease, mortgage, deed of trust or other superior Liens or interests (including, for the avoidance of doubt, any present or future right to occupy any portion of the Leased Real Property) that would entitle the holder thereof to interfere with or disturb the tenant’s use and enjoyment of the Leased Real Property or the exercise of the tenant’s rights under the Real Property Leases so long as the tenant is not in default under the Real Property Lease. No options available to the Company pursuant to any Real Property Lease have been exercised other than pursuant to a writing included in the Real Property Leases. There have been no, and the Company does not expect any, write-offs, abatements or deferrals in rent under any Real Property Lease as a result of or otherwise arising out of COVID-19 or any COVID-19 Measures. The ability of the Company to perform all obligations required to be performed by it under any Real Property Lease has not been materially limited or adversely affected by or as a result of COVID-19 or any COVID-19 Measures. To the Company’s Knowledge, the ability of each other party to each Real Property Lease to perform all obligations required to be performed by it under the applicable Real Property Lease has not been materially limited or adversely affected by or as a result of COVID-19 or any COVID-19 Measures.
(c) Real Property Used in the Business. The Owned Real Property and the Leased Real Property identified on the attached “Owned Real Property Schedule” and the “Leased Real Property Schedule” comprises all of the real property used in the operation of the Business and no other real property is being used or is otherwise reasonably required to operate the Business as currently conducted or as is anticipated to be operated pursuant to the terms hereof as of the Closing Date. The Company has exclusive possession of each parcel of Real Property, except for Real Property that is leased or subleased to third parties as disclosed on the “Leased Real Property Schedule.” Except as disclosed on the attached “Leased Real Property Schedule,” there are no leases, subleases, licenses or other occupancy agreements relating to all or any portion of the Real Property with respect to which the Company is lessor, sublessor, licensor or the like, and no third party is in possession of any Real Property. Except as set forth on the “Owned Real Property Schedule” (with respect to both Owned Real Property and Leased Real Property), there are no third-party Contracts in effect to which the Company is a party for the performance of any repairs, work, or capital improvements at any Real Property, and there is currently no ongoing construction work in, on, or about any Real Property other than normal, immaterial maintenance and repairs being performed in the ordinary course of business. The “Leased Real Property Schedule” sets forth a true, complete and correct list of all leasing commissions due from the Company with respect to any Real Property as of immediately prior to the Closing. Except as would not be material with respect to the Real Property in question, or as would inhibit the ability of the Company to perform its obligations under, or consummate the transactions contemplated by, this Agreement, the Company has not received written notice of any: (i) pending or threatened actions, suits, arbitration, claims or proceedings at law or in equity affecting any Real Property or the Company, which claims would not be fully covered by commercial or captive insurance (subject to deductibles and customary captive insurance assessments), (ii) violation of any zoning, subdivision, platting, building, fire, insurance, safety, health, environmental, set back requirements or other applicable Laws related to the Real Property or the occupancy thereof, or (iii) special assessment against any portion of the Real Property which could adversely affect the use or value of such Real Property.
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3.8 Tangible Assets; Sufficiency of Assets. The Company has good, sufficient and valid legal and beneficial title to, or holds a valid and enforceable leasehold interest in, all of the material personal, tangible and intangible personal property and assets used or held for use by the Company in the Business, in each case free and clear of all Liens, other than Permitted Liens. Except as set forth on the “Tangible Property Schedule”, all tangible personal property and assets of the Company are in good operating condition and repair for the purposes for which they are used in connection with the Business (including as currently proposed to be operated and conducted and in each case subject to normal wear and tear), and no maintenance in respect thereof has been deferred, in each case, except as would not reasonably be expected to be, individually or in the aggregate, material to the Company. The assets, rights, interests and properties owned, leased, licensed, used or held for use by the Company constitute all of the assets, rights, interests and properties, tangible and intangible, owned, leased, licensed, used or held for use by the Company in connection with the conduct and operation of the Business and are adequate, suitable and sufficient to operate and conduct the Business (including as currently proposed to be operated and conducted).
3.9 Material Contracts.
(a) The “Contracts Schedule” attached hereto sets forth an accurate and complete list of each of the following Contracts to which the Company is a party or bound or which any assets, or properties of the Company are subject to or bound (such Contracts listed on or required to be listed on the Contracts Schedule, collectively, the “Material Contracts”):
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(i) Contracts with the Company’s vendors or suppliers with whom the Company has spent more than $750,000 in the aggregate for the three (3) month period ending September 30, 2021, other than purchase orders entered into in the ordinary course of business;
(ii) Contracts (other than a purchase order) with any Key Dealer or Key Vendor;
(iii) Contracts relating to Indebtedness of the Company or any guaranty by the Company of any obligation in respect of Indebtedness;
(iv) Contracts with distributors or sales representatives pursuant to which by the Company makes annual payments in excess of $100,000 individually or $200,000 in the aggregate;
(v) employment, consulting and non-competition Contracts with any employee, officer or consultant whose base annual compensation is equal to or greater than $150,000 or any Contract that provides for severance, retention, change of control or similar payments to any current or former employee or consultant of the Company;
(vi) Contracts pursuant to which the Company is a lessor or a lessee of any property, personal or real, or holds or operates any tangible property, owned by another Person, except for any leases under which the aggregate annual rent or lease payments do not exceed $100,000 individually or $200,000 in the aggregate;
(vii) Contracts relating to or evidencing any Company Affiliated Transaction;
(viii) IP Agreements;
(ix) Contracts (including the Real Property Leases) (A) limiting or purporting to limit (1) the ability of the Company or any Affiliate thereof to engage in any line of business, (2) the ability of the Company to solicit, hire or employ any Person, other than any such obligations contained in customary non-disclosure agreements entered into in the ordinary course of business, (3) the ability of any Person to compete with or obtain any products or services from the Company, or (4) the ability of the Company to solicit the business of any other Person, (B) that provide for any exclusivity, preferred treatment, “most favored nation” treatment, minimum purchase, “take or pay”, minimum volume commitment or similar requirement, (C) that provide for any non-disparagement or similar covenants or (D) that provide for any other non-interference or restrictive covenant obligations;
(x) Contracts entered into by the Company since the beginning of the Look-Back Period or pursuant to which the Company has any outstanding rights or obligations, relating to the acquisition or disposition of, or investment in, any business, division or Person (whether by merger, sale of stock, sale of assets or otherwise), including investments in joint ventures and minority equity investments;
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(xi) Contracts relating to an acquisition, capital expenditure, lease or disposition of any assets or group of assets (including capital assets) with a purchase or sales price (or annual rental obligations) in excess of $100,000 individually or $200,000 in the aggregate (other than sales of finished Inventory in the ordinary course of business);
(xii) any operating agreement, partnership agreement, joint venture agreement or other similar arrangement involving a sharing of profits, revenues, losses, costs or liabilities by the Company with any other Person (including any minority interests);
(xiii) Contracts under which the Company has made advances or loans to another Person, except loans or advances made to employees of the Company in the ordinary course of business in an amount not to exceed $5,000 individually or $20,000 in the aggregate;
(xiv) Contracts pursuant to which the Company has agreed to sell or issue any Equity Interests;
(xv) Contracts that grant any right of first refusal, right of first offer or similar right that limits or purports to limit the ability of the Company to own, operate, sell, transfer, pledge or otherwise dispose of any assets, properties or businesses (including the Real Property);
(xvi) any collective bargaining agreement or similar Contract with any labor union or similar organization;
(xvii) Contracts by which the Company holds any inventory of another Person under a consignment arrangement;
(xviii) Contracts relating to the settlement, conciliation or disposition of any Action involving the Company or any of its assets, businesses or properties involving monetary payments to or by the Company in excess of $100,000 or that involve any equitable or other material non-monetary relief;
(xix) Contracts that are an equityholder agreement, shareholder agreement, registration rights agreement or any arrangement relating to or affecting the ownership of the Equity Interests of the Company;
(xx) Contracts with any Governmental Authority;
(xxi) any Employee Plan;
(xxii) the Real Property Leases and any Contracts relating to any Owned Real Property;
(xxiii) each Dealer Agreement;
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(xxiv) any Contracts with respect to freight forwarding or similar services; and
(xxv) Contracts or other documents granting any power of attorney with respect to the affairs of the Company outside of the ordinary course of business or that is otherwise material to the business, operations, assets or properties of the Company.
(b) The Company has made available to the Purchaser a true, complete and correct copy of all Material Contracts (other than purchase orders entered into in the ordinary course of business). Except as disclosed on the attached “Contracts Schedule,” (i) no event or condition has occurred since the beginning of the Look-Back Period, or exists, with or without notice or lapse of time (or both) that, individually or together with other events or conditions, directly or indirectly, would reasonably be expected to (A) constitute a breach, violation or default of the Company under any Material Contract or, to the Company’s Knowledge, any other party to such Material Contract, in any material respect, (B) permit the termination or modification of any Material Contract or (C) result in the acceleration of any right or obligation under any Material Contract, (ii) each Material Contract is legal, valid and binding Contract, in full force and effect, and enforceable against the Company in accordance with its terms and, to the Company’s Knowledge, each other party thereto, except as such enforceability may be limited by the General Enforceability Exceptions, (iii) each Material Contract was duly authorized, executed and delivered by or on behalf of the Company and, to the Company’s Knowledge, each other party thereto, and (iv) the Company is not in breach, default or violation, and the Company has not taken any action, and to the Company’s Knowledge, no other party is in breach, default or violation, or taken any action, in each case which, with or without notice or lapse of time, or both, would constitute a breach, default or violation, or permit termination, modification or acceleration, as applicable under such Material Contract. The Company is in compliance in all material respects with the terms and requirements of each Material Contract and, to the Company’s Knowledge, each other Person party to such Material Contract is in compliance with the terms and requirements of such Material Contract in all material respects. Since the beginning of the Look-Back Period, none of the Company, any Seller or any Affiliate of the foregoing has received (A) any written notice of, or to the Company’s Knowledge, verbal notice of, any actual, alleged, possible or potential material violation or breach of, default under, or failure to comply with, any term or requirement of any Material Contract or (B) any written notice of the intention of any party or, to the Company’s Knowledge, any verbal notice by any party, to cancel, terminate, modify in a manner adverse to the Company, or fail to renew any Material Contract.
3.10 Proprietary Rights.
(a) The attached “Proprietary Rights Schedule” contains a complete and accurate list of all (i) patented or registered Proprietary Rights and pending patent applications and other applications for registration of Proprietary Rights owned (or purported to be owned) by the Company, including domain names (the “Registered Proprietary Rights”), (ii) material unregistered Trademarks, and (iii) Software owned or purported to be owned by the Company (the “Proprietary Software”). All registration, maintenance, and renewal fees currently due in connection with the Registered Proprietary Rights have been paid and all documents, recordations, and certificates in connection with the Registered Proprietary Rights currently required to be filed have been filed with the relevant patent, copyright, Trademark, or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of prosecuting, maintaining, and perfecting the Registered Proprietary Rights and recording the Company’s ownership interests therein. The Registered Proprietary Rights are valid, subsisting and enforceable.
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(b) The attached “Proprietary Rights Schedule” sets forth a list of all material Contracts pursuant to which (i) any Owned IP is licensed to any third party (other than non-exclusive licenses granted to customers in the ordinary course of business), (ii) a third party grants the Company a license to any third-party Proprietary Rights (other than licenses of mass marketed or otherwise generally available off-the-shelf software licensed on non-discriminatory terms generally available to the public with a fee less than $75,000) (the “Licensed IP”) or (iii) the Company is granted or grants a covenant not to sue or assert with respect to any Proprietary Rights (collectively, “IP Agreements”).
(c) Except as indicated on the “Proprietary Rights Schedule” (i) the Company solely and exclusively owns all right, title and interest in and to the Owned IP (including the Registered Proprietary Rights) and has valid and continuing licenses to use and exploit all other Proprietary Rights used in, held for use, or necessary for the conduct of the Business, in each case, free and clear of all Liens other than Permitted Liens, and (ii) except as would not, individually or in the aggregate, reasonably be expected to be material to the Company, there is no Action settled since the beginning of Look-Back Period, pending, filed, or to the Company’s Knowledge, threatened, and the Company has not received or sent any written claims, allegations, or threats since the beginning of the Look-Back Period (A) alleging that the Company (or third party, as applicable) is currently infringing, misappropriating, diluting or otherwise violating or has infringed, misappropriated, diluted, or otherwise violated the Proprietary Rights of any third party (or the Company, as applicable), (B) alleging any breach of any agreement pursuant to which any Company is a licensee of any Proprietary Rights, or (C) contesting or otherwise challenging the use, ownership, validity, or enforceability of any Owned IP, or the right of the Company to exercise its rights in any Owned IP. Since the beginning of the Look-Back Period, the Company has not received any written communication that involves an offer to license or grant any rights or immunities under any third-party Proprietary Rights, or received any charge, complaint, claim, demand, or notice alleging any of the foregoing. The Owned IP, along with the Licensed IP, constitutes all of the Proprietary Rights necessary and sufficient for the conduct and operation of the Business as currently conducted (other than off-the-shelf licenses).
(d) Neither the use or practice of the Owned IP (or the Licensed IP as it is used in the Business), the operation of the Business as previously conducted and as currently conducted, nor the business practices, operations, or products, services, content or publications of the Company has or does infringe, misappropriate, use without authorization, dilute or otherwise violate any Proprietary Rights of any third party nor constitutes obscenity, defames any Person, constitutes false advertising, violates consumer fraud Laws, or violates a member of the Company’s terms of use of any of its websites. To the Company’s Knowledge, there has been and is no infringement, misappropriation, unauthorized use or other violation by any third party of any Owned IP. The Company has taken commercially reasonable actions to maintain and protect the material Trade Secrets owned or used by the Company. All use, disclosure, or appropriation of any confidential or non-public information not owned by the Company has been pursuant to the terms of a written agreement between the Company and the owner of such confidential or non-public information and is otherwise lawful.
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(e) Except as set forth on the attached “Proprietary Rights Schedule”, the Company IT Systems (i) are sufficient in all material respects for the Company’s current needs in the operation of the Business, (ii) since the beginning of the Look-Back Period, have not been subject to any material failures, crashes, security breaches, or other adverse events affecting the Company IT Systems which has caused material disruption to the businesses of the Company, and (iii) provide for the back-up and recovery of material data consistent with recovery plans, procedures, and facilities implemented by the Company. The information stored in the Company IT Systems has been adequately protected by the Company from unauthorized use, access, or modification by any Person. The Company IT Systems do not contain any computer code or any other mechanisms which may (A) disrupt, disable, erase, or harm in any way such Company IT Systems’ operation, or cause the Company IT Systems to damage or corrupt any data, hardware, storage media, programs, equipment or communications, or (B) permit any Person to access without authorization the Company IT Systems or any product or system containing or used in conjunction with such Company IT Systems.
(f) Neither the execution, delivery, or performance of this Agreement or any Ancillary Agreement nor the consummation of any of the transactions contemplated hereby or thereby will, with or without notice or lapse of time (or both), result in, or give any other Person the right or option to cause or declare, (i) a loss of any Owned IP, (ii) the release, disclosure, or delivery of any Owned IP by or to any escrow agent or other Person, including pursuant to the terms of any source code escrow agreement, or (iii) the grant, assignment, or transfer to any other Person of any license or other right or interest under, to, or in any of the Owned IP.
(g) Except as set forth on the “Proprietary Rights Schedule,” each current and former employee, founder, executive, director, consultant or contractor of the Company who is or was involved in, or independently or jointly contributed to, the conception, reduction to practice, creation or development of any material Owned IP (each such consultant, employee, and contractor a “Contributor”) has signed a valid, enforceable written Contract (i) containing a present assignment of all such Contributor’s Proprietary Rights in any Owned IP to the Company, (ii) deeming all works of authorship by such Contributor to be “works made for hire”, and (iii) including confidentiality provisions protecting the Owned IP. No current or former director, officer, employee, consultant, or contractor of the Company has any right, license, claim, or interest whatsoever in or with respect to any Owned IP. No current or former employee, consultant, contractor or agent of the Company has misappropriated any Trade Secrets or other confidential, non-public, or proprietary information of any other Person in the course of the performance of his or her duties as an employee, consultant, contractor or agent of the Company.
(h) Each material Trademark included in the Registered Proprietary Rights has been used in the country in which the Trademark is registered on the goods identified in the registration since the beginning of the Look-Back Period. Except as would not, individually or in the aggregate, reasonably be expected to be material to the Company, the products of the Company have been marked as required by applicable Law in order to obtain and maintain all rights available pursuant to applicable Law as required under any licenses of Proprietary Rights to which the Company is a party.
3.11 Governmental Licenses. The attached “Governmental Licenses Schedule” sets forth a true, complete and correct list of all material Governmental Licenses used or held for use by the Company in the conduct of the Business (“Material Governmental Licenses”). Except as indicated on the attached “Governmental Licenses Schedule” the Company owns or possesses all right, title and interest in and to each Material Governmental License. The Material Governmental Licenses constitute all of the Governmental Licenses that are necessary or required for the lawful conduct of, and to own and operate, the Business (including as currently proposed to be operated and conducted), except where the failure to maintain such license would not have any material impact on the Company or the Business. The Company is in compliance in all material respects with the terms and conditions of each Material Governmental Licenses and no condition exists that with or without notice or the passage of time (or both) would reasonably be expected to constitute a material breach of, or material default or material violation under, any Material Governmental License. There is no Action pending or, to the Company’s Knowledge, threatened, to revoke, rescind, suspend, withdraw, modify, refuse to renew or terminate any Material Governmental License. The Company has not received any written notice of or, to the Company’s Knowledge, verbal notice of, any breach or violation by the Company of, or default by the Company under, any Material Governmental License (including any of the terms or conditions of such Material Governmental License).
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3.12 Litigation; Proceedings. Except as set forth on the attached “Litigation Schedule” (a) there are no (and since the beginning of the Look-Back Period, there have not been any) (i) Actions pending or, to the Company’s Knowledge, threatened against the Company, any director, manager, officer, executive, non-executive employee, independent contractor or agent of the Company (in their capacities as such), or any of its properties or assets or the Business, except as would not, individually or in the aggregate, reasonably be expected to be material to the Company, (ii) Actions seeking injunctive or other equitable relief ordered against the Company or its assets or properties or the Business, or (iii) Actions against the Company affecting the execution and delivery of this Agreement or any Ancillary Agreement or the consummation of any of the transactions contemplated hereby or thereby, and (b) none of the Company or any of its properties or assets is, or have been since the beginning of the Look-Back Period, subject to, bound by or party to any Order. Except as set forth on the “Litigation Schedule,” there are no settlements to which the Company is a party or by which any of its assets or properties are bound and pursuant to which the Company has any material outstanding liabilities or obligations or limitations.
3.13 Compliance with Laws. Except as set forth on the attached “Compliance Schedule” the Company is, and since the beginning of the Compliance Look-Back Period has been, in compliance in all material respects with all Laws and Orders applicable to the Business, the Company and the assets and properties thereof. Since the beginning of the Compliance Look-Back Period, the Company has not received any notice from, and no Actions have been filed, or to the Company’s Knowledge, threatened against, the Company by, any Governmental Authority or any other Person (a) regarding any actual, alleged, possible, or potential material breach or violation of, or material failure to comply with, any Law or Order applicable to the Business, the Company or any properties or assets thereof, or alleging that the Company has otherwise engaged in any unlawful business practice, (b) regarding any actual, alleged, possible, or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any material remedial action of any nature, (c) requiring the Company or any of its directors, officers, employees or controlling Persons to enter into a cease and desist order, agreement, or memorandum of understanding, (d) restricting or disqualifying the activities of the Company in any material respect, or (e) regarding any investigation into the Business, the Company or any assets or properties thereof, the subject of which notice has not been resolved.
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3.14 Labor and Employees.
(a) The Company is, and since the beginning of the Compliance Look-Back Period has been, in compliance in all material respects with all applicable Laws and Contracts relating to current and former employees and independent contractors and the employment or engagement of labor, including all applicable Laws relating to hiring, discharge or terms and conditions of employment wages, hours, overtime, collective bargaining, employment discrimination, civil rights, safety and health, workers’ compensation, pay equity, classification (including employee-independent contract classification and the proper classification of employees as exempt employees and nonexempt employees under the Fair Labor Standards Act and applicable Law), and the collection and payment of withholding or social security Taxes. The Company has met in all material respects all requirements required by Law relating to the employment of foreign citizens, and the Company does not currently employ, nor has ever employed, any Person who was not permitted to work in the jurisdiction in which such Person was employed. Since the beginning of the Compliance Look-Back Period, the Company has complied in all material respects with all Laws that could require overtime to be paid to any current or former employees or independent contractors, and no Person has ever brought or, to the Company’s Knowledge, threatened to bring a claim for unpaid compensation or employee benefits, including overtime amounts.
(b) The Company is not delinquent in payment to any current or former employee or independent contractor for any wages, fees, salaries, commissions, bonuses, or other direct compensation for service performed by them or amounts required to be reimbursed to such current or former employee or independent contractor or in payments owed upon any termination of such current or former employee or independent contractor’s employment or engagement.
(c) No employee is represented by a union with respect to employment with the Company. The Company is not a party to or bound by any labor or collective bargaining agreement with a union. No petition has been filed or proceedings instituted by any employee or group of employees with any labor relations board seeking recognition of a bargaining representative, and there is no organizational effort currently being made or, to the Company’s Knowledge, threatened by, or on behalf of, any labor union to organize any employees of the Company and no written demand for recognition as a bargaining representative of employees of the Company has been made by, or on behalf of, any labor union. There are no (i) strikes, work stoppages, work slowdowns or lockouts existing or, to the Company’s Knowledge, threatened against or involving any of the employees and the Company and the Company has not experienced any strike, work stoppage, work slowdown or lockout, (ii) unfair labor practice charges filed or, to the Company’s Knowledge, threatened by or on behalf of any union, employee or group of employees, or (iii) charges with respect to or relating to the Company pending before any applicable Governmental Authority responsible for the prevention of unlawful employment practices. No individual who has performed services for the Company has been improperly excluded from participation in any Employee Plan, and the Company has no material direct or indirect liability, whether actual or contingent, with respect to any misclassification of any person as an independent contractor rather than as an employee, or as exempt rather than non-exempt, or with respect to any employee leased from another employer, including for Tax withholding purposes or Employee Plan purposes.
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(d) To the Company’s Knowledge, no current employee or independent contractor is bound by any Contract (including licenses, covenants or commitments of any nature) or subject to any Order that would materially interfere with the use of such employee’s or independent contractor’s best efforts to promote the interests of the Company or that would materially conflict with the Business. Except as set forth on the “Labor and Employment Schedule”, the Company does not have a present intention to terminate the employment or engagement of any current key employee or key independent contractor, or group of key employees or key independent contractors, and to the Company’s Knowledge, no current employee or independent contractor, or group of employees or independent contractors (i) intends to terminate his, her or their employment or engagement with the Company, or (ii) has received an offer to join a business that is competitive with the Business.
(e) Since the beginning of the Compliance Look-Back Period, (i) no allegations of sexual harassment or sexual misconduct have been made against any current or former employee or independent contractor, and (ii) the Company has not entered into any settlement agreement related to allegations of sexual harassment or sexual misconduct by any current or former employee or independent contractor.
3.15 Employee Benefit Plans.
(a) The “Employee Benefits Schedule” sets forth a true, complete and correct list of each material Employee Plan. For purposes of this Agreement, “Employee Plan” means, each (i) defined contribution or defined benefit plans (whether or not terminated) which are employee pension benefit plans (as defined in Section 3(2) of ERISA, whether or not subject to ERISA), (ii) ongoing or terminated funded or unfunded employee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or not subject to ERISA) (“Employee Welfare Plans”), and (iii) any other plan, policy, program or arrangement which provides nonqualified deferred compensation benefits, or any other program, plan, policy or arrangement which provides any savings, severance, retention, employment, consulting, commission, change-of-control, collective bargaining, bonus, incentive, health, life, disability, accident, vacation, tuition reimbursement or other fringe benefits, whether or not subject to ERISA (including any related funding mechanism now in effect or required in the future) (the “Other Plans”), in each of (i), (ii) and (iii), with respect to current or former employees, independent contractors, consultants or directors of the Company, that the Company maintains, sponsors, contributes to or has any obligation to contribute to, or, to the Company’s Knowledge, has any current or potential liability, whether formal or informal, oral or written, funded or unfunded, insured or self-insured.
(b) With respect to each Employee Plan, the Company has provided to the Purchaser or its counsel a true, complete and correct copy, to the extent applicable, of: (i) each writing constituting a part of such Employee Plan and all amendments thereto, and a written description of any material unwritten Employee Plan; (ii) the most recent annual report and accompanying schedules; (iii) the current summary plan description and any summaries of material modifications; (iv) the most recent annual financial statements and actuarial reports; (v) the most recent determination or opinion letter received by the Company from the IRS regarding the tax-qualified status of such Employee Plan; (vi) the most recent written results of all required compliance testing; and (vii) copies of any material correspondence with the IRS, Department of Labor or other Governmental Authority. Except as set forth on the “Employee Benefits Schedule” there has been no amendment to, announcement by the Company relating to, or change in employee participation or coverage under, any Employee Plan which would increase materially the expense of maintaining such plan above the level of the expense incurred therefor for the most recent fiscal year. Except as set forth on the “Employee Benefits Schedule” the Company may amend or terminate any Employee Plan at any time without incurring any Liability thereunder other than in respect of claims incurred prior to such amendment or termination, benefits accrued prior to such termination (and not arising on account of such termination), and the customary costs of implementing such amendment or termination, subject to 26 CFR Section 54.9815-2715(b), which may apply to the termination of group health plans.
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(c) No Employee Plan is, and none of the Company or any ERISA Affiliate of the Company have during the Compliance Look-Back Period, sponsored, established, maintained, contributed to or been required to contribute to, or in any way has any liability (whether on account of an ERISA Affiliate or otherwise), directly or indirectly, with respect to any plan that is, (i) subject to Title IV or Section 302 of ERISA or Section 412, 430 or 4971 of the Code or a “defined benefit” plan within the meaning of Section 414(j) of the Code or Section 3(35) of ERISA (whether or not subject thereto), (ii) a Multiemployer Plan, (iii) a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA, (iv) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), or (v) a plan maintained in connection with any trust described in Section 501(c)(9) of the Code. None of the Company or any ERISA Affiliate has withdrawn at any time within the preceding six years from any Multiemployer Plan, or incurred any withdrawal liability which remains unsatisfied, and no events have occurred and no circumstances exist that could reasonably be expected to result in any such liability to the Company.
(d) The Company does not maintain and has no obligation to contribute to any funded or unfunded Employee Welfare Plan, Multiemployer Plan or Other Plan which provides post-retirement health, accident or life insurance benefits to current or former employees, current or former independent contractors, current or future retirees, their spouses, dependents or beneficiaries, other than health benefits required to be provided to former employees, their spouses and other dependents under Code Section 4980B or other similar Laws.
(e) There are no pending or, to the Company’s Knowledge, threatened Actions (other than routine claims for benefits) by, with respect to, or on behalf of any Employee Plan or any trusts which are associated with such Employee Plans, the assets of any of the trusts under such Employee Plans or the plan sponsor or the plan administrator, or against any fiduciary of the Employee Plans with respect to the operation of such Employee Plans. None of the Employee Plans are under audit or investigation (nor has written notice been received of a potential audit or examination) by the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or any other Governmental Authority. No Event exists that would subject the Company to any (i) Tax, fine, penalty, (ii) Lien or (iii) other liability imposed by ERISA, the Code or other applicable Laws. Each Employee Plan that previously provided for deferred compensation that constituted a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code and applicable regulations) was at all times in documentary compliance with, and was been administered in compliance with, the requirements of Section 409A of the Code and the regulations promulgated thereunder and no amount under such Employee Plan was or has been subject to the interest and additional Tax set forth under Section 409A(a)(1)(B) of the Code. As of the date hereof, no Employee Plan provides for deferred compensation that constitutes a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code and applicable regulations). Each Terminated Deferred Compensation Arrangement has been terminated and liquidated with respect to all participants, effective as of the Deferred Compensation Plan Termination Date in accordance with Treasury Regulations Section 1.409A-3(j)(4)(ix)(B), and the Company has taken all actions necessary or appropriate to pay or cause to be paid to each participant in the Terminated Deferred Compensation Arrangements, as soon as administratively practicable, and in all events no later than twelve (12) months following the Deferred Compensation Plan Termination Date, in a lump sum the accounts and benefits the participants have earned under such plans and arrangements, all in compliance with the requirements of Section 409A of the Code so that no taxes under Section 409A of the Code may be imposed on such participants.
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(f) The Employee Plans (and each respective related trust, insurance contract or fund) have been maintained, funded and administered in accordance with their express terms and in compliance in all material respects with the applicable Laws, including the requirements of ERISA and the Code. Neither the Company nor, to the Company’s Knowledge, any “party in interest” or “disqualified person” with respect to an Employee Plan has engaged in a non-exempt “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA. To the Company’s Knowledge, no fiduciary (within the meaning of Section 3(21) of ERISA) has breached in any material respect any fiduciary duty with respect to an Employee Plan or otherwise has any liability in connection with acts taken (or the failure to act) with respect to the administration or investment of the assets of any Employee Plan. Except as set forth on the “Employee Benefits Schedule”, all payments required to be made by the Company under, or with respect to, any Employee Plan (including all contributions, distributions, reimbursements, premium payments or intercompany charges) with respect to all prior periods have been timely made or, for any such payments that are not yet due, properly accrued and reflected in the most recent consolidated balance sheet prior to the date hereof, in each case in accordance with the provisions of each of the Employee Plans, applicable Law and GAAP. There is not now, nor do any circumstances exist that could give rise to, any requirement for the posting of security with respect to an Employee Plan or the imposition of any Lien on the assets of the Company under ERISA or the Code.
(g) With respect to each Employee Plan that is intended to qualify under Section 401(a) of the Code, such Employee Plan, and its related trust, has at all times since its adoption been so qualified and has received a current determination letter (or is the subject of a current opinion letter in the case of any prototype plan) from the IRS on which the Company can rely that it is so qualified and that its trust is exempt from Tax under Section 501(a) of the Code, and nothing has occurred with respect to the operation of any such plan which could cause the loss of such qualification or exemption or the imposition of any material liability, penalty or Tax under ERISA or the Code.
(h) Except as set forth in the attached “Employee Benefits Schedule”, none of the execution and delivery of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby will (either alone or in combination with another event) (i) result in any payment becoming due, or increase the compensation or benefits payable, to any current or former employees, consultants and directors under any Employee Plan, (ii) result in any acceleration of the time of payment or vesting of any benefits payable by the Company under any Employee Plan or otherwise accelerate or increase any liability of the Company under any Employee Plan, or the forgiveness of indebtedness of any current or former employees, consultants and directors; (iii) create any limitation or restriction on the right of the Company to merge, amend or terminate any Employee Plan, (iv) result in an obligation to fund or otherwise set aside assets to secure to any extent any of the obligations under any Employee Plan, or (v) result in the payment of any amount or benefit (whether in cash or property or the vesting of property) to any “disqualified individual” (as such term is defined in Treasury Regulation Section 1.280G-1) that could, individually or in combination with any other such payment, constitute an “excess parachute payment,” as defined in Section 280G(b)(1) of the Code.
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(i) No Employee Plan covers any employees or independent contractors residing or working outside of the United States (other than any former employees who resided in the United States during their period of service with the Company but have relocated following the termination of such period of service).
(j) Each Employee Plan that is subject to the Affordable Care Act has been established, maintained and administered in compliance with the requirements of the Affordable Care Act, including all notice and coverage requirements, and the Company and each ERISA Affiliate offer minimum essential health coverage, satisfying the affordability and minimum value requirements, to their full time employees (as defined by the Affordable Care Act) sufficient to prevent liability for assessable payments under Section 4980H of the Code. The Company has not attempted to maintain the grandfathered health plan status under the Affordable Care Act of any Employee Plan. Except as disclosed on the “Employee Benefits Schedule”, no Employee Plan is a self-insured arrangement by the Company or funded through a trust and no event has occurred and no condition exists that could reasonably be expected to result in a material increase in the premium costs of any Employee Plan that are fully-insured. The Company has not incurred (whether or not assessed), and is not reasonably expected to incur or to be subject to, any Tax or other penalty with respect to the reporting requirements under Sections 6055 and 6056 of the Code, as applicable, or under Section 4980B, 4980D or 4980H of the Code.
3.16 Tax Matters. Except as set forth in the attached “Taxes Schedule”:
(a) the Company has timely filed (giving effect to valid extensions) all Tax Returns required to be filed by or with respect to it, and all such Tax Returns are true, complete and correct in all material respects. All income and other material Taxes that are due and payable by or with respect to the Company have been timely paid and all material amounts of Taxes that the Company is obligated to withhold from the amounts paid to any employee, member, creditor or other Person have been properly withheld and paid to the appropriate Governmental Authority;
(b) any potential Losses of the Company for Taxes not yet due and payable, or which are being contested in good faith, for periods through the Closing Date do not exceed the amount shown on the face of the Stub Period Balance Sheet (disregarding timing differences) as adjusted for the period thereafter through the Closing Date assuming the Business is operated in the ordinary course;
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(c) the Company has collected all appropriate sales, use and similar Taxes or has obtained the appropriate exemption certificates to except the Company from collecting any such Tax that would otherwise be due;
(d) there are no Tax Liens on any of the assets or properties of the Company, other than Permitted Liens;
(e) the Company has not consented to waive or extend the time in which any Tax may be assessed or collected by any Taxing authority, which extension is in effect as of the date hereof;
(f) there is no Action now in progress or pending against or with respect to the Company with respect to any Tax;
(g) no deficiency or adjustment with respect to Taxes has been proposed, asserted or assessed in writing against the Company which has not been fully paid or otherwise settled, and the Company has made available to the Purchaser for inspection copies of any notice of deficiency, assessment, or other adjustment received since the beginning of the Compliance Look-Back Period;
(h) no written claim has been received from a Governmental Authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to Taxes assessed by such jurisdiction, or any Tax Return filing obligation;
(i) the Company has not been a member of an Affiliated Group;
(j) the Company is not a party to or bound by any Tax allocation, Tax sharing, Tax indemnification or similar agreement (except, in each case, an agreement entered into in the ordinary course of business and not primarily related to Taxes);
(k) the Company is not a party to or bound by any closing agreement, private letter rulings, technical advance memoranda, offer in compromise, or any other agreement or arrangement with any Taxing authority, in each case, that remains in effect, nor is there any outstanding request for such rulings or agreements;
(l) the Company (A) has not participated in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4 or a transaction that was intended to be governed in whole or in part by Section 355 or 361 of the Code; and (B) has no liability for the Taxes of any Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or foreign Law), as a transferee or successor, by contract or operation of law, or otherwise;
(m) the Company is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code;
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(n) the Company has made available to the Purchaser complete copies of all income and franchise Tax Returns of the Company relating to taxable periods ending on or after June 30, 2018;
(o) neither the Company nor any other Person on its behalf has agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of Law or has any Knowledge that any Governmental Authority has proposed any such adjustment, or has any application pending with any Governmental Authority requesting permission for any changes in accounting methods for Tax purposes, in all cases, which adjustments would not have been fully accounted for prior to the Closing;
(p) the Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any: (i) change in, or use of an improper, method of accounting for a Tax period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing; (iii) intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law); (iv) installment sale or open transaction disposition made on or prior to the Closing; or (v) prepaid amount received, deferred revenue accrued or any other income eligible for deferral under any applicable Tax Law on or prior to the Closing;
(q) the Company has used the accrual method of accounting for income Tax purposes at all times since 1987; and
(r) the Company is not and has never been a “personal holding company” as defined in Section 542 of the Code.
3.17 Environmental Matters. Except as set forth on the “Environmental Matters Schedule”:
(a) The Company is, and since the beginning of the Compliance Look-Back Period has been, in compliance with all Environmental Laws in all material respects (which compliance includes possession of and compliance with all Environmental Permits) and the Company has not received any written notice from any Governmental Authority alleging that the Company has materially violated applicable Environmental Laws, except for such notices that have been resolved.
(b) There are no material Environmental Claims with respect to the Business pending or, to the Company’s Knowledge, threatened against the Company, all past Environmental Claims have been resolved, and, to the Company’s Knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, the Release, presence or disposal of any Hazardous Materials, that could reasonably be expected to form the basis of any material Environmental Claim against the Company.
(c) The Company has not placed, stored, buried, or Released any Hazardous Materials produced by, or resulting from any of its operations, at, on, under, in, to or from any real property, except for inventories of such substances to be used, and wastes generated therefrom, in the ordinary course of business (which inventories and wastes, if any, were and are stored or disposed of in compliance with applicable Environmental Laws in all material respects and in a manner that would not result in material liability under Environmental Laws).
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(d) No Releases of Hazardous Materials have occurred and no Person has been exposed to any Hazardous Materials at, from, in, to, on, or under any Real Property and no Hazardous Materials are present in, on, about or migrating to or, to the Company’s Knowledge, from any Real Property that would give rise to material liability of the Company under Environmental Laws.
(e) The Company has not provided an indemnity with respect to, expressly assumed or undertaken any liability, including any corrective, investigatory or remedial obligation of any other Person relating to any Environmental Laws, other than customary environmental indemnities that are set forth on the “Environmental Matters Schedule”.
(f) The Company has not transported or arranged for the treatment, storage, handling, disposal, or transportation of any Hazardous Material to any off-site location which has or could reasonably be expected to give rise to liability of the Company under Environmental Laws.
(g) The Company has provided to the Purchaser true, complete and correct copies of all environmental site assessment reports, studies, audits, and other material information relating to Hazardous Materials, Environmental Claims, or other environmental matters pertaining to the environmental condition of the properties or business of the Company, or the compliance (or noncompliance) by the Company with Environmental Laws, in the Company’s possession or control.
(h) The Company is not required by any Environmental Law or by virtue of the transactions contemplated by this Agreement or the Ancillary Agreements, or as a condition to the effectiveness of such transactions, to (i) perform a site assessment for Hazardous Materials, (ii) remove or remediate Hazardous Materials, (iii) give notice to or receive approval from any Governmental Authority or other Person or record any disclosure document or statement pertaining to environmental matters, or (iv) alter, modify, renew, change or update any Environmental Permit.
3.18 Company Affiliated Transactions. The attached “Company Affiliated Transactions Schedule” sets forth a true, complete and correct list of all Contracts and transactions between the Company, on the one hand, and any officer, director, employee, partner, member, manager, direct or indirect equity holder or Affiliate of the Company or any Related Person of each of the foregoing or any entity in which any of the foregoing Persons owns Equity Interests (other than the Company), on the other hand (except for any employment arrangements entered into in the ordinary course of business, including any Employee Plans). Such transactions or arrangements described in the immediately preceding sentence are referred to herein collectively as “Company Affiliated Transactions”. Except as set forth on the “Company Affiliated Transactions Schedule”, no Affiliate, director, officer, employee, partner, member, manager or direct or indirect equity holder of the Company, or any Related Person of any of the foregoing or any entity in which any of the foregoing Persons owns Equity Interests, (a) owns or has any other interest in any material assets or properties, tangible or intangible, which is used by the Company in the conduct of the Business, (b) has any material commercial relationship (including as landlord, tenant, vendor, distributor, customer, consultant, lender, creditor, borrower, supplier, licensee, licensor, competitor, representative or other business relationship) with the Company, (c) has any ownership or other interest in or has made any loan to, or is a director (or applicable equivalent), officer or employee of any Key Vendor or Key Dealer or competitor of the Company (provided, that with respect to employees of the Company (other than any employees of the Company who are directors, officers of the Company with the title vice president or above, or Sellers, the representation and warranty in this Section 3.18(c) shall be deemed to be made by the Company subject to its Knowledge), or (d) is a party to any Action that is pending or, to the Company’s Knowledge, threatened, against the Company. Upon the termination at the Closing of each Company Affiliated Transaction required to be terminated pursuant to Section 2.3(b)(v), the Company will not have any further Liability thereunder.
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3.19 International Trade Laws; Anti-Corruption; Industry Certifications.
(a) The Business is operated, and since the beginning of the Compliance Look-Back Period has been operated, and the Company is, and since the beginning of the Compliance Look-Back Period has been, in compliance in all material respects with the Anti-Corruption Laws and all applicable International Trade Laws, economic sanctions, anti-bribery and anti-boycott Laws. None of the Company or any of its officers, directors, employees, or agents, or to the Company’s Knowledge, any other Persons authorized to act and acting on behalf of the Company is (i) a Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Treasury Department or the U.S. Department of State, (ii) a Person operating, organized or resident in a country or region which is itself the subject of any Sanctions (currently, Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine), or (iii) any Person owned or controlled by any Person or Persons specified in the immediately preceding clause (i) or clause (ii). Since the beginning of the Compliance Look-Back Period, none of the Company or any of its officers, directors, employees, or agents, or to the Company’s Knowledge, any other Persons authorized to act and acting on behalf of the Company, have violated or been alleged to have violated the Anti-Corruption Laws, made any unlawful payment or corruptly given, offered, promised, or authorized or agreed to give, any money or thing of value, directly or, knowingly, indirectly, to any Person in connection with the Business. Since the beginning of the Compliance Look-Back Period, none of the Company, or any officer, director, employee or agent of the Company, or to the Company’s Knowledge, any other Person acting on behalf of the Company, is or has been the subject of any Action regarding any International Trade Laws, economic sanctions, anti-boycott or Anti-Corruption Laws and no such Action has been threatened. The Company has obtained all required material registrations and other certifications (including industry or trade group certifications and Governmental Licenses) required for it to provide its services or sell or distribute its goods or products, in all applicable jurisdictions in which it conducts the Business and proposes to conduct the Business, and has otherwise complied in all material respects with industry standards applicable to it and the Business, in each case, in respect of the provision of any particular service, or the sale or distribution of any particular goods or products, as applicable, in such jurisdictions. None of the Company, or to the Company’s Knowledge, any of the Company’s suppliers have used, either directly or indirectly, forced or slave labor to procure, manufacture, or otherwise provide any raw materials, products, components, labor, or services that are incorporated into any of the Company’s products or incorporated into any complete product sold by or provided to the Company.
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3.20 Key Business Relationships.
(a) The attached “Key Business Relationships Schedule” sets forth a true, complete and correct list of (i) the top twenty (20) Dealer locations of the Company based on revenue generated by Dealers at such locations for the fiscal year period ended June 30, 2021 and for the three (3) months ended September 30, 2021 (each such Dealer referred to as a “Key Dealer”) and the amount of such revenue generated with respect to each Key Dealer, and (ii) the top twenty (20) vendors or suppliers of the Company based on expenses for the fiscal year period ended June 30, 2021 and for the three (3) months ended September 30, 2021 (and, together with Snap Finance LLC and its Affiliates, each, a “Key Vendor”) and the amount of such expenses incurred with respect to each Key Vendor (including, for the avoidance of doubt, Snap Finance LLC and its Affiliates).
(b) During the past twelve (12) months, the Company has not at any time delivered to, or received from, any Key Dealer or Key Vendor any written notice or written allegation of a material default or breach with respect to any Contract. None of the Key Dealers or Key Vendors has (i) terminated or failed to renew or given written, or to the Company’s Knowledge, verbal notice to the Company evidencing its intention to terminate or fail to renew its relationship with the Company, (ii) been in a material dispute with the Company during the past twelve (12) months, (iii) with respect to the Key Dealers, given written, or to the Company’s Knowledge, verbal notice to the Company evidencing that it plans to materially reduce the quantity of products or services that it purchases from the Company (relative to such Key Dealer’s purchasing history during the twelve (12) months prior to such change) or otherwise materially alter the terms of its commercial relationship in a manner that would be detrimental to the Company or the Business, or (iv) with respect to the Key Vendors, given written, or to the Company’s Knowledge, verbal notice to the Company, evidencing that it plans to materially reduce the quantity of products or services that it provides to the Company or otherwise materially alter the terms of its commercial relationship in a manner that would be detrimental to the Company or the Business. Except as set forth on the “Key Business Relationships Schedule”, there is no single vendor or supplier of products or services to the Company that is necessary for or material to the operation of the Businesses with respect to which a reasonably practicable alternative source of supply is not generally available on commercially reasonable terms.
(c) The attached “Rebates Schedule” sets forth a true, complete and correct list of all discounts, allowances, free goods or services, rebates, programs or other promotions offered by the Company to its customers that had a value, individually or in the aggregate, in excess of $100,000 in the calendar year ended December 31, 2020, or as of November 20, 2021, is reasonably expected to have a value, individually or in the aggregate, in excess of $100,000 in the calendar year ending December 31, 2021.
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3.21 Product Warranty and Product Liability.
(a) Since the beginning of the Look-Back Period, the Company has not manufactured or designed (other than with respect to packaging or branding) any goods, products or Inventory that it sells or distributes.
(b) The attached “Product Warranty and Product Liability Schedule” sets forth a true, complete and correct list of (i) each Action related to any Company warranty, product liability or guaranty that has, or would reasonably be expected to involve, a cost to the Company in excess of $25,000 individually or $100,000 in the aggregate, and (ii) each recall required to be taken, in each case of clauses (i) and (ii), with respect to any goods, products or Inventory sold or distributed by or any service provided by, the Company at any time since the beginning of the Look-Back Period. All Actions related to any Company warranty, product liability or guaranty listed on the “Product Warranty and Product Liability Schedule” have been resolved and the Company does not have any further liability with respect thereto. Except as listed on the “Product Warranty and Product Liability Schedule,” no Action or series of Actions related to any Company warranty, product liability or guaranty with respect to goods, products or Inventory sold or distributed by, or services provided by, the Company has resulted in a cost or liability to the Company in excess of $25,000 individually or $100,000 in the aggregate in any calendar year since the beginning of the Look-Back Period.
(c) Since the beginning of the Look-Back Period, the Company has not received any written notice (or, to the Company’s Knowledge, verbal notice) of any recalls ordered by any Governmental Authority or any other Person with respect to any goods, products or Inventory sold or distributed by, or services provided by, the Company. Except as listed on the “Product Warranty and Product Liability Schedule,” since the beginning of the Look-Back Period, there has not been any Order or Action (and the Company has not received written notice, or, to the Company’s Knowledge, verbal notice, thereof) declaring or alleging any of the goods, products or Inventory sold or distributed by, or services provided by, the Company to be defective or unsafe. No goods, products or Inventory sold, made, distributed, or, to the Company’s Knowledge, transported or handled, by the Company, or any predecessors thereof, at any time, contains, or has ever contained, asbestos.
3.22 COVID-19 Matters.
(a) Except as set forth on the “COVID-19 Matters Schedule”, the Company has not participated in any COVID-19-related programs (including the PPP) or sought or received benefits, advances or relief thereunder or under any other COVID-19 Laws. Except as set forth on the “COVID-19 Matters Schedule”, the Company has not claimed any Tax credit, deferral or other benefit pursuant to a COVID-19 Law. Except as set forth on the “COVID-19 Matters Schedule”, no action by the Company taken prior to the Closing Date will impair the eligibility of the Purchaser or any of its Affiliates (including the Company following the Closing) to claim any payroll Tax credit or deferral that is permitted by a COVID-19 Law.
(b) To the Company’s Knowledge, no event has occurred and no condition exists that would interfere with or impede the availability of the workforce of the Company to conduct the Business and there is no anticipated labor shortage as a result of, in connection with, or related to, COVID-19, a pandemic, any such orders or other similar events. To the extent the Company is requiring employees to perform in-person work in any location subject to such an order, the operations of the Business at such location qualifies as an “Essential Business”, or term of similar import, that is allowed to operate under and for purposes of such order. The Company has not implemented, and currently has no plans to implement, any reductions in hours, furloughs, or salary reductions in connection with COVID-19 that would (i) cause any employee currently classified as “exempt” under applicable federal, provincial and state law to lose such “exempt” status, or (ii) cause any employee’s compensation to fall below the applicable federal, provincial, state, or local minimum wage.
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3.23 Privacy and Data Security.
(a) The Company is, and since the beginning of the Compliance Look-Back Period has been, in compliance in all material respects with (i) applicable Data Protection Laws; (ii) all published, posted and internal privacy policies; (iii) all Contracts or codes of conduct binding on the Company relating to the collection, access, use, storage, disclosure, transmission, or cross-border transfer of Personal Data; and (iv) any standards published by the Payment Card Industry Security Standards Council applicable to the Company ((i)-(iv) collectively, “Data Protection Requirements”).
(b) The Company established and maintains, and has maintained, physical, technical, and administrative security measures and policies, compliant in all material respects with applicable Data Protection Requirements, that (i) identify internal and organizational risks to the confidentiality, integrity, and availability of Personal Data and Data Systems taking into account the sensitivity of the data or systems; (ii) protect the confidentiality, integrity, and availability of the Company’s software, systems, and websites that are involved in the collection or processing of Personal Data and Data Systems; and (iii) maintain notification procedures in compliance with applicable Data Protection Requirements.
(c) The Company has not experienced any failures, crashes, security breaches or incidents, unauthorized access, use, modification, or disclosure, or other adverse events or incidents related to Personal Data or Data Systems that would require notification of or to any Person subject to applicable Data Protection Requirements.
(d) Since the beginning of the Look-Back Period, the Company has not received any subpoenas, demands, or other written notices from any Person investigating, inquiring into, or otherwise alleging any material violation or failure to comply with applicable Data Protection Requirements. No notice, complaint, claim, inquiry, audit, enforcement action, proceeding, litigation or other Action of any kind has been served on, or initiated against, the Company subject to any Data Protection Requirement, nor is the Company aware of any reasonable basis for such a claim, in each case, individually or in the aggregate, that would reasonably be expected to be material to the Company.
(e) The execution, delivery, and performance of this Agreement and the Ancillary Agreements shall not cause, constitute, or result in a material breach or violation of any Data Protection Requirement or other standard terms of service entered into by the users of the Company’s service(s).
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3.24 Bank Accounts. The attached “Bank Accounts Schedule” sets forth a true, complete and correct list of each bank, trust company, savings institution, brokerage firm, mutual fund or other financial institution with which the Company has an account or safe deposit box or which is otherwise used in the Business, including the names and identification and contact information of all Persons authorized to draw thereon or to have access thereto.
3.25 Brokerage. Except as disclosed on the attached “Company Brokerage Schedule” there are no claims for, and no Person is or will become entitled to, any brokerage commissions, finder’s, financial advisors, or investment banker’s fees or similar compensation in connection with the transactions contemplated by this Agreement, any Ancillary Agreements based on any arrangement, Contract or agreement made by or on behalf of the Company or any of its Affiliates.
3.26 Insurance. The attached “Insurance Schedule” sets forth a true, complete and correct list of all title, liability, fire, worker’s compensation and other forms of insurance (including bonds) (such policies, the “Scheduled Insurance Policies”) and the policy limits thereunder that, since the beginning of the Look-Back Period, insure or insured the Company’s properties, assets and operations or any of its current or former officers or directors are set forth on the “Insurance Schedule.” Except for deductibles under Scheduled Insurance Policies, the Company is not self-insured. Except as set forth on the “Insurance Schedule,” the Company is the sole loss payee and the only “named insured” under each Scheduled Insurance Policy. Except as set forth on the Insurance Schedule, all such policy limits as listed therein are available. Such policies cover the assets and risks of the Company in a manner consistent with customary practices of companies engaged in businesses and operations similar to those of the Company. The “Insurance Schedule” lists each open claim made by the Company and each other claim made by the Company since the beginning of the Look-Back Period. All insurance coverage maintained with respect to the Company is occurrence-based, except as otherwise noted on the “Insurance Schedule.” To the Company’s Knowledge, all of such insurance policies are legal, valid, binding and enforceable and in full force and effect and the Company is not in breach or default (including with respect to giving of notices), in any material respect, with respect to its obligations under such insurance policies (including with respect to payment of premiums, deductibles and self-insured amounts that have become payable). The Company has not cancelled or received notice of any material increase of the premiums with respect to, cancellation of, non-renewal or threatened cancellation or non-renewal of, any such insurance policy without replacement thereof. There have been no occurrences that could be reported on the Company’s general liability insurance policy except those already reported and those that would not reasonably be expected to be, individually or in the aggregate, material to the Company, and there has not been a failure by the Company to give notice of any material claim that may be insured under any Scheduled Insurance Policy in a timely fashion or in a manner required by such Scheduled Insurance Policy. There are no claims (other than health insurance claims and each worker’s compensation and any other claim involving less than $25,000 per claim) under any of the Scheduled Insurance Policies as to which any insurance company has notified the Company that it is denying liability or defending, questioning or disputing under a reservation of rights or similar clause any such claim. No Scheduled Insurance Policy provides shared coverage with any Person other than the Company.
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3.27 Dealer Matters.
(a) The attached “Dealer Schedule” sets forth a true, complete and correct (i) list of (A) all Dealer Agreements, (B) the name of each Dealer party to such Dealer Agreement, (C) the business address of the Designated Premises under such Dealer Agreement, and (D) the effective date and expiration date of such Dealer Agreement, and (ii) the form of W.S. Badcock Corporation Dealership Agreement. No Dealer Agreement varies in any material respect from such form set forth on the “Dealer Schedule”.
(b) Each Person who is (i) operating a retail business identified by the trade names and service marks “Badcock Home Furniture & more” or “Badcock Home Furnishings Center” or (ii) selling home furnishings, appliances or other durable goods consigned by the Company to such Person, is a party to a Dealer Agreement.
(c) Except for the Dealer Agreements, the Company is not bound by any other Contract granting a right to any Person to (i) develop or operate a retail business identified by the trade names and service marks “Badcock Home Furniture & more” or “Badcock Home Furnishings Center” or (ii) sell home furnishings, appliances or other durable goods consigned by the Company to such Person.
(d) None of the Company or any Affiliate thereof has operated (i) a franchise system subject to the FTC Rule in connection with its retail operation of the Business or any other business, or (ii) any network or system of dealers or retailers to sell goods or services anywhere in the United States other than the Badcock Dealer Network.
(e) None of the Dealer Agreements constitutes a franchise under any applicable Franchise Sales Laws. The Company has complied with all applicable Franchise and Dealer Relationship Laws in all material respects, or is otherwise not subject to them or is otherwise exempt therefrom.
(f) None of the terms or provisions of any Dealer Agreement violates any applicable Law in any material respect, and none of the policies or practices of the Company in connection with its relationship with any Dealer violates any applicable Law in any material respect. Without limiting the foregoing, no changes in the Dealer commission structure or rates implemented by the Company since the beginning of the Compliance Look-Back Period has breached or violated the rights of any Dealer under its Dealer Agreement or under applicable Law in any material respect.
(g) Except as set forth on the “Dealer Schedule”, since the beginning of the Compliance Look-Back Period, the Company has not received any written, or to the Company’s Knowledge verbal, notice, demand or claim from a Dealer that the Company has violated any Laws in connection with its relationship with such Dealer in any material respect or that its Dealer Agreement constitutes a Franchise under applicable Franchise Sales Laws.
(h) Except as set forth on the “Dealer Schedule,” the Company has not received any written notice of, or to the Company’s Knowledge, verbal notice, that the relationship between the Company and any Dealer under the terms of the Dealer Agreement constitutes a Franchise or a business opportunity under any Franchise Sales Laws or any state business opportunity Laws.
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(i) Nothing contained in any Dealer Agreement prohibits or restricts the Company or any of its Affiliates from offering or selling competitive merchandise through any channel of distribution under any Trademarks that are not licensed to the applicable Dealer under such Dealer Agreement.
3.28 LaGrange Transaction. On or prior to the date hereof, the LaGrange Bond Documents have been terminated, canceled and extinguished, as applicable, none of the Company or any other Person has any continuing rights or obligations under any LaGrange Bond Document, other than rights in favor of the Authority that expressly survive such termination of the LaGrange Bond Documents pursuant to the LaGrange Transaction Documents, and the Company has acquired good and valid legal and beneficial title to the LaGrange Property (such termination, cancellation and extinguishment, collectively, the “LaGrange Transaction”). The “LaGrange Transaction Documents Schedule” sets forth a true, complete and correct list of each document, instrument or agreement required to be executed or delivered by the Company and delivered to the Authority (the “LaGrange Transaction Documents”) to consummate the LaGrange Transaction and no other documents, filings, agreements, instruments or notices are required to be delivered to, and no additional consents are required to be obtained from, any other Person in order to consummate the LaGrange Transaction. The LaGrange Transaction occurred in accordance with all applicable Laws and other requirements of the Authority. The Company has delivered to Purchaser a true, complete and correct copy of each LaGrange Transaction Document and the LaGrange Transaction Documents constitute the sole documents, instruments and agreements used or entered into to effect the LaGrange Transaction. Following the consummation of the LaGrange Transaction, neither the Company nor any other Person will have any further Liability for the payment of any amounts in connection with the LaGrange Transaction, other than rights in favor of the Authority that expressly survive the termination of the LaGrange Bond Documents pursuant to the LaGrange Transaction Documents.
3.29 Disclaimer. Except as expressly set forth in this Article 3 and in Article 4, the Schedules, the Transaction Beneficiary Joinder, the Ancillary Agreements and in any certificates or instruments delivered pursuant to this Agreement, none of the Company or the Sellers or any other Person makes any representation or warranty, express or implied, at law or in equity with respect to the matters addressed herein and any such other representations or warranties are hereby expressly disclaimed. None of the Sellers or the Company makes any representation or warranty to the Purchaser (a) with respect to any projections, estimates or budgets heretofore delivered to or made available to the Purchaser or its counsel, accountants or advisors of (i) future revenues, expenses or expenditures or (ii) future results of operations of the Company, or (b) except as expressly set forth in this Article 3 or in Article 4, the Schedules, the Transaction Beneficiary Joinder, the Ancillary Agreements and in any certificates or instruments delivered pursuant to this Agreement, any other information or documents (financial or otherwise) made available to the Purchaser or its counsel, accountants or advisors with respect to the Company. Notwithstanding anything to the contrary herein or otherwise, nothing in this Agreement (including this Section 3.29) shall limit, restrict or prohibit any rights, remedies, claims or causes of action (or recovery in connection therewith) under the R&W Insurance Policy or in respect of Fraud.
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Article
4
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLERS
As a material inducement to the Purchaser to enter into this Agreement and consummate the transactions contemplated hereby, each Seller severally as to such Seller, hereby represents and warrants to the Purchaser as follows:
4.1 Ownership. Such Seller holds of record and owns beneficially (and is the sole record and beneficial owner of), and has good, valid and marketable right, title and interest in and to, the Purchased Shares set forth next to the name of such Seller on the attached “Capitalization Schedule” free and clear of any Liens and any other restrictions on transfer (other than the restrictions in the Stock Restriction Agreement and other than any transfer restrictions under the 1933 Act and state securities Laws). Except as set forth on the “Ownership Schedule” and the Stock Restriction Agreement, such Seller (a) is not a party to or bound by any option, warrant, right, contract, call, pledge, put or voting trust, proxy equity holders’ agreement, registration rights agreement or other similar Contract with respect to any of the Purchased Shares and (b) has the full power and authority to sell, assign and transfer such Purchased Shares to the Purchaser as contemplated by this Agreement free and clear of any Liens and any other restrictions on transfer (other than any transfer restrictions under the 1933 Act and state securities Laws).
4.2 Organization; Power; Authorization of Transactions. If such Seller is an entity, such Seller is duly incorporated or organized, as applicable, validly existing and in active status or in good standing under the laws of its jurisdiction of organization or formation, as applicable. If such Seller is an entity, such Seller is qualified to transact business as a foreign entity and is in good standing or of active status, as applicable, in each jurisdiction in which the properties or assets owned, leased or operated by such Seller, or the nature of the business of such Seller requires such Seller to be so qualified, except to the extent the failure to qualify would not, individually or in the aggregate, reasonably be expected to be material to such Seller or the Company. Such Seller has all requisite power, authority and legal capacity to execute and deliver this Agreement and the other Ancillary Agreements to which such Seller is a party and to perform his, her or its obligations hereunder and thereunder, including to sell, assign, transfer and deliver the Shares owned by such Seller pursuant to the terms of this Agreement. The execution, delivery, and performance by such Seller of this Agreement and the other Ancillary Agreements to which such Seller is a party, and each of the transactions contemplated hereby or thereby have been duly and validly authorized by all requisite action of such Seller and no other act or proceeding on the part of such Seller is necessary to authorize the execution, delivery or performance by such Seller of this Agreement or any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby. This Agreement, and each of the Ancillary Agreements to which such Seller is a party, have been duly and validly executed and delivered by such Seller and, assuming the due execution and delivery of this Agreement and the other Ancillary Agreements by the other parties hereto and thereto, this Agreement constitutes, and the other Ancillary Agreements constitute, a valid, legal and binding obligation of such Seller, enforceable against such Seller in accordance with its terms except as the enforceability hereof and thereof may be limited by the General Enforceability Exceptions.
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4.3 Absence of Conflicts; Consents and Approvals.
(a) Except in the case of subclause (i) of this Section 4.3(a) or as would not reasonably be expected to materially impair or delay the ability of such Seller to consummate the transactions contemplated by this Agreement or to perform his, her or its obligations under this Agreement or any other Ancillary Document to which such Seller is a party and except for the terms of the Stock Restriction Agreement, the execution, delivery and performance by such Seller of this Agreement and the Ancillary Agreements and the covenants, agreements and obligations hereunder and thereunder and the consummation of each of the transactions contemplated hereby or thereby do not and will not, with or without the giving of notice, the passage of time, or both, conflict with, or result in any violation or breach of or default under or give rise to a right of acceleration, termination, loss of benefit or rights, or cancellation, require novation or the consent or approval of or the provision of notice to any third party or result in any Lien on any of the Shares or any Equity Interests or assets or properties of such Seller, give rise to any additional payment by, or obligation of, such Seller or trigger the right of any Person to acquire all or any part of the Shares or any other Equity Interests of the Company pursuant to a preferential purchase right, preemptive right, right of first refusal or offer, buy-sell arrangement or otherwise, in each case, under any provision of (i) any Material Contract or Governmental License, (ii) the Company Articles, the Company Bylaws or any other organizational or governing documents of the Company, (iii) any Law or Order, or otherwise, except with respect to Permitted Liens, result in the creation of any material Lien upon any of the Shares or any other Equity Interests of the Company or any of the properties or assets of the Company.
(b) Assuming the truth and accuracy of the representations and warranties contained in Section 5.4, no notices to, filings with, or authorizations, consents, approvals, exemptions, Orders, permits, clearances or declarations of any Person or Governmental Authority are required or necessary on the part of, or with respect to, such Seller for the execution or delivery by such Seller of this Agreement or any Ancillary Agreement, or the performance by such Seller of its obligations hereunder or thereunder or the consummation by such Seller of the transactions contemplated hereby or thereby.
4.4 Litigation. Since the beginning of the Look-Back Period, there have not been any Actions pending, or to such Seller’s Knowledge, threatened, against such Seller or any of the assets or properties of such Seller, at law or in equity, or before or by any Governmental Authority, except as would not reasonably be expected to materially impair or delay the ability of such Seller to consummate any of the transactions contemplated by this Agreement or the Ancillary Agreements or to perform its obligations under this Agreement or the Ancillary Agreements to which such Seller is a party or prohibit such Seller from consummating any of the transactions contemplated by this Agreement or the Ancillary Agreements or performing its covenants, agreements and obligations under this Agreement or the Ancillary Agreements to which such Seller is a party.
4.5 Brokerage. Except as disclosed on the attached “Seller Brokerage Schedule” there are no claims for, and no Person is or will become entitled to, any brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement and the Ancillary Agreements based on any arrangement, Contract or agreement made by such Seller or any of such Seller’s Affiliates.
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Article
5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As a material inducement to the Company and the Sellers to enter into this Agreement and consummate the transactions contemplated hereby, the Purchaser represents and warrants to the Company and the Sellers as follows:
5.1 Organization and Power. The Purchaser is a limited liability company duly organized, validly existing and in good standing or active status under the Laws of the State of Delaware. The Purchaser has all requisite limited liability company power and authority to own, operate and lease the assets and properties that it purports to own, operate or lease and to carry on its business and to execute and deliver this Agreement and each other Ancillary Agreement to which it is a party and to perform its obligations hereunder and thereunder.
5.2 Authorization. The execution and delivery by the Purchaser of this Agreement and each of the Ancillary Agreements to which the Purchaser is a party, the performance by the Purchaser of its obligations under this Agreement and each of the Ancillary Agreements to which the Purchaser is a party have been duly and validly authorized by all requisite limited liability company action necessary to authorize the execution, delivery or performance of this Agreement or the other Ancillary Agreements to which the Purchaser is a party. This Agreement (and each of the Ancillary Agreements to which the Purchaser is a party) has been duly executed and delivered by the Purchaser and, assuming the due execution and delivery of this Agreement and the other Ancillary Agreements by the other parties hereto and thereto, this Agreement constitutes, and the other Ancillary Agreements constitute, a valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with their terms, except as the enforceability hereof and thereof may be limited by the General Enforceability Exceptions.
5.3 Absence of Conflicts. Except in the case of subclauses (a)(ii) and (b) of this Section 5.3 or as would not reasonably be expected to impair or materially delay the ability of the Purchaser to consummate the transactions contemplated by this Agreement, the execution, delivery and performance by the Purchaser of this Agreement, the other Ancillary Agreements to which the Purchaser is a party and the consummation of each of the transactions contemplated hereby or thereby will not (a) violate, conflict with, result in any material breach of, constitute a material default under, result in the termination or acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under (i) any organizational documents of the Purchaser, or (ii) to the Purchaser’s Knowledge, any material contract to which the Purchaser is bound or affected; or (b) require any authorization, consent, approval, exemption or other action by or notice to any Governmental Authority under the provisions of any Law.
5.4 Governmental Authorities and Consents. Assuming the truth and accuracy of the representations and warranties contained in Section 3.4 and Section 4.3, no permit, consent, approval or authorization of, or declaration to or filing with, any Governmental Authority or any other Person is required in connection with the execution, delivery or performance of this Agreement and the other Ancillary Agreements to which the Purchaser is a party, by the Purchaser or the consummation by the Purchaser of the transactions contemplated hereby and thereby, except for such approval, authorization, declaration or filing, the failure of which to obtain or make would not reasonably be expected to impair or materially delay the ability of the Purchaser to consummate the transactions contemplated by this Agreement, the execution, delivery and performance by the Purchaser of this Agreement, the other Ancillary Agreements and the consummation of the transactions contemplated hereby or thereby.
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5.5 Litigation. There are no Actions pending or, to the Purchaser’s Knowledge, threatened against or affecting the Purchaser, at law or in equity, or before or by any Government Authority, except for such Actions as would not reasonably be expected to impair or materially delay the ability of the Purchaser to consummate the transactions contemplated by this Agreement, the execution, delivery and performance by the Purchaser of this Agreement, the other Ancillary Agreements and the consummation of the transactions contemplated hereby or thereby.
5.6 Brokerage. Except as disclosed on the attached “Purchaser Brokerage Schedule” there are no claims for, and no Person is or will become entitled to, any brokerage commissions, finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement, and the Ancillary Agreements based on any arrangement, Contract or agreement made or alleged to have been made by or on behalf of the Purchaser or any of its Affiliates.
5.7 Due Diligence Review. The Purchaser acknowledges that: (a) it is an informed and sophisticated investor and has had an opportunity to discuss the Company’s business, management, financial affairs and the terms and conditions of the sale of the Purchased Shares with the Company’s management and has had an opportunity to review the Company’s facilities, (b) it has completed to its satisfaction its own investigation and due diligence review with respect to the Company and it is entering into the transactions contemplated by this Agreement based on such investigation and due diligence, and except for the specific representations and warranties made by the Company and the Sellers in Article 3 and Article 4 under this Agreement, the Schedules, the Transaction Beneficiary Joinder, the Ancillary Agreements and in any certificates or instruments delivered pursuant to this Agreement it is not relying upon any representation or warranty, express or implied, of the Company or any Affiliate, officer, director, employee, agent or advisor thereof, nor upon the accuracy of any record, projection or statement, in each case, made available or given to the Purchaser in the performance of such investigation, (c) it has had access to the Company and its books and records, Contracts (including Tax Returns and related documents), and employees, agents and representatives, and (d) it has had such opportunity to seek accounting, legal or other advice or information in connection with its entry into this Agreement and the other documents referred to herein relating to the consummation of the transactions contemplated hereby and thereby as it has seen fit. In furtherance of the foregoing, and not in limitation thereof, the Purchaser acknowledges that no representation or warranty, express or implied, of the Company or the Sellers or any of their respective Affiliates, with respect to any financial projection or forecast made available to the Purchaser with respect to the revenues or profitability which may arise from the operation of any of the Company either before or after the Closing, shall (except as otherwise expressly represented to in this Agreement, the Schedules, the Transaction Beneficiary Joinder, the Ancillary Agreements or in any certificates or instruments delivered pursuant to this Agreement) form the basis of any claim against the Company or the Sellers or any of their respective Affiliates with respect thereto, it being understood that financial projections and forecasts are, by their nature, inherently uncertain and actual results may vary from such projections and forecasts and that such variations may be material. Notwithstanding anything to the contrary herein or otherwise, nothing in this Agreement (including this Section 5.7) shall limit, restrict or prohibit any rights, remedies, claims or causes of action (or recovery in connection therewith) under the R&W Insurance Policy or in respect of Fraud.
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5.8 Restricted Securities. The Purchaser understands and acknowledges that (a) none of the Purchased Shares have been registered under the 1933 Act, or under any securities Laws of any state of the United States or other jurisdiction, in reliance upon specific exemptions thereunder for transactions not involving any public offering, (b) all of the Purchased Shares constitute “restricted securities” as defined in Rule 144 under the 1933 Act, (c) none of the Purchased Shares are traded or tradable on any securities exchange or over-the-counter, and (d) none of the Purchased Shares may be sold, transferred or otherwise disposed of unless a registration statement under the 1933 Act with respect to such Purchased Shares and qualification in accordance with any applicable state securities Laws becomes effective or unless such registration and qualification is inapplicable, or an exemption therefrom is available. The Purchaser is an “accredited investor” as defined in Rule 501(a) of the 1933 Act.
5.9 Solvency. Assuming that (a) the representation and warranties contained in Article 3 and Article 4 in this Agreement are true and correct, (b) the Company and the Sellers have complied with their obligations under this Agreement and (c) any estimates, projections or forecasts of the Company provided to the Purchaser prior to the date of this Agreement have been prepared in good faith based on assumptions that were and continue to be reasonable and accurate, at and immediately after the consummation of the transactions contemplated by this Agreement (including any debt financing arrangements entered into at the Closing in connection with the transactions contemplated hereby), the Company will be Solvent. For purposes of this Section 5.9, “Solvent” means that, with respect to any Person as of the Closing Date, (i) the amount of the “fair market value” of the assets of the Person, will, as of Closing Date, exceed the amount of all “liabilities of such Person, contingent or otherwise,” as of the Closing Date, as such quoted terms are generally determined in accordance with applicable federal Laws governing determinations of the insolvency of debtors, (ii) such Person will be able pay its indebtedness as its indebtedness becomes absolute and matured, and (iii) the Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business.
5.10 Purchaser Entity. The Purchaser has been formed solely for the purpose of engaging in the transactions contemplated by this Agreement and the Ancillary Agreements and has not incurred liabilities of any nature or conducted any business other than those incidental to its formation and existence and pursuant to or in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. FRG owns all of the Equity Interests of the Purchaser, beneficially and of record, free and clear of all Liens (other than any Liens created pursuant to any debt financing arrangements entered into at the Closing in connection with the transactions contemplated hereby and except for any restrictions arising under the 1933 Act and state securities Laws).
Article
6
COVENANTS AND AGREEMENTS
6.1 Public Announcements. Except for the filing of any Form 8-K with the Securities and Exchange Commission by FRG (and the inclusion of (a) a copy of this Agreement and a summary of the transactions contemplated hereby, and (b) following the Closing, financial information relating to the Company, in any such Form 8-K filing) or as otherwise required by applicable Law, over-the-counter market or stock exchange requirements (based upon the reasonable advice of counsel), no party to this Agreement (nor will any party to this Agreement permit any of its advisors, employees, agents, representatives, direct or indirect equity holders, trustees, beneficiaries or Affiliates to do any thereof) shall make any public announcements in respect of this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby or otherwise communicate with any news media without the prior written consent of the Seller Representative and the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), and the parties shall cooperate as to the timing and contents of any such announcement. Notwithstanding the foregoing, nothing herein shall prevent any Affiliate or direct or indirect equity holder of any party hereto that is a private equity or other investment fund from making customary disclosures to its investors or potential investors who are subject to customary confidentiality restrictions or disclosing general information about the subject matter of this Agreement, any Ancillary Agreement, the Company or the Business (including its and their performance and improvements) in connection with any such fund’s or any of such fund’s Affiliate’s customary fund raising, marketing, informational or reporting activities.
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6.2 Proration of Taxes. For purposes of this Agreement, in the case of any Straddle Period, (i) the amount of any Taxes that are based on or measured by net income or earnings, gross income or earnings, capital or net worth, or any other Taxes resulting from or imposed on, sales, receipts, uses, transfers or assignments of property or other assets, payments or accruals to other Persons (including wages), or any other similar transaction or transactions of the Company that are allocable to the Pre-Closing Tax Period shall be determined based on a deemed interim closing of the books as of the close of business on the Closing Date, and (ii) the amount of all other Taxes of the Company that are allocable to the Pre-Closing Tax Period shall be equal to the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period that are in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period.
6.3 Use of Name. Immediately following the Closing, each Seller shall not, and shall cause such Seller’s respective Affiliates and Related Persons controlled by such Seller or in respect of whom such Seller is a trustee or beneficiary not to, use any Company Names except with respect to each Seller, (a) such Seller may continue using the “Badcock” surname, solely to the extent such use is, (i) in the case of a Seller who is a natural person, as such Seller’s surname and in the name of a legal trust that may be established by such Seller, or (ii) if such Seller is a legal trust, as the name of such legal trust, and (b) such Seller may use the “Badcock” name, only if such name is part of such Seller’s middle name or surname and such usage is limited solely to the extent such usage is in connection with the provision by such Seller (including through an Affiliate controlled by such Seller) of goods or services (i) which are not confusingly similar to the goods and services sold by the Company, which for the avoidance of doubt, includes any goods and services provided as part of the Business, (ii) that do not directly or indirectly compete with, or involve businesses that compete with, the Company and its Affiliates or the Business, and (iii) that are not complementary to, or extensions of, the goods and services of the Company, which for the avoidance of doubt, includes any goods and services provided as part of the Business. Seller acknowledges and agrees that the Company Names will be and remain, subsequent to the Closing, the sole and exclusive property of the Company. Such Seller will not, and will cause its Affiliates and Related Persons controlled by such Seller or in respect of whom such Seller is a trustee or beneficiary not to, directly or indirectly, use, seek to register, register or authorize, waive or consent to others to use, seek to register or register any Company Names or any other Trademarks substantially or confusingly similar thereto anywhere in the world, or challenge the Company’s or any of its Affiliates’ right to use, seek to register or register any Company Names or such Trademarks anywhere in the world. Subject to the limited exceptions set forth in the preceding subclauses (a) and (b) of this Section 6.3, as soon as practicable, but in any event no later than thirty (30) days after the Closing Date, such Seller will, and will cause its Affiliates and Related Persons controlled by such Seller or in respect of whom such Seller is a trustee or beneficiary to, change their names such that they no longer contain all or a portion of any of the Company Names. For purposes of this Agreement, “Company Names” means “W.S. Badcock Corporation”, “Badcock”, “Badcock Home Furniture & more” any other Trademarks owned by the Company as of Closing, and any translations or derivatives thereof and any Trademarks confusingly similar thereto.
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6.4 R&W Insurance Policy. After the Closing, the Purchaser agrees that it will not agree to any amendment or waiver of the R&W Insurance Policy that would materially and adversely impact the Sellers without the prior written consent of the Seller Representative (such consent not to be unreasonably withheld, conditioned or delayed).
Article
7
Indemnification
7.1 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is twelve (12) months from the Closing Date; provided, that the Fundamental Representations and the representations and warranties set forth in Section 3.16 shall survive the Closing and remain in full force and effect until the date that is six (6) years from the Closing Date. Each of the covenants or other agreements contained in this Agreement that expressly contemplates performance after the Closing Date, shall survive in accordance with its terms plus an additional 60 days with respect to any breach thereof. Notwithstanding the foregoing, for any claims asserted in writing by notice from an Indemnified Party to an Indemnifying Party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of such survival period and such claims shall survive until finally resolved. Notwithstanding the foregoing, any obligation to indemnify under this Article 7 for any claim in respect of Fraud shall survive indefinitely and the survival periods set forth in this Section 7.1 shall not limit any survival period set forth in the R&W Insurance Policy.
7.2 Indemnification by the Sellers. Subject to the other terms and conditions of this Article 7, the Sellers shall indemnify the Purchaser, the Company, their respective Affiliates, the Purchaser Representatives and their respective successors and assigns, from and against, and shall hold the Purchaser, the Company, their respective Affiliates, the Purchaser Representatives and their respective successors and assigns harmless from and against, any and all Losses incurred or sustained by, or imposed upon, the Purchaser, the Company, their respective Affiliates, the Purchaser Representatives and their respective successors and assigns, based upon, arising out of, with respect to or by reason of: (a) any inaccuracy in or breach of any of the representations or warranties of the Company or the Sellers contained in this Agreement, any inaccuracy in or breach of any of the representations or warranties set forth in any certificate delivered by the Sellers, the Company or the Seller Representative pursuant to this Agreement or any inaccuracy in or breach of any of the representations or warranties of any Transaction Beneficiary set forth in the Transaction Beneficiary Joinder; (b) any breach or non-fulfillment of any covenant, agreement or obligation of the Sellers, the Company or the Seller Representative contained in this Agreement and to be performed following the Closing; (c) any Pre-Closing Taxes (not including for the avoidance of doubt, any Unpaid Pre-Closing Taxes taken into account in the calculation of Final Indebtedness, as finally determined pursuant to Section 2.4); (d) any Indebtedness of the Company or Transaction Expenses (in each case, as of immediately prior to the Closing) to the extent not taken into account in the calculation of Final Indebtedness or Final Transaction Expenses, respectively, as finally determined pursuant to Section 2.4; and (e) Fraud (including with respect to any representations or warranties made by the Company, notwithstanding that the Company and not the Sellers made any such representation or warranty). In determining whether there has been a breach of any representation or warranty in this Agreement, and in determining the amount of any Losses arising out of or resulting therefrom, in each case, such determination will be made without giving effect to any qualifier as to “materiality” or “Material Adverse Effect” (or any other similar qualification) set forth in any such representation and warranty, except for any reference to “Material Adverse Effect” in the representation and warranty set forth in Section 3.6(b).
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7.3 Indemnification by the Purchaser. Subject to the other terms and conditions of this Article 7, the Purchaser shall indemnify each of the Sellers against, and shall hold each of the Sellers harmless from and against, any and all Losses incurred or sustained by, or imposed upon, the Sellers based upon, arising out of, with respect to or by reason of: (a) any inaccuracy in or breach of any of the representations or warranties of the Purchaser contained in this Agreement and any certificate delivered by the Purchaser pursuant to this Agreement, and (b) any breach or non-fulfillment of any covenant, agreement or obligation of the Purchaser contained in this Agreement.
7.4 Certain Limitations.
(a) Notwithstanding Section 7.2, the Sellers shall not have any liability under Section 7.2(a) and Section 7.2(c) (other than with respect to Fraud) with respect to any Losses unless and until the aggregate amount of Losses for which the Sellers would, but for this Section 7.4(a), be liable exceeds on an individual or cumulative basis an amount equal to $2,750,000 (the “Deductible”), and then the Sellers shall be liable only for all such Losses in excess of the Deductible, and up to and solely from the Indemnification Escrow Fund (or such portion that remains at such time). The Sellers’ aggregate liability under Section 7.2(a) and Section 7.2(c) (in each case, other than with respect to Fraud) shall in no event exceed the Indemnification Escrow Amount. The Sellers’ aggregate liability under Section 7.2 (other than with respect to Fraud) shall in no event exceed $581,402,834.
(b) The amount of any Losses incurred or suffered by an Indemnified Party shall be calculated after giving effect to (i) any insurance proceeds actually received by the Indemnified Party (other than insurance proceeds received by the Purchaser or its Affiliates under the R&W Insurance Policy) to the extent resulting from such Losses, and (ii) any recoveries actually received by the Indemnified Party from any other third party to the extent resulting from such Losses (collectively, “Benefits and Recoveries”); provided, that (A) the amounts set forth in each of clauses (i) and (ii), shall be calculated net of all deductibles or retention amounts, increases in premiums and all fees, costs and expenses incurred in connection with collecting such insurance proceeds and recoveries, and (B) nothing in this Section 7.4(b) shall require an Indemnified Party to file suit or pursue or initiate litigation or other Action. If an Indemnified Party receives any Benefits and Recoveries with respect to a Loss after an Indemnifying Party has made a payment to the Indemnified Party with respect to such Loss, the Indemnified Party shall pay to the Indemnifying Party the amount by which such Benefits and Recoveries (net of all deductibles or retention amounts, increases in premiums and all fees, costs and expenses incurred in connection with collecting such insurance proceeds and recoveries) exceeds the amount of such Loss up to the amount of the Indemnifying Party’s payment. After the Closing, no Seller or any Related Person or Affiliate thereof shall have any right of contribution against the Purchaser, the Company or any of their respective Affiliates thereof for any indemnifiable Loss related to a breach of representation, warranty, covenant or agreement of the Company under this Agreement.
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(c) Each party hereto is relying on the representations and warranties of the other parties hereto regardless of the knowledge obtained through its own investigation or otherwise. Thus, an Indemnified Party’s right to indemnification or any other remedy based on representations, warranties, covenants and agreements herein or any of the other Ancillary Agreements will not be affected by any investigation conducted at any time, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of, or compliance with, any such representation, warranty, covenant or agreement. The indemnities set forth in this Article 7 are intended to be enforceable against the parties hereto in accordance with the express terms and scope thereof notwithstanding any Law that would prohibit or otherwise limit indemnities because of the negligence (whether sole, concurrent, active or passive) or other fault or strict liability of the Indemnified Party.
7.5 Indemnification Procedures. The party making a claim under this Article 7 is referred to as the “Indemnified Party,” and the party against whom such claims are asserted under this Article 7 is referred to as the “Indemnifying Party.” If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification pursuant to Section 7.2 or Section 7.3, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party (a) forfeits rights or defenses by reason of such failure, and (b) demonstrates that such forfeiture actually and materially prejudices the Indemnifying Party. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of any material documents to the extent related thereto, if available, and shall indicate the estimated amount, if available to the Indemnified Party, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnified Party shall control the settlement, appeal and defense of any Third Party Claim and all Losses incurred by the Indemnified Party in connection with such defense and the Indemnified Party shall have the right to take such action as it deems necessary to avoid, dispute, settle, defend, appeal or make counterclaims pertaining to any such Third Party Claim. The amount of the underlying Loss giving rise to such Third Party Claim shall be reimbursed to the Indemnified Party (if such Indemnified Party is the Purchaser) from the Indemnification Escrow Fund or from the Sellers in accordance with the other provisions of this Article 7. The Indemnifying Party (at its sole cost and expense) shall have the right to participate in, but shall not be entitled to control, direct or lead, the defense of such Third Party Claim. The Indemnifying Party shall reasonably cooperate with the Indemnified Party in connection with the defense of such Third Party Claim, including making available to the Indemnified Party and its representatives records relating to such Third Party Claim and furnishing, without expense to the Indemnified Party, employees, advisors, agents and representatives of the Indemnifying Party as may be reasonably necessary for the defense or appeal of such Third Party Claim.
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7.6 Exclusive Remedies. Subject to Section 9.13, each party hereto acknowledges and agrees that such party’s sole and exclusive remedy with respect to any and all claims (other than claims with respect to Fraud) arising out of or related to any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article 7 (and, in the case of the Purchaser, the R&W Insurance Policy). Notwithstanding the foregoing, nothing in this Section 7.6 or otherwise shall limit, restrict or prohibit a party’s right to seek and obtain any equitable relief to which such Party may be entitled pursuant to Section 9.13 or in respect of Fraud.
7.7 No Multiple Recoveries. In the event particular facts or circumstances form the basis of a claim under more than one provision of Section 7.2 or Section 7.3 or a claim under any other provision of this Agreement (including Section 2.4), the party seeking indemnification may bring such claim under any or all of such provisions even though recovery under one provision may be more favorable than recovery under another provision; provided that duplicate or multiple recovery for the same Loss may not occur pursuant to this Agreement. However, subject to such prohibition on duplicate recovery of the same Loss, the parties hereto acknowledge and agree that the facts and circumstances resulting in a payment or determination under Section 2.4 may also form the basis of a claim for a different Loss under a different provision of this Agreement and that such claim may be asserted notwithstanding the determination of a related matter under Section 2.4.
7.8 Escrow Arrangements. The Post-Closing Adjustment Escrow Fund and the Indemnification Escrow Fund will be maintained and distributed in accordance with the terms of this Agreement and the Escrow Agreement. On the first anniversary of the Closing Date, the Purchaser and the Seller Representative will instruct the Escrow Agent to release to the Seller Representative (for the benefit of the Sellers) the amount of funds remaining in the Indemnification Escrow Fund (if any) less a reserve in the amount claimed (or, if a specified amount is not claimed, a reasonable reserve therefor) for any then-pending claim for indemnification made under this Article 7. Any amount remaining in the Indemnification Escrow Fund that is reserved and therefore not released on the first anniversary of the Closing Date will be released to the Seller Representative (for the benefit of the Sellers) as promptly as practicable after each matter for which such reserve was established is finally resolved and full payment (if any) therefor is made except to the extent such amount is reasonably required as a reserve for the remaining then-pending claims.
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Article
8
ADDITIONAL AGREEMENTS AND COVENANTS
8.1 Expenses. Except as otherwise set forth in this Agreement or the Escrow Agreement, each of the parties hereto shall be solely responsible for and shall bear all of its own costs and expenses incident to its obligations under and in respect of this Agreement and the transactions contemplated hereby, including any such costs and expenses incurred by any party hereto in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement (including the fees and expenses of legal counsel, accountants, investment bankers or other representatives and consultants), regardless of whether the transactions contemplated hereby are consummated; provided, however, that (a) the Purchaser shall be responsible for 50% of all premiums, fees, costs, Taxes and expenses incurred in connection with obtaining the R&W Insurance Policy and (b) the Sellers shall be responsible for the payment of all premiums, fees, costs, Taxes and expenses incurred in connection with obtaining the D&O Tail Policy, which amounts will be included as a Transaction Expense.
8.2 Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause its Affiliates to, execute and deliver such further instruments and take such additional action as any other party hereto may reasonably request to effect or consummate the transactions contemplated hereby, including obtaining or delivering any item set forth in Section 2.3(b) that is not delivered to the Purchaser at the Closing or performing any covenant, action or other obligation required to be performed by such party prior to the Closing pursuant to this Agreement.
8.3 Transfer Taxes; Recording Charges. Notwithstanding anything to the contrary herein, all transfer, documentary, sales, use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges and other similar fees and charges (including any penalties and interest) (collectively, “Transfer Taxes”) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be paid by the Sellers when due, and the Sellers will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges.
8.4 Directors and Officers Indemnification; Releases.
(a) The Purchaser agrees that all rights to indemnification, advancement of expenses and exculpation by the Company with respect to matters occurring prior to the Closing Date that are now existing in favor of each Person who is now, or has been at any time prior to the date hereof, an officer or director of the Company (the “D&O Indemnitees”), to the extent provided in the Company Articles or the Company Bylaws, in each case as in effect on the date of this Agreement and made available to the Purchaser, shall survive the Closing Date and shall continue in full force and effect for a period of six (6) years following the Closing Date in accordance with the terms thereof and that the Purchaser shall cause the Company to perform and discharge its obligations to provide such indemnity and exculpation after the Closing for such six (6) year period in accordance with the terms hereof and the Company Articles or the Company Bylaws, and each D&O Indemnification Agreement, as applicable, in each case as in effect on the date of this Agreement and made available to the Purchaser. To the maximum extent permitted by applicable law, for a period of six (6) years following the Closing Date, the Purchaser shall cause the Company to advance expenses in connection with such indemnification to the extent provided in the Company Articles or the Company Bylaws, and any D&O Indemnification Agreement, as applicable, in each case as in effect on the date of this Agreement and made available to the Purchaser, in each case subject to the provision to the Company of a binding written undertaking duly executed by the Person seeking such advancement to repay the amounts so advanced if it is determined that such Person is not entitled to indemnification, advancement or exculpation.
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(b) Except as may be required by applicable Law, following the Closing, the obligations of the Purchaser under this Section 8.4 shall not be terminated or modified in such a manner as to adversely affect in any material respect the rights of any D&O Indemnitee without the consent of such affected D&O Indemnitee (it being expressly agreed that the D&O Indemnitees shall be third-party beneficiaries of this Section 8.4, each of whom may enforce the provisions of this Section 8.4).
(c) In the event that after the Closing the Purchaser, the Company or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in either such case, the Purchaser or the Company, as applicable, shall use its commercially reasonable efforts to ensure proper provisions are made so that the successors and assigns of the Purchaser or the Company, as the case may be, shall assume all of the obligations set forth in this Section 8.4.
(d) Notwithstanding anything to the contrary in this Agreement, to avoid circular recoveries, each Seller, on behalf of itself and its Related Persons, hereby releases, waives and discharges, and agrees not to make or threaten to make, any claim for indemnification or expense advancement, by reason of the fact that such Seller or any of its Related Persons was a controlling person, director, officer, manager, employee or representative of the Company (or serving at the request of the Company on behalf of any other Person or Employee Plan), against the Purchaser, the Company or any of the Purchaser Representatives for any Loss within the scope of such Seller’s indemnification obligations under Article 7 (disregarding the applicability of the Deductible and liability limits for purposes of this Section 8.4(d)).
(e) Each Seller confirms that, effective upon the Closing, there are no payment obligations of the Company due and unpaid (including any dividends or distributions declared or authorized and not yet paid) to such Seller, its Affiliates or any Related Persons of the foregoing and that none of such Seller, its Affiliates or any Related Persons of the foregoing has the right to make any demand for payment or other assessments against the Company. Effective upon the Closing, each Seller, on behalf of itself and its Related Persons, hereby irrevocably and unconditionally releases, waives and discharges, and agrees not to make or threaten to make, any actions, causes of action (in law or in equity), suits, debts, Liens, litigations, Liabilities, claims, counterclaims, cross-claims or demands, whether founded in tort, contract, statute, common law, administrative regulation, or any duties arising thereunder or otherwise, of any nature and kind, known or unknown, suspected or unsuspected, past or present, however arising (each, a “Released Claim”) against the Purchaser, the Company or any of the Purchaser Representatives to the extent arising out of or relating to its ownership of Equity Interests in the Company or as a stockholder of the Company, whether known or unknown, contingent or otherwise, in each case other than (i) claims arising under this Agreement, including for indemnification under Article 7 of this Agreement, and claims for payments that are due and payable to such Seller following the Closing pursuant to Section 2.4 or Section 9.1, if any, (ii) claims in respect of any salary, benefits or compensation under any Contract between such Seller or its Related Persons in their capacities as employees of the Company, on the one hand, and the Company, on the other hand, or (iii) payments under Contracts set forth on the “Permitted Company Affiliate Agreements Schedule”. Each Seller, on behalf of itself and its Related Persons, hereby acknowledges that it has considered the possibility that it may not now know the nature or value of the Released Claims that are generally released pursuant to this Section 8.4(e), and that such general release extends to all claims of every nature and kind, known or unknown, suspected or unsuspected, past or present, however arising, and that any and all rights granted to such Seller pursuant to Section 1542 of the California Civil Code or any analogous applicable Law are hereby expressly waived. Said Section 1542 of the Civil Code of the State of California reads as follows:
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“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
(f) Effective upon the Closing and without further action by any Person, the Purchaser, on behalf of itself and the Company (each, a “Purchaser Releasing Person”), hereby irrevocably, unconditionally and fully waives, acquits, remises, and forever discharges and releases each Seller (collectively, the “Seller Released Parties”) from any and all Liabilities of any kind or nature whatsoever, in each case arising or occurring or that could have arisen or occurred from any actions, omissions or state of facts occurring, not occurring or in existence (whether or not known) on or prior to the Closing and whether absolute or contingent, liquidated or unliquidated, known or unknown, suspected or unsuspected, matured or unmatured or determined or determinable, and whether arising under any Law, Contract, arrangement, or understanding, whether written or oral (other than this Agreement and any Ancillary Agreement) or otherwise at law or in equity (collectively, the “Purchaser Released Claims”), and the Purchaser, on behalf of itself and each other Purchaser Releasing Person, covenants and agrees not to sue, assert or otherwise seek to recover any amounts in any forum in regard to any Purchaser Released Claims from any of the Seller Released Parties (except as provided in this Agreement or any Ancillary Agreement, in each case, only to the extent set forth herein or therein). The Purchaser, on behalf of itself and each other Purchaser Releasing Person, acknowledges and agrees that facts in addition to or different from those which are now known or believed to be true with respect to the subject matter of this release may hereafter be discovered, but the Purchaser, on behalf of itself and each other Purchaser Releasing Person, agrees to remain bound hereby and hereby fully releases all Purchaser Released Claims without regard to the subsequent discovery or existence of different or additional facts and waives the protection of any statute or doctrine limiting a release of unknown or unsuspected Purchaser Released Claims; provided, however, that nothing contained herein shall operate to release, and the Purchaser Released Claims shall not include, (i) any right, claim or obligation under the express terms of this Agreement, any Ancillary Agreement or any other Contract to which such Purchaser Releasing Person is a party or otherwise bound (or the transactions contemplated hereby or thereby), (ii) any claim relating to Fraud or (iii) any claim arising from any obligations or liabilities of any Seller Released Party which first arise after the Closing and are not related to the period prior to the Closing. Without limitation of the foregoing, the Purchaser, on behalf of itself and each other Purchaser Releasing Person, hereby waives the application of any provision of Law, including California Civil Code Section 1542, that purports to limit the scope of a general release. Said Section 1542 of the Civil Code of the State of California reads as follows:
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“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
8.5 Disclosure Schedules. Each disclosure schedule delivered pursuant to this Agreement (each a “Schedule” and collectively, the “Schedules”) shall be in writing and shall qualify this Agreement to the extent provided herein. Certain information set forth in the Schedules is included solely for information purposes and may not be required to be disclosed pursuant to this Agreement. The inclusion of an item in a Schedule as an exception to a representation or warranty shall not be deemed to constitute an acknowledgment that such information is required to be disclosed against such representation or warranty nor shall such information constitute an admission by any party hereto, as applicable, that such item constitutes an item, event, circumstance or occurrence that is material to the Company or any of the Sellers or constitutes a Material Adverse Effect. Any fact or item that is disclosed in any Schedule in a way as to make its relevance or applicability to information called for by any other Schedule reasonably apparent on its face without the need for a reference or cross-reference thereto shall be deemed to be disclosed in such other Schedule, notwithstanding the omission of a reference or cross-reference thereto; provided, in no event shall the listing of items or matters in the Schedules be deemed to be a disclosure with respect to the following Sections unless such disclosure is expressly listed on the Schedule corresponding to the number of such Section: Section 3.1, Section 3.2, Section 3.3, Section 3.4, Section 3.5(a), Section 3.5(c), Section 4.1, Section 4.2 and Section 4.3. Disclosure of any allegations with respect to any alleged breach, violation or default under any contractual or other obligation, or any Law, is not an admission that such breach, violation or default has occurred. Headings and subheadings have been inserted on certain Schedules for convenience of reference only and shall not be considered a part of or affect the construction or interpretation of such Schedules. Where the terms of a contract or other item have been summarized or described in the Schedules, such summary or description does not purport to be a complete statement of the material terms of such contract or other item, and, all such summaries and descriptions are qualified in their entirety by reference to the contract or item being summarized or described. The information provided in the Schedules is being provided solely for the purpose of making disclosures to the Purchaser under this Agreement. In disclosing this information, the Company and the Sellers do not waive, and expressly reserve any rights under, any attorney-client privilege associated with such information or any protection afforded by the work-product doctrine with respect to any of the matters disclosed or discussed therein.
8.6 Retention of Books and Records. The Purchaser shall cause the Company to retain all books, ledgers, files, reports, plans, operating records and any other material documents in existence at the Closing to the extent related to the conduct of the Business and that are required to be retained under the Company’s current bona fide document retention policies for a period of 7 years from the Closing Date, or, if shorter, the applicable period specified in the Purchaser’s or its Affiliates bona fide document retention policies, and to make the same available for a period of 7 years after the Closing for inspection by the Seller Representative (in the presence of at least one representative of the Company or the Purchaser, at the sole cost and expense of the Seller Representative), during regular business hours and upon reasonable request and upon reasonable advance written notice, under the supervision of the Company’s personnel and in such a manner as not to interfere with the normal operations of the Company, in each case to the extent such access is required (a) by the Seller Representative in connection with any Tax audit or preparation of Tax Returns of any Seller, (b) for investigating, settling, preparing for the defense or prosecution of, or defending or prosecuting any Claim to which any Seller is a party (other than any actual or potential Action arising under this Agreement or any Ancillary Agreement or with respect to which the Company or any of its Affiliates, on the one hand, and any of the Sellers or any of their respective Affiliates, on the other hand, are adverse parties); provided that this clause (b) shall in no way limit or expand the rights of any person to obtain discovery under applicable Law with respect to any matter in connection with any such actual or potential Action; provided that, in each case, such access, furnishing of information and cooperation shall not unreasonably or unduly disrupt or interrupt the operations of the Company, the Purchaser or their respective Affiliates, and provided, further, that (i) the auditors and accountants of the Company shall not be obligated to make any work papers available to any Person unless and until such Person has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such auditors or accountants and (ii) in connection with providing such access, none of the Company, the Purchaser or any of their respective Affiliates shall be required to disclose any information to the Seller Representative to the extent such disclosure would: (w) jeopardize any attorney-client privilege or (y) result in the violation of any applicable Law or Material Contract; provided, that the Company, the Purchaser or such Affiliate thereof shall use commercially reasonable efforts to provide such access or disclosure in a manner that would not result in the jeopardizing of such privilege or violation of such applicable Law or Material Contract, as applicable. Notwithstanding anything to the contrary in this Agreement, the Purchaser shall only be required to provide Tax information relating exclusively to the Company for the Pre-Closing Tax Period.
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Article
9
MISCELLANEOUS
9.1 Seller Representative.
(a) By executing this Agreement, each Seller shall have irrevocably authorized and appointed the Seller Representative, as such Person’s representative and attorney-in-fact to act on behalf of such Person with respect to this Agreement and the Escrow Agreement and to take and refrain from taking any and all actions and make any decisions required or permitted to be taken by the Seller Representative pursuant to this Agreement and the Escrow Agreement, including the exercise of the power to:
(i) give and receive notices and communications;
(ii) authorize delivery to the Purchaser of cash from the Post-Closing Adjustment Escrow Fund in satisfaction of any amounts owed to the Purchaser pursuant to Section 2.4(d) or from the Indemnification Escrow Fund in satisfaction of claims for indemnification made by the Purchaser pursuant to Article 7;
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(iii) agree to, negotiate, enter into settlements and compromises of, and comply with orders or otherwise handle any other matters described in Section 2.4;
(iv) agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to claims for indemnification made by the Purchaser pursuant to Article 7;
(v) litigate, arbitrate, resolve, settle or compromise any claim for indemnification pursuant to Article 7;
(vi) execute and deliver all documents necessary or desirable to carry out the intent of this Agreement and any Ancillary Agreement;
(vii) make all elections or decisions contemplated by this Agreement and any Ancillary Agreement;
(viii) engage, employ or appoint any agents or representatives (including attorneys, accountants and consultants) to assist the Seller Representative in complying with his duties and obligations; and
(ix) take all actions necessary or appropriate in the good faith judgment of the Seller Representative for the accomplishment of the foregoing.
(b) The Purchaser shall be entitled to deal exclusively with the Seller Representative on all matters relating to this Agreement and the Escrow Agreement and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Seller by the Seller Representative, any decision, communication, information or writing made, given or executed by the Seller Representative (including any funds flow, distribution waterfall or wire instructions provided by the Seller Representative) and on any other action taken or purported to be taken on behalf of any Seller by the Seller Representative, as being fully and legally binding upon such Seller. Notices or communications to or from the Seller Representative shall constitute notice to or from each of the Sellers. Any decision or action by the Seller Representative hereunder, including any agreement between the Seller Representative and the Purchaser relating to the defense, payment or settlement of any claims for indemnification hereunder, shall constitute a decision or action of all Sellers and shall be final, binding and conclusive upon each such Person. No Seller shall have the right to object to, dissent from, protest or otherwise contest the same. The provisions of this Section, including the power of attorney granted hereby, are independent and severable, are irrevocable and coupled with an interest and shall not be terminated by any act of any one of the Sellers, or by operation of law.
(c) The Seller Representative may resign at any time, and may be removed for any reason or no reason by the vote or written consent of a majority in interest of the Sellers according to each Seller’s Pro Rata Share (the “Majority Holders”); provided, however, in no event shall the Seller Representative resign or be removed without the Majority Holders having first appointed a new Seller Representative who shall assume such duties immediately upon the resignation or removal of the Seller Representative. In the event of the death, incapacity, resignation or removal of the Seller Representative, a new Seller Representative shall be appointed by the vote or written consent of the Majority Holders. Notice of such vote or a copy of the written consent appointing such new Seller Representative shall be sent to the Purchaser, such appointment to be effective upon the later of the date indicated in such consent or the date such notice is received by the Purchaser; provided, that until such notice is received, the Purchaser shall be entitled to rely on the decisions and actions of the prior Seller Representative as described in Section 9.1(a) above.
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(d) The Seller Representative shall not be liable to any of the Sellers for actions taken pursuant to this Agreement or the Escrow Agreement, except to the extent such actions shall have been determined by a court of competent jurisdiction to have constituted gross negligence or involved fraud, intentional or willful misconduct or bad faith. The Sellers shall severally and not jointly (in accordance with their Pro Rata Shares), indemnify and hold harmless the Seller Representative from and against, compensate him for, reimburse him for and pay any and all losses, Actions, including reasonable attorneys’ fees and disbursements, arising out of and in connection with his activities as the Seller Representative under this Agreement and the Escrow Agreement (the “Representative Losses”), in each case as such Representative Loss is suffered or incurred; provided, that in the event it is finally adjudicated that a Representative Loss or any portion thereof was caused by the gross negligence, fraud, intentional or willful misconduct or bad faith of the Seller Representative, the Seller Representative shall reimburse the Sellers the amount of such indemnified Representative Loss attributable to such gross negligence, fraud, intentional or willful misconduct or bad faith. The Representative Losses shall be satisfied: (i) from the Seller Representative Expense Fund; and (ii) to the extent the amount of the Representative Losses exceeds amounts available to Seller Representative under (i), from the Sellers, severally and not jointly (in accordance with their Pro Rata Shares). The Seller Representative shall use the Seller Representative Expense Fund for use in his discretion for the payment of all costs and expenses incurred by the Seller Representative in connection with the exercise by him of the authority granted to him herein (including reasonable attorneys’ fees and expenses, the fees and expenses of any accountants or other professional advisors retained by the Seller Representative and any portion of the fees and expenses of the Accounting Arbitrator for which the Seller Representative is liable hereunder). The Seller Representative in his discretion may also use the Seller Representative Expense Fund to satisfy any finally determined obligations that are required to be satisfied by the Sellers. As soon as practicable after the date on which the final obligation of the Seller Representative under this Agreement and the Escrow Agreement has been discharged or such other date as the Seller Representative deems appropriate (but in no event earlier than twelve (12) months following the Closing Date), the Seller Representative shall pay any amounts remaining in the Seller Representative Expense Fund to the Sellers in accordance with their Pro Rata Shares. If any Tax reporting is required with respect to the ultimate distribution of any balance of the Seller Representative Expense Fund, then the Seller Representative will provide to the Purchaser, upon request, information regarding the amounts thereof so disbursed to be used by the Purchaser or the Purchaser Representatives in completing any required Tax reporting.
9.2 Amendment and Waiver. This Agreement may not be amended, altered or modified except by a written instrument executed by the Sellers and the Purchaser. No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver.
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9.3 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (postage prepaid, return receipt requested); (c) on the date sent by email (provided that no “error” message, “bounce back” or other notification of non-delivery is generated); or (d) one day after the date mailed, by certified or registered mail (in each case, return receipt requested, postage pre-paid). Notices must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section):
If to the Purchaser, then to:
Franchise Group Newco BHF, LLC
c/o Franchise Group, Inc.
109 Innovation Court, Suite J
Delaware, Ohio 43015
Attention: Eric Seeton; Tiffany McMillan-McWaters
Email: ESeeton@franchisegrp.com; tmcwaters@Franchisegrp.com
with a copy, which shall not constitute notice, to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019-6099
Attention: Daniel Mun
Email: DMun@willkie.com
If to the Seller Representative or to any Seller, then to:
William K. Pou, Jr.
PO Box 904
Mulberry, FL 33860
with a copy, which shall not constitute notice, to:
Trenam Law
101 E. Kennedy Blvd., Suite 2700
Tampa, FL 33601
Attention: Gary I. Teblum; Michael J. Reeves
Email: gteblum@trenam.com; mreeves@trenam.com
9.4 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any rights, benefits or obligations set forth herein may be assigned by any of the parties hereto without the prior written consent of the Purchaser, the Company and the Seller Representative and any attempted assignment without such prior written consent shall be void; provided that the Purchaser may (a) assign all or any portion of its rights or obligations under this Agreement without the consent of any party to any of its Affiliates or (b) without the consent of any party, pledge, grant a security interest or assign as collateral all or any portion of its interest in, or rights under, this Agreement to one or more financial institutions and that upon foreclosure or sale or deed in lieu of foreclosure by or to any such financial institutions, the rights of the Purchaser hereunder may be assigned to any such financial institutions or any purchaser upon such foreclosure or sale or deed in lieu of foreclosure; provided, that such assignment will not relieve the Purchaser of its obligations hereunder.
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9.5 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement and this Agreement shall be automatically deemed modified so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible, and the parties hereto shall negotiate in good faith to modify this Agreement in writing to memorialize the foregoing.
9.6 No Strict Construction; Interpretation. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any Person. The words “hereof,” “herein,” “hereby,” “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph and schedule references are to the articles, sections, paragraphs and schedules of this Agreement unless otherwise specified. The words describing the singular number shall include the plural and vice versa, words denoting either gender shall include both genders and the neutral gender (and vice versa) and words denoting natural persons shall include all persons and vice versa. The phrases “the date of this Agreement,” “the date hereof,” “of even date herewith” and terms of similar import shall be deemed to refer to the date set forth in the preamble to this Agreement. The word “including” or any variation thereof means “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. Unless the context of this Agreement otherwise requires, references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto. Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. If the date for any deadline, delivery or payment is on a day that is not a Business Day, the date for such deadline, delivery or payment shall be the next Business Day. Except as otherwise set forth in this Agreement, any accounting terms shall be given their definition under GAAP. References to a particular statute or regulation include all rules and regulations thereunder as in effect as of the time to which such reference relates. The word “will” shall have the same meaning as the word “shall”, and vice versa, and the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. References to “dollar”, “dollars” or “$” shall be to the lawful currency of the United States. The word “or” shall include both the conjunctive and disjunctive, and “any” shall mean “one or more”. All references to the “ordinary course”, “the ordinary course of business” and similar terms shall mean the ordinary course of business of the Company and consistent with past custom and practice (including with respect to quantity and frequency) that are consistent in all material respects with the past practices of the Company since the beginning of the Look-Back Period. Unless the context of this Agreement otherwise requires, references to a “party” means to the applicable Person signatory to this Agreement and references to the “parties” means all Persons signatory to this Agreement. The phrases “delivered” or “made available” shall mean that the information referred to has been physically or electronically delivered to the relevant parties at least one (1) Business Day prior to the date of this Agreement. Time is of the essence for each and every provision of this Agreement. In the computation of periods of time before which, within which or following which, any act is to be done or step taken under this Agreement, the date that is the reference date in calculating such period will be included in such computation.
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9.7 Captions. The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption had been used in this Agreement.
9.8 No Third-Party Beneficiaries. Except as otherwise expressly set forth in this Agreement (including as set forth in Section 9.4 above), nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person, other than the parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement, such third parties specifically including employees or creditors of the Company; provided (i) FRG is an express third-party beneficiary of Section 6.1 and this Section 9.8, (ii) the D&O Indemnitees are express third-party beneficiaries of Section 8.4 and this Section 9.8, (iii) each of the Persons covered by the release set forth in Section 8.4(e) is an express third-party beneficiary of such Section 8.4(e) and this Section 9.8, (iv) Willkie Farr & Gallagher LLP is an intended third-party beneficiary of Section 9.11(b) and this Section 9.8, and (v) Trenam Law is an intended third-party beneficiary of Section 9.11(a) and this Section 9.8.
9.9 Complete Agreement; Counterparts. This Agreement, including the Schedules, the Transaction Beneficiary Joinder and the exhibits hereto, together with the Ancillary Agreements and other instruments referred to herein, constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail, DocuSign, .PDF or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
9.10 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware, over any Action brought by any party arising out of or relating to this Agreement, and each of the parties hereto hereby irrevocably agrees that all claims with respect to any such Action shall be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable Law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.
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9.11 Attorney-Client Privilege and Conflict Waiver.
(a) Trenam, Kemker, Scharf, Barkin, Frye, O’Neill and Mullis, P.A. (“Trenam Law”) has represented the Company, the Sellers and the Seller Representative. All of the parties recognize the commonality of interest that existed prior to Closing. The parties agree that (a) the Purchaser shall not, and shall not cause the Company to, seek to have Trenam Law disqualified from representing any of the Sellers or the Seller Representative in connection with any dispute that may arise between (i) any one or more Sellers or the Seller Representative, on the one hand, and (ii) the Purchaser or the Company, on the other hand, in each case, solely in connection with this Agreement or the transactions contemplated hereby, and (b) in connection with any such dispute that may arise between (i) any one or more Sellers or the Seller Representative, on the one hand, and (ii) the Purchaser or the Company, on the other hand, each of the Sellers or the Seller Representative involved in such dispute (and not the Purchaser or the Company) will have the right to decide whether or not to waive the attorney client privilege that may apply to any communications between the Company and Trenam Law that occurred before the Closing, in each case, to the extent relating to the transactions contemplated by this Agreement. Without limiting the foregoing, the Purchaser and the Company agree that neither the Purchaser nor the Company shall have the right to assert the attorney-client privilege as to pre-closing and post-closing communications between or among the Company, one or more of the Sellers, or the Seller Representative, on one hand, and Trenam Law, on the other hand, to the extent that the privileged communications relate to this Agreement or any of the other agreements entered into in connection with the transactions contemplated by this Agreement or to the transactions contemplated hereby and thereby. Notwithstanding the foregoing, in the event that a dispute arises between the Purchaser, the Company or their respective Affiliates, on the one hand, and any third party (other than a party to this Agreement or any of their respective Affiliates with respect to disputes arising under this Agreement), on the other hand, after the closing, the Purchaser shall be entitled to waive any attorney-client privilege, attorney work product protection and expectation of client confidentiality without the consent of any Person. The files generated and maintained by Trenam Law as a result of Trenam Law’s representation in connection with this Agreement or any of the other agreements entered into in connection with the transactions contemplated by this Agreement or any of the transactions contemplated hereby or thereby shall be and become the exclusive property of the Sellers and the Seller Representative.
(b) Each of the parties hereto acknowledges and agrees that Willkie Farr & Gallagher LLP has acted as counsel to the Purchaser in connection with the negotiation of this Agreement and consummation of the transactions contemplated hereby and intends, after the Closing, to represent the Purchaser, the Company and their respective Affiliates. Accordingly, each of the Sellers and the Seller Representative hereby consents and agrees to, Willkie Farr & Gallagher LLP representing the Purchaser, Company, and their respective Affiliates from and after the Closing in connection with any matter related to such representation. In connection with the foregoing, each Seller and the Seller Representative hereby irrevocably waives and agrees not to assert, any conflict of interest arising from or in connection with (i) Willkie Farr & Gallagher LLP’s prior representation of the Purchaser and (ii) Willkie Farr & Gallagher LLP’s post-Closing representation of the Purchaser, the Company and their respective Affiliates.
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9.12 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IT MAY HAVE IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) DIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT, AGREEMENTS DELIVERED IN CONNECTION THEREWITH, OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
9.13 Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by the Purchaser, the Company, any Seller or the Seller Representative, as applicable, in accordance with their specific terms or were otherwise breached by the Purchaser, the Company, any Seller or the Seller Representative, as applicable. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions, without any requirement to post or provide any bond or other security in connection therewith, to prevent breaches of this Agreement by any of the Purchaser, the Company, any Seller or the Seller Representative, as applicable, and to enforce specifically the terms and provisions hereof against the Purchaser, the Company, any Seller or the Seller Representative, as applicable, in any court having jurisdiction, this being in addition to any other remedy to which the parties hereto are entitled at law or in equity.
9.14 Consent of the Company and the Sellers. By executing this Agreement, the Company and each Seller consents to the sale and transfer of each Seller’s respective Shares pursuant to the terms of this Agreement, such consent qualifying as a written consent to such sale and transfer for purposes of the Stock Restriction Agreement, and, in particular and without limitation, Article 1, subsection (a) of the Stock Restriction Agreement.
9.15 No Vicarious Liability. This Agreement may only be enforced against the parties who are signatories hereto, the Transaction Beneficiaries and their respective successors and permitted assigns. Any claims or Actions that may be based upon, arise out of, or relate to this Agreement, the Transaction Beneficiary Joinder or the negotiation, execution or performance of this Agreement or the Transaction Beneficiary Joinder (including any representation or warranty made in or in connection with this Agreement or the Transaction Beneficiary Joinder or as an inducement to enter into this Agreement) may be made only against the Persons that are signatories to this Agreement, the Transaction Beneficiary Joinder and their respective successors and permitted assigns, and no agent, Affiliate or representative of any such Person (including any Person negotiating or executing this Agreement or the Transaction Beneficiary Joinder on behalf of such Person), in their capacity as such, and in the case of the Purchaser, any Purchaser Representative, will have any liability or obligation with respect to this Agreement or with respect to any claim or Action that may arise out of or relate to this Agreement or the transactions contemplated hereby, or the negotiation, execution, or performance of this Agreement (including a representation or warranty made in connection with this Agreement or as an inducement to enter into this Agreement) or the transactions contemplated hereby. Notwithstanding anything to the contrary herein or otherwise, nothing in this Agreement (including this Section 9.15) shall limit, restrict or prohibit any rights, remedies, claims or causes of action (or recovery in connection therewith) under the R&W Insurance Policy, or in respect of Fraud. The agents, Affiliates and representatives of any party signatory to this Agreement and, with respect to the Purchaser, the Purchaser Representatives, are expressly intended as third-party beneficiaries of Section 9.8 and this provision of this Section 9.15.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above-written.
| PURCHASER: | ||
| FRANCHISE GROUP NEWCO BHF, LLC | ||
| By | /s/ Eric Seeton | |
| Name | Eric Seeton | |
| Title | Chief Financial Officer | |
[Signature Page to Stock Purchase Agreement]
| COMPANY: | ||
| W.S. BADCOCK CORPORATION | ||
| By: | /s/ Robert B. Burnette | |
| Robert B. Burnette, President | ||
[Signature Page to Stock Purchase Agreement]
| SELLERS REPRESENTATIVE: | |
| /s/ William K. Pou, Jr. | |
| William K. Pou, Jr. |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Wogan S. Badcock, III | |
| Wogan S. Badcock III |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Henry C. Badcock | |
| Henry C. Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Ben M. Badcock | |
| Ben M. Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Mitchell P. Stiles, Jr. | |
| Mitchell P. Stiles, Jr. |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Elizabeth L. Faneca | |
| Elizabeth L. Faneca |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Ben M. Badcock, Jr. | |
| Ben M. Badcock, Jr. |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Emily Badcock Vickers | |
| Emily Badcock Vickers |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Ben M. Badcock | |
Ben M. Badcock, as Custodian for Sarah Jane M. Badcock under the Florida Transfers to Minors Act |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Katherine M. Badcock | |
| Katherine M. Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Ellery A. Badcock Linder | |
| Ellery Ann Badcock Linder |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Laura R. Badcock | |
| Laura Rainey Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLERS: | |
| /s/ Elizabeth Badcock Daughtrey | |
| Elizabeth Badcock Daughtrey |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Katherine D. Tinsley | |
| Katherine D. Tinsley |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ William T. Daughtrey, II | |
| William T. Daughtrey, II |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ William T. Daughtrey | |
| William T. Daughtrey |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Mary Badcock Stiles | |
| Mary B. Stiles, as agent for Mary Robison Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Michelle E. Badcock | |
| Michelle E. Badcock |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Henry C. Badcock, Jr. | |
| Henry C. Badcock, Jr. |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Mary T. Stiles | |
| Mary T. Stiles |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Katherine D. Tinsley | |
| Katherine D. Tinsley, as Custodian for Emma K. Geohagan under the Florida Transfers to Minors Act |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ William T. Daughtrey, II | |
| William T. Daughtrey, II, as Custodian for Grace E. Daughtrey under the Florida Transfers to Minors Act |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ William T. Daughtrey, II | |
| William T. Daughtrey, II, as Custodian for William T. Daughtrey, III under the the Florida Transfers to Minors Act |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| /s/ Henry Badcock, Jr. | |
Henry C. Badcock, Jr., as Custodian for Penelope Skye Badcock under the Florida Transfers to Minors Act |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
Mary B. Stiles Trust, dated July 24, 1997, as amended dated May 23, 2018
| |
| By: | /s/ Mary Badcock Stiles |
| Mary B. Stiles, Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
Evelyn Pou Doherty Revocable Trust U/T/D 5/30/79, as amended
| |
| By: | /s/ Evelyn Pou Doherty |
| Evelyn Susan Pou Doherty, Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
William Knox Pou, Jr. Revocable Trust Dated 1/31/03, as amended
| |
| By: | /s/ William K. Pou, Jr. |
| William Knox Pou, Jr., Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
Kathryn O. Pou Revocable Trust Dated 1/31/03, as amended
| |
| By: | /s/ Kathryn O. Pou |
| Kathryn O. Pou, Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
| |
| /s/ William K. Pou, III | |
| William K. Pou, III |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
/s/ Joseph B. Pou | |
| Joseph B. Pou |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
/s/ Andrew S. Pou | |
| Andrew S. Pou |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
William Knox Pou, Jr. Generation Skipping Trust U/T/D 12/29/20
| |
| By: | /s/ Kathryn O. Pou |
| Kathryn O. Pou, Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
Evelyn Susan Pou Doherty Generation Skipping Trust U/T/D 12/29/20
| |
| By: | /s/ William K. Pou, Jr. |
| William K. Pou, Jr., Trustee |
[Signature Page to Stock Purchase Agreement]
|
SELLER:
/s/ Elizabeth L. Daughtrey | |
| Elizabeth L. Daughtrey |
[Signature Page to Stock Purchase Agreement]
| SELLER: | |
| Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| By: | /s/ Wogan S. Badcock, III |
| Wogan S. Badcock, III, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| By: | /s/ Henry C. Badcock |
| Henry C. Badcock, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| By: | /s/ Ben M. Badcock |
| Ben M. Badcock, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| By: | /s/ Mary Badcock Stiles |
| Mary B. Stiles, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| By: | /s/ Elizabeth Badcock Daughtrey |
| Elizabeth B. Daughtrey, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended |
[Signature Page to Stock Purchase Agreement]
Transaction Beneficiary Joinder
Each of the undersigned, being the Transaction Beneficiary of the Trust Seller listed below its signature to this Transaction Beneficiary Joinder, will materially benefit from the transactions contemplated by the Agreement and acknowledges that the Purchaser would not have entered into the Stock Purchase Agreement to which this Transaction Beneficiary Joinder is attached (as may be amended, restated or otherwise modified from time to time, the “Agreement”) or any of the other Ancillary Agreements without adequate assurances that such Trust Seller and such Transaction Beneficiary would be able to honor their obligations under the Agreement, this Transaction Beneficiary Joinder and the other Ancillary Agreements to which either of them is a party. As a material inducement to the Purchaser’s willingness to enter into the Agreement and the other Ancillary Agreements, each undersigned Transaction Beneficiary, with full notice and knowledge of the risks, makes the following representations and warranties to the Purchaser and agrees as follows:
| 1. | Such Transaction Beneficiary represents and warrants that (a) such Transaction Beneficiary has all requisite power, authority and legal capacity to execute and deliver this Transaction Beneficiary Joinder and to perform his, her or its obligations under this Transaction Beneficiary Joinder, (b) the execution and delivery of this Transaction Beneficiary Joinder and the performance of this Transaction Beneficiary Joinder do not and will not, with or without the giving of notice, the passage of time, or both, conflict with or result in, directly or indirectly, a violation or breach of any agreement or obligation by which such Transaction Beneficiary or any of such Transaction Beneficiary’s Affiliates is bound, and (c) such Transaction Beneficiary’s obligations hereunder are enforceable against such Transaction Beneficiary in accordance with its terms except as the enforceability hereof may be limited by the General Enforceability Exceptions. Such Transaction Beneficiary acknowledges and agrees that he, she or it has been represented in negotiations of this Transaction Beneficiary Joinder by counsel of his, her or its own choosing (or has declined to engage such counsel, voluntarily and with full notice of the risks of doing so), and that he, she or it has entered into this Transaction Beneficiary Joinder voluntarily, without coercion, and based upon his, her or its own judgment and not in reliance upon any representations or promises made by any Person or any attorneys, other than those contained within this Transaction Beneficiary Joinder and the Agreement. |
| 2. | Such Transaction Beneficiary represents and warrants that the applicable Seller owns all of the issued and outstanding Equity Interests of the Company set forth next to its name on the “Capitalization Schedule” and, as applicable, |
| (a) | Mary Robison Badcock is a beneficiary of the Mary Robison Badcock Trust (QTIP). |
| (b) | Mary B. Stiles is a beneficiary of the Mary B. Stiles Trust, dated July 24, 1997, as amended dated May 23, 2018. |
| (c) | Evelyn Susan Pou Doherty is a beneficiary of the Evelyn Susan Pou Doherty Revocable Trust U/T/D 5/30/79, as amended with Evelyn Pou Doherty as Grantor. |
| (d) | William Knox Pou, Jr. is a beneficiary of the William Knox Pou, Jr., Revocable Trust Dated 1/31/03, as amended. |
| (e) | Kathryn O. Pou is a beneficiary of the Kathryn O. Pou Revocable Trust dated 1/31/03, as amended. |
| 3. | Such undersigned Transaction Beneficiary hereby undertakes and agrees to perform any and all covenants, obligations and other agreements (including any payment or indemnification obligations under the Agreement) of its applicable Trust Seller set forth in the Agreement and any other Ancillary Agreement to which such Trust Seller is a party as if such undersigned Transaction Beneficiary were such Trust Seller for purposes of the Agreement and any such other Ancillary Agreement and subject to the limitations herein, including in Article 7. Each Transaction Beneficiary further agrees that if its applicable Trust Seller does not timely pay any obligation under the Agreement, including any obligation to pay any Loss, payment or other amount that becomes due and payable by such Trust Seller (including pursuant to Article 2 and Article 7 of the Agreement) or any other ancillary Agreement to which such Trust Seller is a party, such Transaction Beneficiary will pay the amount of such Loss, payment or other amount. |
| 4. | The provisions of Article 9 of the Agreement are incorporated herein by reference and are made a part of this Transaction Beneficiary Joinder, mutatis mutandis. |
| 5. | Capitalized terms used but not otherwise defined in this Transaction Beneficiary Joinder will have the respective meanings ascribed to them in the Agreement. |
[Signature Pages Follow]
IN WITNESS WHEREOF, this Transaction Beneficiary Joinder has been duly executed on behalf of the undersigned Transaction Beneficiary as of the date of the Agreement.
| Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| Name: | /s/ Wogan S. Badcock, III |
Wogan S. Badcock, III, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| Name: | /s/ Henry C. Badcock |
Henry C. Badcock, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| Name: | /s/ Ben M. Badcock |
| Ben M. Badcock, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| Name: | /s/ Mary Badcock Stiles |
| Mary B. Stiles, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended | |
| Name: | /s/ Elizabeth Badcock Daughtrey |
| Elizabeth B. Daughtrey, as Co-Trustee of Mary Robison Badcock Trust created under the Wogan S. Badcock, Jr. Revocable Trust dated November 2, 1977, as amended |
| Address: | |||
| Telephone: | |||
| Email: | |||
| Applicable Seller: | Mary Robison Badcock Trust (QTIP) |
IN WITNESS WHEREOF, this Transaction Beneficiary Joinder has been duly executed on behalf of the undersigned Transaction Beneficiary as of the date of the Agreement.
| /s/ Mary Badcock Stiles | |||
| Name: | Mary B. Stiles | ||
| Address: | |||
| Telephone: | |||
| Email: | |||
| Applicable Seller: | Mary B. Stiles Trust, dated July 24, 1997, as amended dated May 23, 2018 |
[Signature Page to Transaction Beneficiary Joinder]
IN WITNESS WHEREOF, this Transaction Beneficiary Joinder has been duly executed on behalf of the undersigned Transaction Beneficiary as of the date of the Agreement.
| /s/ Evelyn Pou Doherty | |||
| Name: | Evelyn Susan Pou Doherty | ||
| Address: | |||
| Telephone: | |||
| Email: | |||
| Applicable Seller: | Evelyn Susan Pou Doherty Revocable Trust U/T/D 5/30/79, as amended with Evelyn Pou Doherty as Grantor |
[Signature Page to Transaction Beneficiary Joinder]
IN WITNESS WHEREOF, this Transaction Beneficiary Joinder has been duly executed on behalf of the undersigned Transaction Beneficiary as of the date of the Agreement.
| /s/ William K. Pou, Jr. | |||
| Name: | William Knox Pou, Jr. | ||
| Address: | |||
| Telephone: | |||
| Email: | |||
| Applicable Seller: | William Knox Pou, Jr., Revocable Trust Dated 1/31/03, as amended |
[Signature Page to Transaction Beneficiary Joinder]
IN WITNESS WHEREOF, this Transaction Beneficiary Joinder has been duly executed on behalf of the undersigned Transaction Beneficiary as of the date of the Agreement.
| /s/ Kathryn O. Pou | |||
| Name: | Kathryn O. Pou | ||
| Address: | |||
| Telephone: | |||
| Email: | |||
| Applicable Seller: | Kathryn O. Pou Revocable Trust dated 1/31/03, as amended |
[Signature Page to Transaction Beneficiary Joinder]
Exhibit 10.1
Execution Version
FIRST AMENDMENT TO FIRST LIEN CREDIT AGREEMENT
This FIRST AMENDMENT TO FIRST LIEN CREDIT AGREEMENT, dated as of November 22, 2021 (this “Amendment”), among FRANCHISE GROUP, INC., a Delaware corporation (the “Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), certain subsidiaries of the Lead Borrower party hereto, the lenders party hereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A. (“JPM”), in its capacity as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”), which amends that certain First Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “First Lien Credit Agreement”), among each Borrower, each Lender from time to time party thereto, the Administrative Agent and the Collateral Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Amended First Lien Credit Agreement (as defined below).
WHEREAS, the Lead Borrower has requested certain amendments to the First Lien Credit Agreement and certain other Loan Documents to permit, among other things, the incurrence of additional credit facilities in connection with the acquisition by the Lead Borrower of W.S. Badcock Corporation, a Florida corporation (the “Badcock Acquisition”);
WHEREAS, Section 9.02 of the First Lien Credit Agreement permits certain amendments to the First Lien Credit Agreement with the consent of the Lead Borrower, the Administrative Agent and the Required Lenders, including the amendments contemplated herein; and
WHEREAS, each Borrower, the Administrative Agent and the Lenders desire to enter into this Amendment in order to effect the amendments to the First Lien Credit Agreement contemplated herein, in each case, on the terms and subject to the conditions set forth in Section 2 hereof.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments to the First Lien Credit Agreement. Subject to the satisfaction (or waiver by the Lenders) of the conditions set forth in Section 2 hereof, the First Lien Credit Agreement, including all Schedules thereto (but excluding the Exhibits thereto, which shall remain as in effect immediately prior to the First Amendment Effective Date), shall be amended as follows:
(a)
The First Lien Credit Agreement is hereby amended by inserting the language indicated in double underlined text (indicated textually
in the same manner as the following example: underlined text)
in Exhibit A hereto and by deleting the language indicated by strikethrough text (indicated textually in the same manner as the
following example: stricken text) in Exhibit A hereto; and
(b) The Schedules to the First Lien Credit Agreement are hereby amended and restated in their entirety as set forth in Exhibit B hereto.
The First Lien Credit Agreement and Schedules thereto, as so amended pursuant to the foregoing clauses (a) and (b), are referred to herein as the “Amended First Lien Credit Agreement”.
Section 2. Conditions to Effectiveness. The effectiveness of this Amendment is subject only to the satisfaction (or waiver by the Lenders) of the following conditions precedent (the date on which such conditions have been satisfied (or waived by the Lenders), the “First Amendment Effective Date”):
(a) The Administrative Agent shall have received executed counterparts of this Amendment from each Loan Party, the Administrative Agent and the Lenders constituting the Required Lenders.
(b) The Administrative Agent shall have received executed counterparts of each of the documents listed on Exhibit C hereto (the “Additional First Amendment Loan Documents”).
(c) The representations and warranties of each Loan Party set forth in Article III of the Amended First Lien Credit Agreement or any other Loan Document shall be true and correct in all material respects on and as of the First Amendment Effective Date; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, in each case, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(d) No Event of Default shall have occurred and be continuing as of the time of the First Amendment Effective Date or immediately after giving effect to the Amendment and the Badcock Acquisition.
(e) All fees required to be paid on the First Amendment Effective Date pursuant to (i) that certain engagement letter, dated November 22, 2021 (the “Engagement Letter”), by and between JPM and Franchise Group, Inc., including and all reasonable, documented out-of-pocket expenses required to be paid on the First Amendment Effective Date pursuant thereto, to the extent invoiced at least three (3) Business Days prior to the date hereof (or such later date as the Borrowers may reasonably agree), and (ii) that certain Arranger Fee Letter, dated as of November 22, 2021, by and between JPM and Franchise Group, Inc. shall have been paid.
(f) The Administrative Agent shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority (or, to the extent such Loan Party delivered such Organizational Documents to the Administrative Agent on the Effective Date, a certification that the Organizational Documents of such Loan Party have not been amended or otherwise modified since the Effective Date), (ii) an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of each Loan Party, (iii) copies of resolutions of the governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Amendment and the Additional First Amendment Loan Documents to which such Loan Party is a party, as applicable, certified as of the First Amendment Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(g) The Administrative Agent shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated as of the First Amendment Effective Date) of (i) Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, (ii) Taft Stettinius & Hollister LLP, special Ohio counsel to the Loan Parties and (iii) Foley & Lardner LLP, special Florida counsel to the Loan Parties, each in form and substance reasonably satisfactory to the Administrative Agent.
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(h) The Administrative Agent shall have received a certificate of a Responsible Officer of the Lead Borrower certifying that the conditions set forth in Sections 3(c) and (d) have been satisfied.
(i) The Badcock Acquisition shall have been, or shall substantially concurrently with the First Amendment Effective Date be, consummated.
(j) The Administrative Agent shall have received executed copies of that certain First Amendment to Second Lien Credit Agreement, dated as of the date hereof, that certain First Amendment to ABL Credit Agreement, dated as of the date hereof, the Badcock First Lien Loan Documents and the Badcock Second Lien Loan Documents.
Section 3. Fees and Expenses. The Lead Borrower agrees to reimburse the Administrative Agent for all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent in connection with this Amendment to the extent reimbursable by the Borrowers pursuant to Section 9.03 of the Amended First Lien Credit Agreement.
Section 4. Amendments; Counterparts. This Amendment may not be amended or waived except by an instrument in writing signed by each of the parties party hereto. This Amendment and each other Loan Document may be executed in one or more counterparts (and by different parties hereto in different counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or other electronic transmission of an executed counterpart of a signature page to this Amendment and each other Loan Document shall be effective as delivery of an original executed counterpart of this Amendment and such other Loan Document. The Administrative Agent may also require that any such documents and signatures delivered by telecopier or other electronic transmission be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier or other electronic transmission.
Section 5. Governing Law, Jurisdiction and Waiver of Right to Trial by Jury. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. The jurisdiction, service of process, and waiver of right to trial by jury provisions in Sections 9.09 and 9.10 of the First Lien Credit Agreement are incorporated herein by reference mutatis mutandis.
Section 6. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 7. Effect of Amendment.
(a) On and after the date hereof, each reference in the First Lien Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the First Lien Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the First Lien Credit Agreement, mean and are a reference to the First Lien Credit Agreement as modified by this Amendment.
(b) Except as expressly amended hereby, all of the terms and provisions of the First Lien Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Security Agreement and each Loan Document and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.
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(c) Each of the Loan Parties as debtor, grantor, mortgagor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that such liens and security interests continue to secure the Obligations under the Loan Documents, in each case subject to the terms thereof, and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Loan Documents The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.
(d) The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the First Lien Credit Agreement or any of the other Loan Documents. This Amendment shall be deemed to be a Loan Document as defined in the First Lien Credit Agreement.
Section 8. No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Amended First Lien Credit Agreement.
Section 9. Additional First Amendment Loan Documents. By its execution of this Amendment, each Lender hereby consents to, and instructs the Administrative Agent and/or the Collateral Agent, as applicable, to enter into, each of the Additional First Amendment Loan Documents listed as items 1 through 6 on Exhibit C hereto.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.
VALOR ACQUISITION, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
By: /s/ Eric Seeton
Name: Eric Seeton
Title: Chief Financial Officer
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOP FLORIDA, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
BETANCOURT SPORTS NUTRITION, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
Name: Will Powell
Title: President
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
By: /s/ Eric Seeton
Name: Eric Seeton
Title: Vice President
EDUCATE CORPORATE CENTERS
HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY,
LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE,
LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Eric Seeton
Name: Eric Seeton
Title: Vice President
JPMORGAN CHASE BANK, N.A., as the
Administrative Agent and
Collateral Agent
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
AMMC CLO 23, Limited, as a Lender
By: American Money Management Corp., as Collateral Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
Great American Insurance Company of New York, as a Lender
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
Mid Continent Casualty Company, as a Lender
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
Vanliner Insurance Company, as a Lender
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
American Empire Surplus Lines Insurance Company, as a Lender
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
Great American Contemporary Insurance Company, as a Lender
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO 15, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO 18, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO 21, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO 22, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO XI, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO XII, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO XIII, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
AMMC CLO XIV, LIMITED, as a Lender
BY: American Money Management Corp., as Collateral
Manager
By: /s/ David P. Meyer
Name: David P. Meyer
Title: Senior Vice President
Auburn CLO, Ltd., as a Lender
By: Guggenheim Partners Investment Management, LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Bandera Strategic Credit Partners II, LP, as a Lender
By: Octagon Credit Investors, LLC
as Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
BRYANT PARK FUNDING ULC, as a Lender
By: /s/ Mobasharul Islam
Name: Mobasharul Islam
Title: Authorized Signatory
Fortress Credit BSL IX Limited, as a Lender
By: FC BSL IX Management LLC, its collateral
Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FORTRESS CREDIT BSL X LIMITED, as a Lender
By: FC BSL X Management LLC, its Collateral
Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL XIII Limited, as a Lender
By: FC BSL XIII Management LLC, its Collateral
Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FDF III Limited, as a Lender
By: FDF Management LLC Series III,
a designated series of FDF Management LLC,
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FDF IV Limited, as a Lender
By: FDF Management LLC Series IV, a designated
series of
FDF Management LLC, its collateral manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FDF V Limited, as a Lender
By: FDF V Management LLC, it's collateral manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL III Limited, as a Lender
By: FC BSL Management LLC Series III, a designated
series of FC BSL Management LLC
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FORTRESS CREDIT BSL XI LIMITED, as a Lender
By: FC BSL XI Management LLC, its Collateral Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL XII Limited, as a Lender
By: FC BSL XII Management LLC, its Collateral
Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
FORTRESS CREDIT BSL IV LIMITED, as a Lender
By: FC BSL Management LLC Series IV,
a designated series of FC BSL Management LLC,
its collateral manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL V Limited, as a Lender
By: FC BSL Management LLC Series V,
a designated series of FC BSL Management LLC,
its collateral manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL VI Limited, as a Lender
By: FC BSL VI Management LLC, its collateral
manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL VII Limited, as a Lender
By: FC BSL VII Management LLC, its collateral
manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
Fortress Credit BSL VIII Limited, as a Lender
By: FC BSL VIII Management LLC, its collateral
Manager
By: /s/ Tim Bailey
Name: Tim Bailey
Title: Treasurer
First Security Benefit Life Insurance and Annuity
Company of New York, as a Lender
BY: Guggenheim Partners Investment Management,
LLC as Advisor
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Taxable Municipal Bond & Investment
Grade Debt Trust, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Funds Trust - Guggenheim High Yield
Fund, as a Lender
BY: Security Investors, LLC as Investment Adviser
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Blue Cross and Blue Shield of Florida, Inc., as a Lender
BY: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Horace Mann Life Insurance Company, as a Lender
BY: Horace Mann Life Insurance Company
By: Guggenheim Partners Investment Management, LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Reliance Standard Life Insurance Company, as a Lender
BY: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Stichting PGGM Depositary, as a Lender
BY: Acting in its capacity as depositary of PGGM High
Yield Bond Fund
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Loan Master Fund, Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim MM CLO 2018-1, Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
1828 CLO Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Chevron Master Pension Trust, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Delaware Life Insurance Company, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
EAF comPlan II - Private Debt, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Asset Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Fidelity Life Association, A Legal Reserve Life
Insurance Company, as a Lender
BY: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
G.A.S. (Cayman) Limited Trustee for Rainier (Loan
Fund), a series trust of the Multi Strategy Umbrella
Fund Cayman, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
GPIM Route Bond Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim CLO 2020-1, Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Defensive Loan Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Funds Trust - Guggenheim Macro Opportunities Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim MM CLO 2019-2, Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Health Care Service Corporation, a Mutual Legal
Reserve Company (D/B/A Blue Cross Blue Shield of IL
or Blue Cross Blue Shield of TX or Blue Cross Blue
Shield of NM or Blue Cross Blue Shield of OK or Blue
Cross Blue Shield of MT), as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Investors Heritage Life Insurance Company, as a
Lender
By: Guggenheim Partners Investment Management,
LLC as Sub-Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Maverick Enterprises, Inc, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Puritan Life Insurance Company of America, as a
Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
U.S. Financial Life Insurance Company, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Wilton Reassurance Company, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Advisor
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
ZILUX FCP-SIF - Zilux Senior Loans Global, as a
Lender
BY: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Funds Trust - Guggenheim Total Return
Bond Fund, as a Lender
By: Security Investors, LLC as Investment Adviser
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Funds Trust - Guggenheim Floating Rate
Strategies Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
South Carolina Retirement Systems Group Trust, as a
Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Endurance Assurance Corporation, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Gleaner Life Insurance Society By Guggenheim, as a
Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim CLO 2019-1, Ltd., as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
HCA Inc. Master Retirement Trust, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim High-Yield Fund, LLC, as a Lender
BY: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
IAM National Pension Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Adviser
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Strategic Opportunities Fund, as a Lender
BY: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim U.S. Loan Fund, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim Variable Funds Trust - Series F (Floating
Rate Strategies Series), as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Adviser
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
National Teachers Associates Life Insurance Company,
as a Lender
By: Guggenheim Partners Investment Management,
LLC as Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
PartnerSelect High Income Alternatives Fund, as a
Lender
By: Guggenheim Partners Investment Management,
LLC as Sub-Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Wilshire Institutional Master Fund SPC - Guggenheim
Alpha Segregated Portfolio, as a Lender
By: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Guggenheim U.S. Loan Fund II, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
GEM 1 Loan Funding LLC, as a Lender
By: Citibank N.A.,
By: /s/ Cynthia Gonzalvo
Name: Cynthia Gonzalvo
Title: Associate Director
JLK PORTFOLIO, LTD., as a Lender
By: HG Vora Capital Management, LLC, Collateral Agent
By: /s/ Philip Garthe
Name: Philip Garthe
Title: Chief Operating Officer
ZURICH AMERICAN INSURANCE COMPANY, as a
Lender
By: HPS Investment Partners, LLC as Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Zalico VL Series Account - 2, as a Lender
BY: HPS Investment Partners, LLC as Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Hobson Capital, LLC, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Collateral Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Florida Power & Light Company Qualified
Decommissioning Trusts for Turkey Point and St. Lucie
Nuclear Plants, as a Lender
By: HPS Investment Partners, LLC, as Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 13-2018, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Strata CLO II, Ltd., as a Lender
By: HPS Investment Partners, LLC
As the Collateral Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Cardinal Fund, L.P., as a Lender
By: HPS Investment Partners, LLC, as Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
GIM Credit Master Lux S.a r.l., as a Lender
By: HPS Investment Partners, LLC as Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 3-2014, Ltd., as a Lender
By: HPS Investment Partners CLO (US), LLC, its
Investment Manager
By: HPS Investment Partners, LLC, its Sub-Advisor
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Mauna Kea Fund, L.P, as a Lender
By: HPS Investment Partners, LLC, as investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 10-2016, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 11-2017, Ltd., as a Lender
By: HPS Investment Partners CLO (US), LLC, its
Investment Manager
By: HPS Investment Partners, LLC, its Sub-Advisor
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 12-2018, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 14-2019, Ltd., as a Lender
By: HPS Investment Partners, LLC as Sub-Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 15-2019, Ltd., as a Lender
By: HPS Investment Partners, LLC as Sub-Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 2013-2, Ltd., as a Lender
By: HPS Investment Partners CLO (US), LLC, its
Investment Manager
By: HPS Investment Partners, LLC, its Sub-Advisor
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 4-2014, Ltd., as a Lender
By: HPS Investment Partners CLO (US), LLC, its
Investment Manager
By: HPS Investment Partners, LLC, its Sub-Advisor
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 5-2015, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 6-2015, Ltd., as a Lender
By: HPS Investment Partners CLO (US), LLC, its
Investment Manager
By: HPS Investment Partners, LLC, its Sub-Advisor
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 8-2016, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
HPS Loan Management 9-2016, Ltd., as a Lender
By: HPS Investment Partners, LLC, its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
MP 2019 PGU Holdings, L.P., as a Lender
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Institutional Credit Fund Subsidiary, L.P., as a Lender
By: HPS Investment Partners, LLC as Trading Manager
and not in its individual capacity
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
KIM Global KPI Guggenheim Professional Private
Trust, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Advisor
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
KIM Global KPS Guggenheim Professional Private
Trust, as a Lender
By: Guggenheim Partners Investment Management,
LLC as Advisor
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Midland National Life Insurance Company, as a Lender
BY: Guggenheim Partners Investment Management, LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
National Interstate Insurance Company, as a Lender
By: /s/ David Meyer
Name: David Meyer
Title: Senior Vice President
North American Company for Life and Health
Insurance, as a Lender
BY: Guggenheim Partners Investment Management,
LLC
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Baloise Senior Secured Loan Fund III, as a Lender
By: Octagon Credit Investors, LLC
as Sub Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
CSAA Insurance Exchange, as a Lender
By: Octagon Credit Investors, LLC, as sub-advisor
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Kolumban Alternative Investments - Loans, as a Lender
By: Octagon Credit Investors, LLC
as Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 51, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Credit All Weather Income Fund, Ltd., as a
Lender
By: Octagon Credit Investors, LLC
as Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 20-R, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 43, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 44, Ltd., as a Lender
By: Octagon Credit Investor, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 45, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
SCORLUX SICAV-SIF -SCOR GLOBAL LOANS, as
a Lender
By: Octagon Credit Investors, LLC
as Sub Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Snowy Range Fund, LLC, as a Lender
By: Octagon Credit Investors, LLC
as Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Star Insurance Company, as a Lender
By: Octagon Credit Investors, LLC as Investment
Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
XAI Octagon Floating Rate & Alternative Income Term
Trust, as a Lender
By: Octagon Credit Investors, LLC
as Sub-Adviser
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 47, Ltd, as a Lender
By: Octagon Credit Investors, LLC
As Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 52, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 53, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 54, Ltd, as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 56, Ltd, as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 46, Ltd., as a Lender
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 48, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 49, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 50, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XXI, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Portfolio Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon 55, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Asset Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 18-R, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 24, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 26, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Portfolio Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 27, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 28, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 29, Ltd., as a Lender
By: Octagon Credit Investors, LLC as Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 30, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 31, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 32, LTD., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 33, LTD., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 34, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 35, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Asset Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 36, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 37, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 38, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Asset Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 39, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 40, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 41, Ltd., as a Lender
By: Octagon Credit Investors, LLC
as Portfolio Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners 42, Ltd., as a Lender
By: Octagon Credit Investors, LLC as Collateral
Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XIV, Ltd., as a Lender
BY: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XV, Ltd., as a Lender
BY: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XVI, Ltd., as a Lender
BY: Octagon Credit Investors, LLC
as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XVII, Ltd., as a Lender
BY: Octagon Credit Investors, LLC as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Investment Partners XXII, Ltd, as a Lender
By: Octagon Credit Investors, LLC as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
G.A.S. (Cayman) Limited, as Trustee on behalf of
Octagon Joint Credit Trust Series I (and
not in its
individual capacity), as a Lender
BY: Octagon Credit Investors, LLC, as Portfolio Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Loan Funding, Ltd., as a Lender
By: Octagon Credit Investors, LLC as Collateral Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Octagon Senior Secured Credit Master Fund Ltd., as a Lender
BY: Octagon Credit Investors, LLC
as Investment Manager
By: /s/ Benjamin Chung
Name: Benjamin Chung
Title: Assistant Vice President, Portfolio Administration
Balboa Bay Loan Funding 2020-1 Ltd, as a Lender
By: /s/ Andrew H. Levine
Name: Andrew H. Levine
Title: Executive Vice President & Senior Counsel
PIMCO CLO Opportunities Fund, L.P., as a Lender
By: /s/ Andrew H. Levine
Name: Andrew H. Levine
Title: Executive Vice President & Senior Counsel
PIMCO Horseshoe Fund, LP, as a Lender
By: Pacific Investment Management Company LLC,
as its Investment Advisor
By: /s/ Andrew H. Levine
Name: Andrew H. Levine
Title: Executive Vice President & Senior Counsel
Roaring Fork Trading, LLC, as a Lender
By: Truist Bank, as Manager
By: /s/ Connie Bailey-Blake
Name: Connie Bailey-Blake
Title: Vice President
Guggenheim Variable Funds Trust - Series P (High
Yield Series), as a Lender
BY: Security Investors, LLC, as Management Company
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Sonoma County Employees' Retirement Association, as
a Lender
By: Guggenheim Partners Investment Management, LLC as Investment Manager
By: /s/ Kaitlin Trinh
Name: Kaitlin Trinh
Title: Authorized Person
Strata CLO I, Ltd., as a Lender
By: HPS Investment Partners, LLC
As the Collateral Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Watford Asset Trust I, as a Lender
by HPS Investment Partners, LLC as its Investment
Manager
By: /s/ Serge Adam
Name: Serge Adam
Title: Managing Director
Exhibit A
FIRST LIEN CREDIT AGREEMENT
CONFORMED THROUGH THE FIRST AMENDMENT TO
FIRST LIEN CREDIT AGREEMENT DATED AS OF NOVEMBER 22, 2021
EXECUTION VERSIONExecution
Version
CONFORMED THROUGH THE FIRST AMENDMENT TO
FIRST LIEN CREDIT AGREEMENT DATED AS OF NOVEMBER 22, 2021
FIRST LIEN CREDIT AGREEMENT
dated as of
March 10, 2021
among
FRANCHISE GROUP, INC.,
as a Borrower and Lead Borrower,
FRANCHISE GROUP NEWCO PSP, LLC,
as a Borrower,
VALOR ACQUISITION, LLC,
as a Borrower,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
as a Borrower,
the Lenders from time to time party hereto,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as Collateral Agent,
and
JPMORGAN CHASE BANK, N.A.,
CITIZENS BANK, N.A.
and
CREDIT SUISSE LOAN FUNDING LLC and CREDIT SUISSE AG (acting through such of
its affiliates
or branches as it deems appropriate),
as Lead Arrangers and Joint Bookrunners
Table of Contents
Page
| ARTICLE | I Definitions | 1 |
| SECTION | 1.01 Defined Terms. | 1 |
| SECTION | 1.02 Classification of Loans and Borrowings. |
| SECTION | 1.03 Terms Generally. |
| SECTION | 1.04 Accounting Terms; GAAP. |
| SECTION | 1.05 Effectuation of Transactions. |
| SECTION | 1.06 Limited Conditionality Acquisition. |
| SECTION | 1.07 Certain Determinations. |
| SECTION | 1.08 Divisions. |
| SECTION | 1.09 Interest Rates; LIBOR Notification. |
| ARTICLE | II The Credits |
| SECTION | 2.01 Commitments. |
| SECTION | 2.02 Loans and Borrowings. |
| SECTION | 2.03 Requests for Borrowings. |
| SECTION | 2.04 [Reserved]. |
| SECTION | 2.05 [Reserved]. |
| SECTION | 2.06 Funding of Borrowings. | |
| SECTION | 2.07 Interest Elections. |
| SECTION | 2.08 Termination and Reduction of Commitments. |
| SECTION | 2.09 Repayment of Loans; Evidence of Debt. |
| SECTION | 2.10 Amortization of Term Loans. |
| SECTION | 2.11 Prepayment of Loans. |
| SECTION | 2.12 Fees. |
| SECTION | 2.13 Interest. |
| SECTION | 2.14 Benchmark Unavailability; Benchmark Replacement Setting. |
| SECTION | 2.15 Increased Costs. |
| SECTION | 2.16 Break Funding Payments. |
| SECTION | 2.17 Taxes. |
| SECTION | 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs. |
| SECTION | 2.19 Mitigation Obligations; Replacement of Lenders. |
| SECTION | 2.20 Incremental Credit Extensions. |
| SECTION | 2.21 Refinancing Amendments. |
| SECTION | 2.22 Defaulting Lenders. |
| SECTION | 2.23 Illegality. |
| SECTION | 2.24 Loan Modification Offers. |
| ARTICLE | III Representations and Warranties |
| SECTION | 3.01 Organization; Powers. |
| SECTION | 3.02 Authorization; Enforceability. |
| SECTION | 3.03 Governmental Approvals; No Conflicts. |
| SECTION | 3.04 Financial Condition; No Material Adverse Effect. |
| SECTION | 3.05 Properties. |
| SECTION | 3.06 Litigation and Environmental Matters. |
| SECTION | 3.07 Compliance with Laws. |
| SECTION | 3.08 Investment Company Status. |
| SECTION | 3.09 Taxes. |
| SECTION | 3.10 ERISA; Labor Matters. |
Table of Contents
(continued)
Page
| SECTION | 3.11 Disclosure. |
| SECTION | 3.12 Subsidiaries. |
| SECTION | 3.13 Intellectual Property; Licenses, Etc. |
| SECTION | 3.14 Solvency. |
| SECTION | 3.15 Federal Reserve Regulations. |
| SECTION | 3.16 Use of Proceeds. |
| SECTION | 3.17 Anti-Corruption Laws and Sanctions. |
| SECTION | 3.18 Security Documents. |
| SECTION | 3.19 Insurance. |
| SECTION | 3.20 Franchise Agreements. |
| ARTICLE | IV Conditions |
| SECTION | 4.01 Effective Date. |
| SECTION | 4.02 Each Credit Event after the Effective Date. |
| ARTICLE | V Affirmative Covenants |
| SECTION | 5.01 Financial Statements and Other Information. |
| SECTION | 5.02 Notices of Material Events. |
| SECTION | 5.03 Information Regarding Collateral. |
| SECTION | 5.04 Existence; Conduct of Business. |
| SECTION | 5.05 Payment of Taxes, etc. |
| SECTION | 5.06 Maintenance of Properties. |
| SECTION | 5.07 Insurance. |
| SECTION | 5.08 Books and Records; Inspection and Audit Rights. |
| SECTION | 5.09 Compliance with Laws. |
| SECTION | 5.10 Use of Proceeds. |
| SECTION | 5.11 Additional Subsidiaries. |
| SECTION | 5.12 Further Assurances. |
| SECTION | 5.13 Franchise Agreements. |
| SECTION | 5.14 Certain Post-Closing Obligations. |
| SECTION | 5.15 Maintenance of Ratings. |
| ARTICLE | VI Negative Covenants |
| SECTION | 6.01 Indebtedness; Certain Equity Securities. |
| SECTION | 6.02 Liens. |
| SECTION | 6.03 Fundamental Changes; Lead Borrower Covenant. |
| SECTION | 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. |
| SECTION | 6.05 Asset Sales. |
| SECTION | 6.06 Sale and Leaseback Transactions. |
| SECTION | 6.07 Restricted Payments; Certain Payments of Indebtedness. |
| SECTION | 6.08 Transactions with Affiliates. |
| SECTION | 6.09 Restrictive Agreements. |
| SECTION | 6.10 Financial Maintenance Covenants. |
| SECTION | 6.11 Changes in Fiscal Periods. |
| SECTION | 6.12 Amendment of Financing Documents. |
| SECTION | 6.13 Franchise Agreements. |
| SECTION | 6.14 Badcock. | 148 |
| -ii- |
Table of Contents
(continued)
Page
| ARTICLE | VII Events of Default |
| SECTION | 7.01 Events of Default. |
| SECTION | 7.02 Right to Cure. |
| SECTION | 7.03 Application of Proceeds. |
| ARTICLE | VIII Administrative Agent |
| SECTION | 8.01 Appointment and Authority. |
| SECTION | 8.02 Rights as a Lender. |
| SECTION | 8.03 Exculpatory Provisions. |
| SECTION | 8.04 Reliance by Agents. |
| SECTION | 8.05 Delegation of Duties. |
| SECTION | 8.06 Resignation of Administrative Agent; Mergers. |
| SECTION | 8.07 Non-Reliance on Agents and Lenders. |
| SECTION | 8.08 No Other Duties, Etc. |
| SECTION | 8.09 Administrative Agent May File Proofs of Claim. |
| SECTION | 8.10 No Waiver; Cumulative Remedies; Enforcement. |
| SECTION | 8.11 Withholding Taxes. |
| SECTION | 8.12 Credit Bidding. |
| SECTION | 8.13 Erroneous Payments. | 163 |
| ARTICLE | IX Miscellaneous |
| SECTION | 9.01 Notices. |
| SECTION | 9.02 Waivers; Amendments. |
| SECTION | 9.03 Expenses; Indemnity; Damage Waiver. |
| SECTION | 9.04 Successors and Assigns. |
| SECTION | 9.05 Survival. |
| SECTION | 9.06 Counterparts; Integration; Effectiveness. |
| SECTION | 9.07 Severability. |
| SECTION | 9.08 Right of Setoff. |
| SECTION | 9.09 Governing Law; Jurisdiction; Consent to Service of Process. |
| SECTION | 9.10 WAIVER OF JURY TRIAL. |
| SECTION | 9.11 Headings. |
| SECTION | 9.12 Confidentiality. |
| SECTION | 9.13 USA PATRIOT Act. |
| SECTION | 9.14 Release of Liens and Guarantees. |
| SECTION | 9.15 No Advisory or Fiduciary Responsibility. |
| SECTION | 9.16 Interest Rate Limitation. |
| SECTION | 9.17 Intercreditor Agreements |
| SECTION | 9.18 Judgment Currency |
| SECTION | 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
| SECTION | 9.20 Acknowledgement Regarding Any Supported QFCs |
| SECTION | 9.21 Keepwell | 185 |
| -iii- |
SCHEDULES:
| Schedule 2.01 | — | Commitments and Loans |
| Schedule 2.02 | — | First Amendment Effective Date Badcock Material Real Property |
| Schedule 3.03 | — | Government Approvals; No Conflicts |
| Schedule 3.06 | — | Litigation and Environmental Matters |
| Schedule 3.12 | — | Subsidiaries |
| Schedule 3.20 | — | Franchise Agreements |
| Schedule 5.14(a) | — | Certain Post-Closing Obligations |
| Schedule 6.01 | — | Existing Indebtedness |
| Schedule 6.02 | — | Existing Liens |
| Schedule 6.04(e) | — | Existing Investments |
| Schedule 6.05(k) | — | Specified Disposition |
| Schedule 6.08 | — | Existing Affiliate Transactions |
| Schedule 6.09 | — | Existing Restrictions |
| Schedule 9.01 | — | Notices |
EXHIBITS:
| Exhibit A | — | Form of Assignment and Assumption |
| Exhibit B | — | Form of Guarantee Agreement |
| Exhibit C | — | Form of Perfection Certificate |
| Exhibit D | — | Form of Collateral Agreement |
| Exhibit E | — | Form of Compliance Certificate |
| Exhibit F | — | [Reserved] |
| Exhibit G | — | Form of Solvency Certificate |
| Exhibit H | — | Form of Closing Certificate |
| Exhibit I | — | Form of Master Intercompany Note |
| Exhibit J | — | Form of Specified Discount Prepayment Notice |
| Exhibit K | — | Form of Specified Discount Prepayment Response |
| Exhibit L | — | Form of Discount Range Prepayment Notice |
| Exhibit M | — | Form of Discount Range Prepayment Offer |
| Exhibit N | — | Form of Solicited Discounted Prepayment Notice |
| Exhibit O | — | Form of Solicited Discounted Prepayment Offer |
| Exhibit P | — | Form of Acceptance and Prepayment Notice |
| Exhibit Q-1 | — | Form of United States Tax Compliance Certificate 1 |
| Exhibit Q-2 | — | Form of United States Tax Compliance Certificate 2 |
| Exhibit Q-3 | — | Form of United States Tax Compliance Certificate 3 |
| Exhibit Q-4 | — | Form of United States Tax Compliance Certificate 4 |
| Exhibit R | — | Form of Note |
| Exhibit S | — | Form of Notice of Borrowing |
| -iv- |
FIRST LIEN CREDIT AGREEMENT, dated as of March 10, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), the Lenders from time to time party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent and as Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified below:
“A Team” means A Team Sales, LLC, a Delaware limited liability company.
“ABL Agent” means JPM, as agent under the ABL Credit Agreement or any successor thereto acting in such capacities.
“ABL Credit Agreement” means (i) that certain Third Amended and Restated Loan and Security Agreement, as in effect on the First Amendment Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement), among each Loan Party party thereto, certain lenders party thereto and the ABL Agent, and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent asset-based revolving credit facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not an ABL Credit Agreement hereunder. Any reference to the ABL Credit Agreement hereunder shall be deemed a reference to any ABL Credit Agreement then in existence.
“ABL Intercreditor Agreement” means
(a) that certain Amended and Restated Intercreditor Agreement,
dated as of the First Amendment Effective Date, by and among
the Collateral Agent, the Second Lien Agent and the ABL Agent
(and any other Persons party thereto), and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented,
extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement
among the ABL Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the ABL Credit Agreement
and the other ABL Loan Documents) and,
the Agents (or any of them) and the Second Lien Agent (and
any other Persons party thereto), that is reasonably acceptable to the Administrative Agent and the Lead Borrower, as may be amended,
amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as
applicable.
“ABL Loan Documents” shall have the meaning ascribed to the term “Financing Agreements” in the ABL Credit Agreement.
“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Acceptable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“Acceptable Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Acceptance and Prepayment Notice” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D)(2) substantially in the form of Exhibit P.
“Acceptance Date” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“Accepting Lenders” has the meaning specified in Section 2.24(a).
“Acquired Company” means PSP Midco, LLC, a Delaware limited liability company.
“Acquired EBITDA” means, with respect to any Pro Forma Entity, for any period, the amount of Consolidated EBITDA of such Pro Forma Entity (determined as if references to the Borrower and its Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“Acquired Entity or Business” has the meaning given such term in the definition of “Consolidated EBITDA.”
“Acquired Subsidiaries” means the Acquired Company and its subsidiaries.
“Acquisition” means the acquisition of the Acquired Company and the Acquired Subsidiaries pursuant to the Acquisition Agreement.
“Acquisition Agreement” means that certain Amended and Restated Equity Purchase Agreement dated as of March 3, 2021 (including the schedules, exhibits and disclosure letters thereto) by and among the Acquired Company, FG Newco PSP, Lead Borrower, PSP Holdings, LLC, Sentinel Capital Partners VI-A, L.P., Sentinel PSP Blocker, Inc., PSP Intermediate, LLC, Sentinel Capital Partners, L.L.C. and PSP Midco Holdings, LLC.
“Additional Lender” means any Additional Term Lender.
“Additional Term Lender” means, at any time, any bank, financial institution or other institutional lender or investor that agrees to provide any portion of any (a) Incremental Term Loans pursuant to an Incremental Facility Amendment in accordance with Section 2.20 or (b) Credit Agreement Refinancing Indebtedness with respect to any existing Term Loans or Term Commitments, as applicable, pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval not to be unreasonably withheld, conditioned or delayed) and the Lead Borrower.
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“Adjusted LIBO Rate” means, subject to Section 2.14(b), with respect to any Eurodollar Borrowing, for any Interest Period, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate as in effect at such time for such Interest Period and (ii) the Statutory Reserve Rate; provided that the Adjusted LIBO Rate for any Interest Period shall not be less than 0.75% per annum.
“Administrative Agent” means JPM, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Administrative Agent Fee Letter” means that certain Amended and Restated Administrative Agent Arranger Fee Letter, dated as of January 29, 2021, by and among the Borrower and the Administrative Agent.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affected Class” has the meaning specified in Section 2.24(a).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“After Year End Payment” has the meaning assigned to such term in Section 2.11(d).
“Agent” means the Administrative Agent and the Collateral Agent, and any successors and assigns in such capacity, and “Agents” means two or more of them.
“Agent Parties” has the meaning given to such term in Section 9.01(c).
“Agreement” has the meaning given to such term in the preliminary statements hereto.
“Agreement Currency” has the meaning given to such term in Section 9.18.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%; provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above.
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“Ancillary Document” has the meaning assigned to such term in Section 9.06.
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, and all other applicable laws, rules, and regulations concerning or relating to bribery or corruption.
“Applicable Account” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“Applicable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Applicable Rate” means, (a) with respect to any Initial Term Loans maintained as ABR Loans, 3.75% per annum, and with respect to any Initial Term Loans maintained as Eurodollar Loans, 4.75% per annum, and (b) with respect to any Incremental Term Loans or Other Term Loans, as set forth in the applicable Refinancing Amendment, Incremental Facility Amendment or Loan Modification Agreement.
“Approved Bank” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Arranger Fee Letter” means that certain Amended and Restated Arranger Fee Letter, dated as of January 29, 2021, by and among the Borrower and the Commitment Parties.
“Asset Sale Prepayment Percentage” means 100%; provided that, if at any time the First Lien Net Leverage Ratio is (i) less than or equal to 2.17 to 1.00 and greater than 1.67 to 1.00 (as set forth in the most recent Compliance Certificate delivered to the Administrative Agent for any fiscal quarter or fiscal year of the Lead Borrower in accordance with Section 5.01, provided that for purposes of calculating the First Lien Net Leverage Ratio for this definition, the Consolidated EBITDA of any Person acquired pursuant to a Limited Condition Transaction shall not be included until such Limited Condition Transaction is consummated), the applicable Asset Sale Prepayment Percentage shall instead be 50% and (ii) less than or equal to 1.67 to 1.00 (as set forth in the most recent Compliance Certificate delivered to the Administrative Agent for any fiscal quarter or fiscal year of the Lead Borrower in accordance with Section 5.01, provided that for purposes of calculating the First Lien Net Leverage Ratio for this definition, the Consolidated EBITDA of any Person acquired pursuant to a Limited Condition Transaction shall not be included until such Limited Condition Transaction is consummated), the applicable Asset Sale Prepayment Percentage shall instead be 0%.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“Auction Agent” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
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“Audited Financial Statements” means (a) the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of the Lead Borrower ended on or about December 31, 2019 and (b) the audited consolidated balance sheet of PSP and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of PSP, ended on or about December 31, 2019.
“Available Amount” means, as of any date of determination, a cumulative amount equal to (without duplication and without duplication of any amount included in the Available Equity Amount):
(a) [Reserved], plus
(b) the sum of an amount (which amount shall not be less than zero) equal to the sum of (x) Excess Cash Flow (but not less than zero in any period) for the fiscal year of the Lead Borrower ending on or about December 31, 2021 and (y) Excess Cash Flow for each succeeding completed fiscal year as of such date, in each case, that was not required to prepay Term Loan Borrowings pursuant to Section 2.11(d) or Term Loan Borrowings (as defined in the Second Lien Credit Agreement) pursuant to Section 2.11(d) of the Second Lien Credit Agreement (this clause (b), the “Retained ECF Basket”), plus
(c) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower and its Subsidiaries on Investments made using the Available Amount (not to exceed the original amount of such Investments), plus
(d) [Reserved], plus
(e) the Net Proceeds of a sale or other Disposition received by the Borrower or any Subsidiary of Investments made using the Available Amount, plus
(f) [Reserved], plus
(g) [Reserved], plus
(h) the aggregate amount of any Retained Declined Proceeds and Retained Asset Sale Proceeds.
“Available Equity Amount” means a cumulative amount equal to (without duplication, and without duplication of any amount included in the Available Amount):
(a) without duplication of any amount included in the Available Amount, the Net Proceeds of new public or private issuances after the Effective Date of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) of the Lead Borrower, plus
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(b) capital contributions received by the Lead Borrower after the Effective Date in cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash capital contributions) in respect of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), plus
(c) the net cash proceeds received by the Borrower or any Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower or any Subsidiary on Investments made using the Available Equity Amount (not to exceed the original amount of such Investments).
“Available General RP Capacity Amount” means (i) the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.07(a)(xv) plus (ii) the amount of prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing that may be made at the time of determination pursuant to Section 6.07(b)(vi)(A) minus (iii) the sum of the amount of the Available General RP Capacity Amount utilized by the Borrower or any Subsidiary prior to such time to make (a) Restricted Payments pursuant to Section 6.07(a)(xv), (b) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(A), (c) Investments pursuant to Section 6.04(m)(A)(ii) utilizing the Available General RP Capacity Amount or (d) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(B) utilizing the Available General RP Capacity Amount.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.14(e).
“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Badcock Acquisition” means the “Badcock Acquisition” as defined in the First Amendment.
“Badcock Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Badcock Security Documents as security for the Secured Obligations. For the avoidance of doubt, Collateral does not constitute “Badcock Collateral”.
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“Badcock Collateral Agreement” means the First Lien Collateral Agreement, dated as of the First Amendment Effective Date, between Badcock and the Collateral Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from Badcock
(i) a counterpart of the Badcock Guarantee Agreement duly executed and delivered on behalf of Badcock, and
(ii) a counterpart of the Badcock Collateral Agreement duly executed and delivered on behalf of Badcock,
in each case under this clause (a) together with opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b) all outstanding Equity Interests of each direct Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of Badcock, shall have been pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;
(c) (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Badcock as payee and all such obligors as payors in the form of the Badcock Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Badcock Collateral owned by Badcock, all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Badcock Intellectual Property Security Agreements required by this Agreement, the Badcock Security Documents, Requirements of Law and reasonably requested by the Administrative Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Badcock Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Badcock Security Documents, the Intercreditor Agreements and the other provisions of the term “Badcock Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording no later than the tenth (10th) Business Day following the First Amendment Effective Date (other than with respect to Uniform Commercial Code financing statements); and
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(e) the Administrative Agent shall have received (i) counterparts of a Badcock Mortgage with respect to each Badcock Material Real Property duly executed and delivered by Badcock; provided, that, to the extent any Badcock Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Agents will cooperate with the Lead Borrower in order to minimize the amount of tax payable in connection with such Badcock Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Badcock Mortgage to the book value of such Badcock Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Badcock Mortgage as a first priority Lien on the Mortgaged Property described therein (subject to the terms of the Intercreditor Agreements), free of any other Liens except as expressly permitted by Section 6.02 and Section 6.14, together with such customary lender’s endorsements as the Administrative Agent may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Administrative Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Badcock Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Badcock Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Badcock Mortgaged Property, and if any Badcock Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Administrative Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Badcock Mortgaged Property is located regarding the enforceability of the Badcock Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Administrative Agent, (v) a survey or existing survey together with a no change affidavit of such Badcock Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Administrative Agent, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Badcock Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s); provided further that, with respect to any First Amendment Effective Date Badcock Material Real Property, the requirements set forth in this clause (c) shall not be required to be satisfied until the date set forth on Schedule 2.02 for such First Amendment Effective Date Badcock Material Real Property, or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of the Loan Parties (other than Badcock) or (ii) particular assets of Badcock, if solely for purposes of this clause (a)(ii), and for so long as the Administrative Agent and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Badcock Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Badcock Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents; (d) in no event shall Badcock be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall any Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall Badcock be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Badcock Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall Badcock be required to complete any filings or other action with respect to security interests in Badcock Intellectual Property beyond the filing of Badcock Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Badcock Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Badcock Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Badcock Security Documents.
“Badcock First Lien Agent” means JPM, as administrative agent and collateral agent under the Badcock First Lien Credit Agreement, or any successor thereto acting in such capacities.
“Badcock First Lien Credit Agreement” means that certain First Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the Badcock First Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement).
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“Badcock First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock First Lien Credit Agreement.
“Badcock Guarantee Agreement” means the Guarantee Agreement, dated as of the First Amendment Effective Date, between Badcock and the Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Intellectual Property” has the meaning assigned to such term in the Badcock Collateral Agreement.
“Badcock Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Badcock Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Badcock Collateral that can be perfected by the filing of such security agreements, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Intercreditor Agreement” means that certain that certain Four Lien Intercreditor Agreement, dated as of the First Amendment Effective Date, by and among the Agents, the Second Lien Agent, the Badcock First Lien Agent and the Badcock Second Lien Agent and acknowledged by Badcock, as it may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Badcock Master Intercompany Note” means the Master Intercompany Note, dated the First Amendment Effective Date, pursuant to which Badcock is the “payee” and the Lead Borrower and its Subsidiaries (other than Badcock) are the “payors”.
“Badcock Material Real Property” means (a) the real property described on Schedule 2.02 (the “First Amendment Effective Date Badcock Material Real Property”) and (b) any other real property (including fixtures) (i) located in the United States, (ii) first acquired by Badcock after the First Amendment Effective Date and (iii) owned (but not leased or ground-leased) by Badcock with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Material Real Property does not constitute “Badcock Material Real Property”.
“Badcock Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Badcock Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Badcock Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent and the Borrower.
“Badcock Mortgaged Property” means each parcel of Badcock Material Real Property with respect to which a Badcock Mortgage is granted pursuant to the “Badcock Collateral and Guarantee Requirement,” Section 5.12(a), or Section 5.12(c).
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“Badcock Pledged Equity Interests” has the meaning set forth in the Badcock Collateral Agreement.
“Badcock Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the Badcock Second Lien Credit Agreement, or any successor thereto acting in such capacities.
“Badcock Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the Badcock Second Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement).
“Badcock Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock Second Lien Credit Agreement.
“Badcock Security Documents” means the Badcock Collateral Agreement, the Badcock Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Badcock Collateral and Guarantee Requirement” and/or Section 5.12(a) (solely as it may relate to Badcock) or Section 5.12(c) to secure any of the Secured Obligations.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
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“Basel III” means: (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated; (ii) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
“Benchmark” means, initially, the LIBO Rate; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.14(b).
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(a) the sum of: (1) Term SOFR and (2) the related Benchmark Replacement Adjustment;
(b) the sum of: (1) Daily Simple SOFR and (2) the related Benchmark Replacement Adjustment;
(c) the sum of: (1) the alternate benchmark rate that has been selected by the Administrative Agent and the Lead Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time and (2) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (a), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion. If the Benchmark Replacement as determined pursuant to clause (a), (b) or (c) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(a) for purposes of clauses (a) and (b) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:
(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
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(2) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(b) for purposes of clause (c) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Lead Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities;
provided that, in the case of clause (a) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
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(c) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.
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“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board of Directors” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States of America.
“Bookrunner” means each of JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Credit Suisse Loan Funding LLC and Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate), each in its capacity as a joint bookrunner.
“Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Borrower Materials” has the meaning assigned to such term in Section 5.01.
“Borrower Offer of Specified Discount Prepayment” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
“Borrower Solicitation of Discount Range Prepayment Offers” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“Borrower Solicitation of Discounted Prepayment Offers” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $500,000.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Requirements of Law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
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“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any Capitalized Leases; provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”). For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
“Capitalized Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person (a) as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income Tax purposes); provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”).
“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and its Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrower and its Subsidiaries.
“Cash Management Obligations” means (a) obligations of the Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“Cash Management Services” has the meaning assigned to such term in the definition of “Secured Cash Management Obligations”.
“Casualty Event” means any event that gives rise to the receipt by the Borrower or any Subsidiary of any insurance proceeds or condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
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“Change in Law” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including for purposes of Section 2.15.
“Change of Control” means (x) the
acquisition of beneficial ownership, directly or indirectly, by any Person or group, other than the Permitted Holders (directly or indirectly,
including through one or more holding companies), of Equity Interests representing 35% or more of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests in the Lead Borrower and the percentage of the aggregate ordinary voting power
so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the Lead Borrower
held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one or more holding companies)
otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do
so designate, nominate or appoint) a majority of the Board of Directors of the Lead Borrower or (y) any “change of control”
or similar event under the ABL Credit Agreement or,
the Second Lien Credit Agreement, the First Lien Badcock Credit Agreement
or the Second Lien Badcock Credit Agreement.
For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase “Person or group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of the Lead Borrower directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
“Class” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Initial Term Loans, Incremental Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is an Initial Term Loan Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments, Other Term Loans, and Incremental Term Loans that have different terms and conditions shall be construed to be in different Classes.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations. For the avoidance of doubt, Badcock Collateral does not constitute “Collateral”.
| -17- |
“Collateral Agent” means JPM, in
its capacity as collateral agent hereunder and thereunderunder
the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Collateral Agreement” means the First Lien Collateral Agreement among the Borrower, each other Loan Party (other than Badcock) and the Collateral Agent, substantially in the form of Exhibit D.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from
(i)
each Borrower and Subsidiary (other than any Excluded Subsidiary or
Badcock) either (x) ain
the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Guarantee Agreement duly executed
and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including
by ceasing to be an Excluded Subsidiary but excluding Badcock),
a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
and
(ii)
each Borrower and Subsidiary (other than any Excluded Subsidiary or
Badcock) either (x) ain
the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Collateral Agreement duly executed
and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including
by ceasing to be an Excluded Subsidiary but excluding Badcock),
a supplement to the Collateral Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent, opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b)
subject to Section 5.14, all outstanding Equity Interests of the Borrower and each Subsidiary (other than (i) any Equity
Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than
a Borrower or Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent
constituting “securities” within the meaning of the UCC)) owned by or on behalf of any Loan Party,
(other than Badcock), shall have been pledged pursuant to the
Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of
such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests
in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;
provided that, with respect to any Equity Interests of Badcock (which the
Lead Borrower hereby agrees shall be evidenced by a certificate following the First Amendment Effective Date), the requirements set forth
in this clause (b) (including the issuance of such certificate) shall not be required to be satisfied until the date that is sixty (60)
days following the First Amendment Effective Date, or such longer time period as agreed by the Collateral Agent in its reasonable discretion;
| -18- |
(c) subject to Section 5.14, (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties (other than Badcock) as payees and all such obligors as payors in the form of the Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Collateral owned by any Loan Party (other than Badcock), all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements required by this Agreement, the Security Documents, Requirements of Law and reasonably requested by the Administrative Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Security Documents, the Intercreditor Agreements and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording; and
(e)
the Administrative Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly
executed and delivered by the record owner of such Mortgaged Property; provided, that, to the extent any Mortgaged Property is
located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes,
the Agents will cooperate with the Borrower or the applicable Loan Party in order to minimize the amount of tax payable in connection
with such Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting
the amount secured by such Mortgage to the book value of such Mortgaged Property, as reasonably determined by the Lead Borrower, if such
limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance
(or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring
the Lien of each such Mortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as
expressly permitted by Section 6.02, together with such customary lender’s endorsements (other
than a creditor’s rights endorsement) as the Administrative Agent may reasonably request to the extent available
in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Administrative Agent shall accept zoning reports
from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the
fair marketbook
value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower
be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan”
Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged
Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard
area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance
as provided in Section 5.07(b), (iv) opinions, addressed to the Administrative Agent and the Secured Parties, from counsel qualified
to opine in each jurisdiction where a Mortgaged Property is located regarding the enforceability of the Mortgage and
such other matters as may be in form and substance reasonably satisfactory to the Administrative Agent, (v) a survey or
existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 20162021
Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date
of preparation of such survey and otherwise reasonably satisfactory to the Administrative Agent, and (vi) evidence of payment of title
insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the
Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
| -19- |
Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of Badcock or (ii) particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if solely for purposes of this clause (a)(ii), and for so long as the Administrative Agent and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to the Borrower and its Affiliates (including the imposition of withholding or other material taxes)), outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents; (d) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall any Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall any Loan Party be required to complete any filings or other action with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required, except to the extent required under the Loan Documents with respect to distribution centers of the Loan Parties; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.
| -20- |
“Commitment” means with respect to any Lender, the Term Commitment or Other Term Commitment of any Class or any combination thereof (as the context requires).
“Commitment Parties” means JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Credit Suisse Loan Funding LLC and Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate).
“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.
“Compliance Certificate” has the meaning assigned to such term in Section 5.01(e).
“Consolidated Cash Interest Charges” means, for any period, the total interest expense of the Borrower and its Subsidiaries for such period determined on a consolidated basis net of any interest income, which shall be determined on a cash basis only and solely in respect of Indebtedness of the type described in the definition of Consolidated Total Indebtedness and excluding, for the avoidance of doubt, (i) any non-cash interest expense and any capitalized interest, whether paid or accrued, (ii) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (iii) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses (including agency costs, amendment, consent or other front end, one-off or similar non-recurring fees), (iv) any expenses resulting from discounting of indebtedness in connection with the application of recapitalization accounting or purchase accounting, (v) penalties or interest related to taxes and any other amounts of non-cash interest resulting from the effects of acquisition method accounting or pushdown accounting, (vi) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (vii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (viii) any one-time cash costs associated with breakage in respect of Swap Agreements for interest rates, (ix) any payments with respect to make whole premiums, commissions or other breakage costs of any Indebtedness, (x) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (xi) expensing of bridge, arrangement, structuring, commitment, fronting or other financing fees, (xii) fees and expenses (including any penalties and interest relating to Taxes but excluding any bona fide interest expense) associated with the consummation of the Transactions, (xiii) agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (xiv) fees (including any ticking fees) and expenses (including any penalties and interest relating to Taxes) associated with any Investment not prohibited by Section 6.04 or the issuance of Equity Interests or Indebtedness (in each case excluding any bona fide interest expense).
“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, plus:
(a) without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
| -21- |
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financing activities, plus (F) amortization or write-off of deferred financing fees, debt issuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing fees and expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received in connection with the purchasing or procurement of goods or services under any purchasing card or similar program;
(ii) provision for taxes based on income, profits, revenue or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges;
(iv) [reserved];
(v) net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness;
(vi) severance, relocation, integration and facilities’ opening costs and expenses and other business optimization costs and expenses and operating improvements (including related to new product introductions and any operating expenses, losses or charges related to the implementation of cost savings initiatives, operating expense reductions and other similar initiatives), recruiting fees, signing costs, reserve, retention, recruiting, relocation and signing bonuses and expenses, transition costs, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), contract terminations, professional and consulting fees incurred in connection with any of the foregoing and other one-time and nonoperational costs and expenses;
(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income, excluding cash distributions in respect thereof;
(ix) [reserved];
(x) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
| -22- |
(xi) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xii) any gain relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clause (c)(iv) below;
(xiii) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xiv) charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered by indemnification provisions or by any insurance provider in connection with the Transactions, a Permitted Acquisition or any other acquisition or Investment, disposition or any Casualty Event, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (xiv) (and if not so reimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the next measurement period);
(xv) cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (c) below for any previous period and not added back;
(xvi) Earn-Out payments, contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments incurred in connection with the Acquisition and/or any acquisition or other investment (including any acquisition or other investment consummated prior to the Effective Date) which are paid or accrued during the applicable period; and
(xvii) other adjustments (i) identified to the Lead Arrangers prior to the Effective Date, (ii) set forth in (A) the Model or (B) the quality of earnings report prepared by independent registered public accountants of recognized national standing or any other accounting firm reasonably acceptable to the Administrative Agent and delivered to the Administrative Agent in connection with the Transactions or (iii) contemplated by the Acquisition Agreement; plus
| -23- |
(b) without duplication, (i) the amount of “run rate” cost savings, operating expense reductions and synergies related to any of the Transactions, any Specified Transaction, any restructuring, any business optimization activities, cost saving initiatives and operating improvements or other initiatives, actions or events (each of the foregoing, an “Event”) that are reasonably identifiable and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Event (or, if the underlying Event is any of the Transactions, within 18 months after the Effective Date) (including actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower) (which cost savings, operating expense reductions and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that no cost savings, operating expense reductions or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions, other operating improvements or synergies that are included above or in the definition of “Pro Forma Basis” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided, further that the aggregate amount of addbacks to Consolidated EBITDA pursuant this clause (b) for any period, excluding any addbacks for such period pursuant to this clause (b) where the underlying Event is any of the Transactions, shall not exceed 20.0% of Consolidated EBITDA for such period (calculated after giving effect to such addbacks); less
(c) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business);
(ii) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(iii) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period;
(iv) any loss relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xi) and (a)(xii) above;
(v) the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary added (and not deducted in such period) to Consolidated Net Income;
(vi) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or cash reserve for a potential cash item that reduced Consolidated EBITDA in any prior period, any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase Consolidated EBITDA in such prior period, and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business; and
(vii) any amount included in Consolidated Net Income of such Person for such period attributable to non-controlling interests pursuant to the application of FASB Accounting Standards Codification Topic 810-10-45;
in each case, as determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP; provided that:
| -24- |
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
(II) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
(III) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to the Transactions, an “Acquired Entity or Business”), based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) in the case of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting, the Consolidated EBITDA of such Person multiplied by the ownership percentage of the Borrower or applicable Subsidiary therein;
(IV) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by the Borrower or any Subsidiary during such period (each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “Sold Entity or Business”), based on the Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Administrative Agent (for further delivery to the Lenders); and
(V) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any non-cash expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder).
Notwithstanding the foregoing, Consolidated EBITDA
shall be deemed to equal (a) $127,130,374 for the fiscal quarter of the Lead Borrower ended on or
about March 31, 2020, (b) $80,121,961 for the fiscal quarter of the Lead Borrower
ended on or about June 30, 2020, (c) $73,342,974 for the
fiscal quarter of the Lead Borrower ended on or about September 30, 2020, (d) $59,648,397102,145,028
for the fiscal quarter of the Lead Borrower ended on or about December 31, 2020 and,
(eb)
$25,460,393135,453,700
for the fiscal monthquarter
of the Lead Borrower ended on or about JanuaryMarch
31, 2021, (c) $129,457,547 for
the fiscal quarter of the Lead Borrower ended on or about June 30, 2021
and (d) $115,698,793 for the fiscal quarter of the Lead Borrower ended on or about September
30, 2021 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated
in this Agreement, in connection with any calculation on a Pro Forma Basis (including,
for the avoidance of doubt, in respect of any disposition of Badcock Collateral during the relevant periods)); provided
that such amounts of Consolidated EBITDA for any such fiscal quarter shall be adjusted to include, without duplication, any cost savings
that would otherwise be included pursuant to clause (b) of this definition.
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“Consolidated First Lien Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral on an equal priority basis (but without regard to the control of remedies) with Liens securing the Secured Obligations (it being understood and agreed that any Indebtedness under the ABL Loan Documents, the Badcock First Lien Credit Agreement and the Badcock Second Lien Credit Agreement shall constitute Consolidated First Lien Indebtedness).
“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) unusual, or non-recurring gains or losses for such period,
(b) the cumulative effect of a change in accounting principles during such period;
(c) any Transaction Costs incurred during such period,
(d) any fees, costs and expenses (including (x) any transaction or retention bonus or similar payment and (y) any indemnities) incurred during such period, or any amortization thereof for such period, in connection with or in relation to any acquisition (including any acquisition of a franchisee), non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, incurrence, issuance or repayment of debt or similar transaction, issuance of equity securities, option buyouts, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument or similar transaction (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
(e) any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
(f) accruals and reserves that are established or adjusted as a result of the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on Earn-Outs) or changes as a result of the adoption or modification of accounting policies during such period,
| -26- |
(g) stock-based award compensation expenses (including any one-time compensation related to unvested options outstanding as of the Effective Date),
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) any income (loss) from Investments recorded using the equity method,
(j) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration,
(k) any unrealized gain or loss due solely to fluctuations in currency values and the related tax effects, determined in accordance with GAAP,
(l) [Reserved],
(m) (A) the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of the Lead Borrower or any of its direct or indirect parent companies in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case, to the extent permitted in the Loan Documents,
(n) any costs or expenses incurred by the Borrower or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrower or Net Proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),
(o) the Consolidated Net Income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, and
(p) any non-cash goodwill impairment charges or other intangible asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of ASC 350 or other non-cash asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of SFAS 144.
There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefits related to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for any period the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its Subsidiaries), as a result of the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
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In addition, to the extent included in the Consolidated Net Income of such Person and its Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall (i) exclude any expenses and charges that are reimbursed by indemnification or other reimbursement provisions in connection with any acquisition or other investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder and (ii) include the amount of business interruption insurance proceeds received and, to the extent covered by insurance and actually reimbursed, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption.
“Consolidated Secured Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral.
“Consolidated Total Indebtedness”
means, as of any date of determination, (i) the aggregate amount of Indebtedness of the Lead Borrower and its Subsidiaries outstanding
on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness
resulting from the application of the acquisition method accounting in connection with the Transactions or any Permitted Acquisition (or
other Investment not prohibited hereunder)) consisting only of third-party Indebtedness for borrowed money, drawn but unreimbursed obligations
under letters of credit, letters of guaranty and bankers’ acceptances and third-party debt obligations evidenced by bonds, debentures,
loan agreements, promissory notes or similar instruments, and, in each case, without duplication, Guarantees by the Lead Borrower and
its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, in respect of any of the foregoing
Indebtedness of any other Person minus (ii) the sum of (x) unrestricted cash and cash equivalents of the Lead Borrower and its
Subsidiaries in an aggregate amount not to exceed $150,000,000 and (y) cash and cash equivalents restricted in favor of the Administrative
Agent, the Collateral Agent or any Lender (which may also include cash and cash equivalents securing other indebtedness (including Indebtedness
under the ABL Loan Documents or the,
the Second Lien Loan Documents, the Badcock First Lien Loan Documents or the Badcock Second Lien Loan Documents) secured
by a Lien on the Collateral and the Badcock Collateral).
“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, excluding the current portion of current and deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of Loans to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by the Lead Borrower and its Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (z) the effects of acquisition method accounting.
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“Contract Consideration” has the meaning assigned to such term in the definition of “Excess Cash Flow”.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b) or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning specified in Section 9.20.
“COVID-19 Pandemic” means the global spread of the coronavirus illness, which was declared to be a pandemic by the World Health Organization on March 11, 2020.
“Credit Agreement Refinancing Indebtedness”
means Indebtedness issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) by
the Borrower or any other Loan Party in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans
or Incremental Term Loans, (“Refinanced Debt”); provided
that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not
greater than the aggregate principal amount of the Refinanced Debt (plus any premium, accrued interest, original issue discount and fees
and expenses incurred in connection with such exchange, extension, renewal, replacement or refinancing), (b) does not mature earlier than
or have a Weighted Average Life to Maturity shorter than the Refinanced Debt (other than with respect to any customary bridge loan facility,
so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements
of this clause (b) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges),
(c) if such Indebtedness is unsecured or secured by the Collateral and the
Badcock Collateral on a junior lien basis to the Secured Obligations, does not (1) mature prior to the date that is 91
days after the maturity date of the Refinanced Debt (or if later, 91 days after the Latest Maturity Date), (2) have a Weighted Average
Life to Maturity shorter than the Refinanced Debt (or any later maturing Term Facility then in effect) plus 91 days, or (3) have mandatory
prepayment, redemption or offer to purchase events more onerous than those with respect to Refinanced Debt (and shall otherwise be subject
to the same terms as the Refinanced Debt) (in each case other than with respect to any customary bridge loan facility, so long as the
long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this
clause (c) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (d)
[reserved], (e) shall not be guaranteed by any entity that is not a Loan Party, (f) in the case of any secured Indebtedness (i) is not
secured by any assets not securing the Secured Obligations, (ii) if not comprising Indebtedness hereunder, is subject to the relevant
Intercreditor Agreement(s) and (iii) in the case of Refinanced Debt that was secured on a junior basis to the Secured Obligations, shall
be secured on
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a junior basis to the Secured Obligations; provided that any unsecured Refinanced Debt shall not be refinanced with secured Credit Agreement Refinancing Indebtedness, (g) in the case of Refinanced Debt that is subordinated in right of payment to the Secured Obligations, shall be subordinated on the same basis, (h) has covenants, events of default and guarantees (excluding, for avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions) of any such Indebtedness, that are not materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the Refinanced Debt (or, with respect to any Permitted Junior Priority Refinancing Debt, than the Indebtedness under the Second Lien Credit Agreement) (as determined by the Lead Borrower in good faith) unless (1) the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (2) any such provisions apply after the Latest Maturity Date at the time of such refinancing, (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower or (4) such terms reflect market terms and conditions (taken as a whole) at the time of such refinancing (as determined by the Lead Borrower in good faith) and are also added for the benefit of the Lenders of the Initial Term Loans (to the extent remaining outstanding after the incurrence or issuance of such refinancing Indebtedness) (it being understood to the extent that any such terms are added for the benefit of the Lenders of the Initial Term Loans, no consent shall be required from the Administrative Agent or any such Lenders of the Initial Term Loans), and (i) if such Indebtedness is secured on a pari passu basis with the Liens securing the Secured Obligations, such Indebtedness may participate on a pro rata basis or a less than a pro rata basis (but not greater than a pro rata basis) in any mandatory repayments or prepayments in respect of the Term Loans; provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Lead Borrower within such five (5) Business Day period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees). For the avoidance of doubt, such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
“Cure Amount” has the meaning assigned to such term in Section 7.02(a).
“Cure Expiration Date” has the meaning assigned to such term in Section 7.02(a).
“Cure Right” has the meaning assigned to such term in Section 7.02(a).
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
“Debtor Relief Laws” means the Bankruptcy Code, 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.
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“Default” means any event or condition that constitutes an Event of Default or that upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Lead Borrower or the Administrative Agent, or any other Lender, as applicable, in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any other Lender, as applicable, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or any other Lender’s, as applicable, receipt of such certification in form and substance satisfactory to it and the Administrative Agent or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Lead Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition or, if converted to cash after 180 days, the lesser of (a) the consideration in cash or cash equivalents received from such conversion and (b) the fair market value of such non-cash consideration at the time of such conversion).
“Discount Prepayment Accepting Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“Discount Range” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Notice” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C)(1) substantially in the form of Exhibit L.
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“Discount Range Prepayment Offer” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit M, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“Discount Range Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Discounted Prepayment Determination Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Discounted Prepayment Effective Date” means in the case of a Borrower Offer of Specified Discount Prepayment or Borrower Solicitation of Discount Range Prepayment Offer, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable, unless a shorter period is agreed to between the Borrower and the Auction Agent.
“Discounted Term Loan Prepayment” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Dispose” and “Disposition” each has the meaning assigned to such term in Section 6.05.
“Disposed EBITDA” means, with respect to any Sold Entity or Business for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Borrower and its Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.
“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
(a) matures or is mandatorily redeemable or contains any mandatory put, redemption or repayment provision (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests);
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof; or
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(d) in the case of any preferred Equity Interest, provides for scheduled payments of dividends and/or distributions in cash;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided, however, that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after, or payment thereunder is subject to the prior, repayment in full of all the Loans and all other Loan Document Obligations that are accrued and payable and the termination of the Commitments, (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of the Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Borrower or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person and (iii) any Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for a requirement of payment of dividends or distributions in violation of clauses (a) or (b) above shall not constitute a Disqualified Equity Interest if the terms of such Equity Interest (x) give the applicable issuer the option to elect to pay such dividends or distributions on a non-cash basis and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under Section 6.07 of this Agreement or would result in an Event of Default hereunder.
“Disqualified Lenders” means (i) those Persons identified by the Lead Borrower to the Administrative Agent in writing prior to the Effective Date as being “Disqualified Lenders”, (ii) those Persons who are competitors of the Lead Borrower, the Acquired Company and/or any of their Subsidiaries or Persons Controlling or Controlled by any of the foregoing, in each case, identified by the Lead Borrower to the Administrative Agent from time to time in writing (including by email) which designation shall become effective three (3) Business Days after the delivery of each such written designation to the Administrative Agent, but which shall not apply retroactively to disqualify any persons that have previously acquired, or entered into a trade to acquire, an assignment or participation interest in the Loan and (iii) in the case of each Person identified pursuant to clauses (i) and (ii) above, any of their Affiliates (other than any such Affiliate that is primarily engaged in, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the primary Disqualified Lender does not possess the power to direct or cause the direction of the investment policies of such entity referenced in clause (ii) above, unless separately identified by the Lead Borrower pursuant to clause (i) above) that are either (x) identified in writing by the Lead Borrower to the Administrative Agent from time to time or (y) clearly identifiable as Affiliates on the basis of such Affiliate’s name. Such list of Disqualified Lenders shall be available for inspection upon request by any Lender.
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.
“Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the occurrence of:
(a) a notification by the Administrative Agent to (or the request by the Lead Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
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(b) the joint election by the Administrative Agent and the Lead Borrower to trigger a fallback from the LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders.
“Earn-Outs” means, with respect to any Person, obligations of such Person arising from Permitted Acquisitions or other Investments permitted hereunder which are payable to the sellers thereunder in their capacity as such based on the achievement of specified financial results or other criteria or milestones over time.
“ECF Percentage” means, with respect to the prepayment required by Section 2.11(d) with respect to any fiscal year of the Lead Borrower, 50%; provided, that, if the First Lien Net Leverage Ratio (prior to giving effect to the applicable prepayment pursuant to Section 2.11(d), but after giving effect to any voluntary prepayments made pursuant to Section 2.11(a) prior to the date of such prepayment) as of the end of the applicable fiscal year is (a) less than or equal to 2.17 to 1.00 but greater than 1.92 to 1.00, the ECF Percentage shall be reduced to 25.0% for such fiscal year and (b) less than or equal to 1.92 to 1.00, the ECF Percentage shall be reduced to 0.00% for such fiscal year.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Effective Date” means March 10, 2021.
“Effective Yield” means, as of any date of determination, the sum of (i) the higher of (A) the Adjusted LIBO Rate on such date for a deposit in dollars with a maturity of one month and (B) the Adjusted LIBO Rate floor, if any, with respect thereto as of such date, (ii) the interest rate margins as of such date (with such interest rate margin and interest spreads to be determined by reference to the Adjusted LIBO Rate) and (iii) the amount of original issuance discount and/or upfront fees thereon (converted to yield assuming a four-year average life and without any present value discount) (it being understood that customary arrangement, underwriting, structuring or commitment fees payable to any of the Commitment Parties in connection with the applicable Term Commitment or to one or more arrangers, bookrunners or structuring advisors (or their affiliates) of any Incremental Facility shall be excluded).
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“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than the Borrower or any of its Affiliates), other than, in each case, (i) a natural person (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person), (ii) a Defaulting Lender or (iii) a Disqualified Lender; provided that a Disqualified Lender will constitute an Eligible Assignee solely to the extent that such assignment is consented to in writing by the Lead Borrower. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that the Administrative Agent shall have no liability with respect to any assignment made to a Disqualified Lender unless (i) the Administrative Agent has acted with gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable judgment) and (ii) the Lead Borrower has not consented to such assignment or is not deemed to have consented to such assignment to the extent required by Section 9.04(b).
“Enterprise Transformative Event” means any merger, acquisition, Investment, dissolution, liquidation, consolidation or Disposition, in any such case by the Borrower or any Subsidiary, that is either (a) not permitted by the terms of any Loan Document immediately prior to the consummation of such transaction or (b) if permitted by the terms of the Loan Documents immediately prior to the consummation of such transaction, would not provide the Borrower and the Subsidiaries with adequate flexibility under the Loan Documents for the continuation or expansion of their combined operations following such consummation, as reasonably determined by the Lead Borrower acting in good faith.
“Environmental Laws” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“Environmental Liability” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity
Grant” means Equity Interests issued within 365 days after May 1, 2020 by Liberty/Revolution Top Parent to
Brent Turner; provided that no more than 5% of the Equity Interests issued by Liberty/Revolution
Top Parent as of May 1, 2020 may be so issued.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Title IV and Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 4001(b) of ERISA or Section 414 of the Code.
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“ERISA Event” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability, or the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity 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.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital and long-term account receivables for such period,
(iv) an amount equal to the aggregate net non-cash loss on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income, and
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(v) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) gains, less:
(b) the sum, without duplication, of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income pursuant to the last sentence of the definition of “Consolidated Net Income” to the extent such amounts are due but not received during such period) and cash charges included in clauses (a) through (j) of the definition of “Consolidated Net Income” (other than cash charges to the extent financed with the proceeds of long-term Indebtedness (other than revolving Indebtedness)),
(ii) the amount of capital expenditures made in cash or accrued during such period, except to the extent that such capital expenditures were financed with the proceeds of (x) long term Indebtedness of the Borrower or its Subsidiaries (other than revolving Indebtedness) or (y) the issuance of Equity Interests,
(iii) (x) the aggregate amount of all principal payments of Indebtedness (including the principal component of payments in respect of Capitalized Leases, but excluding (A) all principal payments of Indebtedness to the extent reducing the required prepayment of Term Loans pursuant to Section 2.11(d) as a result of the application of clauses (i) through (v) of the first proviso thereof, (B) all prepayments of revolving loans except to the extent there is an equivalent permanent reduction in commitments thereunder and (C) all principal payments of Indebtedness to the extent financed with long-term Indebtedness (other than revolving Indebtedness)) and (y) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, to the extent not financed with long-term Indebtedness (other than revolving Indebtedness),
(iv) an amount equal to the aggregate net non-cash gain on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
(v) increases in Consolidated Working Capital and long-term account receivables for such period,
(vi) cash payments by the Borrower and its Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness,
(vii) the aggregate amount of payments and expenditures actually made by the Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such payments and expenditures are not expensed during such period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries other than revolving Indebtedness or (y) the issuance of Equity Interests,
(viii) cash payments by the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries or (y) the issuance of Equity Interests,
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(ix) without duplication of amounts deducted from Excess Cash Flow in respect of a prior period, at the option of the Lead Borrower, the aggregate consideration (including Earn-Outs) required to be paid in cash by the Borrower and its Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “Contract Consideration”) entered into prior to or during such period relating to capital expenditures, Permitted Acquisitions or other Investments permitted hereunder (other than intercompany Investments or Investments in cash equivalents) to be consummated or made during the period of four consecutive fiscal quarters of Lead Borrower following the end of such period (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)); provided that to the extent the aggregate amount actually utilized to finance such capital expenditures, Permitted Acquisitions or other applicable Investments during such subsequent period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such subsequent period of four consecutive fiscal quarters,
(x) the amount of cash rent payments made in such period to the extent they exceed the amount of rent payments deducted in determining Consolidated Net Income for such period,
(xi) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, and
(xii) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) losses or charges.
“Excess Cash Flow Period” has the meaning set forth in Section 2.11(d).
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.
“Excluded Accounts” means (a) Zero Balance Accounts (provided that, upon any such account ceasing to be a Zero Balance Account, such account shall cease to be an Excluded Account), (b) Store Accounts, (c) accounts into which government receivables and government reimbursement payments are deposited, (d) payroll accounts (including accounts used for the disbursement of payroll, payroll taxes and other employee wage and benefit payments, including 401(k) and other retirement plans, rabbi trusts for deferred compensation and health care benefits), (e) withholding and trust accounts, escrow and other fiduciary accounts, (f) Manual Sweeping Accounts, (g) Deposit Accounts, Securities Accounts and commodity accounts that (x) individually have a daily balance of not more than $100,000 and (y) together with all other Deposit Accounts, Securities Accounts and commodity accounts constituting Excluded Accounts under this clause (g), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or commodity accounts and (h) consisting solely of cash or Cash Equivalents securing Indebtedness permitted by Section 6.01(a)(xxvi) to the extent such security constitutes Liens permitted by Section 6.02(xxiii).
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“Excluded Assets” means, (a) any fee-owned real property that is not Material Real Property, all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters) and any real property that contains improvements and is located in an area determined (as of the First Amendment Effective Date with respect to real property owned on the First Amendment Effective Date and as of the date of acquisition of any real property acquired after the First Amendment Effective Date) by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (b) motor vehicles, railcars, trailers, aircraft, aircraft engines, construction and earth moving equipment and other assets subject to certificates of title or ownership (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (d) commercial tort claims with an individual value, as determined by the Lead Borrower in good faith, of less than $5,000,000 and commercial tort claims for which no complaint or counterclaim has been filed in a court of competent jurisdiction, (e) Equity Interests in any Person (other than any Wholly Owned Subsidiaries) to the extent the pledge thereof to the Collateral Agent is not permitted by the terms of such Person’s organizational, incorporation or joint venture documents, (f) [Reserved], (g) Equity Interests of any Immaterial Subsidiary (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries (including real estate special purpose entities), (h) [reserved], (i) any lease, license or other agreement, government approval or franchise with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, such lease, license or other agreement, government approval or franchise (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code, (j) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in each case if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), (k) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act, (l) any asset if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any applicable Requirements of Law, rule or regulation, or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the Uniform Commercial Code or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority, unless such consent, approval, license or authorization has been received in consultation with the Administrative Agent, (m) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Borrower or any Material Subsidiary of the Borrower), under the terms of any applicable organizational or incorporation documents, joint venture agreement or shareholders’ agreement, equity interests in any person other than Material Subsidiaries that are Wholly Owned Subsidiaries after giving effect to the anti-assignment provisions of the UCC or any other applicable Requirements of Law, (n) Excluded Accounts, (o) assets to the extent a security interest in such assets would result in material adverse tax consequences to the Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (p) assets sold to any Person who is not a Loan Party in compliance with the Loan Documents, (q) assets owned by a Subsidiary Loan Party after the release of the Guarantee of such Subsidiary Loan Party pursuant to the Loan Documents, and (r) any assets with respect to which, in the reasonable judgment of the Administrative Agent and the Lead Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences as determined by the Lead Borrower and the Administrative Agent in good faith) of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.
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“Excluded Information” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Excluded Party” has the meaning assigned to such term in Section 9.03(b).
“Excluded Subsidiary” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of the Lead Borrower, (b) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation (so long as any such contractual prohibition is not incurred in contemplation of the acquisition of such Subsidiary, and only for so long as such contractual prohibition shall be continuing) existing on the Effective Date or, if later, the date such Subsidiary first becomes a Subsidiary, from guaranteeing the Secured Obligations or which would require any governmental or regulatory consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained (c) any Subsidiary acquired pursuant to a Permitted Acquisition or similar Investment financed with secured Indebtedness permitted to be incurred pursuant to Section 6.01(xx) (and not incurred in contemplation of such Permitted Acquisition or similar Investment) and any subsidiary thereof that guarantees such Indebtedness, in each case to the extent, and so long as, such secured Indebtedness prohibits such Subsidiary from becoming a Loan Party, providing a Guarantee of the Secured Obligations or granting Liens on its assets as security for the Secured Obligations, (d) any direct or indirect U.S. subsidiary of a Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code, and any direct or indirect U.S. Subsidiary that has no material assets other than the equity of (or equity of and obligations owed to or treated as owed by) one or more direct or indirect non-U.S. subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of the Code, (e) any Immaterial Subsidiary, (f) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Lead Borrower (as agreed in writing), the cost or other consequences (including any adverse tax consequences as determined in good faith by the Borrower and the Administrative Agent) of providing the guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary if the provision of a guaranty by such Subsidiary would result in material adverse tax consequences to the Lead Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (h) any other Subsidiary excused from becoming a Loan Party pursuant to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”, (i) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (j) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries and (k) any Foreign Subsidiary; provided that any Immaterial Subsidiary that is a signatory to the Collateral Agreement and the Guarantee Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Lead Borrower has otherwise notified the Administrative Agent; provided further that the Lead Borrower may at any time and in its sole discretion, with the consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), cause any Subsidiary to not be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents; provided, further, that notwithstanding the foregoing, no Subsidiary that Guarantees the obligations under the ABL Credit Agreement, the Second Lien Credit Agreement, the First Lien Badcock Credit Agreement or the Second Lien Badcock Credit Agreement shall be an Excluded Subsidiary hereunder.
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“Excluded Swap Obligation” means, with respect to any Loan Party at any time, any Secured Swap Obligation under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, 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 Secured 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 Exchange Act (determined after giving effect to any “Keepwell”, support or other agreement for the benefit of such Loan Party), at the time such guarantee or grant of a security interest becomes effective with respect to such related Secured Swap Obligation. If a Secured Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Secured Swap Obligation that is attributable to swaps that are or would be rendered illegal due to such guarantee or security interest.
“Excluded Taxes” means, with respect to any Recipient, (a) Taxes imposed on (or measured by) net income (however denominated) and franchise Taxes by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office located in such jurisdiction (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Lead Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office.
“Existing FRG ABL Credit Agreement” means that certain ABL Credit Agreement, dated as of September 23, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing Term Loan Credit Agreement” means that certain Credit Agreement, dated as of February 14, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing VSI ABL Credit Agreement” means that certain Second Amended and Restated Loan and Security Agreement, dated as of December 16, 2019, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and JPM, as agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
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“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“FG Newco Intermediate AF” has the meaning assigned to such term in the preliminary statements hereto.
“FG Newco PSP” has the meaning assigned to such term in the preliminary statements hereto.
“Financial Maintenance Covenants” means the covenants set forth in Section 6.10.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or corporate controller of the Lead Borrower, another officer of the Lead Borrower with similar responsibilities, or the chief executive officer or chief operating officer of the Lead Borrower.
“Financing Transactions” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party and (b) the borrowing of Loans hereunder and the use of the proceeds thereof.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Amendment” means that certain First Amendment to First Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the other Loan Parties party thereto and the Agents.
“First Amendment Effective Date” means November 22, 2021.
“First Amendment Effective Date Badcock Material Real Property” has the meaning assigned to such term in the definition of the term “Badcock Material Real Property.”
“First Lien Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated First Lien Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“First Lien Pari Passu Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral (and from and after Payment in Full of Badcock Obligations, the Badcock Collateral) on a pari passu basis (but without regard to the control of remedies) (and any other Persons party thereto) with the Loan Document Obligations in customary form reasonably acceptable to the Administrative Agent and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“First Lien/Second Lien Intercreditor Agreement”
means (a) that certain Amended and Restated First Lien/Second
Lien Intercreditor Agreement, dated as of the First Amendment Effective
Date, by and among the Agents and,
the Second Lien Agent, the Badcock First Lien Agent and the Badcock Second
Lien Agent, and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended
or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement
between the Second Lien Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the Second
Lien Credit Agreement and the other Second Lien Loan Documents) and the Agents (or any of them) (and any other Persons party thereto),
that is reasonably acceptable to the Administrative Agent and the Lead Borrower, as may be amended, amended and restated, modified, supplemented,
extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
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“Fixed Amounts” has the meaning assigned to such term in Section 1.07(b).
“Fixed Charge Coverage Ratio” means, for any period of four fiscal quarters of the Lead Borrower, the ratio of (a) Consolidated EBITDA for such period minus (i) all Unfinanced Capital Expenditures for such period and (ii) cash taxes paid (including in the form of tax distributions) for such period (net of cash refunds received during such period) to (b) the sum of (i) Consolidated Cash Interest Charges paid or payable currently for such period plus (ii) scheduled amortization of Funded Debt (including Capitalized Leases) paid or payable currently in cash for such period.
“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means the applicable benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate (as specified as of the Effective Date in the definition of LIBO Screen Rate).
“Foreign Lender” has the meaning assigned to such term in Section 2.17(e)(ii).
“Foreign Prepayment Event” has the meaning assigned to such term in Section 2.11(g).
“Foreign Subsidiary” means each Subsidiary that is organized under or incorporated in the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.
“Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Lead Borrower and its Subsidiaries.
“Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any Loan Party or Subsidiary of a Loan Party to comply with any applicable law, rule, regulation or order of any Governmental Authority.
“Franchise Laws” means all applicable laws, rules, regulations, orders, binding guidance or other requirements of the United States Federal Trade Commission or any other Governmental Authority relating to the relationship between franchisor and franchisees or to the offer, sale, termination, non-renewal or transfer of a franchise.
“Franchise Rights” mean the rights of a franchisee of any Loan Party or Subsidiary within any specified geographic area.
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“Funded Debt” means all Indebtedness
of the Borrower and its Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within
one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than
one year from such date, including Indebtedness in respect of the Loans and in respect of the Loans under and as defined in each of the
ABL Credit Agreement and,
the Second Lien Credit Agreement, the First Lien Badcock Credit Agreement
and the Second Lien Badcock Credit Agreement.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations or Capitalized Leases shall be determined in accordance with the definitions of such terms.
“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“Governmental Authority” means any (i) federal, state, local, municipal, or other government, (ii) governmental or quasi-Governmental Authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (iii) body exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). 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 in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
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“Guarantee Agreement” means the First Lien Guarantee Agreement among the Loan Parties (other than Badcock) and the Administrative Agent, substantially in the form of Exhibit B.
“Hazardous Materials” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
“IBA” has the meaning specified in Section 1.09.
“Identified Participating Lenders” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Identified Qualifying Lenders” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“Immaterial Subsidiary” means any Subsidiary other than a Material Subsidiary.
“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.
“Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness or in the form of Qualified Equity Interests of the Borrower or any of its direct or indirect parent entities, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.
“Incremental Cap” means, as of any date of determination, (I) the greater of $315,000,000 and 100.0% of Consolidated EBITDA for the most recently ended Test Period as of such time, plus (II) an amount equal to all voluntary prepayments and debt buy-backs and payments utilizing the “yank a bank” provisions herein (to the extent that the underlying debt is retired and not assigned) of the Initial Term Loans and loans under any Incremental Facilities, Incremental Equivalent Debt and Credit Agreement Refinancing Indebtedness, in each case, made on or prior to the date of any such incurrence (in the case of any revolving facility, only so long as it is accompanied by a corresponding permanent commitment reduction thereunder), in each case, to the extent secured on a pari passu basis with the Term Facility except, in each case, to the extent (x) incurred in reliance on clause (III) below or (y) financed with the proceeds of long-term Indebtedness (other than revolving Indebtedness) of the Borrower or its Subsidiaries, plus (III) the maximum aggregate principal amount that can be incurred without causing the First Lien Net Leverage Ratio, after giving effect to the incurrence of such Incremental Facility (which shall assume that the full amount of any revolving credit facilities being established at such time are fully drawn) and the use of proceeds thereof and any acquisition consummated concurrently therewith and any other acquisition, disposition, debt incurrence, debt retirement and other appropriate pro forma adjustment events, including any debt incurrence or retirement subsequent to the end of the applicable Test Period and on or prior to the date of such incurrence (but in any event calculated without netting the cash proceeds of such Incremental Facility and any other Incremental Facility incurred concurrently), on a Pro Forma Basis (but excluding the cash proceeds of such incurrence and without giving effect to any simultaneous incurrence of any Incremental Facility or Incremental Equivalent Debt made pursuant to the foregoing clause (I)), to exceed
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(x) 2.67 to 1.00 as of the last day of the most recently ended period of four consecutive fiscal quarters of the Lead Borrower for which financial statements have been delivered to the Administrative Agent, in each case, at the Lead Borrower’s option, either (A) at the time of the effectiveness of such Incremental Facility or Incremental Equivalent Debt or (B) in the case of any Incremental Facility or Incremental Equivalent Debt incurred to finance a Limited Condition Transaction, at the time a definitive agreement is entered into with respect to the transaction to be financed by such Incremental Facility or Incremental Equivalent Debt. In calculating the Incremental Cap, (1) the Lead Borrower may elect to use the amounts permitted under clause (III) of the preceding sentence before using clause (I) and/or (II) of the preceding sentence, and if multiple amounts are available and the Lead Borrower does not make an election, the Lead Borrower will be deemed to have utilized amounts permitted first under clause (III), second under clause (II) and last under clause (I), and (2) the Lead Borrower may, in its sole discretion, classify or reclassify, or later divide, classify or reclassify (as if incurred at such later time), any item of Indebtedness (or any portion thereof) as between clauses (I), (II) and (III) of the preceding sentence in any manner that complies with the preceding sentence and will be entitled to only include the amount and type of such item of Indebtedness (or any portion thereof) in one of the clauses in the preceding sentence (or any portion thereof) and such item of Indebtedness (or any portion thereof) shall be treated as having been incurred or existing pursuant to only such clause or clauses (or any portion thereof) without giving pro forma effect to such item (or portion thereof) when calculating the amount of Indebtedness that may be incurred pursuant to any other clause.
“Incremental Equivalent Debt” has the meaning assigned to such term in Section 6.01(a)(vii).
“Incremental Facility” has the meaning assigned to such term in Section 2.20(a).
“Incremental Facility Amendment” has the meaning assigned to such term in Section 2.20(d).
“Incremental Term Facility” has the meaning assigned to such term in Section 2.20(a).
“Incremental Term Loan” has the meaning assigned to such term in Section 2.20(a).
“Incurrence Based Amounts” has the meaning assigned to such term in Section 1.07(b).
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (w) trade accounts payable in the ordinary course of business, (x) any Earn-Out obligation, purchase price adjustment or similar obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid within thirty (30) days after being due and payable, (y) liabilities associated with customer prepayments and deposits and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller,
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(iii) contingent indemnity and similar obligations incurred in the ordinary course of business (iv) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (v) Indebtedness of any Person that is a direct or indirect parent of the Borrower appearing on the balance sheet of the Borrower, or solely by reason of push down accounting under GAAP, (vi) any non-compete or consulting obligations incurred in connection with a Permitted Acquisition, (vii) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (viii) for the avoidance of doubt, any Qualified Equity Interests issued by the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and its Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).
“Indemnified Taxes” means Taxes imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document, other than Excluded Taxes and Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Information” has the meaning assigned to such term in Section 9.12(a).
“Initial Term Loan Commitment” means the commitment of a Lender to make Initial Term Loans, and “Initial Term Loan Commitments” means such commitments of all Lenders. The aggregate amount of the Initial Term Loan Commitments as of the Effective Date is $1,000,000,000.
“Initial Term Loan Lender” means a Lender with an Initial Term Loan Commitment or an outstanding Initial Term Loan.
“Initial Term Loans” means the Term Loans made on the Effective Date pursuant to Section 2.01.
“Intellectual Property” has the meaning assigned to such term in the Collateral Agreement.
“Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Collateral that can be perfected by the filing of such security agreements.
“Intercreditor Agreement” means the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement, the Badcock Intercreditor Agreement, the First Lien Pari Passu Intercreditor Agreement and/or the Junior Lien Intercreditor Agreement, as the context may require.
“Interest Election Request” means a request by the Borrower to convert or continue a Term Loan Borrowing in accordance with Section 2.07.
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“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and on the Term Maturity Date and (b) with respect to any Eurodollar Loan, the last Business Day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and on the Term Maturity Date.
“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Eurodollar Borrowing and ending on the date that is one, two, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if agreed to by each Lender participating therein, twelve months or such other period less than one month thereafter as the Borrower may elect); provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period and (c) no Interest Period shall extend beyond the Term Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available for dollars) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available for dollars) that exceeds the Impacted Interest Period, in each case, at such time.
“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 or Indebtedness or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of the Borrower and the Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms)) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be 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 in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good
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faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
“Investors” means the one or more co-investors and other investors (which may include existing shareholders, board members, management or other rollover investors of the Acquired Company) who are holders of Equity Interests in the Borrower (or any direct or indirect parent thereof) on the Effective Date after giving effect to the Transactions, together with their Affiliates.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“JPM” means JPMorgan Chase Bank, N.A.
“Judgment Currency” has the meaning assigned to such term in Section 9.18.
“Junior Financing” means (a) any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any Subsidiary) for borrowed money in a principal amount in excess of $10,000,000 that is secured on a junior basis to the Secured Obligations, unsecured or contractually subordinated in right of payment or right of lien to the Loan Document Obligations and (b) any Permitted Refinancing in respect of the foregoing. For avoidance of doubt, Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents and Indebtedness under the Badcock First Lien Credit Agreement and the other Badcock First Lien Loan Documents shall not constitute Junior Financing but Indebtedness under the Second Lien Credit Agreement and the other Second Lien Loan Documents and Indebtedness under the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Loan Documents shall constitute Junior Financing.
“Junior Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral and the Badcock Collateral on a junior basis (but without regard to the control of remedies) to the Loan Document Obligations and the Indebtedness incurred under the Second Lien Credit Agreement and the other Second Lien Loan Documents (and any other Persons party thereto), in customary form reasonably acceptable to the Administrative Agent and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
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“Latest Maturity Date” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan or any Other Term Commitment, in each case as extended in accordance with this Agreement from time to time.
“LCA Election” has the meaning assigned to such term in Section 1.06.
“LCA Test Date” has the meaning assigned to such term in Section 1.06.
“Lead Arranger” means each of JPMorgan Chase Bank, N.A., Citizens Bank, N.A. and Credit Suisse Loan Funding LLC and Credit Suisse AG (acting through such of its affiliates or branches as it deems appropriate), each in its capacity as a lead arranger.
“Lead Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Legal Reservations” has the meaning assigned to such term in Section 3.02.
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, an Incremental Facility Amendment, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Liberty
Area Development Rights” means certain development rights allotted or sold, or able to be allotted or sold,
to an area developer to market and sell territories within a specified geographic area to eligible franchisees.
“Liberty
Franchise Rights” mean the rights of a franchisee of any Liberty Party within any specified geographic area.
“Liberty
Parties” means Franchise Group Intermediate L 1, LLC, a Delaware limited liability company, and each of its
Subsidiaries.
“Liberty/Revolution
Top Parent” means Franchise Group Intermediate L, LLC, a Delaware limited liability company.
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBO Rate shall be the Interpolated Rate.
“LIBO Screen” has the meaning assigned to such term in the definition of “LIBO Screen Rate”.
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“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion) (the “LIBO Screen”); provided that if the LIBO Screen Rate as so determined would be less than 0.75%, such rate shall be deemed to 0.75% for the purposes of this Agreement.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, ground lease, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Limited Condition Transaction” means any Permitted Acquisition or other investment, incurrence of Indebtedness, Restricted Payment or repayment, repurchase or redemption of Indebtedness permitted hereunder by the Borrower or one or more of its Subsidiaries.
“Loan Document Obligations” means (a) the due and punctual payment in cash by the Borrower of (i) the principal of the Loans and all accrued and unpaid interest thereon at the Applicable Rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents to which it is a party, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment in cash and performance of all other monetary obligations of the Borrower under or pursuant to each of the Loan Documents to which it is a party and (c) the due and punctual payment and performance of all the monetary obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents to which it is a party (including interest and monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Loan Documents” means this Agreement, any Refinancing Amendment, any Loan Modification Agreement, any Incremental Facility Amendment, the Guarantee Agreement, the Badcock Guarantee Agreement, the Collateral Agreement, the Badcock Collateral Agreement, the other Security Documents, the other Badcock Security Documents, each Intercreditor Agreement then in effect, the Arranger Fee Letter, the Administrative Agent Fee Letter and, except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e).
“Loan Modification Agreement” means a Loan Modification Agreement, in form reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Accepting Lenders, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
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“Loan Modification Offer” has the meaning specified in Section 2.24(a).
“Loan Parties” means the Borrower and any Subsidiary Loan Parties.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Majority in Interest”, when used in reference to Lenders of any Class, means, at any time, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
“Manual Sweeping Accounts” shall have the meaning ascribed to the term “Manual Sweeping Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Master Agreement” has the meaning assigned to such term in the definition of “Swap Agreement”.
“Master Intercompany Note” means
the Amended and Restated Master Intercompany Note substantially
in the form of Exhibit I.,
dated the First Amendment Effective Date, pursuant to which the Lead Borrower and its Subsidiaries (other than Badcock) are the “payees”
and the Lead Borrower and its Subsidiaries are the “payors”.
“Material Adverse Effect” means (a) on the Effective Date or with respect to any representations and warranties made as of the Effective Date (any date prior thereto), a Company Material Adverse Effect (as defined in the Acquisition Agreement as in effect on the Effective Date) and (b) otherwise, a circumstance or condition that would materially and adversely affect (i) the business, results of operations or financial condition of the Lead Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Loan Parties, taken as a whole, to perform their payment obligations under the applicable Loan Documents or (iii) the rights and remedies, taken as a whole, of the Agents and the Lenders under the Loan Documents.
“Material Indebtedness” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Material Intellectual Property” means any intellectual property owned by the Borrower or any of its Subsidiaries, the loss of which would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
“Material Non-Public Information” means material non-public information with respect to the Lead Borrower or its Affiliates, or the respective securities of any of the foregoing for purposes of United States Federal and state securities laws.
“Material Real Property” means real property (including fixtures) (i) located in the United States, (ii) first acquired by any Loan Party (other than Badcock) after the Effective Date and (iii) owned (but not leased or ground-leased) by any Loan Party (other than Badcock) with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Badcock Material Real Property does not constitute “Material Real Property”.
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“Material Subsidiary” means each Wholly Owned Subsidiary that, as of the last day of the fiscal quarter of the Lead Borrower most recently ended, had net revenues or total assets for such quarter in excess of 2.5% of the consolidated net revenues or total assets, as applicable, of the Lead Borrower and its Subsidiaries for such fiscal quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Lead Borrower most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or total assets, as applicable, of the Borrower and its Subsidiaries for such fiscal quarter, the Lead Borrower shall designate at its sole discretion one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as Borrower is in compliance with the foregoing.
“Maximum Rate” has the meaning assigned to such term in Section 9.16.
“MFN Adjustment” has the meaning assigned to such term in Section 2.20(b)(i).
“MFN Cushion” means 0.50% per annum.
“Model” means the model delivered by the Lead Borrower to the Lead Arrangers on or prior to the Effective Date.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Mortgage” means a mortgage, deed
of trust, assignment of leases and rentsdeed
to secure debt or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for
the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent and
the Borrower.
“Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted pursuant to the “Collateral and Guarantee Requirement”, Section 5.11, Section 5.12 or Section 5.14 (if any).
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Proceeds” means, with respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any cash or Permitted Investments received in respect of any Designated Non-Cash Consideration or other non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or Earn-Out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by the Borrower and its Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance
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premiums, and related search
and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses
and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition of an
asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount of
all payments that are permitted hereunder and are made by the Borrower and its Subsidiaries as a result of such event to repay Indebtedness
(other than (xA)
the Loans or,
(yB)
other pari passu or juniorin
respect of the Collateral, Indebtedness secured by a lien on thesuch
Collateral that is pari passu or junior to the lien on such Collateral
securing the Secured Obligations and (C) in respect of the Badcock Collateral, Indebtedness secured by a lien on such Badcock Collateral
that is pari passu or junior to the lien on such Badcock Collateral securing the Secured Obligations) secured by
such asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds
thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to
or for the account of the Borrower or its Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated
with such asset and retained by the Borrower or any Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to
be payable) and the amount of any reserves established by the Borrower and its Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of
any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower
at such time of Net Proceeds in the amount of such reduction.
“Non-Accepting Lender” has the meaning assigned to such term in Section 2.24(c).
“Non-Cash Charges” means (a) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization of intangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from the application of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisition method accounting, (e) depreciation and amortization (including amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (including non-cash charges related to deferred rent) (provided, in each case, that if any non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).
“Non-Cash Compensation Expense” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(c).
“Non-Wholly Owned Subsidiary” means any Subsidiary other than a Wholly Owned Subsidiary.
“Not Otherwise Applied” means, with reference to the Available Amount or the Available Equity Amount, that such amount was not previously applied pursuant to 6.04(m), 6.07(a)(vii) and 6.07(b)(vii).
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“Note” means a promissory note of the Borrower, in substantially the form of Exhibit R, payable to a Lender in a principal amount equal to the principal amount of the Term Loans of such Lender.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Offered Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Offered Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Organizational Documents” means, with respect to any Person, the charter, articles of association or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of any present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient (x) having executed, delivered, become a party to, performed its obligations or received payments under, received or perfected a security interest under or enforced any Loan Documents or engaged in any other transaction pursuant to this Agreement or (y) having sold or assigned an interest in any Loan Documents).
“Other Taxes” means any and all present or future recording, stamp, documentary or similar Taxes arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“Other Term Commitments” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
“Other Term Loans” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Participant” has the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” has the meaning assigned to such term in Section 9.04(c)(ii).
“Participating Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
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“Payment in Full of Badcock Obligations” means, collectively, (i) the termination of all Commitments (under and as defined in the Badcock First Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock First Lien Credit Agreement) (other than contingent indemnification obligations) and (ii) the termination of all Commitments (under and as defined in the Badcock Second Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock Second Lien Credit Agreement) (other than contingent indemnification obligations).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Perfection Certificate” means a certificate substantially in the form of Exhibit C.
“Perfection Requirements” means the
need for appropriate filings, registrations, endorsements, notarizations, stampings and/or notifications of the Security Documents or,
the Badcock Security Documents, the Collateral or the Badcock
Collateral and any other steps or actions necessary in any jurisdiction or under any laws or regulations in order to (i)
create or perfect the Liens on the Collateral granted by the Loan Parties (other
than Badcock) in favor of the Secured Parties, (ii) create or perfect the Liens on the Badcock Collateral granted by Badcock in
favor of the Secured Parties and/or to(iii)
achieve the relevant priority expressed therein or in the Intercreditor Agreements (including the delivery of any stock certificate or
promissory note required to be delivered pursuant to the applicable Loan Documents).
“Permitted Acquisition” means the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger or consolidation between any Subsidiary and such Person), or (ii) such Person is merged into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a Similar Business (or assets with respect thereto), (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement” to the extent applicable shall have been taken to the extent required by Sections 5.11 or 5.12 (or shall be taken within the time periods set forth in this Agreement or such later date as agreed to by the Administrative Agent in its sole discretion) (other than with respect to any Subsidiary of such newly created or acquired Subsidiary that is an Excluded Subsidiary), (d) subject to Section 1.06, after giving effect to any such purchase or other acquisition no Event of Default shall have occurred and be continuing, (e) the total consideration paid in connection with all such purchases and acquisitions of the Equity Interests in any Person which will not become a Loan Party (within the time periods set forth in this Agreement), or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person if substantially all of such assets will not become owned by a Loan Party (or a Person that will become a Loan Party within the time periods set forth in this Agreement), shall not exceed $20,000,000 in the aggregate, unless financed with the proceeds of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) and (f) after giving effect to such purchase or acquisition, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.31 to 1.00.
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“Permitted Amendment” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders and/or (c) additional covenants or other provisions (i) with respect to which the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (ii) to the extent any such provisions apply after the Latest Maturity Date at the time of such Loan Modification Offer, or (iii) to the extent such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower.
“Permitted ECF Recalculation Considerations” has the meaning assigned to such term in Section 2.11(d).
“Permitted Encumbrances” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(b) Liens with respect to outstanding motor vehicle fines and Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ Liens and other similar Liens arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, in each case so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
(c) Liens incurred, pledges or deposits made in the ordinary course of business (i) in connection with payroll taxes, workers’ compensation, unemployment insurance and other social security legislation, public liability laws or similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary or otherwise supporting the payment of items of the type set forth in the foregoing clause (i);
(d) Liens incurred or deposits made to secure the performance of tenders, bids, trade contracts, customer claims, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) easements, licenses, servitudes, restrictive covenants, rights-of-way, restrictions, encroachments, protrusions, zoning restrictions and other similar encumbrances and title defects affecting real property that, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
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(f) leases or subleases of real or personal property granted to other Persons (as lessee thereof) that do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(g) rights of future tenants pursuant to written leases entered into in accordance with the terms hereof;
(h) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j) and any pledge and/or deposit securing any settlement of threatened litigation;
(i) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for the account of the Borrower or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01 and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(j) Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made in respect of operating leases entered into by the Borrower or any of its Subsidiaries;
(k) rights of recapture of unused real property (other than any Mortgaged Property or any Badcock Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(l) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(m) liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any of the Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(n) Liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property or Badcock Intellectual Property, or covenants not to sue with respect to Intellectual Property or Badcock Intellectual Property, made in the ordinary course of business;
(o) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(p) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long as such Liens are not exercised or except where the exercise of such Liens would not reasonably be expected to have a Material Adverse Effect;
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(q) Liens or security given to public utilities or to any municipality or Governmental Authority when required by the utility, municipality or Governmental Authority in connection with the supply of services or utilities to the Borrower or any of its Subsidiaries;
(r) servicing agreements, development agreements, site plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of the assets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of the business activities of the Borrower and its Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect; and
(s) Liens securing Priority Obligations;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money other than Liens referred to in clauses (d) and (k) above securing obligations under letters of credit or bank guarantees or similar instruments related thereto and in clause (g) above, in each case to the extent any such Lien would constitute a Lien securing Indebtedness for borrowed money.
“Permitted First Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Holders” means (a) Vintage Capital Management, LLC, (b) Brian Kahn, (c) Lauren Kahn, (d) Tributum, L.P., (e) Stefac LP, (f) Vintage Tributum, L.P., (g) Kahn Capital Management, LLC, (h) Vintage Vista GP, LLC, (i) Andrew Laurence, (j) B. Riley FBR, Inc., (k) Bryant R. Riley, (l) any direct or indirect current or former equity holders of Buddy’s Newco, LLC or Franchise Group New Holdco, LLC, (m) Samjor Family LP, (n) Vintage RTO, L.P. and (o) any Affiliates, general partners, limited partners, investment managers, investment advisors, investment funds or direct or indirect equity holders, successors or assigns of any of the foregoing.
“Permitted Investments” means any of the following, to the extent owned by the Borrower or any Subsidiary:
(a) dollars, euros, Swiss francs, Sterling, Canadian dollars, or such other currencies held by it from time to time in the ordinary course of business;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) any member nation of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged in support thereof;
(c) time deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S. banks and $100,000,000 (or the dollar equivalent as of the date of determination) in the case of foreign banks (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
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(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above;
(f) marketable short-term money market and similar highly liquid funds substantially all of the assets of which are comprised of securities of the types described in clauses (b) through (e) above;
(g) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, the United Kingdom, Canada, Switzerland, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s;
(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) demand deposit accounts holding cash;
(l) interest bearing instruments with a maximum maturity of 180 days in respect of which the obligor is a G7 government or other G7 governmental agency or a G7 financial institution with credit ratings from S&P of at least “A-2” or the equivalent thereof or from Moody’s of at least “P-2” or the equivalent thereof;
(m) other short-term investments of a type analogous to the foregoing utilized by Foreign Subsidiaries;
(n) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (m) above; and
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(o) any guarantee or indemnity for the obligations of a Subsidiary in connection with a Subsidiary claiming exemption from audit, the preparation and filing of its accounts or other similar exemptions (including under section 394C, 448C or 479C of the Companies Act 2006 or other similar or equivalent provisions).
“Permitted Junior Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a junior basis to the Secured Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted Junior Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, exchanged or extended except (i) by an amount equal to unpaid accrued interest and premium thereon plus underwriting discounts, other amounts paid, and fees and expenses (including upfront fees, original issue discount or initial yield payments) incurred, in connection with such modification, refinancing, refunding, renewal or extension, (ii) by an amount equal to any existing revolving commitments unutilized thereunder to the extent that the portion of any existing and unutilized revolving commitment being refinanced was permitted to be drawn under Section 6.01 immediately prior to such refinancing (other than by reference to a Permitted Refinancing) and such drawing shall be deemed to have been made and (iii) to the extent such excess amounts is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(xii) and (a)(xxvi), Indebtedness resulting from such modification, refinancing, refunding, renewal, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended; provided that the foregoing requirements of this clause (b) shall not apply to the extent such Indebtedness constitutes a customary bridge facility, so long as the long-term Indebtedness into which any such bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to conditions customary for similar conversions or exchanges (c) if the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms not materially less favorable, taken as a whole, to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended, (d) such Permitted Refinancing is not secured by a Lien on any assets other than the collateral securing, and, to the extent secured by the Collateral and the Badcock Collateral, with no higher priority than the Liens securing, the Indebtedness being refinanced, except for accessions and additions to such property and replacements and proceeds thereof (unless permitted to be secured by another provision of Section 6.02), (e) if unsecured, such Indebtedness shall remain unsecured (unless permitted to be secured by another provision of Section 6.02) and (f) no Loan Party that was not an obligor with respect to the Indebtedness being refinanced shall be an obligor under the Permitted Refinancing and if the Indebtedness being refinanced was (or was required to be) subject to an Intercreditor Agreement, the holders of such Permitted Refinancing (if such Indebtedness is secured) or their authorized representative on their behalf, shall become party to such Intercreditor Agreement, in each case providing for the same (or lesser) lien priority renewed, exchanged or extended. For the avoidance of doubt, it is understood that a Permitted Refinancing may constitute a portion of an issuance of Indebtedness in excess of the amount of such Permitted Refinancing; provided that such excess amount is otherwise permitted to be incurred under Section 6.01. For the avoidance of doubt, it is understood and agreed that a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness to the extent such successive Permitted Refinancings satisfy the foregoing requirements.
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“Permitted Unsecured Refinancing Debt” means any unsecured Indebtedness incurred by the Loan Parties in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that such Indebtedness constitutes Credit Agreement Refinancing Indebtedness. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity, whether existing as of the Effective Date or subsequently created or coming to exist.
“Plan” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to such term in Section 5.01.
“Pledged Equity Interests” has the meaning set forth in the Collateral Agreement.
“Post-Transaction Period” means, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter of the Lead Borrower immediately following the date on which such Specified Transaction is consummated.
“Prepayment Event” means:
(a)
(I) the Disposition described on Schedule 6.05(k), (II) Dispositions
by Badcock pursuant to Section 6.05(f) and Section 6.05(u) and/or (IIIII)
any other non-ordinary course sale, transfer or other disposition of any property or asset of the Borrower or any of its Subsidiaries
pursuant to Section 6.05(k) or the occurrence of any other Casualty Event, in each case of this clause (IIIII)
resulting in aggregate Net Proceeds exceeding (A) with respect to any single transaction or series of related transactions, the greater
of $8,000,000 and 2.5% of Consolidated EBITDA individually or (B) with respect to all dispositions pursuant to Section 6.05(k)
or Casualty Events in each case not excluded pursuant to previous clause (A), the greater of $16,000,000 and 5.0% of Consolidated EBITDA
in the aggregate in any fiscal year of the Lead Borrower, other than dispositions constituting a sale and leaseback transaction to the
extent consummated substantially contemporaneously with the acquisition by the Borrower or such Subsidiary of the property subject to
such sale and leaseback transaction; provided that, for the avoidance of doubt, in each case of this clause (IIIII),
(x) only Net Proceeds in excess of such amount shall be subject to the mandatory prepayment provisions set forth in Section 2.11(c)
and (y) no Prepayment Event shall occur in any fiscal year of the Lead Borrower until the Net Proceeds received during such fiscal year
that are subject to clause (B) above exceed the amount set forth in clause (B) above; or
(b) the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 (other than Credit Agreement Refinancing Indebtedness) or permitted by the Required Lenders pursuant to Section 9.02.
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“Prepayment Percentage” means (xw)
with respect to a Prepayment Event described in clause (a)(I) of the definition of Prepayment Event, 100%, (yx)
with respect to a Prepayment Event described in clause (a)(II) of the definition of Prepayment Event,
100%, (y) with respect to a Prepayment Event described in clause (a)(III) of the definition of Prepayment Event, the Asset
Sale Prepayment Percentage and (z) with respect to a Prepayment Event described in clause (b) of the definition of Prepayment Event, 100%.
“Prime Rate” means the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases quoting a prime rate of the type described, either (a) the per annum rate quoted as the base rate on such corporate loans in a different national publication as reasonably selected by Administrative Agent or (b) the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent).
“Priority Obligation” means any obligation that is secured by a Lien on any Collateral and/or any Badcock Collateral in favor of a Governmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by the applicable Security Documents and/or Badcock Security Documents, as the case may be, including any such Lien securing amounts owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pension fund obligations.
“Pro Forma Basis,” “Pro Forma Compliance” and “Pro Forma Effect” mean, as to any Person, for any events as described below that occur subsequent to the commencement of a period for which the effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four (4) consecutive fiscal quarter of the Lead Borrower period ended on or before the occurrence of such event (the “Reference Period”):
(a) in making any determination of Consolidated EBITDA or any component thereof or the determination of financial ratios and tests hereunder, effect shall be given to the Transactions, any Specified Transaction made during the applicable Test Period and any synergies, operating improvements, operating expense reductions or cost savings pertaining to the business of the Borrower or any of its Subsidiaries, in each case, that occurred during the Reference Period or with respect to any such event or transaction included in the definition of Specified Transactions and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Specified Transaction, synergies, operating improvements, operating expense reductions or cost savings (or, with respect to the Transactions, within 18 months of the Effective Date) (including, in each case, actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower), net of the amount of actual benefits realized, and without duplication of any such amount included in Consolidated EBITDA pursuant to the definition thereof;
(b) in making any determination on a Pro Forma Basis, of Pro Forma Compliance or of Pro Forma Effect, (i) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under the Loan Documents or otherwise) issued, incurred, assumed or repaid during the Reference Period (or with respect to Indebtedness repaid, during the Reference Period or subsequent to the end of the Reference Period and prior to, or simultaneously with, the event for which the calculation of any such ratio is made) shall be deemed to have been issued, incurred, assumed or repaid at the beginning of such period, (ii) such calculation shall be made without regard to the netting of any cash proceeds of Indebtedness incurred in connection with the relevant transactions, (iii) in the case of any Indebtedness in the nature of a revolving credit facility, the entire principal amount of such credit facility shall be deemed to have been fully drawn and (iv) interest expense of such Person attributable to interest on any Indebtedness for which pro forma effect is being given as provided in preceding clause (i) bearing floating interest rates shall be computed on a pro forma basis at the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination,
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(c) [Reserved], and
(d) income statement items (whether positive or negative) attributable to all property acquired or disposed of in such relevant transaction shall be included as if such transaction had occurred as of the first day of the relevant Test Period. Whenever a financial ratio or test or covenant is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which financial statements of the Borrower were delivered pursuant to Section 5.01(a) or (b).
“Pro Forma Disposal Adjustment” means, for any Test Period that includes all or a portion of a fiscal quarter of the Lead Borrower included in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Lead Borrower in good faith as a result of contractual arrangements between the Borrower or any Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Period and which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal.
“Pro Forma Entity” means any Acquired Entity or Business.
“Pro Forma Financial Statements” has the meaning assigned to such term in Section 3.04(c).
“Proposed Change” has the meaning assigned to such term in Section 9.02(c).
“PSP” means Pet Supplies “Plus”, LLC, a Delaware limited liability company.
“Public Company Costs” means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and charges relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursement, charges relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.
“Public Lender” has the meaning assigned to such term in Section 5.01.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning specified in Section 9.20.
“Qualified ECP Guarantor” shall mean, in respect of any Secured Swap Obligation, each Borrower that has total assets exceeding $10,000,000 at the time the Guarantee by Badcock or grant of a security interest by Badcock becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act, as amended, 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, as amended. “Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
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“Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
“Qualifying Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Ratio Debt” has the meaning assigned to such term in Section 6.01(a)(viii).
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the LIBO Rate, 11:00 a.m. (London time) on the day that is two Business Days prior to the date of such setting, and (2) if such Benchmark is not the LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion.
“Refinanced Debt” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower executed by each of (a) the Lead Borrower, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“Register” has the meaning assigned to such term in Section 9.04(b)(iv).
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the partners, directors, officers, employees, trustees, agents, controlling persons, advisors and other representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, emptying, escaping, pumping, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
“Relevant Governmental Body” means the Board of Governors or the NYFRB, or a committee officially endorsed or convened by the Board of Governors or the NYFRB, or any successor thereto.
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“Removal Effective Date” has the meaning assigned to such term in Section 8.06.
“Representative” means, with respect to any series of Indebtedness permitted by this Agreement to be secured by the Collateral and/or the Badcock Collateral on a pari passu or junior or “silent” subordinated basis (or prior to Payment in Full of Badcock Obligations, secured by the Badcock Collateral on a senior basis), the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Repricing Transaction” means (a) the incurrence by the Borrower of any syndicated dollar-denominated term loans that are secured on a pari passu basis with the Initial Term Loans (i) having an Effective Yield that is less than the Effective Yield for the Initial Term Loans (and not by virtue of any fluctuation in any “base” rate), but excluding Indebtedness incurred in connection any transaction that would, if consummated, constitute a Change of Control, Permitted Acquisition or similar Investment or Enterprise Transformative Event and (ii) the proceeds of which are used to prepay (or, in the case of a conversion, deemed to prepay) or replace, in whole or in part, outstanding principal of Initial Term Loans or (b) any effective reduction in the Effective Yield for the Initial Term Loans (e.g., by way of amendment, waiver or otherwise), except for a reduction in connection with any transaction that would, if consummated, constitute a Change of Control, Permitted Acquisition or similar Investment or Enterprise Transformative Event, and, in the case of any transaction under either clause (a) or clause (b) above, the primary purpose of which is to lower the Effective Yield on the Initial Term Loans. Any determination by the Administrative Agent with respect to whether a Repricing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Initial Term Loans.
“Required Additional Debt Terms” means with respect to any Incremental Equivalent Debt or Ratio Debt, (a) such Indebtedness does not mature earlier than the Term Maturity Date with respect to the Initial Term Loans or have a Weighted Average Life to Maturity less than the greatest Weighted Average Life to Maturity of the Initial Term Loans outstanding at the time of incurrence of such Indebtedness (except in the case of customary bridge loans which, subject to customary conditions (including no payment or bankruptcy event of default), would either automatically be converted into or required to be exchanged for permanent refinancing which does not mature earlier than the Term Maturity Date with respect to the Initial Term Loans at the time of such incurrence, issuance or effectiveness), (b) such Indebtedness, if issued, borrowed or guaranteed by a Loan Party, is not guaranteed by any entity that is not a Loan Party (except to the extent such Indebtedness that is subject to the Required Additional Debt Terms is expressly permitted to be incurred or issued by any Subsidiary that is not a Loan Party under Section 6.01), (c) such Indebtedness, if secured by assets that secure the Secured Obligations, (i) is not secured by any assets not securing the Secured Obligations and (ii) is subject to the relevant Intercreditor Agreement(s), (d) such Indebtedness shall not participate on a greater than pro rata basis than the Initial Term Loans with respect to any mandatory prepayment (other than any scheduled amortization payment) provided that the Borrower and the lenders providing the relevant Incremental Equivalent Debt or Ratio Debt shall be permitted, in their sole discretion, to elect to prepay or receive, as applicable, any such prepayment on a less than pro rata basis and (e) subject to the foregoing, the covenants, events of default and guarantees of any such Indebtedness shall not be materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the covenants, events of default and guarantees of the Initial Term Loans unless (1) the existing Initial Term Loans also receive the benefit of such more restrictive terms (it being understood that no consent shall be required from the Administrative Agent or any Lender to add such more restrictive terms for the benefit of any the existing Initial Term Loans), (2) any such provisions apply only after the Term Maturity Date with respect to the Initial Term Loans at the time of such incurrence, (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower or (4) such terms reflect market terms and conditions (taken as a whole) at the time of such incurrence (as determined by the Lead Borrower in good faith); provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Borrower within such five (5) Business Day period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees).
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“Required Lenders” means, at any time, Lenders having Term Loans and unused Commitments representing more than 50% of the aggregate Term Loans and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and the unused Commitments of each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Requirements of Law” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resignation Effective Date” has the meaning assigned to such term in Section 8.06.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies or partnerships that do not have officers, any manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary, assistant secretary, company secretary or director of a Loan Party, and as to the Lead Borrower, any Financial Officer. 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 Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.
“Retained Asset Sale Proceeds” means any proceeds of any Prepayment Event described in clause (a) of the definition of the term “Prepayment Event” that are not required to be used to prepay Term Loan Borrowings pursuant to Section 2.11(c).
“Retained Declined Proceeds” has the meaning assigned to such term in Section 2.11(e).
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
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“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned 50% or more by any such Person in the foregoing clauses (a) and (b), or (d) any Person otherwise the subject of Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the Second Lien Credit Agreement, or any successor thereto acting in such capacities.
“Second Lien Credit Agreement”
means (i) that certain Second Lien Credit Agreement, as in effect on the First
Amendment Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed
from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement and,
the First Lien/Second Lien Intercreditor Agreement and, prior to Payment
in Full of Badcock Obligations, the Badcock Intercreditor Agreement), among each Loan Party party
thereto, the lender(s) party thereto and the Second Lien Agent and (ii) any other credit agreement, loan agreement, note
agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other
financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the
ABL Intercreditor Agreement and,
the First Lien/Second Lien Intercreditor Agreement and, prior to Payment
in Full of Badcock Obligations, the Badcock Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations
outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent second lien term loan facility, unless the
agreement or instrument related thereto expressly provides that it is not intended to be and is not a Second Lien Credit Agreement hereunder.
Any reference to the Second Lien Credit Agreement hereunder shall be deemed a reference to any Second Lien Credit Agreement then in existence.
For the avoidance of doubt, the Badcock Second Lien Credit Agreement shall
not constitute a “Second Lien Credit Agreement” hereunder.
“Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Second Lien Credit Agreement.
“Secured Cash Management Obligations” means the due and punctual payment and performance of all obligations of the Borrower and its Subsidiaries in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs or any automated clearing house transfers of funds (collectively, “Cash Management Services”) provided to the Borrower or any Subsidiary (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) that are (a) owed to the Administrative Agent or any of its Affiliates, (b) owed on the Effective Date to a Person that is a Lender or an Affiliate of a Lender as of the Effective Date and (c) owed to a Person that is an Agent, a Lender or an Affiliate of an Agent or Lender at the time such obligations are incurred, and that in each case has been designated as a “Secured Cash Management Obligation” in a writing executed by the Lead Borrower and such counterparty and delivered to the Administrative Agent. It is hereby understood that obligations in respect of any specific Cash Management Services may not be Secured Cash Management Obligations under this Agreement to the extent it is similarly treated as such under the ABL Credit Agreement.
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“Secured Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Secured Obligations” means (a) the Loan Document Obligations, (b) the Secured Cash Management Obligations and (c) the Secured Swap Obligations (excluding with respect to any Loan Party, Excluded Swap Obligations of such Loan Party).
“Secured Parties” means (a) each Lender, (b) the Administrative Agent, (c) the Collateral Agent, (d) each Person to whom any Secured Cash Management Obligations or Secured Swap Obligations are owed, (e) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document, Secured Swap Obligation or Secured Cash Management Obligation and (f) the permitted successors and assigns of each of the foregoing.
“Secured Swap Obligations” means the due and punctual payment and performance of all obligations of the Borrower and its Subsidiaries under each Swap Agreement that (a) is with a counterparty that is the Administrative Agent or any of its Affiliates, (b) is in effect on the Effective Date with a counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent as of the Effective Date or (c) is entered into after the Effective Date with any counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent at the time such Swap Agreement is entered into, and that in each case has been designated as a “Secured Swap Obligation” in a writing executed by the Lead Borrower and such counterparty and delivered to the Administrative Agent. It is hereby understood that obligations in respect of any Swap Agreement may not be Secured Swap Obligations under this Agreement to the extent it is similarly treated as such under the ABL Credit Agreement.
“Security Documents” means the
Collateral Agreement, the Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to
the “Collateral and Guarantee Requirement”
and/or Section 5.11, Section 5.12 or(a)
(other than as it may relate to Badcock), Section 5.12(b) or Section 5.14 to secure any of the Secured Obligations.
“Securities Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Similar Business” means (1) any business conducted by the Borrower or any Subsidiary on the Effective Date or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to (including non-core incidental businesses acquired in connection with any permitted Investment), or a reasonable extension, development or expansion of, the businesses that the Borrower and its Subsidiaries conduct or propose to conduct on the Effective Date.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
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“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the NYFRB, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Sold Entity or Business” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“Solicited Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Solicited Discounted Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solicited Discounted Prepayment Notice” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit N.
“Solicited Discounted Prepayment Offer” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit O, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
“Solicited Discounted Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solvent” means, with respect to the Lead Borrower and its Subsidiaries, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Lead Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities, (ii) the Lead Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital and (iii) the Lead Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For the purposes of this definition, capitalized terms used and not defined in this Agreement shall have the meanings provided for in Exhibit G.
“Specified Acquisition Agreement Representations” means such of the representations and warranties in the Acquisition Agreement made by, or with respect to, the Acquired Company and its subsidiaries and its businesses as are material to the interests of the Lenders, but only to the extent that the Borrower (or any of its Affiliates) has the right (taking into account any applicable cure provisions) to terminate its or such Affiliates’ obligations under the Acquisition Agreement or decline to consummate the Acquisition (in accordance with the terms thereof) as a result of a breach of such representations and warranties in the Acquisition Agreement.
“Specified Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Notice” means an irrevocable written notice of the Borrower Offer of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit J.
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“Specified Discount Prepayment Response” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit K, to a Specified Discount Prepayment Notice.
“Specified Discount Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“Specified Representations” means the representations and warranties of the Borrower, and to the extent applicable, the other Loan Parties, set forth in Section 3.01(a), Section 3.01(b) (as it relates to the organizational power and authority to execute, deliver and perform obligations under each Loan Document to which each applicable Person is a party after giving effect to the Transactions), Section 3.02, Section 3.03(b)(i) (with respect to the incurrence of the loans and the provision of the Guarantees, in each case under the Loan Documents, and the granting of the security interests in the Collateral to secure the Secured Obligations), Section 3.08, Section 3.14, Section 3.15, Section 3.17(a) (with respect to the use of proceeds of the Term Facility on the Effective Date), 3.17(b) (with respect to the PATRIOT Act), and Section 3.18 (as it relates to the creation, validity and perfection of the security interests in the Collateral).
“Specified Transaction” means, with respect to any period, any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board of Governors. Eurodollar Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D of the Board of Governors or any other applicable law, rule or regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Store Accounts” shall have the meaning ascribed to the term “Store Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Submitted Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Submitted Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held (unless parent does not Control such entity), or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent; in each case, whether existing as of the Effective Date or subsequently created or coming to exist.
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“Subsidiary” means any subsidiary of the Lead Borrower (unless otherwise specified or the context otherwise requires).
“Subsidiary Loan Party” means (i) each Subsidiary of the Lead Borrower (other than FG Newco PSP, Valor and FG Newco Intermediate AF) that is party to the Guarantee Agreement and (ii) Badcock.
“Successor Borrower” has the meaning assigned to such term in Section 6.03(a)(iv).
“Supported QFC” has the meaning specified in Section 9.20.
“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Tax Restructuring” means any reorganizations
and other activities related to tax planning and tax reorganization (as determined by Lead Borrower in good faith) entered into after
the Effective Date so long as such Tax Restructuring does not materially impair the Guarantee or,
the Badcock Guarantee, the security interests of the Agents and the Lenders under the Security Documents in the Collateral
or the security interests of the Agents and the Lenders under the Badcock
Security Documents in the Badcock Collateral, taken as a whole, and Borrower and its Subsidiaries otherwise comply with
Sections 5.11 and 5.12.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means, with respect to each Lender, the Initial Term Loan Commitment, if any, of such Lender to make Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a Refinancing Amendment, (iii) an Incremental Facility Amendment in respect of any Term Loans or (iv) a Loan Modification Agreement. The amount of each Lender’s Term Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Term Commitment, Loan Modification Agreement or Refinancing Amendment, as the case may be. As of the Effective Date, the total Term Commitment is $1,000,000,000.
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“Term Facility” means the Term Loans provided to or for the benefit of the Borrower pursuant to the terms of this Agreement.
“Term Lender” means a Lender with a Term Commitment or an outstanding Term Loan.
“Term Loans” means, individually or collectively as the context requires, Initial Term Loans, Other Term Loans and Incremental Term Loans.
“Term Maturity Date” means (a) in the case of the Initial Term Loans, March 10, 2026 and (b) in the case of any Incremental Term Facility or any Other Term Loan, the date set forth in the applicable documentation in respect thereof.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Test Period” means, at any date of determination, the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time for which financial statements are delivered pursuant to Section 5.01(a) or (b); provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time.
“Total Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Transaction Costs” means all fees, premiums, costs and expenses incurred or payable by the Borrower or any other Subsidiary in connection with the Transactions.
“Transactions” means (a) the Acquisition, (b) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents and the incurrence of the Term Facility and the funding of the Initial Term Loans on the Effective Date, (c) the consummation of the other transactions contemplated by this Agreement on the Effective Date, (d) the consummation of any other transactions in connection with the foregoing, (e) the repayment of the existing Indebtedness under the Existing Term Loan Credit Agreement and the termination of such Existing Term Loan Credit Agreement and the documents related thereto, (f) the repayment of the existing Indebtedness under the Existing FRG ABL Credit Agreement and the termination of the Existing FRG ABL Credit Agreement and the documents related thereto, (g) the execution and delivery of the ABL Credit Agreement and the other ABL Loan Documents (to the extent entered into on or after the Effective Date or otherwise originally entered into in connection with the ABL Credit Agreement rather than the Existing VSI ABL Credit Agreement), the creation or continuation on or after the Effective Date of the Liens pursuant to the Collateral Documents (as defined in the ABL Credit Agreement) and the incurrence or continuance of any borrowings thereunder to be incurred or continued on the Effective Date, (h) the execution and delivery of the Second Lien Credit Agreement and the other Second Lien Loan Documents, the creation on or after the Effective Date of the Liens pursuant to the Security Documents (as defined in the Second Lien Credit Agreement) and the incurrence of any borrowings thereunder to be incurred on the Effective Date and (i) the payment of the Transaction Costs related thereto.
“Type,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
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“U.S. Special Resolution Regimes” has the meaning specified in Section 9.20.
“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, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral or the Badcock Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the terms “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unaudited Financial Statements” means (a) the unaudited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of the Lead Borrower ended on or about September 30, 2020 and (b) the unaudited consolidated balance sheet of PSP and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of PSP ended on or about September 30, 2020.
“Unfinanced Capital Expenditures” means, for any period, capital expenditures paid in cash (other than cash constituting proceeds of long-term Indebtedness (other than revolving Indebtedness)) during such period, other than (a) the purchase price paid in connection with a Permitted Acquisition or other similar Investment not prohibited by this Agreement and expenditures made in connection with the Transactions, (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (c) expenditures made with the proceeds of Dispositions, Casualty Events or similar dispositions or events that are not required to be applied to repay Indebtedness pursuant to the terms of this Agreement, the ABL Credit Agreement, the Second Lien Credit Agreement, the First Lien Badcock Credit Agreement or the Second Lien Badcock Credit Agreement, (d) expenditures made in leasehold improvements, to the extent reimbursed by the landlord, (e) expenditures to the extent actually paid for by any Person other than any Borrower or Subsidiary and for which no Borrower or Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation in respect of the relevant expenditures to such Person, (f) property, plant and equipment taken in settlement of accounts and (g) that portion of interest on Indebtedness incurred for capital expenditures which is capitalized in accordance with GAAP.
“United States Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(e)(ii)(C).
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“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“Valor” has the meaning assigned to such term in the preliminary statements hereto.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wholly Owned Subsidiary” means any Subsidiary that
is a wholly owned subsidiary. Notwithstanding the foregoing, Liberty/Revolution Top Parent shall be
deemed a Wholly Owned Subsidiary of each Borrower so long as Liberty/Revolution Top Parent would be a Wholly Owned Subsidiary of each
Borrower if not for the Equity Grant.
“wholly owned subsidiary” means, with respect to any Person at any date, a subsidiary of such Person of which securities or other ownership interests representing 100% of the Equity Interests (other than (a) directors’ qualifying shares and (b) nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law) are, as of such date, owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Zero Balance Accounts” means Deposit Accounts in which a balance of zero is maintained by the depository institution at all times by automatically transferring funds from a master Deposit Account to such Zero Balance Account in an amount only large enough to cover checks presented and other debits to such account, such that any such Zero Balance Account maintains an overnight balance of zero dollars at all times.
SECTION 1.02 Classification of Loans and Borrowings.
For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Class (e.g., an “Initial Term Loan”) or by Type (e.g., a “Eurodollar Loan” or “ABR Loan”) or by Class and Type (e.g., a “Eurodollar Initial Term Loan”). Borrowings also may be classified and referred to by Class (e.g., an “Initial Term Loan Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Initial Term Loan Borrowing”).
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SECTION 1.03 Terms Generally.
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, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document, including all schedules, exhibits and other attachments thereto and as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP.
(a) 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 in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Notwithstanding anything to the contrary herein, but subject to Section 1.09, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio, the First Lien Net Leverage Ratio, the Secured Net Leverage Ratio, the Fixed Charge Coverage Ratio and any other financial ratio or test that are calculated with respect to any Test Period during which a Specified Transaction occurs shall be calculated on a Pro Forma Basis. Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Specified Transaction has occurred or (y) any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Subsidiaries or any joint venture since the beginning of such Test Period has consummated any Specified Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Specified Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of (x) calculating compliance with Section 6.10, if applicable and (y) the determination of “ECF Percentage”, in each case, the date of the required calculation shall be the last day of the Test Period, and no Specified Transaction occurring thereafter shall be taken into account).
SECTION 1.05 Effectuation of Transactions.
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All references herein to the Borrower and its Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Transactions that occurred on the Effective Date, unless the context otherwise requires.
SECTION 1.06 Limited Conditionality Acquisition.
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDA or total assets or whether a Default or Event of Default has occurred and is continuing or any representations and warranties have been complied with, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred and is continuing shall, at the option of the Lead Borrower (the Lead Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or the date of the declaration or making of such Restricted Payment constituting a Limited Condition Transaction or of the giving of irrevocable (which may be conditional) notice with respect to a repayment, repurchase or redemption of Indebtedness constituting a Limited Condition Transaction, or, as an alternative option with respect to Permitted Acquisitions or investments constituting Limited Condition Transactions, the date of a public announcement of an intention to make an offer in respect of the target of such Permitted Acquisition or investment (the “LCA Test Date”) after giving Pro Forma Effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such transactions occurred at the beginning of the applicable Test Period, and for the avoidance of doubt, if any of such ratios or other provisions are exceeded as a result of fluctuations in such ratio or amount (including due to fluctuations in Consolidated EBITDA of the Borrower or such person subject to such Limited Condition Transaction) or other provisions at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder. If the Lead Borrower has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall be calculated (and tested) on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) had been consummated on the LCA Test Date.
SECTION 1.07 Certain Determinations.
(a) Notwithstanding anything to the contrary herein, for purposes of the covenants described in Article V, Article VI or in connection with any Incremental Facility, if any transaction or action would be permitted pursuant to one or more provisions described therein, the Borrower may divide and classify such transaction or action within the relevant covenant (or other provisions) in any manner that complies with such covenant (or other provision) set forth therein, and may later divide and reclassify any such transaction or action so long as the transaction or action (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception (or other provisions) as of the date of such reclassification; provided that if any financial ratio or test governing any applicable Incurrence Based Amount would be satisfied in any subsequent period following the utilization of any Fixed Amount, such reclassification shall be deemed to have automatically occurred if not elected otherwise by the Lead Borrower; provided, further, that such reclassification shall not be permitted with respect to (i) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(i), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(i), (ii) the Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents, which shall only be permitted under Section 6.01(a)(xxxi), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(xvii) and (iii) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(xxxii), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(xxi). For the avoidance of doubt, if the applicable date for meeting any requirement hereunder or under any other Loan Document falls on a day that is not a Business Day, compliance with such requirement shall not be required until noon on the first Business Day following such applicable date.
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(b) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio or test (including any Total Net Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence.
(c) Notwithstanding the foregoing, for purposes of any determination under Article V, Article VI or Article VII or any determination under any other provision of this Agreement subject to any Dollar limitation, threshold or basket, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars based on the relevant currency exchange rate in effect on the applicable date of determination (rounded to the nearest currency unit, with 0.5 or more of a currency unit being rounded upward); provided, however, that for purposes of determining compliance with Article VI with respect to any amount in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness, Lien or Investment is incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payment in respect of any Junior Financing is made or such transaction with an Affiliate is entered into; provided, further, that, for the avoidance of doubt, the foregoing provisions of this Section 1.07(c) shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness, Lien or Investment may be incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payments in respect of any Junior Financing may be made or such transaction with an Affiliate may be entered into at any time under such Sections. For purposes of any determination of Consolidated Total Indebtedness, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates used in preparing the most recently delivered financial statements pursuant to Section 5.01(a) or Section 5.01(b) adjusted to reflect the currency translation effects, determined in accordance with GAAP, of any Swap Agreements permitted hereunder for currency exchange risks with respect to the applicable currency in effect on the date of determination of the dollar equivalent thereof. Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.
SECTION 1.08 Divisions.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
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SECTION 1.09 Interest Rates; LIBOR Notification.
The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. Upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, Section 2.14(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.14(d), of any change to the reference rate upon which the interest rate on Eurodollar Loans is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate implemented pursuant to Section 2.14(b), whether upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.14(c)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.
ARTICLE II
The Credits
SECTION 2.01 Commitments.
Subject to the terms and conditions set forth herein, each Initial Term Loan Lender severally agrees to make an Initial Term Loan to the Borrower denominated in dollars on the Effective Date in a principal amount equal to its Initial Term Loan Commitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
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(b) Subject to Section 2.14, each Term Loan Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement;
(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Eurodollar Borrowing that results from a continuation of an outstanding Eurodollar Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of fifteen (15) Eurodollar Borrowings outstanding.
SECTION 2.03 Requests for Borrowings.
To request a Term Loan Borrowing, the Lead Borrower shall notify the Administrative Agent of such request in writing by telecopy, electronic mail, facsimile or overnight courier (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing, (b) in the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, on the date of the proposed Borrowing; provided that any notice given in connection with Borrowings on the Effective Date (including Eurodollar Borrowings) may be given not later than 2:00 p.m., New York City time, one (1) Business Day before the Effective Date; provided further that, in each case, the Administrative Agent may in its discretion accept any later request. Each such written Borrowing Request shall be signed by the Lead Borrower substantially in the form of Exhibit S and shall be irrevocable. Each such written Borrowing Request shall specify the following information:
(i) whether the requested Borrowing is to be a Borrowing of Initial Term Loans and/or a Borrowing of any other Class (specifying the Class thereof);
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and
(vii) except in the case of any Borrowing that is made on the Effective Date, that as of the date of such Borrowing, the conditions set forth in Sections 4.02(a) and 4.02(b) are satisfied.
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If no election as to the Type of Borrowing is specified as to any Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04 [Reserved].
SECTION 2.05 [Reserved].
SECTION 2.06 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Lead Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.06 and may, in reliance on such assumption and in its sole discretion, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender agrees to pay to the Administrative Agent an amount equal to such share on demand of the Administrative Agent. If such Lender does not pay such corresponding amount forthwith upon demand of the Administrative Agent therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower agrees to pay such corresponding amount to the Administrative Agent forthwith on demand. The Administrative Agent shall also be entitled to recover from such Lender or Borrower interest on such corresponding amount, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing in accordance with Section 2.13. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
(c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
SECTION 2.07 Interest Elections.
(a) Each Term Loan Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Lead Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Lead Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
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(b) To make an election pursuant to this Section 2.07, the Lead Borrower shall notify the Administrative Agent of such election in writing by telecopy, electronic mail, facsimile or overnight courier by the time that a Borrowing Request would be required under Section 2.03 if the Lead Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such written Interest Election Request shall be irrevocable and shall be signed by the Lead Borrower.
(c) Each written Interest Election Request shall specify the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Lead Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Lead Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.08 Termination and Reduction of Commitments.
(a) Unless previously terminated, on the Effective Date, the Term Commitments in effect on such date shall terminate upon the making of the relevant Term Loans.
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(b) The Lead Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000 unless such amount represents all of the remaining Commitments of such Class.
(c) The Lead Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
SECTION 2.09 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement. In the event of any inconsistency between the entries made pursuant to paragraphs (b) and (c) of this Section 2.09, the accounts maintained by the Administrative Agent pursuant to paragraph (c) of this Section 2.09 shall control.
(e) Any Lender may request through the Administrative Agent that Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
SECTION 2.10 Amortization of Term Loans.
(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, (i) the Borrower shall repay Term Loan Borrowings with respect to the Initial Term Loans on the last day of each March, June, September and December in an amount equal to 0.25% of the sum of the aggregate principal amount of the Initial Term Loans outstanding on the Effective Date (commencing on the last Business Day of the first full calendar quarter of the Lead Borrower ended after the Effective Date) and (ii) the Borrower shall repay Term Loan Borrowings with respect to the Other Term Loans as specified in the applicable Refinancing Amendment or Loan Modification Agreement; provided, with respect to this clause (a), that any such payment due on a date that is not a Business Day shall instead be due on the next preceding Business Day.
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(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) Notwithstanding anything contained herein to the contrary, any prepayment of a Term Loan Borrowing of any Class (i) pursuant to Section 2.11(a) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10 as directed by the Lead Borrower (and absent such direction in direct order of maturity), and (ii) pursuant to Section 2.11(c) or 2.11(d) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10, or, except as otherwise provided in any Refinancing Amendment or Loan Modification Agreement, pursuant to the corresponding section of such Refinancing Amendment or Loan Modification Agreement, as applicable, in direct order of maturity.
(d) Prior to any repayment of any Term Loan Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Loan Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11 Prepayment of Loans.
(a) (i) Subject to clause (b) below, the Lead Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty.
(ii) Notwithstanding anything in any Loan Document to the contrary but subject to clause (b) below, so long as no Default or Event of Default has occurred and is continuing, the Borrower or any of its Subsidiaries may offer to prepay all or a portion of the outstanding Term Loans on the following basis:
(A) the Borrower or any of its Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “Discounted Term Loan Prepayment”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that the Borrower or any of its Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by the Borrower or any of its Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date the Borrower or any of its Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the Borrower’s or any of its Subsidiaries’ election
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not to accept any Solicited Discounted Prepayment Offers; provided, further, that each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“Excluded Information”), (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
(B) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “Specified Discount Prepayment Amount”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “Specified Discount”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Specified Discount Prepayment Response Date”).
(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “Discount Prepayment Accepting Lender”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
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(3) If there is at least one Discount Prepayment Accepting Lender, the Borrower or any of its Subsidiaries will make prepayment of outstanding Term Loans pursuant to this subsection (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to paragraph (2) above; provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “Specified Discount Proration”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date and (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by the Borrower or any of its Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(C) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “Discount Range Prepayment Amount”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “Discount Range”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by the Borrower or any of its Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Discount Range Prepayment Response Date”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “Submitted Discount”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “Submitted Amount”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
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(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). The Borrower or any of its Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “Applicable Discount”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following paragraph (3)) at the Applicable Discount (each such Lender, a “Participating Lender”).
(3) If there is at least one Participating Lender, the Borrower or any of its Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “Identified Participating Lenders”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Discount Range Proration”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, and (IV) if applicable, each Identified Participating Lender of the Discount Range Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(D) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate dollar amount of the Term Loans (the “Solicited Discounted Prepayment Amount”) and the tranche or tranches of Term Loans that the Borrower or any of its Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Solicited Discounted Prepayment Response Date”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “Offered Discount”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “Offered Amount”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
(2) The Auction Agent shall promptly provide the Borrower or any of its Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. The Borrower or any of its Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to the Borrower or any of its Subsidiaries (the “Acceptable Discount”), if any. If the Borrower or any of its Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by the Borrower or any of its Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this paragraph (2) (the “Acceptance Date”), the Borrower or any of its Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from the Borrower or any of its Subsidiaries by the Acceptance Date, the Borrower or any of its Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
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(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “Discounted Prepayment Determination Date”), the Auction Agent will determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “Acceptable Prepayment Amount”) to be prepaid by the Borrower or any of its Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If the Borrower or any of its Subsidiaries elects to accept any Acceptable Discount, then the Borrower or any of its Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “Qualifying Lender”). The Borrower or any of its Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “Identified Qualifying Lenders”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Solicited Discount Proration”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) the Borrower or any of its Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, and (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to such Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to such Borrower shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(E) In connection with any Discounted Term Loan Prepayment, the Borrower or any of its Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from the Borrower or any of its Subsidiaries in connection therewith.
(F) If any Term Loan is prepaid in accordance with subsections (B) through (D) above, the Borrower or any of its Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. The Borrower or any of its Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, in immediately available funds not later than 11:00 a.m. (New York City time) on the Discounted Prepayment Effective Date and all such prepayments shall be applied to the remaining principal installments (if any) of the relevant tranche of Term Loans on a pro rata basis across such installments. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
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(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by the Borrower or any of its Subsidiaries.
(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of the Borrower or any of its Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and its respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
(J) The Borrower or any of its Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by such Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
(b) (i) In the event that, on or prior to the date that is six (6) months after the First Amendment Effective Date, the Borrower (x) prepays, repays, refinances, repurchases, substitutes or replaces all or any portion of the Initial Term Loans in connection with a Repricing Transaction or (y) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a Repricing Transaction (including in the case of any required assignment pursuant to Section 9.02(c)), the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender (including each Lender holding Initial Term Loans immediately prior to the consummation of such Repricing Transaction that withholds its consent to such Repricing Transaction and is replaced as a Non-Consenting Lender pursuant to Section 9.02(c)), (A) in the case of clause (x), a premium of 1.00% of the aggregate principal amount of the Initial Term Loans so prepaid, repaid, refinanced, substituted or replaced and (B) in the case of clause (y), a fee equal to 1.00% of the aggregate principal amount of the Initial Term Loans that are the subject of such Repricing Transaction outstanding immediately prior to such amendment, modification, waiver or consent. For the avoidance of doubt, no prepayment fee shall be payable with respect to the Initial Term Loans at any time on or after the date that is six (6) months after the First Amendment Effective Date.
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(ii) All voluntary prepayments shall be applied to either the Term Facility or any Incremental Facility (or more than one of such facilities) as determined by the Lead Borrower. All voluntary prepayments of the Term Facility shall be applied to the remaining amortization payments (if any) under such Term Facility, as directed by the Lead Borrower (and absent such direction, in direct order of maturity thereof), including to any Class of extending or existing Term Loans in such order as the Lead Borrower may designate.
(c)
In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries
in respect of any Prepayment Event (other than any Prepayment Event in respect of ABL Priority Collateral (as defined in the ABL Intercreditor
Agreement), to the extent such Prepayment Event is in respect of ABL Priority Collateral, as determined by the Lead Borrower in good faith)
the Borrower shall, within five (5) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described
in clause (b) of the definition of “Prepayment Event”, on the date of such Prepayment Event), prepay Term Loan Borrowings
(with respect to a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, (x) to the extent
resulting from the incurrence of Credit Agreement Refinancing Indebtedness, limited to the applicable Refinanced Debt and (y) otherwise,
on a pro rata basis among all Term Loan Borrowings) in an aggregate amount equal to the Prepayment Percentage (or, with respect
to Net Proceeds in respect of a Prepayment Event triggered by clause (b) of the definition of “Prepayment Event”,
100%) of the amount of such Net Proceeds; provided that, in the case of any event described in clause (a)(IIIII)
of the definition of the term “Prepayment Event”, if the Borrower or any of the Subsidiaries invest (or commit to invest)
the Net Proceeds from such event (or a portion thereof) within 12 months after receipt of such Net Proceeds in the business of the Borrower
and the other Subsidiaries (including any acquisitions permitted under Section 6.04 and capital expenditures), then no prepayment
shall be required pursuant to this paragraph in respect of such Net Proceeds in respect of such event (or the applicable portion of such
Net Proceeds, if applicable) except to the extent of any such Net Proceeds therefrom that have not been so invested (or committed to be
invested) by the end of such 12-month period (or if committed to be so invested within such 12-month period, have not been so invested
within 180 days after the end of such 12-month period), at which time a prepayment shall be required in an amount equal to such Net Proceeds
that have not been so invested (or committed to be invested); provided further that (1) the Lead Borrower may elect to deem expenditures
that otherwise would be permissible reinvestments that occur prior to receipt of the Net Proceeds by or on behalf of the Borrower or any
of its Subsidiaries in respect of any Prepayment Event triggered by clause (a)(IIIII)
of the definition of the term “Prepayment Event” to have been reinvested in accordance with this Section 2.11(c), so
long as such deemed expenditure shall have been made no earlier than the earlier of execution of a definitive agreement and consummation
of such transaction, in each case, for such Prepayment Event triggered by clause (a)(IIIII)
of the definition of the term “Prepayment Event”; (2) the Borrower may use a portion of such Net Proceeds in respect
of a Prepayment Event triggered by clause (a)(IIIII)
of the definition of “Prepayment Event” to prepay or repurchase any Incremental Equivalent Debt, Ratio Debt and Credit Agreement
Refinancing Indebtedness that is secured on a pari passu basis with the Term Loans, in each case in an amount not to exceed the
product of (x) the amount of such Net Proceeds and (y) a fraction, the numerator of which is the outstanding principal amount of such
Incremental Equivalent Debt, Ratio Debt and Credit Agreement Refinancing Indebtedness and the denominator of which is the aggregate outstanding
principal amount of Term Loans and such Incremental Equivalent Debt, Ratio Debt and Credit Agreement Refinancing Indebtedness, and such
amount so used shall reduce on a dollar-for-dollar basis, any prepayment amount due hereunder in respect of such Net Proceeds and (3)
the foregoing reinvestment rights shall not be applicable and the Borrower shall be required to prepay Term Loan Borrowings with 100%
of the Net Proceeds of any Prepayment Event triggered by (i) clause (a)(IIIII)
of the definition of “Prepayment Event” with respect to any non-ordinary course sale, transfer or other disposition of any
property or asset of the Borrower or any of its Subsidiaries pursuant to Section 6.05(k) if the Total Net Leverage Ratio, determined
on a pro forma basis after giving effect to any such Prepayment Event, is greater than the Total Net Leverage Ratio immediately prior
to giving effect to such Prepayment Event and (ii) clause (a)(I) or (a)(II)
of the definition of “Prepayment Event”.
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(d) Following the end of each fiscal year of the Lead Borrower, commencing with the fiscal year ending on or about December 31, 2021 (each, an “Excess Cash Flow Period”), the Borrower shall prepay Term Loan Borrowings in an aggregate amount equal to the ECF Percentage (after giving effect to any adjustment pursuant to the Permitted ECF Recalculation Considerations (as defined below)) of Excess Cash Flow for such fiscal year; provided that such amount shall be reduced, at the option of the Borrower, by the aggregate amount (other than any amount applied to reduce the prepayment required under this clause (d) in respect of any prior year) of: (i) voluntary prepayments of Term Loans during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) shall be limited to the actual amount of such cash prepayment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (ii) voluntary prepayments of (x) Indebtedness under the Badcock First Lien Credit Agreement and/or the Badcock Second Lien Credit Agreement and (y) Indebtedness secured on a pari passu basis with the Term Loans that are incurred under Incremental Facilities, Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness or Ratio Debt secured on a pari passu basis with the Term Loans, in each case, during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) or similar provisions shall be limited to the actual amount of such cash prepayment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (iii) except to the extent deducted in the calculation of Excess Cash Flow, the amount of any reduction in the outstanding amount of any Term Loans resulting from any assignment made in accordance with Section 9.04(g) during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction shall be limited to the actual amount of cash paid in connection with the relevant assignment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (iv) prepayments of revolving loans under the ABL Credit Agreement or any other revolving credit facility secured by a Lien on the Collateral and the Badcock Collateral ranking pari passu with the Lien on the Collateral and the Badcock Collateral securing the ABL Credit Agreement or senior or pari passu with the Lien on the Collateral and the Badcock Collateral securing the Indebtedness hereunder, in each case, to the extent accompanied by a permanent reduction in commitments therefor and not financed with the incurrence of other long-term Indebtedness (other than revolving Indebtedness or Disqualified Equity Interests), in each case, during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below, (v) except to the extent deducted in the calculation of Excess Cash Flow, without duplication of any Contract Consideration already deducted in a previous Excess Cash Flow Period, capital expenditures, Permitted Acquisitions or other Investments not prohibited by this Agreement (other than Investments among the Borrower and its Subsidiaries and Investments in cash or Permitted Investments) during such fiscal year and, at the option of the Borrower, after fiscal year-end and prior to the date such prepayment is due as provided below (or committed during such period to be used for such purposes within the succeeding twelve month period, in each case subject to reversal of such deduction if any such committed amount is not actually expended within such twelve-month period), (vi) except to the extent deducted in the calculation of Excess Cash Flow, Restricted Payments (other than Restricted Payments made by any Borrower or Subsidiary to any other Borrower or Subsidiary) and prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing, in each case, during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (or committed during such period to be used for such purposes within the succeeding twelve month period, in each case subject to reversal of such deduction if any such committed amount is not actually
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expended
within such twelve-month period), (vii) regularly scheduled principal payments in respect of (x)
any Term Loans or,
(y) Indebtedness under the Badcock First Lien Credit Agreement and/or the Badcock Second Lien Credit Agreement or (z) Indebtedness
secured on a pari passu basis with the Term Loans that are incurred under Incremental Facilities, Incremental Equivalent Debt,
Credit Agreement Refinancing Indebtedness or Ratio Debt secured on a pari passu basis with the Term Loans and (viii) transaction
costs and expenses related to items set forth in the preceding clauses (i) through (vii) (any payments described in the foregoing
clauses (i) through (viii) of this proviso that are made after the end of the applicable Excess Cash Flow Period but prior
to the making of the applicable prepayment in respect of such Excess Cash Flow Period being referred to herein as an “After Year
End Payment”); provided that (1) an Excess Cash Flow payment pursuant to this clause (d) shall only be required
with respect to amounts in excess of $10,000,000 for any Excess Cash Flow Period (and only such excess amount shall be applied to the
payment thereof) and (2) following the making of any After Year End Payment, (i) the First Lien Net Leverage Ratio shall be recalculated
giving Pro Forma Effect to such After Year End Payment as if such payment were made during the applicable Excess Cash Flow Period and
the ECF Percentage for purposes of making such Excess Cash Flow prepayment shall be determined by reference to such recalculated First
Lien Net Leverage Ratio and (ii) such After Year End Payment shall not be applied to the calculation of the First Net Lien Leverage Ratio
in connection with the determination of the ECF Percentage for purposes of (and shall not reduce the required amount of) any subsequent
Excess Cash Flow payment in another Excess Cash Flow Period (the foregoing the “Permitted ECF Recalculation Considerations”).
Notwithstanding anything to the contrary in the foregoing, the Borrower may use a portion of such amount of Excess Cash Flow (as so reduced)
in respect of any such fiscal year of the Lead Borrower that would otherwise be required to be applied to prepay Term Loans to prepay
or repurchase any other Incremental Equivalent Debt, Ratio Debt and Credit Agreement Refinancing Indebtedness that is secured by the Collateral
and the Badcock Collateral on a pari passu basis with
the Term Loans to the extent such other Indebtedness and the Liens securing such other Indebtedness are permitted hereunder, in each case
in an amount not to exceed the product of (A) the amount of Excess Cash Flow (as so reduced) in respect of such fiscal year otherwise
required to be applied to prepay Term Loan Borrowings (without giving effect to this sentence) and (B) a fraction, the numerator of which
is the outstanding principal amount of such Incremental Equivalent Debt, Ratio Debt and Credit Agreement Refinancing Indebtedness and
the denominator of which is the aggregate outstanding principal amount of Term Loans and such Incremental Equivalent Debt, Ratio Debt
and Credit Agreement Refinancing Indebtedness. Each prepayment pursuant to this paragraph shall be made on or before the date that is
five Business Days after the date on which financial statements are required to be delivered pursuant to Section 5.01(a) with
respect to the fiscal year for which Excess Cash Flow is being calculated.
(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any mandatory prepayment of Term Loan Borrowings made at a time when Term Loan Borrowings of more than one Class remain outstanding, the Borrower shall select Term Loan Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Loan Borrowings (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier at least two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been
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applied to prepay Term Loans or Other Term Loans of any such Class but was so declined shall first be offered on a pro rata basis to Lenders who did not decline such proceeds, and thereafter (to the extent remaining after compliance with any applicable mandatory prepayment provisions of the ABL Credit Agreement and the Second Lien Credit Agreement), may be retained by the Borrower and added to the Available Amount (such amounts, “Retained Declined Proceeds”). Optional prepayments of Term Loan Borrowings shall be allocated among the Classes of Term Loan Borrowings as directed by the Borrower, and in the absence of a designation by the Borrower, in direct order of maturity, and subject to the foregoing, the Administrative Agent shall apply such prepayments in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16; provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c) or (d), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurodollar Loans.
(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) in writing by telecopy, electronic mail, facsimile or overnight courier of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment (or, in each case, such later date or date which the Administrative Agent may agree to in its sole discretion). Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and subject to Section 2.11(b), shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
(g)
Notwithstanding any other provisions of Section 2.11(c) or (d), (A) to the extent that any of or all the Net Proceeds
of any Prepayment Event set forth in clause (a)(IIIII)
of the definition thereof by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.11(c) (a “Foreign
Prepayment Event”) or Excess Cash Flow of a Foreign Subsidiary giving rise to a payment pursuant to Section 2.11(d) are
prohibited by, would violate or conflict with, or be delayed by, applicable local law from being repatriated to the Borrower, the portion
of such Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section
2.11(c) or (d), as the case may be, and such amounts may be retained by such Subsidiary so long, but only so long, as the Lead
Borrower determined in good faith that the applicable local law will not permit repatriation to the Borrower and once the Lead
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Borrower has determined in good faith that such repatriation of any of such affected Net Proceeds or Excess Cash Flow is permitted under the applicable local law, such repatriation will be effected as soon as practicable and such repatriated Net Proceeds or Excess Cash Flow will be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c) or (d), as applicable, (B) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Prepayment Event or Excess Cash Flow of a Foreign Subsidiary giving rise to a payment pursuant to Section 2.11(d) would have a material adverse tax or cost consequence with respect to such Net Proceeds or Excess Cash Flow, the Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary; provided that if the Lead Borrower determines in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event or Excess Cash Flow so affected would no longer have a material adverse tax consequence with respect to such Net Proceeds or Excess Cash Flow, such Net Proceeds or Excess Cash Flow shall be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c) or Section 2.11(d), as applicable, and (C) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event or Excess Cash Flow would conflict with the fiduciary duties of a Subsidiary’s directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any officer, director, employee, manager, member or management or consultant of such Subsidiary, the Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary.
SECTION 2.12 Fees.
(a) [Reserved].
(b) [Reserved].
(c) The Borrower agrees to pay (i) to the Administrative Agent, for its own account, fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent in the Administrative Agent Fee Letter and (ii) to the Lead Arrangers and/or the Administrative Agent, as applicable, for their accounts or the accounts of the Lenders (as specified therein), fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Lead Arrangers in the Arranger Fee Letter.
(d) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 any principal of or interest on any Loan or any fee or other amount payable by any Loan Party under a Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, all overdue principal amounts of the Loans shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of the principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided, further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
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(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Benchmark Unavailability; Benchmark Replacement Setting.
(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(1) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate of the LIBO Rate, as applicable (including because the LIBO Screen Rate is not available or published on a current basis), for such Interest Period; provided that no Benchmark Transition Event or Early Opt-in Election shall have occurred at such time; or
(2) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then in each such case, the Administrative Agent shall give notice thereof to the Lead Borrower and the Lenders in writing by telecopy, electronic mail, facsimile or overnight courier as promptly as practicable thereafter and, until the Administrative Agent notifies the Lead Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, then such Borrowing shall be made as an ABR Borrowing; provided, however, that, in each case, the Lead Borrower may revoke any Borrowing Request that is pending when such notice is received.
(b) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 2.14), if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders (or, if such Benchmark Replacement affects fewer than all Classes, the Majority in Interest Lenders of each affected Class).
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(c) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(d) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Lead Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.
(e) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or the LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion (including the LIBO Screen, if applicable) or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service (including the LIBO Screen, if applicable) for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(f) Benchmark Unavailability Period. Upon the Lead Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.
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SECTION 2.15 Increased Costs.
(a) 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 by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate);
(ii) subject the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document to any Taxes (other than Indemnified Taxes, Other Taxes or Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred or reduction actually suffered; provided that the Borrower shall not be liable for such compensation if, in the case of requests for reimbursement under clause (ii) above resulting from a market disruption, (A) the relevant circumstances are not generally affecting the banking market or (B) the applicable request has not been made by the Majority in Interest of Term Lenders with respect to Term Loans; provided, further, that to the extent any such costs or reductions are incurred by any Lender as a result of any requests, rules, guidelines or directives enacted or promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Basel III, then such Lender shall be compensated pursuant to this Section 2.15(a) only to the extent such Lender is imposing such charges on similarly situated borrowers where the terms of other syndicated credit facilities permit it to impose such charges.
(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.
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(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than one hundred and eighty (180) days prior to the date that such Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.16 Break Funding Payments.
In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. Such loss, cost or expense shall in no event exceed that which would have been incurred by such Lender had it funded each Eurodollar Loan made by it at the Adjusted LIBO Rate for such Loan by a matching deposit or other borrowing in the applicable interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt of such demand. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements.
SECTION 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
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(b) The Borrower shall timely pay to the relevant Governmental Authority in accordance with Requirements of Law or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c) The Borrower, jointly and severally, shall indemnify the Administrative Agent and each Lender within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document, as the case may be (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) (such Lender, a “Foreign Lender”) shall deliver (to the extent it is legally entitled to do so) to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Administrative Agent) whichever of the following is applicable:
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(A) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty,
(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit Q-1, Q-2, Q-3 or Q-4, as applicable, to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to such Borrower as described in Section 881(c)(3)(C) of the Code (any such certificate a “United States Tax Compliance Certificate”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable (provided that, if the Lender is a partnership and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
(E) any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
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(f) If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of Taxes as to which it has been indemnified pursuant to this Section 2.17 or with respect to which additional amounts have been paid pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees promptly to repay the amount paid over to the Borrower pursuant to this Section 2.17(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority (provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary in this Section 2.17(f), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrowers pursuant to this Section 2.17(f) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Notwithstanding anything to the contrary, this Section 2.17(f) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person.
(g) The agreements in this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(h) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest or fees, or of amounts payable under Sections 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as may be specified by the Administrative Agent, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension. All payments or prepayments of any Loan shall be made in dollars, all payments of accrued interest payable on a Loan shall be made in dollars, and all other payments under each Loan Document shall be made in dollars.
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(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (B) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender 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 Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a) or Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and to be applied to, any future funding obligations of such Lender under any such Section.
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SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall (at the request of the Lead Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder affected by such event, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender is a Defaulting Lender, then the Lead Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Lead Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued but unpaid fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Lead Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
SECTION 2.20 Incremental Credit Extensions.
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(a)
The Borrower may at any time or from time to time on one or more occasions after the Effective
Datefrom and after Payment in Full of Badcock Obligations,
by written notice delivered to the Administrative Agent request to add one or more additional Classes of term loans or additional term
loans of the same Class as any existing Class of term loans (an “Incremental Term Facility”) and/or increase the principal
amount of the Term Loans by requesting new term loan commitments to be added to such Loans (an “Incremental Term Increase”,
and together with any Incremental Term Facility, the “Incremental Term Loans” or the “Incremental Facilities”);
provided that, at the time that any such Incremental Term Loan is made or effected, no Event of Default (except, in the case of
the incurrence or provision of any Incremental Facility in connection with a Limited Condition Transaction, no Event of Default pursuant
to Sections 7.01(a), (b), (h) or (i)) shall have occurred and be continuing; provided, further,
that Incremental Term Facilities may be borrowed by any one or more Loan Parties. Notwithstanding anything to the contrary herein, the
aggregate outstanding principal amount of the Incremental Facilities that can be incurred at any time shall not exceed the Incremental
Cap at such time. Each Incremental Facility shall be in a minimum principal amount of $2,000,000 and integral multiples of $500,000 in
excess thereof if such Incremental Facilities are denominated in dollars (unless the Lead Borrower and the Administrative Agent otherwise
agree); provided that such amount may be less than $2,000,000 if such amount represents all the remaining availability under the
aggregate principal amount of Incremental Facilities set forth above.
(b) (i)(i) The Incremental Term Loans (a) shall rank equal in right of payment with the Term Loans, shall be secured only by the Collateral and the Badcock Collateral securing the Secured Obligations, shall be secured by the Collateral and the Badcock Collateral on a pari passu basis with the Term Facility, and shall not be guaranteed by any Person which is not a Loan Party, (b) shall not mature earlier than the Term Maturity Date with respect to the Initial Term Loans (except in the case of bridge loans the terms of which provide for an automatic extension of the maturity date thereof, subject to customary conditions, to a date that is not earlier than the Term Maturity Date with respect to the Initial Term Loans), (c) shall not have a shorter Weighted Average Life to Maturity (except in the case of bridge loans the terms of which provide for an automatic extension of the maturity date thereof, subject to customary conditions, to a date that is not earlier than the Term Maturity Date with respect to the Initial Term Loans) than the remaining Initial Term Loans, (d) shall have a maturity date (subject to clause (b)), an amortization schedule (subject to clause (c)), and interest rates (including through fixed interest rates), interest margins, rate floors, upfront fees, funding discounts, original issue discounts and prepayment terms and premiums for the Incremental Term Loans as determined by the Lead Borrower and the Additional Term Lenders thereunder; provided that in the event that the Effective Yield for any Incremental Term Loans incurred in reliance on clause (III) of the definition of “Incremental Cap” prior to the 12-month anniversary of the Effective Date that are secured by the Collateral and the Badcock Collateral on a pari passu basis with the Secured Obligations (other than (1) any Incremental Term Loans with a maturity date more than one year after the Term Maturity Date with respect to the Initial Term Loans, (1)(2) any Incremental Term Loans incurred in connection with a Permitted Acquisition or other permitted Investment or (2)(3) any Incremental Term Loans originally incurred in reliance on clauses (I) or (II) of the definition of “Incremental Cap”) is greater than the Effective Yield for the Initial Term Loans by more than the MFN Cushion, then the Effective Yield for the Initial Term Loans shall be increased to the extent necessary so that the Effective Yield for such Initial Term Loans is equal to the Effective Yield for the Incremental Term Loans minus the MFN Cushion (provided that the “LIBOR floor” applicable to the Initial Term Loans shall be increased to an amount not to exceed the “LIBOR floor” applicable to such Incremental Term Loans prior to any increase in the Applicable Rate applicable to such Term Loans then outstanding) (any required adjustment to the Effective Yield described in this clause (d) shall be referred to herein as an “MFN Adjustment”), (e) other than with respect to Credit Agreement Refinancing Indebtedness shall not participate on a greater than pro rata basis than the Initial Term Loans with respect to any mandatory prepayment (other than any scheduled amortization payment), provided that the Lead Borrower and the lenders providing the relevant Incremental Term Loans shall be permitted, in their sole discretion, to elect to prepay or receive, as applicable, any such prepayment on a less than pro rata basis and (f) may otherwise have terms and conditions different from those of the Term Loans (including currency denomination); provided that except with respect to matters contemplated by clauses (b), (c), (d) and (e) above, the covenants, events of default and guarantees of any such Incremental Term Loans shall not be materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the covenants, events of default and guarantees of the Initial Term Loans, unless (1) the existing Initial Term Loans also receive the benefit of such more restrictive terms (it being understood that no consent shall be required from the Administrative Agent or any Lender to add such more restrictive terms for the benefit the existing Initial Term Loans), (2) any such provisions apply after the Term Maturity Date with respect to the Initial Term Loans at the time of incurrence of such Incremental Facility, (3) such terms reflect market terms and conditions (taken as a whole) at the time of establishment of such Incremental Term Facility, as determined in good faith by the Borrower or (4) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower; provided further that subject to Section 1.06, upon the incurrence of any Incremental Term Loans, (x) the representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct in all material respect and (y) no Event of Default shall have occurred and be continuing.
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(c) Each notice from the Borrower pursuant to this Section shall set forth the requested amount of the relevant Incremental Facility.
(d) Commitments in respect of any Incremental Facility shall become Commitments under this Agreement pursuant to an amendment (an “Incremental Facility Amendment”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, any Loan Party that is a Borrower thereof, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent. An Incremental Facility may be provided, subject to the prior written consent of the Lead Borrower (not to be unreasonably withheld), by any existing Lender (it being understood that no existing Lender shall, unless it agrees, be obligated to provide any Incremental Facilities) or by any Additional Lender; provided that the Administrative Agent shall have consent rights (not to be unreasonably withheld, conditioned or delayed) with respect to such Additional Lender, if such consent would be required pursuant to Section 9.04 for an assignment of Loans or Commitments, as applicable, to such Additional Lender. Incremental Term Loans shall be a “Loan” for all purposes of this Agreement and the other Loan Documents. The Incremental Facility Amendment may, subject to Section 2.20(b), without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section 2.20. The effectiveness of any Incremental Facility Amendment and the occurrence of any credit event (including the making (but not the conversion or continuation) of a Loan thereunder) pursuant to such Incremental Facility Amendment shall be subject to the satisfaction of such conditions as the parties thereto shall agree and as required by this Section 2.20. The Borrower (or other applicable Loan Party) will use the proceeds of the Incremental Facilities for working capital and other general corporate purposes of the Borrower and its Subsidiaries, including capital expenditures, Permitted Acquisitions and other Investments, Restricted Payments and the refinancing of Indebtedness, and any other use not prohibited by the Loan Documents.
(e) Notwithstanding anything to the contrary, this Section 2.20 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.21 Refinancing Amendments.
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans), in the form of Other Term Loans or Other Term Commitments; provided that the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment (or reduction) of outstanding Indebtedness being so refinanced, as the case may be, and accompanied by any prepayment premium payable thereon in accordance with the terms hereof. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $5,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section.
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(b) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments. Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to Section 2.05(j) or this Section 2.22(a)(ii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 2.05(j) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(b)
Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting
Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as
of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect
to any cash Collateralcollateral),
such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions
as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders, whereupon
that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except
to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute
a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.23 Illegality.
If any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted LIBO Rate, or to determine or charge interest rates based upon the Adjusted LIBO Rate, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Loans denominated in dollars or to convert ABR Loans denominated in dollars to Eurodollar Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted LIBO Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three (3) Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans denominated in dollars of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Each Lender agrees to notify the Administrative Agent and the Lead Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
SECTION 2.24 Loan Modification Offers.
(a) At any time after the Effective Date, the Lead Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “Loan Modification Offer”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “Affected Class”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Lead Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “Accepting Lenders”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
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(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by the Lead Borrower, each applicable Accepting Lender and the Administrative Agent; provided that no Permitted Amendment shall become effective unless the Lead Borrower shall have delivered to the Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall be reasonably requested by the Administrative Agent in connection therewith. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “Non-Accepting Lender”) then after receipt of consents from Lenders constituting the Required Lenders hereunder, the Lead Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11(a)(i)) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
ARTICLE III
Representations
and Warranties
The Borrower represents and warrants to the Lenders and each Agent that (limited, on the Effective Date, to the Specified Representations):
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SECTION 3.01 Organization; Powers.
Each of the Borrower and its Subsidiaries (a) is duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the relevant jurisdictions) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdictions) in, every jurisdiction where such qualification is required, except, with respect to clause (a) above (other than with respect to the Borrower), clause (b) above (other than with respect to the Borrower) and clause (c) above, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.02 Authorization; Enforceability.
This Agreement has been duly authorized, executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law, (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in any legal opinion delivered to an Agent in connection with any Loan Document (together, the “Legal Reservations”) and (iv) the Perfection Requirements.
SECTION 3.03 Governmental Approvals; No Conflicts.
Except as set forth in Schedule 3.03 and subject to the Legal Reservations and the Perfection Requirements, the execution, delivery and performance by any Loan Party of this Agreement or any other Loan Document (a) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of the Borrower or any other Loan Party, or (ii) any Requirements of Law applicable to the Borrower or any other Loan Party, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon the Borrower or any Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by the Borrower or any Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except Liens created under the Loan Documents or permitted by Section 6.02, except (in the case of each of clauses (a), (b)(ii), (c) and (d)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, or imposition of Lien, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.04 Financial Condition; 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, including the notes thereto and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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, including the notes thereto.
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(b) The Unaudited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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.
(c) The Borrower has heretofore furnished to the Lead Arrangers the consolidated pro forma balance sheet of the Lead Borrower and its Subsidiaries as of and for the period of twelve fiscal months of the Lead Borrower ended on or about September 30, 2020 (the “Pro Forma Financial Statements”), which have been prepared in good faith, based on assumptions believed by the Lead Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respects on a pro forma basis the estimated financial position of the Lead Borrower and its Subsidiaries as at the fiscal quarter of the Lead Borrower ended on or about September 30, 2020, assuming that the Transactions had actually occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of operations).
(d) Since the Effective Date, there has been no Material Adverse Effect.
SECTION 3.05 Properties.
Each of the Borrower and its Subsidiaries has good title to, or valid interests in, all its real and personal property material to its business, if any (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters.
(a) Except as set forth in Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Subsidiaries that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any of its Subsidiaries (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, to the knowledge of the Borrower, become subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) has, to the knowledge of the Borrower, any basis to reasonably expect that the Borrower or any of its Subsidiaries will become subject to any Environmental Liability.
SECTION 3.07 Compliance with Laws.
Each of the Borrower and its Subsidiaries is in compliance with all Requirements of Law applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.08 Investment Company Status.
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
SECTION 3.09 Taxes.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Borrower and each Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets otherwise due and payable (whether or not shown on a Tax return), except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against the Borrower or any Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 ERISA; Labor Matters.
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as would not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect, (i) each employee benefit plan (as defined in Section 3(2) of ERISA) that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of the Borrower, threatened in writing claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
(d) Except as would not reasonably be expected to have a Material Adverse Effect, (i) none of the Borrower or its Subsidiaries has experienced any labor strike or work stoppage or other collective labor dispute by employees due to labor disagreements and (ii) each of the Borrower and its Subsidiaries is in compliance in all respects with any collective bargaining agreement to which it is a party.
SECTION 3.11 Disclosure.
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(a) As of the First Amendment Effective Date, the written reports, financial statements, certificates or other written factual information (other than projections and information of a general economic or industry specific nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered thereunder (as modified or supplemented by other information so furnished), when taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial information, the Borrower represents only that such information, when taken as a whole, was prepared in good faith based upon assumptions believed by it to be reasonable at the time delivered, it being understood that (i) any such projected financial information is merely a prediction as to future events and is not to be viewed as fact, (ii) such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower or any of its Subsidiaries and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
(b) As of the First Amendment Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification (if any) provided pursuant to Section 4.01(l) is true and correct in all respects.
SECTION 3.12 Subsidiaries.
As of the First Amendment Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and each of its subsidiaries in, each subsidiary of the Lead Borrower.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as would not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Borrower, each of the Borrower and its Subsidiaries owns, licenses or possesses the right to use all Intellectual Property and Badcock Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of the Borrower, no Intellectual Property or Badcock Intellectual Property owned by the Borrower or any Subsidiary and used in the operation of its business as currently conducted infringes upon the Intellectual Property or Badcock Intellectual Property of any Person except for such infringements that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property or the Badcock Intellectual Property is pending or, to the knowledge of the Borrower, threatened in writing against the Borrower or any Subsidiary, which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Solvency.
Immediately after the consummation of each of the Transactions that occurred on the Effective Date (including the execution and delivery of this Agreement, the making of the Loans and the use of proceeds of such Loans on the date hereof) and the transactions contemplated by the First Amendment, the Lead Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
SECTION 3.15 Federal Reserve Regulations.
None of the Borrower or any of its Subsidiaries is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
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SECTION 3.16 Use of Proceeds.
The Borrower will use the proceeds of the Initial Term Loans made on the Effective Date to directly or indirectly finance the Transactions and to fund any original issue discount or upfront fees payable in connection therewith.
SECTION 3.17 Anti-Corruption Laws and Sanctions.
(a) The Borrower and each of its Subsidiaries will not, directly or to their knowledge indirectly, use the proceeds of the Loans to fund any activity or business with any Person, or in any country or territory that, at the time of such funding, is the subject of Sanctions, or in violation of any Anti-Corruption Laws, the USA PATRIOT Act, any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of Treasury and any successor Governmental Authority, or other applicable anti-money laundering or anti-terrorism laws.
(b) The Borrower and its Subsidiaries and, to the knowledge of the Borrower, the officers, directors, employees and agents of the Borrower and its Subsidiaries are in compliance in all material respects with applicable Anti-Corruption Laws and applicable Sanctions, the USA PATRIOT Act, and other applicable anti-money laundering and anti-terrorism laws.
(c) (i) None of the Borrower or its Subsidiaries and (ii) to the knowledge of the Borrower or its Subsidiaries, none of their respective directors, officers, employees and agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.
(d) The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance in all material respects by the Borrower and its Subsidiaries with applicable Anti-Corruption Laws and applicable Sanctions.
SECTION 3.18 Security Documents.
Subject to Section 5.14, the Legal Reservations
and the Perfection Requirements, (a) the Security Documents
are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding and enforceable
security interest in the Collateral described therein and proceeds and products thereof and
(b) the Badcock Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a
legal, valid, binding and enforceable security interest in the Badcock Collateral described therein and proceeds and products thereof.
In the case of (i) Pledged Equity Interests and Badcock Pledged
Equity Interests represented by certificates, (x) if and when such certificates are delivered to the Collateral Agent or (y) when
financing statements in appropriate form are filed in the appropriate filing offices, and (ii) the
other Collateral described in the Collateral Agreement, which can be perfected by filing a financing statement, when financing statements
in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Collateral Agreement have
been completed and (iii) the other Badcock Collateral described in the Badcock
Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed
in the appropriate filing offices and such other filings as are required in the Badcock Collateral Agreement have been completed,
the Lien created by the Collateral Agreement or the Badcock Collateral Agreement,
as applicable, shall constitute, to the extent such perfection is required by the Collateral Agreement or
the Badcock Collateral Agreement, as applicable, a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral or the Badcock Collateral,
as applicable, and the proceeds and products thereof, as security for the Secured Obligations.
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SECTION 3.19 Insurance.
The Borrower and each of its Subsidiaries maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) were financially sound and responsible at the time the relevant coverage was last placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business.
SECTION 3.20 Franchise Agreements.
(a) Schedule 3.20 sets forth a complete and accurate list as of the First Amendment Effective Date of all Franchise Agreements to which any Loan Party or any of their Subsidiaries is a party.
(b) Except as set forth on Schedule 3.20, as of the First Amendment Effective Date, to the knowledge of the Loan Parties, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein which conflicts, or potentially conflicts, with any grant of exclusive rights to a territory granted under any other Franchise Agreement. Except as set forth in Schedule 3.20, as of the First Amendment Effective Date, no current franchisee under a Franchise Agreement has given written notice to a Loan Party’s management during the six (6) month period before the First Amendment Effective Date of its intention to rescind or terminate (with or without cause) any Franchise Agreement.
(c) Except as could not reasonably be expected to have a Material Adverse Effect, (i) each Loan Party has prepared and maintained each of its Franchise Disclosure Documents, in an accurate and correct manner, (ii) each Loan Party has filed all required Franchise Disclosure Documents required by law in all states and jurisdictions requiring registration and approval prior to any offers or sales of franchises in such states, and (iii) each Loan Party has filed all material changes, amendments, renewals thereto on a timely and accurate basis as required under, and required by applicable Requirements of Law. Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party’s Franchise Disclosure Documents were prepared in compliance with applicable Franchise Laws and disclosure guidelines, and there were no misrepresentations or omissions of information in any Franchise Disclosure Documents at the time such Loan Party was using such Franchise Disclosure Documents. Each Franchise Agreement complies, and the offer and sale of such Franchise Agreement complied, in each case at the time such offer and sale was made, with all Franchise Laws, except to the extent of any non-compliance therewith which could not reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date.
The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement) that such party has signed a counterpart of this Agreement.
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(b) The Administrative Agent shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, and such local counsel as may be reasonably requested by the Administrative Agent in the jurisdictions of organization of any Loan Party, each in form and substance reasonably satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Effective Date, with appropriate insertions, or otherwise in form and substance reasonably satisfactory to the Administrative Agent, executed by any Responsible Officer of such Loan Party, and including or attaching the documents referred to in paragraph (d) of this Section 4.01, and (ii) a certificate of the Lead Borrower, dated the Effective Date, substantially in the form of Exhibit H, executed by any Responsible Officer of the Lead Borrower.
(d) The Administrative Agent shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) with respect to each Loan Party executing the Loan Documents, an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of such Loan Party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party, certified as of the Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(e) (i) The Administrative Agent shall have received all fees required to be paid on the Effective Date pursuant to the Administrative Agent Fee Letter and reasonable and documented out-of-pocket expenses required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least three (3) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower) and (ii) the Lead Arrangers and/or the Administrative Agent, as applicable, shall have received all fees in respect of the Term Facility required to be paid on the Effective Date pursuant to the Arranger Fee Letter; provided, that any or all such amounts referred to in this clause (e) may, at the option of the Lead Borrower, be offset against the proceeds of the initial Loans made hereunder.
(f) The Collateral and Guarantee Requirement (other than in accordance with Section 5.14) shall have been satisfied and the Administrative Agent shall have received a completed Perfection Certificate dated the Effective Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby; provided that if, notwithstanding the use by the Borrower of commercially reasonable efforts without undue burden or expense to cause the Collateral and Guarantee Requirement to be satisfied on the Effective Date, the requirements thereof (other than (i) the execution and delivery of the Guarantee Agreement and the Collateral Agreement by the Loan Parties, (ii) subject to the Intercreditor Agreements, the creation and perfection of security interests in the Equity Interests of the Borrower and each Subsidiary owned by or on behalf of any Loan Party (provided that such Equity Interests are not Excluded Assets or owned or held by an Excluded Subsidiary), with respect to Equity Interests in the Acquired Company and the Acquired Subsidiaries, to the extent received on the Effective Date, and (iii) delivery of Uniform Commercial Code financing statements with respect to perfection of security interests in the assets of the Loan Parties that may be perfected by the filing of a financing statement under the Uniform Commercial Code) are not satisfied as of the Effective Date, the satisfaction of such requirements shall not be a condition to the availability of the initial Loans on the Effective Date (but shall be required to be satisfied as promptly as practicable after the Effective Date or otherwise within the period specified in Schedule 5.14, or such later date as the Administrative Agent may otherwise reasonably agree). Notwithstanding the foregoing, no Collateral shall be subject to any other pledges, security interest or mortgages, except for the Liens permitted under this Agreement.
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(g) Since the date of the Acquisition Agreement, there shall not have occurred a Company Material Adverse Effect (as defined in the Acquisition Agreement).
(h) The Lead Arrangers shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) The Specified Acquisition Agreement Representations shall be true and correct to the extent required by the definition thereof on and as of the Effective Date and the Specified Representations shall be true and correct in all material respects (or, if qualified by materiality, in all respects) on and as of the Effective Date; provided that, in each case, to the extent that any such representation expressly refers to an earlier date, such representation shall be true and correct in all material respects as of such earlier date.
(j) The Acquisition shall have been consummated, or substantially simultaneously with the borrowing of the Initial Term Loans on the Effective Date, shall be consummated, in all material respects in accordance with the terms of the Acquisition Agreement.
(k) The Administrative Agent shall have received (i) a certificate from the chief financial officer or equivalent Responsible Officer of the Lead Borrower certifying as to the solvency (as of the Effective Date) of the Lead Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, in substantially the form attached hereto as Exhibit G and (ii) certificates with respect to insurance policies of the Loan Parties as required under Section 5.07, all in form and substance reasonably satisfactory to Administrative Agent.
(l) (i) The Administrative Agent shall have received at least three (3) Business Days before the Effective Date all documentation and other information about the Loan Parties that the Administrative Agent reasonably determines is required by United States regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the USA PATRIOT Act and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Administrative Agent and each initial Lender that requests a Beneficial Ownership Certification will have received, at least three (3) Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower, in each case of clauses (i) and (ii), to the extent that the Administrative Agent has reasonably requested such items in writing delivered to the Loan Parties at least ten (10) Business Days prior to the Effective Date.
(m) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof.
(n) The Administrative Agent (or its counsel) shall have received from each party thereto (i) a counterpart of the ABL Intercreditor Agreement signed on behalf of such party and (ii) a counterpart of the First Lien/Second Lien Intercreditor Agreement signed on behalf of such party.
SECTION 4.02 Each Credit Event after the Effective Date.
After the Effective Date, the obligation of each Lender to make a Loan on the occasion of any Borrowing, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:
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(a) (i) In the case of any Borrowing, other than a Borrowing under any Incremental Facility, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing and (ii) in the case of any Borrowing under any Incremental Facility, “specified representations” and, solely to the extent required by the Additional Lenders providing such Incremental Facility, other representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, in each case, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(b) At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing (or, in the case of any Borrowing under any Incremental Facility incurred in connection with a Permitted Acquisition or an Investment not prohibited by Section 6.04, no Event of Default specified in Sections 7.01(a), (b), (h) or (i) shall have occurred and be continuing).
Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section 4.02) shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 4.02.
ARTICLE V
Affirmative Covenants
From and after the Effective Date and until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Loan Document shall have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information.
Borrower and its Subsidiaries will furnish to the Administrative Agent, on behalf of each Lender:
(a) (i) on or before the date that is 90 days after the end of each fiscal year of the Lead Borrower, commencing with the fiscal year of the Lead Borrower ended on or about December 31, 2021, the audited consolidated balance sheet and audited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case, in comparative form the figures for the previous fiscal year, all reported on by BDO, Deloitte or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any material qualification or exception as to the scope of such audit (other than with respect to, or resulting from, (A) an upcoming maturity date of any indebtedness for borrowed money or (B) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money)) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Lead Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year;
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(b) (i) on or before the date that is 30 days after the end of each of the first three fiscal quarters of each fiscal year of the Lead Borrower, commencing with the first fiscal quarter of the Lead Borrower ended after the Effective Date, the unaudited consolidated balance sheet and unaudited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case, in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of the Lead Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter;
(c) [reserved];
(d) not later than ten (10) Business Days of any delivery of financial statements under paragraph (a) above, a reasonably detailed annual budget for the Borrower and its Subsidiaries on a consolidated basis, in a form customarily prepared by the Lead Borrower or otherwise as may be reasonably agreed between the Lead Borrower and the Administrative Agent (it being agreed that such annual budget shall not be provided to Public Lenders);
(e) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate (a “Compliance Certificate”) of a Financial Officer in the form of Exhibit E hereof (i) certifying as to whether a Default then exists and, if a Default does then exist, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations (A) to the extent the Financial Maintenance Covenants are then required to be tested, demonstrating compliance with the Financial Maintenance Covenants, and (B) in the case of financial statements delivered under paragraph (a) above, beginning with the financial statements for the fiscal year of the Lead Borrower ending on or about December 31, 2021, of Excess Cash Flow for such fiscal year;
(f) [reserved];
(g) [reserved];
(h) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by the Borrower or any Subsidiary with the SEC or with any national securities exchange; and
(i) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing.
Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing the Form 10-K or 10-Q (or the equivalent), as applicable, of the Borrower (or a parent company thereof) filed with the SEC within the applicable time periods required by applicable law and regulations; provided that such materials are accompanied by a report and opinion of BDO, Deloitte or any other independent registered public accounting firm of nationally recognized standing, 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 the scope of such audit (other than with respect to, or resulting solely from, (i) an upcoming maturity date of any indebtedness for borrowed money or (ii) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money).
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Documents required to be delivered pursuant to Section 5.01(a), (b) or (h) (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 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
Notwithstanding anything to the contrary herein, neither the Borrower nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s obligations under this Section 5.01) to any third party.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Bookrunners will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or its Affiliates’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Bookrunners, and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”; provided that the Borrower’s failure to comply with this sentence shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials as “PUBLIC”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (e) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information.
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SECTION 5.02 Notices of Material Events.
Promptly after any Responsible Officer of the Borrower or any Subsidiary obtains knowledge thereof, the Borrower or the applicable Subsidiary will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default or Event of Default (other than any Default resulting from any non-compliance with Section 5.01);
(b) the occurrence of any ERISA Event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect;
(c) any litigation, or governmental investigation or proceeding pending against the Borrower or any of its Subsidiaries which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect; and
(d) any other development or event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days or such longer period as reasonably agreed to by the Administrative Agent) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or incorporation or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property or Badcock Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
(b) Not later than five (5) Business Days after delivery of financial statements pursuant to Section 5.01(a), the Lead Borrower shall deliver to the Administrative Agent a certificate executed by a Responsible Officer of the Lead Borrower (i) setting forth any material changes to the information required pursuant to the Perfection Certificate or confirming that there has been no material change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section 5.03 and (ii) identifying any Wholly Owned Subsidiary that has become, or ceased to be, a Material Subsidiary or an Excluded Subsidiary during the most recently ended fiscal quarter of the Lead Borrower.
SECTION 5.04 Existence; Conduct of Business.
The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Material Intellectual Property and Governmental Approvals used in the conduct of its business, except to the extent (other than with respect to the preservation of the existence of the Borrower) that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
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SECTION 5.05 Payment of Taxes, etc.
The Borrower will, and will cause each of its Subsidiaries to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by the Borrower or any of its Subsidiaries or (b) the failure to make payment would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 5.06 Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (subject to casualty, condemnation and ordinary wear and tear), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.07 Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. Each such general liability policy of insurance (other than directors and officers policies, workers compensation policies and business interruption insurance), to the extent covering Collateral or Badcock Collateral and to the extent that Collateral Agent can be granted an insurable interest therein, shall (i) in the case of each such general liability policy, name the Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each such casualty insurance policy, contain a loss payable clause or mortgagee endorsement that names the Collateral Agent, on behalf of the Lenders as the loss payee or mortgagee thereunder.
(b) If any portion of any Mortgaged Property or Badcock Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party to (i) if required by the Flood Insurance Laws or other applicable law, maintain, or cause to be maintained, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
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SECTION 5.08 Books and Records; Inspection and Audit Rights.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards) consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or its Subsidiary, as the case may be. The Borrower will, and will cause each of its Subsidiaries that is a Loan Party to, permit any representatives designated by the Administrative Agent or any Lender, during normal business hours and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Administrative Agent and the Lenders under this Section 5.08 and the Administrative Agent shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants.
(b) The Lead Borrower will, within 30 days (or, after using commercially reasonable efforts to schedule such call at a later date agreed to by the Administrative Agent at its sole discretion) after the date of the delivery (or, if later, required delivery) of the quarterly and annual financial information pursuant to Sections 5.01(a) and (b), hold a conference call or teleconference, at a time selected by the Lead Borrower and reasonably acceptable to the Administrative Agent, with all of the Lenders that choose to participate, to review the financial results of the previous fiscal quarter or fiscal year of the Lead Borrower, as the case may be, of the Lead Borrower (it being understood that any such call may be combined with any similar call held for any of the Lead Borrower’s other lenders or security holders).
SECTION 5.09 Compliance with Laws.
(a) The Borrower will, and will cause each of its Subsidiaries to, comply with its Organizational Documents and all Requirements of Law (including ERISA, Environmental Laws, the USA PATRIOT Act, Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, the U.S. Foreign Corrupt Practices Act of 1977 and other anti-money laundering, anti-corruption, sanctions and anti-terrorism laws) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(b) The Borrower will not request any Borrowing, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (i) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country except to the extent permissible for a Person required to comply with Sanctions, (ii) in any manner that would result in the violation of any Sanctions applicable to the Borrower and its Subsidiaries or to the knowledge of the Borrower, any other party hereto or (iii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any legislation.
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SECTION 5.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans for the purposes set forth in Section 3.16.
SECTION 5.11 Additional Subsidiaries.
(a)
If (i) any additional Subsidiary is formed or acquired after the Effective Date (other
than Badcock), (ii) if any Subsidiary ceases to be an Excluded
Subsidiary or (iii) if the Borrower, at its option, elects to cause a Domestic
Subsidiary, or to the extent reasonably acceptable to the Administrative Agent, a Foreign Subsidiary that is not a Wholly Owned Subsidiary
(including any consolidated Affiliate in which the Borrower and its Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party,
then, the Borrower will, within thirty (30) days (or such longer period as may be agreed to by the Administrative Agent in its reasonable
discretion) after such newly formed or acquired Subsidiary is formed or acquired or such Subsidiary ceases to be an Excluded Subsidiary
or the Borrower has made such election, notify the Administrative Agent thereof, and will cause such Subsidiary (unless such Subsidiary
is an Excluded Subsidiary) to satisfy the Collateral and Guarantee Requirement with respect to such Subsidiary and with respect to any
Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party within thirty (30) days after such notice
(or such longer period as the Administrative Agent shall reasonably agree) and the Administrative Agent shall have received a completed
Perfection Certificate (or supplement thereof) with respect to such Subsidiary signed by a Responsible Officer, together with all attachments
contemplated thereby.
(b) Within sixty (60) days (or, to the extent any new Material Subsidiary is organized or incorporated under the laws of a jurisdiction in which no existing Loan Party is organized or incorporated, within ninety (90) days) (or, in each case, such longer period as otherwise provided in this Agreement or as the Administrative Agent may reasonably agree) after the Borrower identifies any new Material Subsidiary (other than Badcock) pursuant to Section 5.03(b), all actions (if any) required to be taken with respect to such Subsidiary in order to satisfy the Collateral and Guarantee Requirement shall have been taken with respect to such Subsidiary, to the extent not already satisfied pursuant to Section 5.11(a).
(c) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within ninety (90) days, following the formation or acquisition of such real property or such Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
SECTION 5.12 Further Assurances.
(a) The Borrower will, and will cause each Loan Party to, 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, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, in each case, to cause the “Collateral and Guarantee Requirement” (or the “Badcock Collateral and Guarantee Requirement” in the case of Badcock) to be and remain satisfied, all at the expense of the Loan Parties.
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(b) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Material Real Property or improvements thereto or any interest therein, are acquired by the Borrower or any other Loan Party (other than Badcock) or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”. In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party (other than Badcock), as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
(c) If, after the First Amendment Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Badcock Material Real Property or improvements thereto or any interest therein, are acquired by Badcock (other than assets constituting Badcock Collateral under a Badcock Security Document that become subject to the Lien created by such Badcock Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause Badcock to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Badcock Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Badcock Collateral and Guarantee Requirement”. In the event any Badcock Material Real Property is mortgaged pursuant to this Section 5.12(c), Badcock shall be required to comply with the “Badcock Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Badcock Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
SECTION 5.13 Franchise Agreements.
The Borrower will, and will cause each Loan Party to, satisfy and perform in all material respects all obligations of each such Person under each Franchise Agreement, except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.14 Certain Post-Closing Obligations.
As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14(a) or such later date as the Administrative Agent agrees to in writing, including to reasonably accommodate circumstances unforeseen on the Effective Date, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedules 5.14(a) and 5.14(b), as applicable, that, where such actions are to be taken to reasonably accommodate circumstances unforeseen on the Effective Date, would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Agent pursuant to its authority as set forth in the definition of the term “Collateral and Guarantee Requirement”.
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SECTION 5.15 Maintenance of Ratings.
The Borrower shall use commercially reasonable efforts to maintain (i) a public corporate credit rating (but not any particular rating) from S&P and a public corporate family rating (but not any particular rating) from Moody’s, in each case in respect of the Lead Borrower, and (ii) a public rating (but not any particular rating) in respect of the Term Loans made available under this Agreement from each of S&P and Moody’s.
ARTICLE VI
Negative Covenants
From and after the Effective Date and until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable (other than (i) contingent amounts not yet due and (ii) Cash Management Obligations) under any Loan Document have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of the Borrower and any of the Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Sections 2.20 or 2.21);
(ii) Indebtedness outstanding on the First Amendment Effective Date and any Permitted Refinancing thereof; provided that any Indebtedness in excess of $6,000,000 for the most recently ended Test Period as of such time, shall only be permitted if set forth on Schedule 6.01;
(iii) Guarantees by the Borrower and its Subsidiaries in respect of Indebtedness of the Borrower or any Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is otherwise permitted by Section 6.04, (B) no Guarantee by any Subsidiary of any Junior Financing or any unsecured Indebtedness for borrowed money that constitutes Material Indebtedness shall be permitted unless such Subsidiary shall have also provided a Guarantee of the applicable Loan Document Obligations pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement, as the case may be, and (C) if the Indebtedness being guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(iv) Indebtedness of the Borrower or any Subsidiary owing to the Borrower or any Subsidiary, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date (or the date of acquisition of such Subsidiary) or such later date as the Administrative Agent may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to material adverse tax consequences) on terms (i) not materially less favorable, taken as a whole, to the Lenders as those set forth in the Master Intercompany Note and the Badcock Master Intercompany Note or (ii) otherwise reasonably satisfactory to the Administrative Agent;
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(v) (A) Indebtedness (including Capital Lease Obligations and purchase money indebtedness) incurred, issued or assumed by the Borrower or any Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that, in the case of any purchase money Indebtedness, such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement; provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) (excluding any Capital Lease Obligations incurred pursuant to a sale and leaseback transaction permitted under Section 6.06) shall not exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(vi) Indebtedness in respect of Swap Agreements not incurred for speculative purposes;
(vii) from and after Payment in Full of Badcock Obligations, (A) Indebtedness of any Borrower, any Subsidiary or any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into the Borrower or a Subsidiary) incurred, issued or assumed after the Effective Date (including in connection with, or in order to finance, any Permitted Acquisition or any other Investment not prohibited by Section 6.04); provided that (w) such Indebtedness complies with the Required Additional Debt Terms, (x) the aggregate principal amount for all such Indebtedness incurred, issued or assumed pursuant to this clause shall not exceed, at the time of incurrence thereof, the Incremental Cap at such time, (y) any such Indebtedness incurred, issued or assumed in reliance on clauses (I) or (II) of the definition of “Incremental Cap” may be secured or unsecured bonds, notes, debentures or loans and, if secured by Liens on the Collateral and the Badcock Collateral securing the Secured Obligations, may be secured either by Liens pari passu with the Liens on the Collateral and the Badcock Collateral securing the Secured Obligations (but without regard to control of remedies) or by Liens having a junior priority relative to the Liens on the Collateral and the Badcock Collateral securing the Secured Obligations (any Indebtedness incurred pursuant to this subclause (A), “Incremental Equivalent Debt”); provided, further, that the Incremental Equivalent Debt of Subsidiaries that are not Loan Parties, together with the Ratio Debt of Subsidiaries that are not Loan Parties, in each case, at any time outstanding, shall not, in the aggregate, exceed $20,000,000 for the most recently ended Test Period as of such time of determination, and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) (or successive Permitted Refinancings thereof);
(viii) from and after Payment in Full of Badcock Obligations, (A) Indebtedness of the Borrower or any Subsidiary; provided that (1) if such Indebtedness is secured by a Lien on the Collateral and the Badcock Collateral that ranks pari passu with the Liens on the Collateral and the Badcock Collateral securing the Loans, after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, the First Lien Net Leverage Ratio is less than or equal to 2.67 to 1.00, (2) if such Indebtedness is secured by a Lien on the Collateral and the Badcock Collateral that ranks junior in priority (or is otherwise subordinated) to the Liens on the Collateral and the Badcock Collateral securing the Loans, after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, the Secured Net Leverage Ratio is less than or equal to 3.56 to 1.00 and (3) if such Indebtedness is unsecured, after giving effect to the incurrence of such Indebtedness on a Pro Forma Basis, at the election of the Lead Borrower, (I) the Total Net Leverage Ratio is less than or equal to 3.56 to 1.00 or (II) the Fixed Charge Coverage Ratio is greater than or equal to 2.00 to 1.00; provided, further, that (x) such Indebtedness complies with the Required Additional Debt Terms and (y) in the case of any such Indebtedness consisting of term loans secured by a Lien on the Collateral and the Badcock Collateral that ranks pari passu with the Liens on the Collateral and the Badcock Collateral securing the Loans, the MFN Adjustment shall apply to such Indebtedness as if such Indebtedness was an Incremental Term Loan; provided, further, that the Incremental Equivalent Debt of Subsidiaries that are not Loan Parties, together with the Ratio Debt of Subsidiaries that are not Loan Parties, in each case, at any time outstanding, shall not, in the aggregate, exceed $20,000,000 for the most recently ended Test Period as of such time of determination (any Indebtedness incurred pursuant to this subclause (A), “Ratio Debt”), and (B) any Permitted Refinancing of Indebtedness incurred pursuant to the foregoing subclause (A) (or successive Permitted Refinancings thereof);
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(ix) [reserved];
(x) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xi) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, Earn-Outs, incentive non-competes and other contingent obligations) or other similar arrangements incurred or assumed in connection with any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xii) (A) Indebtedness of the Borrower or any of the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xii) shall not exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiii) (A) Indebtedness of, incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures in an aggregate outstanding principal amount not to exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiv) [reserved];
(xiv) Indebtedness (A) incurred pursuant to the Badcock First Lien Credit Agreement and the other Badcock First Lien Loan Documents in an aggregate principal amount not to exceed $425,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the Badcock First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the First Lien Pari Passu Intercreditor Agreement and (B) incurred pursuant to the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Loan Documents in an aggregate principal amount not to exceed $150,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the Badcock Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement;
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(xv) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xvi) Indebtedness supported by a letter of credit, in a principal amount not to exceed the face amount of such letter of credit;
(xvii) (A) Indebtedness arising from an agreement providing for indemnification obligations or obligations in respect of purchase price (including earn-outs) or other similar adjustments incurred in any Permitted Acquisition, any other Investment or any Disposition, in each case permitted under this Agreement, and (B) Indebtedness arising from guaranties, letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments securing the performance pursuant to any such agreement described in clause (A);
(xviii) Permitted Unsecured Refinancing Debt and any Permitted Refinancing thereof;
(xix) (A) Permitted First Priority Refinancing Debt and any Permitted Refinancing thereof and (B) Permitted Junior Priority Refinancing Debt and any Permitted Refinancing thereof;
(xx) (A)(I) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into the Borrower or any Subsidiary) after the Effective Date as a result of any Permitted Acquisition or any other Investment not prohibited by Section 6.04, or (II) Indebtedness of any Person that is assumed by the Borrower or any Subsidiary in connection with an acquisition of assets by the Borrower or such Subsidiary in any Permitted Acquisition or any other Investment not prohibited by Section 6.04; provided that such Indebtedness is not incurred in contemplation of such Permitted Acquisition or other Investment and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further, that the aggregate principal amount of Indebtedness at any time outstanding under this clause (xx) shall not exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;
(xxi) (A) Indebtedness of any Subsidiary that is not a Loan Party; provided that the aggregate principal amount of Indebtedness of which the primary obligor or a guarantor is a Subsidiary that is not a Loan Party outstanding in reliance of this clause (xxi) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxii) Indebtedness incurred by the Borrower or any of the Subsidiaries in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligations regarding workers compensation claims;
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(xxiii) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(xxiv) (x) Indebtedness representing deferred compensation or stock-based compensation owed to employees, consultants or independent contractors of the Borrower or its Subsidiaries incurred in the ordinary course of business or consistent with past practice and (y) Indebtedness consisting of obligations of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries under deferred compensation to employees, consultants or independent contractors of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries or other similar arrangements incurred by such Persons in connection with the Transactions, any Permitted Acquisition or any other Investment not prohibited by Section 6.04;
(xxv) Indebtedness consisting of unsecured promissory notes issued by the Borrower or any Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, successors, executors, administrators, heirs, legatees or distributees, in each case to finance the purchase or redemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) to the extent permitted by Section 6.07(a);
(xxvi) (A) letters of credit or bank guarantees (exclusive of letters of credit issued pursuant to the ABL Credit Agreement) and similar instruments incurred by the Borrower and the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xxvi) shall not exceed the greater of $16,000,000 and 5.0% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxvii) Capital Lease Obligations arising under any sale and leaseback transaction permitted hereunder in reliance upon Section 6.05(f);
(xxviii) to the extent constituting Indebtedness, motor vehicle leases in the ordinary course of business;
(xxix) Indebtedness of any Loan Parties or Subsidiaries incurred in connection with any non-payment of rent by such Loan Parties or Subsidiaries caused by the COVID-19 Pandemic to the extent the landlord or other party to which such rent is due has accepted such temporary non-payment and has not declared a default under any applicable lease; provided that the aggregate outstanding amount of such Indebtedness attributable to unpaid rent shall not at any time exceed $10,000,000 for the most recently ended Test Period as of such time of determination;
(xxx)
unsecured Indebtedness owing to area developers and/or franchisees incurred by the Liberty
Parties solely for the purpose of repurchasing Liberty Area Development Rights and/or Liberty Franchise Rights as permitted under clauses
(y) and (z) of Section 6.04; provided that (i) such
Indebtedness shall not bear interest, and (ii) the aggregate outstanding principal amount of such Indebtedness shall not at any time exceed
the greater of $16,000,000 and 5.0% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;[reserved];
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(xxxi) Indebtedness incurred pursuant to any ABL Credit Agreement and the other ABL Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $250,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xxxii) Indebtedness incurred pursuant to any Second Lien Credit Agreement and the other Second Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $300,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the Second Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the First Lien/Second Lien Intercreditor Agreement; and
(xxxiii) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxii) above.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, issue any preferred Equity Interests or any Disqualified Equity Interests, except (A) in the case of the Borrower, preferred Equity Interests that are Qualified Equity Interests and (B)(x) preferred Equity Interests issued to and held by the Borrower or any Subsidiary and (y) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (B) (x) any such issuance of preferred Equity Interests that are not Qualified Equity Interests shall constitute incurred Indebtedness and be subject to the provisions set forth in Sections 6.01(a) and (b) (and shall only be permitted if the incurrence of such Indebtedness would have been permitted thereunder) and (y) if so incurred, any cash payments made with respect to such preferred Equity Interests shall constitute Restricted Payments and shall be subject to Section 6.07(a).
For purposes of determining compliance with any dollar denominated restriction on the incurrence of Indebtedness, the dollar equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided, however, that if such Indebtedness is a Permitted Refinancing incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance such dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Permitted Refinancing does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness the Borrower or any Subsidiary may incur pursuant to this Section 6.01 shall not be deemed exceeded by fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of any extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness.
With respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence.
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This Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral.
SECTION 6.02 Liens.
The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens existing on the First Amendment Effective Date (provided that any Lien securing Indebtedness or other obligations in excess of $6,000,000 shall only be permitted if set forth on Schedule 6.02) and any modifications, replacements, renewals or extensions thereof; provided that (A) such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof, and (B) the obligations secured or benefited by such modified, replacement, renewal or extension Lien are permitted by Section 6.01;
(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property and Badcock Intellectual Property) that do not (A) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor or licensee under any lease or license entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased or licensed;
(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection, (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
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(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(ix) Liens on property or other assets of any Subsidiary that is not a Loan Party, which Liens secure Indebtedness or other obligations of such Subsidiary or another Subsidiary that is not a Loan Party, in each case permitted by this Agreement;
(x) Liens granted by a Subsidiary that is not a Loan Party in favor of any Subsidiary or the Borrower and Liens granted by a Loan Party in favor of any other Loan Party;
(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition);
(xii) any interest or title of a lessor or sublessor under leases or subleases (other than leases constituting Capital Lease Obligations) entered into by the Borrower or any Subsidiary in the ordinary course of business;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by the Borrower or any Subsidiary in the ordinary course of business;
(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and its Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
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(xvii) Liens securing Obligations (as defined in the ABL Credit Agreement) under the ABL Credit Agreement and the other ABL Loan Documents; provided that the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens securing Indebtedness permitted under Section 6.01(a)(xix);
(xx) Liens on real property other than the Mortgaged Properties or the Badcock Mortgaged Properties;
(xxi) Liens securing Secured Obligations (as defined in the Second Lien Credit Agreement) under the Second Lien Credit Agreement and the other Second Lien Loan Documents; provided that the Second Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) prior to Payment in Full of Badcock Obligations, the Badcock Intercreditor Agreement;
(xxii) Liens securing Indebtedness permitted under Section 6.01(a)(vii), (viii) or (xii);
(xxiii) Liens on cash and Permitted Investments to secure Indebtedness permitted under Section 6.01(a)(x) or (xxvi);
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) Liens securing Indebtedness permitted under Section 6.01(a)(xxi);
(xxviii) other Liens; provided that at the time of the granting of and after giving Pro Forma Effect to any such Lien and the obligations secured thereby (including the use of proceeds thereof) the lesser of (x) the aggregate outstanding face amount of obligations secured by Liens existing in reliance on this clause (xxviii) and (y) the fair market value of the assets securing such obligations shall not exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period;
(xxix)
Liens in favor of credit card issuers and credit card processors arising in the ordinary course of business securing the obligation
to pay customary fees and expenses in connection with credit card arrangements; and
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(xxx)
Liens on motor vehicles securing Indebtedness permitted by clause (xxviii) of Section 6.01.;
and
(xxxi) Liens securing (A) Secured Obligations (as defined in the Badcock First Lien Credit Agreement) under the Badcock First Lien Credit Agreement and the other Badcock First Lien Loan Documents; provided that the Badcock First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the First Lien Pari Passu Intercreditor Agreement and (B) Secured Obligations (as defined in the Badcock Second Lien Credit Agreement) under the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Loan Documents; provided that the Badcock Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement.
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness.
SECTION 6.03 Fundamental Changes; Lead Borrower Covenant.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that:
(i) (A) any Subsidiary (other than a Borrower) may merge or consolidate with a Borrower; provided that a Borrower shall be the continuing or surviving Person and (B) any Subsidiary (other than a Borrower) may merge or consolidate with one or more other Subsidiaries; provided that when any Subsidiary Loan Party is merging or consolidating with another Subsidiary the continuing or surviving Person shall be a Subsidiary Loan Party; provided further that if the continuing or surviving Person is not a Subsidiary Loan Party, as applicable, the acquisition of such Subsidiary Loan Party by such surviving non-Loan Party Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Subsidiary that is not a Loan Party may merge or consolidate with or into any other Subsidiary that is not a Loan Party and (B) any Subsidiary may liquidate or dissolve or change its legal form if the Borrower determines in good faith that such action is in the best interests of the Borrower and its Subsidiaries and is not materially disadvantageous to the Lenders;
(iii) (x) any Borrower, other than the Lead Borrower, may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to a Borrower and (y) any Subsidiary may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or another Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment must be a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Lead Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04;
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(iv) a Borrower may merge or consolidate with (or Dispose of all or substantially all of its assets to) any other Person (including another Borrower); provided that (A) a Borrower shall be the continuing or surviving Person (or, if one of the parties to such merger, consolidation or Disposal is the Lead Borrower, then the Lead Borrower shall be the continuing or surviving Person) or (B) if the Person formed by or surviving any such merger or consolidation (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) is not a Borrower or is a Person into which the Borrower has been liquidated (any such Person, the “Successor Borrower”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States, any State thereof or the District of Columbia, (2) the Successor Borrower shall expressly assume all the obligations of a Borrower under this Agreement and the other Loan Documents to which such Borrower is a party, pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Administrative Agent, (3) each Loan Party other than such Borrower, unless it is the other party to such merger or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement, and (4) such Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer and an opinion of counsel, each stating that such merger or consolidation complies with this Agreement; provided further that if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, such Borrower under this Agreement and the other Loan Documents; provided further that such Borrower will use commercially reasonable efforts to provide any documentation and other information about the Successor Borrower as shall have been reasonably requested in writing by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act; provided, further, that a Successor Borrower may not succeed to or be substituted for the Lead Borrower pursuant to this clause (iv);
(v) the Borrower and its Subsidiaries may undertake or consummate any Tax Restructuring;
(vi) [Reserved];
(vii) any Subsidiary may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be a Borrower or a Subsidiary, which together with each of the Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12; and
(viii) any Subsidiary may effect a merger, dissolution, liquidation, consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
(b) Neither the Borrower, nor any Subsidiary Loan Party, shall amend or permit any amendments to such Person’s Organizational Documents after the Effective Date in any manner that (when taken as a whole) would be materially adverse to Lenders.
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(c) The Lead Borrower will not conduct, transact or otherwise engage in any material business or material operations other than (i) the ownership and/or acquisition of the Equity Interests of its Subsidiaries and any other Persons engaged in a Similar Business (subject to Section 6.04), (ii) the performance of obligations under and compliance with its Organizational Documents, or other Requirement of Law (including the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance), ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of any of its Subsidiaries, and including in connection with the maintenance of its status as public company and any activities related or incidental thereto, including compliance with Requirements of Law and requirements, rules, regulations and guidance (whether or not binding) of the SEC and Nasdaq, Inc., (iii) subject to Section 6.04, repurchases of Indebtedness through open market purchases and Dutch auctions (to the extent not in violation hereof and to the extent any Loans so purchased are automatically and irrevocably cancelled after repurchase), the making of any loan to any officers, directors, managers, members of management, consultants or independent contractors and the making of any Investment in any of its Subsidiaries, (iv) participating in tax, accounting and other administrative matters related to the Lead Borrower and its Subsidiaries, (v) the entry into, and exercise of rights and performance of its obligations under and in connection with the Loan Documents and Guarantees of other Indebtedness not prohibited from being incurred under this Agreement by the Lead Borrower and its Subsidiaries, including borrowings under this Agreement, the ABL Credit Agreement, the Second Lien Credit Agreement, the Badcock First Lien Credit Agreement, the Badcock Second Lien Credit Agreement and any other Indebtedness not prohibited from being incurred under this Agreement, (vi) any issuance or registration of its Qualified Equity Interests for sale or resale (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Qualified Equity Interests), including the costs, fees and expenses related thereto, (vii) holding of any cash and Permitted Investments, (viii) the payment of dividends or making of distributions, making of loans and contributions to the capital of its Subsidiaries and any other Persons engaged in a Similar Business and guaranteeing the obligations of its Subsidiaries and making Investments, in each case, not in violation of Article VI of this Agreement, (ix) incurring fees, costs and expenses relating to overhead and general operating expenses including professional fees for legal, tax and accounting issues and paying taxes, (x) providing indemnification for its current and former officers, directors, managers, members of management, employees, advisors, consultants or independent contractors, (xi) performing of its obligations under the Acquisition Agreement and the other documents and agreements related thereto or contemplated thereby, (xii)(1) the payment of Public Company Costs or (2) activities reasonably incidental to the consummation of a Tax Restructuring, (xiii) activities incidental to the businesses or activities described in the foregoing clauses and (xiv) any business or other activities that are identical, reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the business and activities conducted by or proposed to be conducted by the Lead Borrower on or immediately prior to the Effective Date.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
(b) loans or advances to officers, members of the Board of Directors and employees of the Borrower and its Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of the Borrower (or any direct or indirect parent thereof) (provided that the amount of such loans and advances made in cash to such Person shall be immediately contributed to the Lead Borrower in cash as common equity or Qualified Equity Interests and shall not increase the Available Equity Amount or constitute Cure Amounts) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time in reliance on this clause (iii) not to exceed $15,000,000 for the most recently ended Test Period as of such time;
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(c)
Investments by any Borrower or Subsidiary in any Borrower or Subsidiary; provided, that (i)
Investments by any Loan Parties in any Subsidiaries that are not a Loan Party shall not exceed an aggregate outstanding
amount of the greater of $16,000,000 and 5.0% of Consolidated EBITDA for the most recently ended Test Period as of such time;
and (ii) prior to Payment in Full of Badcock Obligations, Investments by any
Borrower or any Subsidiary (other than Badcock) in Badcock pursuant to this clause (c) shall not exceed an aggregate outstanding amount
equal to the sum of (A) $25,000,000 plus (B) the Available Equity Amount (assuming that each reference in such definition to “Effective
Date” refers to the “First Amendment Effective Date”);
(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the First Amendment Effective Date (provided that any Investment in an amount greater than $6,000,000 shall only be permitted if set forth on Schedule 6.04(e)) and any modification, replacement, renewal, reinvestment or extension thereof and (ii) Investments existing on the First Amendment Effective Date by any Borrower or any Subsidiary in any Borrower or any Subsidiary and any modification, renewal or extension thereof; provided, in each case, that the amount of the Investment as of the First Amendment Effective Date (or, if later, the date of the initial making of such Investment) is not increased except by the terms of such Investment to the extent, in the event such increase is in excess of $6,000,000 for the most recently ended Test Period as of such time, set forth on Schedule 6.04(e) or as otherwise permitted by this Section 6.04;
(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h)
(A) Permitted Acquisitions and,
(B) the Badcock Acquisition and (C) intercompany Investments
required (as determined by the Lead Borrower in good faith) to consummate Permitted Acquisitions and
the Badcock Acquisition;
(i) Investments in connection with the Transactions;
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(l) loans and advances to any equity holder of the Lead Borrower (or any direct or indirect parent thereof) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such holder (or such parent) in accordance with Section 6.07(a);
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(m) additional Investments (other than Investments in Badcock prior to Payment in Full of Badcock Obligations) and other acquisitions; provided that the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid (excluding the Net Proceeds from the issuance of such Qualified Equity Interests) in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of (A) (i) the greater of $40,000,000 and 12.5% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition; plus (ii) the Available General RP Capacity Amount at such time; plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (C) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (D) Investments in an aggregate outstanding amount not to exceed the portion, if any, of any unused amounts available under Section 6.07(a)(v) or 6.07(a)(xv) for Restricted Payments on the relevant date of determination that the Borrower elects to apply pursuant to this Section 6.04(m); provided that any Investment made in reliance on preceding clause (B) shall be subject to (x) no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 having occurred and be continuing or resulting therefrom and (y) before and after giving Pro Forma Effect to such Investment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.56 to 1.00 as of the end of the most recently ended Test Period as of such time;
(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments (other than Investments in Badcock prior to Payment in Full of Badcock Obligations) and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests;
(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary (provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(q) receivables owing to the Borrower or any Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
(s) Investments in the Borrower or any Subsidiary in connection with any Tax Restructuring;
(t) additional Investments so long as at the time of any such Investment and after giving effect thereto, (A) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.06 to 1.00 and (B) no Event of Default exists or would result therefrom;
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
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(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;
(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, Badcock Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) Investments in joint ventures (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in joint ventures) in an aggregate outstanding amount not to exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period;
(y) [reserved];
(z) [reserved];
(y) repurchases of Liberty
Area Development Rights; provided that (A) the aggregate purchase price for repurchases of Liberty
Area Development Rights shall not exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA during any fiscal year of the Lead
Borrower and (B) no Event of Default exists or would result therefrom;
(z) repurchases of Liberty
Franchise Rights; provided that (A) the aggregate purchase price for repurchases of Liberty Franchise
Rights shall not exceed the greater of $16,000,000 and 5.0% of Consolidated EBITDA during any fiscal year of the Lead Borrower and (B)
no Event of Default exists or would result therefrom;
(aa) Investments in Similar Businesses (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in Similar Businesses) in an aggregate outstanding amount not to exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period;
(bb)
(i) Investments arising as a result of sale and leaseback
transactions permitted by Section 6.06 hereto; and and
(ii) to the extent constituting Investments, Investments by Badcock consisting of guarantees by Badcock of operating lease liabilities
of lessees to the owners of real property sold by Badcock pursuant to and in accordance with Section 6.05(u) (solely with respect to the
real property that was the subject of any such sale); and
(cc) loans and advances to franchisees in the ordinary course of business (A) in connection with the sale of Franchise Rights or (B) to provide working capital to franchisees; provided that (i) such loans and advances in excess of $750,000 individually shall be evidenced by promissory notes and any such promissory notes shall be pledged to the Collateral Agent to the extent required by the Security Documents and (ii) the aggregate outstanding principal amount of such loans and advances made in reliance on this clause (cc) shall not exceed $10,000,000 for the most recently ended Test Period at any time.
Notwithstanding anything to the contrary in this Section 6.04, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Material Intellectual Property (except for non-exclusive leases or non-exclusive licenses with respect thereto) as of the Effective Date owned by any Loan Party or any interest in any Franchise Agreement may be contributed and/or assigned as an Investment or otherwise transferred to (i) any non-Loan Party or (ii) prior to Payment in Full of Badcock Obligations, Badcock.
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SECTION 6.05 Asset Sales.
The Borrower will not, and will not permit any of its Subsidiaries to, (i) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it or (ii) permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to the Borrower or a Subsidiary in compliance with Section 6.04(c)) (each, a “Disposition” and the term “Dispose” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable to maintain, in the conduct of the business of the Borrower and its Subsidiaries (including allowing any registration or application for registration of any Intellectual Property or Badcock Intellectual Property that is no longer used or useful, or economically practicable to maintain, to lapse, go abandoned, be dedicated to the public domain or be invalidated);
(b) Dispositions of inventory and other assets in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property;
(d)
Dispositions of property to the Borrower or a Subsidiary; provided that if the transferor in such a transaction is a Loan
Party, then (i)(i) the transferee must be a Loan Party (other than, prior
to Payment in Full of Badcock Obligations, Badcock), (ii) to the extent constituting an Investment, such Investment
must be a Permitted Investment in a Subsidiary that is not a Loan Party or,
prior to Payment in Full of Badcock Obligations, Badcock, in each case, in accordance with Section 6.04 or
(iii) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party,
or, prior to Payment in Full of Badcock Obligations, Badcock,
such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration
received in respect thereof is a permitted investment in a Subsidiary that is not a Loan Party or,
prior to Payment in Full of Badcock Obligations, Badcock, in each case, in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03 and Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
(f) Dispositions of property pursuant to sale and leaseback transactions permitted by Section 6.06 hereto;
(g) Dispositions of Permitted Investments;
(h) Dispositions of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, abandonments, licenses, sublicenses or other disposals (including of Intellectual Property and Badcock Intellectual Property), in each case, (A) granted in the ordinary course of business or (B) that do not materially interfere with the business of the Borrower and its Subsidiaries, taken as a whole;
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(j) transfers of property subject to Casualty Events;
(k) Dispositions of property to Persons other than Subsidiaries (including the sale or issuance of Equity Interests of a Subsidiary and including the sale of real property) for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of (x) with respect to any single transaction or series of related transactions, $10,000,000 or (y) with respect to all other Dispositions in any fiscal year of the Lead Borrower not excluded from the requirements of this proviso pursuant to the immediately preceding subclause (x), $20,000,000, the Borrower or any Subsidiary shall receive not less than 75% of such consideration in excess of the amounts referred to subclauses (x) and (y) in the form of cash or Permitted Investments; provided, however, that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of the Borrower or such Subsidiary or in the footnotes thereto) of the Borrower or such Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of the Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by the Borrower or such Subsidiary from such transferee that are converted by the Borrower or such Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result of such Disposition (other than intercompany debt owed to the Borrower or its Subsidiaries), to the extent that the Borrower and all of the Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash and (D) any Designated Non-Cash Consideration received by the Borrower or such Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $25,000,000, with the fair market value (as determined in good faith by the Lead Borrower) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash; provided, further, that, other than in respect of the Disposition described on Schedule 6.05(k), no Event of Default shall have occurred and be continuing at the time of, and after giving effect to, any Disposition made pursuant to this clause (k);
(l) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(m) Dispositions or forgiveness of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;
(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of the Borrower and its Subsidiaries and (B) made to obtain the approval of any applicable antitrust authority in connection with a Permitted Acquisition;
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(o) Dispositions of assets that are not Collateral or Badcock Collateral in an aggregate amount not to exceed the greater of $8,000,000 and 2.5% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(p) transfers of condemned property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) any Disposition of the Equity Interests of any Immaterial Subsidiary;
(r) other Dispositions in an aggregate amount not to exceed the greater of $8,000,000 and 2.5% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(s) the sale by the Liberty
Parties of Liberty Area Development Rights, Liberty Franchise Rights, and store locations (and customer lists and other assets related
thereto), in each case in the ordinary course of business and consistent with past practice; provided further
that no Event of Default under paragraph (a), (b),
(d) (solely as a result of an Event of Default due to failure to comply with a Financial Maintenance
Covenant, subject to the cure rights set forth in Section 7.02 and solely after the expiration
of the applicable Cure Expiration Date), (h) or (i) of
Section 7.01 shall have occurred and be continuing at the time of, and after giving effect to,
any Disposition made pursuant to this clause (s); and
(s) [reserved];
(t)
sales or other dispositions by any Borrower or any Subsidiary of assets in connection with the closing or sale of a retail store
location (the closure of a store is not in and of itself the disposition of assets), warehouse, distribution center or corporate office
of such Borrower or Subsidiary in the ordinary course of business of such Borrower or Subsidiary, which sale or disposition consists of
leasehold interests in the premises of such store or distribution center, the equipment and fixtures located at such premises and the
books and records relating exclusively and directly to the operations of such store or distribution center; provided, that, such
sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction.;
and
(u) Dispositions of Badcock Collateral for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
Notwithstanding anything to the contrary in this Section 6.05, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Loan Party shall, directly or indirectly, sell or otherwise transfer (except for non-exclusive leases or non-exclusive licenses with respect thereto) any Material Intellectual Property as of the Effective Date or any interest in any Franchise Agreement to (i) any non-Loan Party or (ii) prior to Payment in Full of Badcock Obligations, Badcock.
SECTION 6.06 Sale and Leaseback Transactions.
The Borrower will not, and will not permit any of its Subsidiaries to,
enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal,
used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for (i) sale and leaseback
transactions in an aggregate amount not to exceed the greater of $16,000,000 and 5.0% of Consolidated EBITDA and,
(ii) any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not
less than the fair market value (as determined in good faith by the Lead Borrower) of such fixed or capital asset and is consummated within
270 days after the Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset
and (iii) any sale and leaseback transactions of Badcock Collateral so long
as such sale is for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
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SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:
(i) each Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary; provided that in the case of any such Restricted Payment by a Subsidiary that is not a Wholly Owned Subsidiary of the Borrower, such Restricted Payment is made to the Borrower and/or any Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments made on or substantially contemporaneously with the Effective Date to consummate the Transactions, including to finance the payment of Transaction Costs;
(iv) repurchases of Equity Interests in the Borrower or any Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments used to redeem, acquire, retire, repurchase or settle the Borrower’s Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Lead Borrower (or any direct or indirect parent thereof), and its Subsidiaries (in each case, other than the executive management (i.e., the CEO, the CFO, any executive vice presidents and any similar executive management positions)), upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date not to exceed $10,000,000 in any fiscal year of the Lead Borrower with unused amounts in any fiscal year being carried over solely to the next succeeding fiscal years; provided that such amount in any fiscal year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower or the Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors the Borrower or any Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward solely to the next subsequent fiscal year; provided further that cancellation of Indebtedness owning to the Borrower or any Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Borrower or any Subsidiary in connection with a repurchase of Equity Interests of the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
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(vi) [reserved];
(vii) in addition to the foregoing Restricted Payments, the Borrower may make additional Restricted Payments, in an aggregate amount, when taken together with the aggregate amount of loans and advances previously made pursuant to Section 6.04(m) in lieu of Restricted Payments permitted by this clause (vii), not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any Restricted Payment made in reliance on preceding clause (A) shall be subject to, (x) no Event of Default having occurred and be continuing or resulting therefrom (tested at the time of declaration of such Restricted Payment) and (y) before and after giving Pro Forma Effect to such Restricted Payment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.06 to 1.00 as of the end of the most recently ended Test Period (tested at the time of declaration of such Restricted Payment);
(viii) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions;
(ix) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
(x) Restricted Payments to pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xi) payments made or expected to be made by the Borrower or any Subsidiary in respect of withholding or similar Taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
(xii) [Reserved];
(xiii) [Reserved];
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(xiv) [Reserved];
(xv) additional Restricted Payments in an amount not to exceed $120,000,000; provided that after giving effect to such Restricted Payment no Event of Default exists or would result therefrom;
(xvi) [Reserved]; and
(xvii) additional Restricted Payments; provided that after giving effect to such Restricted Payment (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.81 to 1.00 and (B) no Event of Default exists or would result therefrom.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, in each case, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal, premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
(ii) refinancings of Indebtedness to the extent permitted by Section 6.01;
(iii) (1) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of the Borrower and (2) any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
(iv) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that after giving effect to such prepayments, redemptions, purchases, defeasances or other payments (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.81 to 1.00 and (B) no Event of Default exists or would result therefrom;
(v) payments made in connection with, or in order to consummate, the Transactions;
(vi) (A) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing in an aggregate amount not to exceed the greater of $80,000,000 and 25.0% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period plus (B) the amount of Restricted Payments that may be made pursuant to Section 6.07(a)(xv) at such time;
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(vii) additional prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that the aggregate amount of such prepayments, redemptions, purchases, defeasances and other payments made in reliance on this clause (vii), shall not exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments; provided that any prepayments, redemptions, purchases, defeasances and other payments made in reliance on preceding clause (A) shall be subject to, before and after giving Pro Forma Effect to such prepayments, redemptions, purchases, defeasances and other payments, the Total Net Leverage Ratio being less than or equal to 3.06 to 1.00 as of the end of the most recently ended Test Period (tested at the time of distribution or delivery of any irrevocable notice of prepayment, redemption, repurchase or defeasance, as applicable, in respect thereof);
(viii)
the prepayment of any Junior Financing owed to the Borrower or a Subsidiary or the prepayment of any Permitted Refinancing of such
Indebtedness with the proceeds of any other Junior Financing; provided that (i)
no Loan Party shall make any prepayment of any Junior Financing owed to any Subsidiary that is not a Loan Party pursuant
to this clause (viii); and (ii)
prior to Payment in Full of Badcock Obligations, neither the Borrower nor any Subsidiary (other than Badcock) shall make any prepayment
of any Junior Financing owed to Badcock pursuant to this clause (viii);
(ix)
prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing within one year of the scheduled
maturity of such Junior Financing; provided, that after giving effect to such prepayments, redemptions, purchases, defeasances
and other payments, no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 exists
or would result therefrom.;
and
(x) payments, prepayments, purchases and defeasance of any Indebtedness under the Badcock Second Lien Credit Agreement in accordance with the terms thereof.
SECTION 6.08 Transactions with Affiliates.
The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among any Borrower or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction and (B) transactions involving aggregate payment or consideration of less than the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time, (ii) on terms not materially less favorable to the Borrower or such Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate (as determined by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith), (iii) the payment of Transaction Costs, fees and expenses related to the Transactions, (iv) Dispositions in the form of a sale of furniture and assignment of lease agreements to franchisees in the ordinary course of business consistent with past practices, so long as the sale thereof is approved by disinterred members of the Board of Directors (or any committee thereof), (v) issuances of Equity Interests of the Borrower and the Subsidiaries to the extent otherwise permitted by this Agreement, (vi) employment and severance arrangements and other compensation arrangements between the Borrower and its Subsidiaries and their respective officers and employees in the ordinary course of business or otherwise in connection with the Transactions (including loans and advances pursuant to Sections 6.04(b) and 6.04(n)), (vii) investments by Affiliates in Indebtedness and preferred Equity Interests of the Borrower and the Subsidiaries, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and
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indemnities provided on behalf of, members
of the Board of Directors, officers and employees of the Lead Borrower (or any direct or indirect parent thereof) and the Subsidiaries
in the ordinary course of business to the extent attributable to the ownership or operation of the Lead Borrower and its Subsidiaries,
(ix) transactions pursuant to agreements in existence or contemplated on the First
Amendment Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment
is not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances
in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary
course of business (including any cash management activities related thereto), (xii) transactions with customers, clients, suppliers,
contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course
of business and which are fair to the Borrower and the Subsidiaries, in the reasonable determination of the Lead Borrower, or are on terms
at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) issuance
of the Equity Grant,[reserved], (xiv)
customary payments by the Borrower and any Subsidiaries to any Investors made for any financial advisory, consulting, financing, underwriting
or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or
financings), which payments are approved by the majority of the members of the Board of Directors (or any committee thereof) or a majority
of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith and (xv) payments
by the Borrower and any Subsidiaries to reimburse any Investors and other Affiliates for any indemnities and reasonable out-of-pocket
costs and expenses incurred in connection with the provision of any financial advisory, consulting, financing, underwriting or placement
services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings)
by such Investor to Borrower and any Subsidiaries.
SECTION 6.09 Restrictive Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a)
restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) any documentation governing Incremental
Equivalent Debt or Ratio Debt, (4) any documentation governing Permitted Unsecured Refinancing Debt, Permitted First Priority Refinancing
Debt or Permitted Junior Priority Refinancing Debt; provided that none of such documentation shall prohibit or limit the Lien in favor
of the Collateral Agent for the benefit of the Secured Parties with respect to the Secured Obligations as in effect on the Effective Date,
(5) any documentation governing Indebtedness incurred pursuant to Section 6.01(a)(xxi) or Section 6.01(a)(xxvi), (6) the
ABL Loan Documents or the,
the Second Lien Loan Documents, the Badcock First Lien Loan Documents or the Badcock Second Lien Loan Documents or (7)
any documentation governing any Permitted Refinancing incurred to refinance any such Indebtedness referenced in clauses (1) through
(6) above;
(b) customary restrictions and conditions existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
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(d) customary provisions in leases, licenses, sublicenses and other contracts restricting the assignment thereof;
(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary and the restriction or condition set forth in such agreement does not apply to the Lead Borrower or any other Subsidiary;
(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or, in the case of any Junior Financing, are market terms at the time of issuance and are imposed solely on such Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary; and
(m)
customary provisions related to creditworthiness of the tenant contained in real property leases entered into by Subsidiaries,
so long as the Borrower has determined in good faith that such creditworthiness provisions could not reasonably be expected to impair
the ability of the Borrower and its Subsidiaries to meet their ongoing obligations; and.
(n) the Equity Grant.
SECTION 6.10 Financial Maintenance Covenants.
(a) Maximum Total Net Leverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Total Net Leverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, to be greater than (a) for each fiscal quarter (commencing with the first full fiscal quarter ending after the Effective Date) prior to the fiscal quarter ending on or about December 31, 2022, 4.25 to 1.00 and (b) for each fiscal quarter thereafter (beginning with the fiscal quarter ending on or about December 31, 2022), 3.75 to 1.00.
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(b) Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Fixed Charge Coverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, on a consolidated basis to be less than 1.50 to 1.00.
SECTION 6.11 Changes in Fiscal Periods.
The Lead Borrower will not make any change in its fiscal year; provided, however, that the Lead Borrower may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Lead Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year, without any requirement of consent by any Lender or other Person (notwithstanding anything to the contrary in Section 9.02); and provided further that the limitation of this Section 6.11 shall not apply with respect to any short year resulting from the Transactions that occurred on the Effective Date.
SECTION 6.12 Amendment of Financing Documents.
The Borrower will not, and will not permit any of its Subsidiaries to, amend, modify, waive, terminate or release any ABL Loan Document, any Second Lien Loan Document, any Badcock First Lien Loan Document, any Badcock Second Lien Loan Document or the documentation governing any other Junior Financing, in each case, in a manner restricted by the terms of any applicable intercreditor or subordination agreement.
SECTION 6.13 Franchise Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to, maintain or distribute any Franchise Disclosure Documents, or enter into any Franchise Agreements, in violation of Section 3.20(c).
SECTION 6.14 Badcock.
In addition to the restrictions set forth in Sections 6.1 through 6.13, the Borrower will not permit Badcock to, in each case prior to Payment in Full of Badcock Obligations:
(a) create, incur, assume or permit to exist any Indebtedness, except Indebtedness permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) and (a)(xxxiii) (solely as it relates to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) of Section 6.01) of Section 6.01;
(b) issue any preferred Equity Interests or any Disqualified Equity Interests;
(c) create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except Liens permitted by clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (xii), (xiii), (xv), (xvi), (xviii), (xx), (xxi), (xxiii) (solely in respect of Section 6.01(a)(x)), (xxv), (xxix), (xxx) and (xxxi) of Section 6.02;
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(d) merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve;
(e) make or hold any Investment, except Investments permitted by clauses (a), (d), (e), (g), (j), (k), (n), (q), (r), (s), (v) (w) and (bb) of Section 6.04;
(f) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it, except Dispositions permitted by clauses (a), (b), (c), (d), (f), (g), (h), (i), (j), (m), (p), (t) and (u) of Section 6.05; provided that any Disposition by Badcock pursuant to Section 6.05(f) or Section 6.05(u) shall only be permitted hereunder to the extent the Net Proceeds of such Disposition are used to repay Indebtedness in accordance with the terms of the Badcock First Lien Credit Agreement, the Badcock Second Lien Credit Agreement and this Agreement (without giving effect to any reinvestment rights that would otherwise allow the Borrower and its Subsidiaries to reinvest such Net Proceeds in lieu of making any such repayment); or
(g) allow to be effective any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except to the extent permitted by Section 6.06(iii).
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default.
If any of the following events (any such event, an “Event of Default”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any of the Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect (or all respects to the extent already qualified by materiality) when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of thirty (30) days after notice thereof from the Administrative Agent to the Borrower;
(d) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of the Borrower), 5.10, 5.14 or in Article VI; provided that any Event of Default due to failure to comply with the Financial Maintenance Covenants is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the Cure Expiration Date for the applicable fiscal quarter of the Lead Borrower;
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(e) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01) and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent to the Borrower;
(f) [reserved];
(f) any Lien purported to be created under any Badcock Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Badcock Collateral, with the priority required by the applicable Badcock Security Documents, except (i) as a result of the sale or other disposition of the applicable Badcock Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Badcock Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Badcock Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(g) any event or condition occurs that results in any Material Indebtedness, Indebtedness under the ABL Loan Documents, Indebtedness under the Second Lien Credit Agreement, Indebtedness under the Badcock First Lien Credit Agreement and/or Indebtedness under the Badcock Second Lien Credit Agreement becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired) the holder or holders of any such Indebtedness or any trustee or agent on its or their behalf to cause any such Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement) or (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness, other than on account of failure to make a payment required as a result of such termination or similar events;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
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(j) one or more final, non-appealable, enforceable judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not covered by insurance (including self-insurance) as to which the insurer has been notified of such judgment or order and has not denied coverage) shall be rendered against the Borrower and any of the Material Subsidiaries or any combination thereof and the same shall remain undischarged for a period of sixty (60) consecutive days during which execution shall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such Loan Party that are material to the businesses and operations of the Borrower and its Subsidiaries, taken as a whole, to enforce any such judgment;
(k) an ERISA Event occurs that has resulted or would reasonably be expected to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(m) any material provision of any Loan Document or any material Guarantee of the Loan Document Obligations shall for any reason be asserted in writing by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material Guarantee of the Loan Document Obligations by any Loan Party pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement shall cease to be in full force and effect (other than in accordance with the terms of the Loan Documents); or
(o) a Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Lead Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
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SECTION 7.02 Right to Cure.
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that the Borrower and its Subsidiaries fail to comply with the requirements of the Financial Maintenance Covenants as of the last day of any applicable fiscal quarter of the Lead Borrower, at any time after the end of such fiscal quarter until the expiration of the fifteenth (15th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter of the Lead Borrower (or the fiscal year of the Lead Borrower ended on the last day of such fiscal quarter of the Lead Borrower) are required to be delivered pursuant to Sections 5.01(a) or (b), as applicable (such date, the “Cure Expiration Date”), the Lead Borrower shall have the right to issue Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Administrative Agent) for cash or otherwise receive cash contributions to the capital of the Lead Borrower as cash common equity or other Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Administrative Agent) (collectively, the “Cure Right”), and upon the receipt by the Borrower of the Net Proceeds of such issuance (the “Cure Amount”) pursuant to the exercise by the Borrower of such Cure Right the Financial Maintenance Covenants shall be recalculated giving effect to the following pro forma adjustment:
(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Maintenance Covenants and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and
(ii) if, after giving effect to the foregoing pro forma adjustment (without giving pro forma effect to any repayment of any Indebtedness with any portion of the Cure Amount and without netting against the calculation of Consolidated Total Indebtedness any portion of the Cure Amount on the balance sheet of the Lead Borrower and its Subsidiaries, in each case, with respect to such fiscal quarter only), the Lead Borrower and its Subsidiaries shall then be in compliance with the requirements of the Financial Maintenance Covenants, the Borrower and its Subsidiaries shall be deemed to have satisfied the requirements of the Financial Maintenance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Maintenance Covenants that had occurred shall be deemed cured for the purposes of this Agreement;
provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by the Borrower (or any other receipt of cash in respect of its Cure Rights).
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Lead Borrower there shall be no more than two (2) fiscal quarters in which the Cure Right is exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times and (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Maintenance Covenants and any amounts in excess thereof shall not be deemed to be a Cure Amount. Notwithstanding any other provision in this Agreement to the contrary, the Cure Amount received pursuant to any exercise of the Cure Right shall be disregarded for purposes of determining any financial ratio based conditions and/or available basket under Article VI of this Agreement (and the Cure Amount shall not be credited as an addition to any basket (including the Available Amount or the Available Equity Amount) or for any other calculation). For the avoidance of doubt, no Cure Amounts shall be applied to reduce the Indebtedness of the Borrower and its Subsidiaries on a Pro Forma Basis (whether by “cash netting” or otherwise) for purposes of determining compliance with the Financial Maintenance Covenants for the fiscal quarter with respect to which such Cure Right was made.
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(c) [Reserved].
(d) Notwithstanding anything herein to the contrary, neither the Administrative Agent nor any Lender shall exercise the right to accelerate the Loans under the Term Facility or terminate the Commitments and none of the Administrative Agent, any Lender or any other Secured Party shall exercise any right to foreclose on or take possession of the Collateral or the Badcock Collateral or exercise any remedy solely on the basis of an Event of Default having occurred and being continuing with respect to the Financial Maintenance Covenants, in each case, unless such Event of Default is not cured pursuant to the exercise of the applicable Cure Right on or prior to the applicable Cure Expiration Date (except to the extent that the Lead Borrower has confirmed in writing that it does not intend to provide the Cure Amount).
SECTION 7.03 Application of Proceeds.
(a) Subject to the terms of any applicable Intercreditor Agreement contemplated by this Agreement, in connection with the exercise of remedies provided for in Section 7.01, any amounts received on account of the Secured Obligations (including in respect of any sale of, collection from or other realization upon all or any part of the Collateral or the Badcock Collateral (including any Collateral or Badcock Collateral consisting of cash) or the Guarantees) shall be applied by the Administrative Agent and/or the Collateral Agent, as applicable, to the payment of the Secured Obligations as follows:
(i) first, to the payment of all reasonable and documented or invoiced out of pocket costs and expenses incurred by the Collateral Agent in connection with such sale, collection, other realization or otherwise and to the payment of all other amounts owing to each of the Administrative Agent, and the Collateral Agent in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all reasonable and documented or invoiced out of pocket court costs and the fees and expenses of its agents, the repayment of all advances made by it under any Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy under any Loan Document, in each case, if and to the extent payable pursuant to the terms of the Loan Documents;
(ii) second, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among such Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution) in accordance with this Agreement;
(iii) third, to any agent of any other junior secured debt, in accordance with any applicable Intercreditor Agreement; and
(iv) fourth, to the Borrower, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.
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The Administrative Agent and/or the Collateral Agent, as applicable,
shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement.
In the event that application of payments or,
Collateral proceeds or Badcock Collateral proceeds is to be made after any bankruptcy or insolvency proceeding has been
commenced, references in this Section 7.03(a) with respect to (i) interest shall include interest accruing after the commencement
of such bankruptcy or insolvency proceeding whether or not such interest is an allowed claim in such bankruptcy or insolvency proceeding,
and (ii) any other amounts shall only include amounts that are allowed claims in such bankruptcy or insolvency proceeding.
(b) Notwithstanding anything to the contrary in Section 7.03(a), Excluded Swap Obligations with respect to any Loan Party shall not be paid with amounts received from such Loan Party or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Secured Obligations otherwise set forth in Section 7.03(a).
ARTICLE VIII
Administrative Agent
SECTION 8.01 Appointment and Authority.
(a) Each of the Lenders hereby irrevocably (i) appoints (A) JPM to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and (B) JPM to act on its behalf as Collateral Agent hereunder and under the other Loan Documents and (ii) authorizes the Administrative Agent and the Collateral Agent (in their capacities as such), as applicable, to take such actions on such Lender’s behalf and to exercise such powers as are delegated to the Administrative Agent and the Collateral Agent, as applicable, by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints JPM to act on its behalf as Collateral Agent under the Security Documents and the Badcock Security Documents and authorizes JPM (in its capacity as Collateral Agent) to take such actions on such Secured Party’s behalf and to exercise such powers as are delegated to the Collateral Agent by the terms hereof or thereof together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirements of Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
(b) Each of the Lenders and each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints and authorizes the Collateral Agent, as applicable, to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral and Badcock Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and/or the Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents and any Lien on the Badcock Collateral (or any portion thereof) granted under the Badcock Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
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SECTION 8.02 Rights as a Lender.
Any Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions.
No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, each Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law;
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity;
(d) shall in no event be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions;
(e) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment;
(f) shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to such Agent by the Borrower or a Lender;
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(g) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents or the Badcock Security Documents, (v) the value or the sufficiency of any Collateral or Badcock Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent; and
(h) shall not be responsible for nor have any duty to monitor the performance or any action of the Borrower or other Loan Party, or any of their directors, members, officers, agents, affiliates or employees, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party, and may assume performance by all such Persons of their respective obligations and shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
SECTION 8.04 Reliance by Agents.
Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. As to any matters not expressly provided for in this Agreement and in the other Loan Documents (including enforcement or collection), the Administrative Agent and/or the Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender. Upon request by the Administrative Agent and/or the Collateral Agent, as the case may be, the Required Lenders shall confirm in writing the Administrative Agent’s authority and/or the Collateral Agent’s authority, as the case may be, to take any action in accordance with the terms of the Loan Documents and this Section 8.04 and may refrain from acting until such confirmation has been provided.
Notwithstanding anything else to the contrary herein, whenever reference
is made in this Agreement, or any other Loan Document, to any discretionary action by, consent, designation, specification, requirement
or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be)
suffered or omitted by the Administrative Agent or eitherthe
Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion,
rights or remedies to be made (or not to be made) by the Administrative Agent or eitherthe
Collateral Agent, it is understood that in all cases the Administrative Agent or such Collateral Agent shall be fully justified in failing
or refusing to take any such action if it shall not have received written instruction, advice or concurrence from (i) in the case of the
Administrative Agent, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein
or in any other Loan Document) or (ii) in the case of the Collateral Agent, the Administrative Agent. The Administrative Agent and Collateral
Agent shall have no liability for any failure or delay in taking any actions contemplated above as a result of a failure or delay on the
part of the Required Lenders (or Administrative Agent in the case of the Collateral Agent) to provide such instruction, advice or concurrence.
This provision is intended solely for the benefit of each of the Administrative Agent and the Collateral Agent and its successors and
permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer
any rights or benefits on any party hereto.
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Except for any action expressly required of the Administrative Agent or the Collateral Agent hereunder or other Loan Document to which it is a party, it shall in all cases be fully justified in failing or refusing to act unless it shall receive further assurances to its reasonable satisfaction, including indemnification, from the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. No provision of this Agreement or any Loan Document shall require the Administrative Agent or the Collateral Agent to take any action that it reasonably believes to be contrary to applicable law or to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties thereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 8.05 Delegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of any Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Facility as well as activities as such Agent.
SECTION 8.06 Resignation of Administrative Agent; Mergers.
Each Agent may resign upon thirty (30) days’ notice to the Lenders and the Lead Borrower, whether or not a successor Agent has been appointed. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless an Event of Default under Sections 7.01(a), (b), (h) or (i) has occurred and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Agent is replaced, the “Resignation Effective Date”); provided that if the retiring Agent shall notify the Lead Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
If the Person serving as an Agent is a Defaulting Lender, the Required Lenders and the Lead Borrower may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Agent and, with the consent of the Lead Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
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With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed and (ii) with respect to any outstanding payment obligations) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.
Any corporation or association into which an Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which an Agent is a party, will be and become the successor Agent under this Agreement and related Loan Documents and will have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.
SECTION 8.07 Non-Reliance on Agents and Lenders.
Each Lender acknowledges that it has, independently and without reliance upon any Agent, any Lead Arranger, any Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, any Lead Arranger or any Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption, Incremental Facility Amendment or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agents and/or the Lenders on the Effective Date.
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No Lender and no other Secured Party shall have any right individually
to realize upon any of the Collateral or the Badcock Collateral or to
enforce any Guarantee of the Secured Obligations or the Badcock Guarantee
of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised
solely by the Administrative Agent and the Collateral Agent on behalf of the Lenders and the other Secured Parties in accordance with
the terms thereof. In the event of a foreclosure by the Administrative Agent or the Collateral Agent on any of the Collateral or
the Badcock Collateral pursuant to a public or private sale or other disposition, the Administrative Agent, the Collateral
Agent or any Lender may be the purchaser or licensor of any or all of such Collateral
or such Badcock Collateral at any such sale or other disposition, and the Administrative Agent or such Collateral Agent,
as agent for and representative of the Lenders and the other Secured Parties (but not any Lender, Lenders, Secured Party or Secured Parties
in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral or
the Badcock Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account
of the purchase price for any collateral payable by the Administrative Agent or the Collateral Agent on behalf of the Lenders at such
sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral
and of, the Badcock
Collateral, the Guarantees of the Secured Obligations and
the Badcock Guarantee of the Secured Obligations, to have agreed to the foregoing provisions.
SECTION 8.08 No Other Duties, Etc.
Anything herein to the contrary notwithstanding, neither the Bookrunners nor the Lead Arrangers shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
SECTION 8.09 Administrative Agent May File Proofs of Claim.
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, and any Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and such Agent and their respective agents and counsel and all other amounts due the Lenders and each Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and, by its acceptance of the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of any Agent and its agents and counsel, and any other amounts due such Agent under Sections 2.12 and 9.03.
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Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any Secured Party that is not a party hereto any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or any Secured Party that is not a party hereto to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or any Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) any Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as an Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to such Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
SECTION 8.11 Withholding Taxes.
To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 8.11. The agreements in this Section 8.11 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
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SECTION 8.12 Credit Bidding.
The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral and/or the Badcock Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral and/or the Badcock Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral and/or Badcock Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
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SECTION 8.13 Erroneous Payments.
(a) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 8.13 shall be conclusive, absent manifest error.
(b) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(c) Each Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by any Borrower or any other Loan Party, except, in each case, to the extent such erroneous Payment is, and solely with respect to the amount of such erroneous Payment that is, comprised of funds of the Borrower or any other Loan Party. Each Lender hereby consents to subclause (x) of this clause (c).
(d) Each party’s obligations under this Section 8.13 shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Loan Document Obligations under any Loan Document.
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ARTICLE IX
Miscellaneous
SECTION 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, 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 fax or other electronic transmission, as follows:
(i) if to the Borrower, the Administrative Agent or the Collateral Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax or other electronic transmission 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 and other communications 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 Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not 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 (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.
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(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower 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. The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties 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 Borrower in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.14, Section 2.20 with respect to any Incremental Facility Amendment, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Lead Borrower, the Administrative Agent (to the extent that such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall execute such waiver, amendment or other modification to the extent approved by the Required Lenders) and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or the Collateral Agent, as the case may be, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender or change any ratable sharing or payment provision that directly and adversely affects any Lender (with only such Lenders whose entitlement to a payment under such provisions is reduced being “directly and adversely affected”) without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby, provided that only the consent of the Required Lenders shall be necessary to waive any obligation of the Borrower to pay default interest pursuant to Section 2.13(c) or to waive the MFN Adjustment, (iii) postpone the maturity of any Loan, or the date of any scheduled amortization payment of the principal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date, any scheduled amortization payment or the date for payment of any interest or fees), without the written consent of each Lender directly and adversely affected thereby, (iv) change any of the provisions of this Section without the written consent of each Lender directly and adversely affected thereby; provided that any such change which is in favor of a Class of Lenders holding Loans maturing after the maturity of other Classes of Lenders (and only takes effect after the maturity of such other Classes of Loans or Commitments) will require the written consent of the Required Lenders with respect to each Class directly and adversely affected thereby, (v) change the percentage set forth in the definition of “Required Lenders”, “Majority in Interest” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) subordinate (or have the effect of subordinating) Liens securing any material portion of the Collateral (other than in connection with debtor-in-possession financing or use of cash collateral in accordance with the terms of the applicable Intercreditor Agreements), without the written consent of each Lender directly and adversely affected thereby, (vii) release (or have the effect of releasing) all or substantially all or any material portion of the value of the Guarantees under the Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender), (viii) release (or
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have the effect of releasing) all or substantially all or any material portion of the Collateral from the Liens of the Security Documents, without the written consent of each Lender (other than a Defaulting Lender) except as expressly provided in the Loan Documents, (ix) change any pro rata sharing and/or payment provisions or any payment “waterfall” herein or in any other Loan Document, without the written consent of each Lender directly and adversely affected thereby, or (x) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of the Required Lenders with respect to any Class directly and adversely affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent without the prior written consent of the Administrative Agent or the Collateral Agent, as applicable, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Lead Borrower and the Administrative Agent in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Administrative Agent, so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, or (iii) to add any provisions to any Loan Documents that, in the reasonable judgment of the Administrative Agent, are more favorable to the Lenders (or to the applicable subset thereof), so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by the Lead Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time and (D) no Lenders other than the Lenders holding a Majority in Interest of the applicable Class shall be required to waive, amend, supplement or modify the conditions precedent to any Borrowings of Loans of such Class. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Lead Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents and related documents in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Administrative Agent at the request of the Lead Borrower without the need to obtain the consent of any other Lender if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Administrative Agent, so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents, or (iv) to integrate any Incremental Facility or Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents, including the relevant Intercreditor Agreement(s).
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(c) In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders (and, to the extent any Proposed Change requires the consent of Lenders holding Loans of any Class pursuant to clause (iv), (v) or (ix) of paragraph (b) of this Section 9.02, the consent of a Majority in Interest of the outstanding Loans and unused Commitments of such Class) to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “Non-Consenting Lender”), then, so long as the Lender that is acting as Administrative Agent is not a Non-Consenting Lender, the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, (i) if no Event of Default under Sections 7.01(a), (b), (h) or (i) exists, permanently prepay all of the Loans of any Class owing by it to, and terminate any Commitments of, such Non-Consenting Lender or (ii) require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consent shall not unreasonably be withheld, conditioned or delayed, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, Term Loans of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
SECTION 9.03 Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Commitment Parties (limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of Latham & Watkins LLP and, if reasonably necessary, of a single firm of local counsel to the Commitment Parties in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of such other counsel retained with the Lead Borrower’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), in each case incurred in connection with the Term Facility, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof) and (ii) all reasonable and documented out-of-pocket expenses incurred by each Agent or any Lender, including the fees, charges and disbursements of counsel for such Agent and the Lenders, in connection with the preservation, enforcement or protection of any rights or remedies (A) in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws), including its rights under this Section 9.03 or (B) in connection with the Loans made hereunder, including all such out-of-pocket costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that such
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counsel shall be limited to one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) (and, in the case of a conflict of interest, where each Agent or any Lender affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel, one additional counsel) and such other counsel as may be retained with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the expenses of counsel shall not include any allocated costs of in-house counsel.
(b) The Borrower shall indemnify each Agent, each Lender, the Lead Arrangers, the Bookrunners and each Related Party of any of the foregoing Persons (but excluding any such Person to the extent such Person is acting as a financial advisor to the Investors in connection with the Transactions (any such Person to the extent acting in such capacity, an “Excluded Party”)) (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from (without duplication), any and all losses, claims, damages, liabilities and reasonable and documented out-of-pocket fees and expenses (limited, in the case of legal fees and expenses, to the reasonable and documented fees, charges and disbursements of one counsel for all Indemnitees, to the extent reasonably necessary, a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnitees, taken as a whole (and, solely in the case of an actual or potential conflict of interest, where the Indemnitee affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel after receipt of consent from the Lead Borrower (not to be unreasonably withheld or delayed), of one additional firm of counsel for the affected Indemnitees, and, if reasonably necessary, one additional firm of local counsel in each appropriate material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for such affected Indemnitees, taken as a whole), incurred by or asserted against any Indemnitee by any third party or by the Borrower or any Subsidiary arising out of, in connection with, or as a result of any claim, litigation, investigation or proceeding (including any inquiry or investigation), regardless of whether any such Indemnitee is a party thereto, whether based on contract, tort or any other theory, relating to (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder, the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the Term Facility or the enforcement of any obligations of a Loan Party hereunder or under any other Loan Document, (ii) any Loan or the use of the proceeds therefrom or (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property, any Badcock Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any Subsidiary, or any other Environmental Liability related in any way to the Borrower or any Subsidiary; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitee (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitees (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Agents, the Lead Arrangers or the Bookrunners, in each case, in their respective capacities) that does not arise from an act or omission by the Borrower or any Subsidiary. This Section 9.03 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) To the extent that the Borrower fails to pay any amount required to be paid by it to any Agent or any Lender under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to such Agent or such Lender, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount;
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provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent or such Lender in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the aggregate outstanding Term Loans and unused Commitments at such time (or if all such amounts have been reduced to zero, at the time immediately preceding such reduction). The obligations of the Lenders under this paragraph (c) are subject to the last sentence of Section 2.02(a) (which shall apply mutatis mutandis to the Lenders’ obligations under this paragraph (c)).
(d) To the extent permitted by applicable law, (i) the Borrower shall not assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such direct or actual damages are determined by a court of competent jurisdiction by final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of, or a material breach of the Loan Documents by, such Indemnitee or its Related Parties and (ii) no Loan Party (or any Affiliate thereof), Investor (or any Affiliate thereof), or Indemnitee shall be liable for any special, indirect, consequential, incidental, exemplary 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 or thereby, the Financing Transactions, any Loan or the use of the proceeds thereof; provided that nothing in this paragraph shall limit any Loan Party’s (or any Affiliate thereof) or Investor’s (or any Affiliate thereof) indemnity and reimbursement obligations to the extent that such indirect, special, punitive or consequential damages are included in any claim by a third party unaffiliated with the applicable Indemnitee with respect to which the applicable Indemnitee is entitled to indemnification as set forth in this Section 9.03.
(e) All amounts due under this Section 9.03 shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns.
(a) 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 (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. 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 paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent (except with respect to assignments to competitors of the Borrower) not to be unreasonably withheld, conditioned or delayed) of (A) the Lead Borrower; provided that no consent of the Lead Borrower shall be required for an assignment (x) by a Term Lender to any other Lender, any Affiliate of a Lender or any Approved Fund, or (y) if an Event of Default under Sections 7.01(a), (b), (h) or (i) with respect to the Lead Borrower has occurred and is continuing (other than in respect of a proposed assignment to a Disqualified Lender); provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Lead Borrower’s prior written consent; provided further that the Lead Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Lead Borrower or any Subsidiary would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or Term Commitment to (x) a Lender, an Affiliate of a Lender or an Approved Fund or (y) subject to Section 9.04(g), the Borrower or any of its Subsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Lead Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within five (5) Business Days after written notice of such assignment, the Lead Borrower shall be deemed to have consented to such assignment (other than in respect of a proposed assignment to a Disqualified Lender).
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the trade date specified in the Assignment and Assumption with respect to such assignment or, if no trade date is so specified, as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $2,500,000 (and integral multiples of $500,000 in excess thereof), unless the Administrative Agent otherwise consents (such consent not to be unreasonably withheld, conditioned or delayed), (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender or an Affiliate of a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Lead Borrower and the Administrative Agent any tax forms required by Section 2.17(e) and an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain Material Non-Public Information about the Borrower, the other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal and interest amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) 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.
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(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (other than to a Person that is not an Eligible Assignee) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related stated interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form under Section 5f.103-1(c) and proposed Section 1.163-5(b) of the United States Treasury regulations.
(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable 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 Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Lead Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) [Reserved].
(g) Any Lender may, at any time, assign all or a portion of its Term Loans to the Borrower or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) no proceeds from any loans under any revolving credit facilities will be used to fund such assignments, (ii) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (iii) no Event of Default shall have occurred and be continuing and (iv) each Lender making such assignment to the Borrower or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) the Borrower or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders. Except as otherwise set forth in this Agreement (including in connection with the calculation of Excess Cash Flow prepayments), cancellation of Term Loans in connection with this clause (g) shall not constitute a voluntary or mandatory prepayment of Term Loans.
(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Lead Borrower. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to make the list of Disqualified Lenders available to such Lender for inspection. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Lead Borrower to such Lender and the Administrative Agent: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee; provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Lead Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents
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and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
SECTION 9.05 Survival.
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of any Agent.
SECTION 9.06 Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the syndication of the Loans and Commitments 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 Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic
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means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent (whether on its own behalf or on behalf of any Lender), any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Loan Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the Administrative Agent, any Lender or any Affiliates or Related Parties of any of the foregoing for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising as a result of the failure of any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
SECTION 9.07 Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent then such provisions shall be deemed to be in effect only to the extent not so limited.
SECTION 9.08 Right of Setoff.
If an Event of Default under Sections 7.01(a), (b), (h) or (i) shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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
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owing by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. Notwithstanding the foregoing, no amount set off from any Loan Party (other than the Borrower) shall be applied to any Excluded Swap Obligation of such Loan Party (other than the Borrower).
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York, except that (x) the interpretation of the definition of “Company Material Adverse Effect” (as defined in the Acquisition Agreement) (and whether or not a Company Material Adverse Effect has occurred) for the purpose of Section 4.01(g), (y) the determination of the accuracy of any Specified Acquisition Agreement Representation and whether as a result of any inaccuracy thereof the Borrower or any of its Affiliates have the right to terminate its or their obligations under the Acquisition Agreement and (z) the determination of whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement shall in each case be determined pursuant to the Acquisition Agreement, which is governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 or, to the extent permitted by law, in such Federal court. Each of the 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 any Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or its properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY 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 ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings.
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 9.12 Confidentiality.
(a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors, in each case, who need to know such Information in connection with the Transactions (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 and any failure of such Persons acting on behalf of the Administrative Agent or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent or the relevant Lender, as applicable), (ii) to the extent requested by any governmental authority or self-regulatory authority having jurisdiction over the Administrative Agent, any Lender or any Affiliates of any of the foregoing, as applicable, or, based on reasonable advice of counsel, to the extent required by (A) an order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, (B) applicable law or by any subpoena or similar compulsory legal process or (C) in connection with the exercise of remedies or enforcement of rights hereunder in any suit, action or proceeding relating to this Agreement; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by bank accountants or governmental or self-regulatory authorities exercising examination or regulatory authority, each Lender and the Administrative Agent shall notify the Lead Borrower as promptly as practicable of any such requested or required disclosure and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, and provided further that in no event shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Borrower or any of its Subsidiaries, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any direct or indirect contractual
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counterparty to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency in connection with obtaining a rating; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers (including any numbering, administration or settlement service providers) providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the Term Facility (e.g., identities of parties, maturity dates, interest rates, etc.) on a confidential basis, (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or otherwise by reason of improper disclosure by the Administrative Agent any Lender or any Affiliates or Related Parties of any of the foregoing (including the Persons referred to in clauses (i) above) in violation of any confidentiality obligations owing to the Loan Parties or any Subsidiaries, Affiliates or Related Parties of any of the foregoing or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower or any Subsidiary, which source is not known by the recipient of such information to be subject to a confidentiality obligation, or (viii) to the extent that such information was already in the possession of the Administrative Agent or any Lender prior to any duty or other undertaking of confidentiality or is independently developed by the Administrative Agent or any Lender without the use of such information and without otherwise violating the terms of this Section 9.12. For the purposes hereof, “Information” means all information received from or on behalf of the Borrower or any of its Subsidiaries relating to the Borrower, any of its Subsidiaries or their business. Any Person required to maintain the confidentiality of Information as provided in this Section 9.12 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. Notwithstanding the foregoing, other than as set forth in the proviso below, (x) no such information shall be disclosed to a Disqualified Lender or Excluded Party that constitutes a Disqualified Lender or Excluded Party, as applicable, at the time of such disclosure without the Lead Borrower’s prior written consent and (y) in connection with any proposed assignment of Loans and/or Commitments in accordance with Section 9.04, upon request by the applicable potential assignee therefor, the applicable potential assigning Lender may disclose the list of Disqualified Lenders to such potential assignee solely for purposes of enabling such assignee to make a representation in its applicable Assignment and Assumption that such prospective assignee is an Eligible Assignee, provided, however, that, subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, the list of Disqualified Lenders may be disclosed to any bona fide potential assignee or Participant, so that such potential assignee or Participant can represent and warrant that it is neither a Disqualified Lender nor an Affiliate of a Disqualified Lender.
(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION 9.12) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
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SECTION 9.13 USA PATRIOT Act.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT 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 such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.14 Release of Liens and Guarantees.
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents (including its Guarantee or Badcock Guarantee, as the case may be, of the Secured Obligations) and all security interests created by the Security Documents in Collateral or by the Badcock Security Documents in Badcock Collateral, as the case may be, owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary (including pursuant to a permitted merger with a Subsidiary that is not a Loan Party) or becomes an Excluded Subsidiary (other than solely as a result of such Subsidiary Loan Party ceasing to be a Wholly Owned Subsidiary) or (2) upon the request of the Lead Borrower, in connection with a transaction permitted under this Agreement (but only a transaction (x) in which such Subsidiary Loan Party becomes a bona fide joint venture and the other Person taking an equity interest in such Subsidiary Loan Party takes such equity interest for fair market value (as determined in good faith by the Lead Borrower) and is not an Affiliate of the Borrower (other than as a result of such joint venture), (y) in which such Subsidiary Loan Party does not own or have an exclusive license of any Material Intellectual Property or own any Equity Interests of any Person that owns or is the exclusive licensee of any Material Intellectual Property and (z) the primary purpose (as determined by the Lead Borrower in good faith) of which is not the release of any Guarantee of or Lien on the assets of such Subsidiary Loan Party) as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary. Upon any sale or other transfer by any Loan Party (other than to the Borrower or any Subsidiary Loan Party) of any Collateral and/or Badcock Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral and/or under any Badcock Security Document in any Badcock Collateral, the security interests in such Collateral created by the Security Documents and/or such Badcock Collateral created by the Badcock Security Documents, as the case may be, shall be automatically released. Upon the release of any Subsidiary Loan Party from its Guarantee or Badcock Guarantee, as the case may be, in compliance with this Agreement, the security interest in any Collateral or Badcock Collateral owned by such Subsidiary created by the Security Documents or the Badcock Security Documents, as the case may be, shall be automatically released. Upon termination of the aggregate Commitments and payment in full of all Secured Obligations (other than contingent indemnification obligations), all obligations under the Loan Documents and all security interests created by the Security Documents and the Badcock Security Documents shall be automatically released. In connection with any termination or release pursuant to this Section 9.14, the Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or that Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or that Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement.
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(b) The Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(iv).
(c) Each of the Lenders, and by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to provide any release or evidence of release, termination or subordination contemplated by this Section 9.14. Upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or that Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14.
SECTION 9.15 No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, any of its Affiliates or any other Person and (B) none of the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders has any obligation to the Borrower 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; and (iii) the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and none of the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Lead Arrangers, the Bookrunners and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
SECTION 9.16 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 Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
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SECTION 9.17 Intercreditor Agreements. Each of the Lenders and, by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, hereby agrees that the Administrative Agent and/or the Collateral Agent may enter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of the Administrative Agent and/or the Collateral Agent (and/or their affiliated designees, representatives or agents) on its behalf as collateral agent, respectively, thereunder. In the event of any conflict between the provisions of this Agreement or any other Loan Document (other than any Intercreditor Agreement) and the provisions of any Intercreditor Agreement, the provisions of such Intercreditor Agreement shall govern and control.
SECTION 9.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with the normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrowers in respect of any such sum due from them to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or the relevant Lender of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or the relevant Lender may in accordance with the normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender from the Borrowers in the Agreement Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
SECTION 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
| 1. | the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and |
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| 2. | the effects of any Bail-In Action on any such liability, including, if applicable: |
| i. | a reduction in full or in part or cancellation of any such liability; |
| ii. | a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or |
| iii. | the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. |
SECTION 9.20 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
SECTION 9.21 Keepwell. Each Borrower, to the extent constituting a 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 Badcock to honor all of its obligations under the Badcock Guarantee Agreement in respect of Secured Swap Obligations (provided, however, that each such Qualified ECP Guarantor shall only be liable under this Section 9.21 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.21, or otherwise under this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Borrower under this Section 9.21 shall remain in full force and effect until the termination of the Badcock Guarantee Agreement in accordance with its terms. Each Borrower
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intends that this Section 9.21 constitute, and this Section 9.21 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of Badcock for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
[Remainder of Page Intentionally Left Blank]
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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.
FRANCHISE GROUP, INC., as Lead Borrower and a Borrower
By: ________________________________
Name:
Title:
FRANCHISE GROUP NEWCO PSP, LLC, as a Borrower
By: ________________________________
Name:
Title:
valor acquisition, llc, as a Borrower
By: ________________________________
Name:
Title:
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, as a Borrower
By: ________________________________
Name:
Title:
[Signature Page to First Lien Credit Agreement]
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Collateral Agent
By: ________________________________
Name:
Title:
[Signature Page to First Lien Credit Agreement]
JPMORGAN CHASE BANK, N.A.,
as a Lender
By: ________________________________
Name:
Title:
[Signature Page to First Lien Credit Agreement]
Exhibit 10.2
FIRST AMENDMENT TO SECOND LIEN CREDIT AGREEMENT
This FIRST AMENDMENT TO SECOND LIEN CREDIT AGREEMENT, dated as of November 22, 2021 (this “Amendment”), among FRANCHISE GROUP, INC., a Delaware corporation (the “Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), certain subsidiaries of the Lead Borrower party hereto, the lenders party hereto (the “Lenders”) and ALTER DOMUS (US) LLC (“Alter Domus”), in its capacity as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent”), which amends that certain Second Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Second Lien Credit Agreement”), among each Borrower, each Lender from time to time party thereto, the Administrative Agent and the Collateral Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Amended Second Lien Credit Agreement (as defined below).
WHEREAS, the Lead Borrower has requested certain amendments to the Second Lien Credit Agreement and certain other Loan Documents to permit, among other things, the incurrence of additional credit facilities in connection with the acquisition by the Lead Borrower of W.S. Badcock Corporation, a Florida corporation (the “Badcock Acquisition”);
WHEREAS, Section 9.02 of the Second Lien Credit Agreement permits certain amendments to the Second Lien Credit Agreement with the consent of the Lead Borrower, the Administrative Agent and the Required Lenders, including the amendments contemplated herein; and
WHEREAS, each Borrower, the Administrative Agent and the Lenders desire to enter into this Amendment in order to effect the amendments to the Second Lien Credit Agreement contemplated herein, in each case, on the terms and subject to the conditions set forth in Section 2 hereof.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments to the Second Lien Credit Agreement. Subject to the satisfaction (or waiver by the Lenders) of the conditions set forth in Section 2 hereof, the Second Lien Credit Agreement, including all Schedules thereto (but excluding the Exhibits thereto, which shall remain as in effect immediately prior to the First Amendment Effective Date), shall be amended as follows:
(a)
The Second Lien Credit Agreement is hereby amended by inserting the language indicated in double underlined text (indicated textually
in the same manner as the following example: underlined
text) in Exhibit A hereto and by deleting the language indicated by strikethrough text (indicated textually in the
same manner as the following example: stricken text) in Exhibit A hereto; and
(b) The Schedules to the Second Lien Credit Agreement are hereby amended and restated in their entirety as set forth in Exhibit B hereto.
The Second Lien Credit Agreement and Schedules thereto, as so amended pursuant to the foregoing clauses (a) and (b), are referred to herein as the “Amended Second Lien Credit Agreement”.
| -1- |
Section 2. Conditions to Effectiveness. The effectiveness of this Amendment is subject only to the satisfaction (or waiver by the Lenders) of the following conditions precedent (the date on which such conditions have been satisfied (or waived by the Lenders), the “First Amendment Effective Date”):
(a) The Administrative Agent and the Required Lenders shall have received executed counterparts of this Amendment from each Loan Party, the Administrative Agent and the Lenders constituting the Required Lenders.
(b) The Administrative Agent and the Required Lenders shall have received executed counterparts of each of the documents listed on Exhibit C hereto (the “Additional First Amendment Loan Documents”).
(c) The representations and warranties of each Loan Party set forth in Article III of the Amended Second Lien Credit Agreement or any other Loan Document shall be true and correct in all material respects on and as of the First Amendment Effective Date; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, in each case, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(d) No Event of Default shall have occurred and be continuing as of the time of the First Amendment Effective Date or immediately after giving effect to the Amendment and the Badcock Acquisition.
(e) All fees and reasonable, documented out-of-pocket expenses required to be paid on the First Amendment Effective Date to the Agents and the Lenders pursuant to Section 9.03 of the Amended Second Lien Credit Agreement, to the extent invoiced at least two (2) Business Days prior to the date hereof (or such later date as the Borrowers may reasonably agree) shall have been paid.
(f) The Administrative Agent and the Required Lenders shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority (or, to the extent such Loan Party delivered such Organizational Documents to the Administrative Agent on the Effective Date, a certification that the Organizational Documents of such Loan Party have not been amended or otherwise modified since the Effective Date), (ii) an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of each Loan Party, (iii) copies of resolutions of the governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Amendment and the Additional First Amendment Loan Documents to which such Loan Party is a party, as applicable, certified as of the First Amendment Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(g) The Administrative Agent and the Required Lenders shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated as of the First Amendment Effective Date) of (i) Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, (ii) Taft Stettinius & Hollister LLP, special Ohio counsel to the Loan Parties and (iii) Foley & Lardner LLP, special Florida counsel to the Loan Parties, each in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders.
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(h) The Administrative Agent and the Required Lenders shall have received a certificate of a Responsible Officer of the Lead Borrower certifying that the conditions set forth in Sections 3(c) and (d) have been satisfied.
(i) The Badcock Acquisition shall have been, or shall substantially concurrently with the First Amendment Effective Date be, consummated.
(j) The Administrative Agent and the Required Lenders shall have received executed copies of that certain First Amendment to First Lien Credit Agreement, dated as of the date hereof, that certain First Amendment to ABL Credit Agreement, dated as of the date hereof, the Badcock First Lien Loan Documents and the Badcock Second Lien Loan Documents.
Section 3. Fees and Expenses. The Lead Borrower agrees to reimburse the Administrative Agent and the Lenders for all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent and the Lenders in connection with this Amendment to the extent reimbursable by the Borrowers pursuant to Section 9.03 of the Amended Second Lien Credit Agreement.
Section 4. Amendments; Counterparts. This Amendment may not be amended or waived except by an instrument in writing signed by each of the parties party hereto. This Amendment and each other Loan Document may be executed in one or more counterparts (and by different parties hereto in different counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or other electronic transmission of an executed counterpart of a signature page to this Amendment and each other Loan Document shall be effective as delivery of an original executed counterpart of this Amendment and such other Loan Document. The Administrative Agent may also require that any such documents and signatures delivered by telecopier or other electronic transmission be confirmed by a manually-signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier or other electronic transmission.
Section 5. Governing Law, Jurisdiction and Waiver of Right to Trial by Jury. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. The jurisdiction, service of process, and waiver of right to trial by jury provisions in Sections 9.09 and 9.10 of the Second Lien Credit Agreement are incorporated herein by reference mutatis mutandis.
Section 6. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 7. Effect of Amendment.
(a) On and after the date hereof, each reference in the Second Lien Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Second Lien Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Second Lien Credit Agreement, mean and are a reference to the Second Lien Credit Agreement as modified by this Amendment.
(b) Except as expressly amended hereby, all of the terms and provisions of the Second Lien Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Security Agreement and each Loan Document and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.
| -3- |
(c) Each of the Loan Parties as debtor, grantor, mortgagor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Agreement) and confirms that such liens and security interests continue to secure the Obligations under the Loan Documents, in each case subject to the terms thereof, and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Loan Documents The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.
(d) The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the Second Lien Credit Agreement or any of the other Loan Documents. This Amendment shall be deemed to be a Loan Document as defined in the Second Lien Credit Agreement.
Section 8. No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Amended Second Lien Credit Agreement.
Section 9. Additional First Amendment Loan Documents. By its execution of this Amendment, each Lender hereby consents to, and instructs the Administrative Agent and/or the Collateral Agent, as applicable, to enter into, each of the Additional First Amendment Loan Documents listed as items 1 through 6 on Exhibit C hereto.
[Signature Pages Follow]
| -4- |
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
| AMERICAN FREIGHT MANAGEMENT COMPANY, LLC | ||
| AMERICAN FREIGHT GROUP, LLC | ||
| AMERICAN FREIGHT HOLDINGS, LLC | ||
| AMERICAN FREIGHT, LLC | ||
| FRANCHISE GROUP ACQUISITION TM, LLC | ||
| FRANCHISE GROUP INTERMEDIATE B, LLC | ||
| FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC | ||
| FRANCHISE GROUP INTERMEDIATE PSP, LLC | ||
| FRANCHISE GROUP INTERMEDIATE S, LLC | ||
| FRANCHISE GROUP INTERMEDIATE V, LLC | ||
| FRANCHISE GROUP NEW HOLDCO, LLC | ||
| FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC | ||
| FRANCHISE GROUP NEWCO PSP, LLC | ||
| FRANCHISE GROUP NEWCO S, LLC | ||
| FRANCHISE GROUP NEWCO V, LLC | ||
| FRANCHISE GROUP, INC. | ||
| VALOR ACQUISITION, LLC | ||
| FRANCHISE GROUP INTERMEDIATE BHF, LLC | ||
| FRANCHISE GROUP NEWCO BHF, LLC | ||
| FRANCHISE GROUP INTERMEDIATE SL, LLC | ||
| FRANCHISE GROUP NEWCO SL, LLC | ||
| By: /s/ Eric Seeton | ||
| Name: | Eric Seeton | |
| Title: | Chief Financial Officer | |
VITAMIN SHOPPE INDUSTRIES LLC | ||
| VITAMIN SHOPPE FRANCHISING, LLC | ||
| By: /s/ Laura Coffey | ||
| Name: | Laura Coffey | |
| Title: | Chief Financial Officer | |
| VITAMIN SHOPPE MARINER, LLC | ||
| VITAMIN SHOPPE GLOBAL, LLC | ||
| VITAMIN SHOP FLORIDA, LLC | ||
| VITAMIN SHOPPE PROCUREMENT SERVICES, LLC | ||
| BETANCOURT SPORTS NUTRITION, LLC | ||
|
By: Vitamin Shoppe Industries LLC, its sole member | ||
| By: /s/ Laura Coffey | ||
| Name: | Laura Coffey | |
| Title: | Chief Financial Officer | |
| [Signature Page to First Amendment to Second Lien Credit Agreement] |
| AMERICAN FREIGHT OUTLET STORES, LLC | ||
| OUTLET MERCHANDISE, LLC | ||
| By: /s/ Will Powell | ||
| Name: | Will Powell | |
| Title: | President | |
| AMERICAN FREIGHT FRANCHISING, LLC | ||
| AMERICAN FREIGHT FRANCHISOR, LLC | ||
| By: /s/ Will Powell | ||
| Name: | Will Powell | |
| Title: | Chief Executive Officer and President | |
| BUDDY'S NEWCO, LLC | ||
| BUDDY'S FRANCHISING AND LICENSING LLC | ||
| By: /s/ Michael Bennett | ||
| Name: | Michael Bennett | |
| Title: | Chief Executive Officer | |
| PET SUPPLIES “PLUS”, LLC | ||
| PSP MIDCO, LLC | ||
| PSP SERVICE NEWCO, LLC | ||
| PSP STORES, LLC | ||
| PSP SUBCO, LLC | ||
| PSP GROUP, LLC | ||
| PSP FRANCHISING, LLC | ||
| PSP DISTRIBUTION, LLC | ||
| By: /s/ Eric Seeton | ||
| Name: | Eric Seeton | |
| Title: | Vice President | |
| [Signature Page to First Amendment to Second Lien Credit Agreement] |
| EDUCATE CORPORATE CENTERS HOLDINGS, LLC | ||
| EDUCATE DIGITAL, LLC | ||
| EDUCATE OPERATING COMPANY, LLC | ||
| EDUCATE, INC. | ||
| LEARNING PARTNERSHIPS, LLC | ||
| LEARNING SYSTEM OF THE FUTURE, LLC | ||
| MARYLAND LEARNING CENTERS, LLC | ||
| OMEGA LEARNING CENTERS, LLC | ||
| SYLVAN IN-HOME, LLC | ||
| SYLVAN LEARNING CENTERS, LLC | ||
| SYLVAN LEARNING, LLC | ||
| By: /s/ Eric Seeton | ||
| Name: | Eric Seeton | |
| Title: | Vice President | |
| [Signature Page to First Amendment to Second Lien Credit Agreement] |
| ALTER DOMUS (US) LLC, solely in its capacities as Administrative Agent and Collateral Agent and not in its individual capacity | ||
| By: /s/ Matthew Trybula | ||
| Name: | Matthew Trybula | |
| Title: | Associate Counsel | |
| [Signature Page to First Amendment to Second Lien Credit Agreement] |
| HVS XXXIV LLC, as a Lender | ||
| By: /s/ Russell D. Gannaway | ||
| Name: | Russell D. Gannaway | |
| Title: | Authorized Person | |
| D3V XI LLC, as a Lender | ||
| By: /s/ Jamie Weinstein | ||
| Name: | Jamie Weinstein | |
| Title: | Authorized Person | |
| PIF ONSHORE XVII LP, as a Lender | ||
| By: /s/ Russell D. Gannaway | ||
| Name: | Russell D. Gannaway | |
| Title: | Officer of the Investment Manager | |
| RSF XVIII LLC, as a Lender | ||
| By: /s/ Russell D. Gannaway | ||
| Name: | Russell D. Gannaway | |
| Title: | Authorized Person | |
| OC III LVS XXI LP, as a Lender | ||
| By: OC III GP II LLC, its general partner | ||
| By: /s/ Adam L. Gubner | ||
| Name: | Adam L. Gubner | |
| Title: | Authorized Person | |
| [Signature Page to First Amendment to Second Lien Credit Agreement] |
| IRRADIANT SOLUTIONS FUND, L.P., as a Lender | ||
| By: /s/ Jon Levinson | ||
| Name: | Jon Levinson | |
| Title: | Authorized Person | |
| IRRADIANT SOLUTIONS MINI-MASTER FUND, L.P., as a Lender | ||
| By: /s/ Jon Levinson | ||
| Name: | Jon Levinson | |
| Title: | Authorized Person | |
| IFRG INVESTORS II, L.P., as a Lender | ||
| By: /s/ Jon Levinson | ||
| Name: | Jon Levinson | |
| Title: | Authorized Person | |
EXHIBIT A
SECOND LIEN CREDIT AGREEMENT
CONFORMED THROUGH THE FIRST AMENDMENT TO
SECOND LIEN CREDIT AGREEMENT DATED AS OF NOVEMBER 22, 2021
CONFORMED THROUGH THE FIRST AMENDMENT TO
SECOND LIEN CREDIT AGREEMENT DATED AS OF NOVEMBER 22, 2021
SECOND LIEN CREDIT AGREEMENT
dated as of
March 10, 2021
among
FRANCHISE GROUP, INC.,
as a Borrower and Lead Borrower,
FRANCHISE GROUP NEWCO PSP, LLC,
as a Borrower,
VALOR ACQUISITION, LLC,
as a Borrower,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
as a Borrower,
the Lenders from time to time party hereto,
and
ALTER DOMUS (US) LLC,
as Administrative Agent and as Collateral Agent
Table of Contents
| Page | ||
| ARTICLE I DEFINITIONS | 1 | |
| SECTION 1.01 | Defined Terms. | 1 |
| SECTION 1.02 | Classification of Loans and Borrowings. | |
| SECTION 1.03 | Terms Generally. | |
| SECTION 1.04 | Accounting Terms; GAAP. | |
| SECTION 1.05 | Effectuation of Transactions. | |
| SECTION 1.06 | Limited Conditionality Acquisition. | |
| SECTION 1.07 | Certain Determinations. | |
| SECTION 1.08 | Divisions. | |
| SECTION 1.09 | Interest Rates; LIBOR Notification. | |
| ARTICLE II THE CREDITS | | |
| SECTION 2.01 | Commitments. | |
| SECTION 2.02 | Loans and Borrowings. | |
| SECTION 2.03 | Requests for Borrowings. | |
| SECTION 2.04 | [Reserved]. | |
| SECTION 2.05 | [Reserved]. | |
| SECTION 2.06 | Funding of Borrowings. | |
| SECTION 2.07 | Interest Elections. | |
| SECTION 2.08 | Termination and Reduction of Commitments. | |
| SECTION 2.09 | Repayment of Loans; Evidence of Debt. | |
| SECTION 2.10 | Repayment of Term Loans. | |
| SECTION 2.11 | Prepayment of Loans. | |
| SECTION 2.12 | Fees. | |
| SECTION 2.13 | Interest. | |
| SECTION 2.14 | Benchmark Unavailability; Benchmark Replacement Setting. | |
| SECTION 2.15 | Increased Costs. | |
| SECTION 2.16 | Break Funding Payments. | |
| SECTION 2.17 | Taxes. | |
| SECTION 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Setoffs. | |
| SECTION 2.19 | Mitigation Obligations; Replacement of Lenders. | |
| SECTION 2.20 | [Reserved]. | |
| SECTION 2.21 | Refinancing Amendments. | |
| SECTION 2.22 | Defaulting Lenders. | |
| SECTION 2.23 | Illegality. | |
| SECTION 2.24 | Loan Modification Offers. | |
| ARTICLE III REPRESENTATIONS AND WARRANTIES | | |
| SECTION 3.01 | Organization; Powers. | |
| SECTION 3.02 | Authorization; Enforceability. | |
| SECTION 3.03 | Governmental Approvals; No Conflicts. | |
| SECTION 3.04 | Financial Condition; No Material Adverse Effect. | |
| SECTION 3.05 | Properties. | |
| SECTION 3.06 | Litigation and Environmental Matters. | |
| SECTION 3.07 | Compliance with Laws. | |
| SECTION 3.08 | Investment Company Status. | |
| SECTION 3.09 | Taxes. | |
| SECTION 3.10 | ERISA; Labor Matters. | |
Table of Contents
(continued)
| Page | ||
| SECTION 3.11 | Disclosure. | |
| SECTION 3.12 | Subsidiaries. | |
| SECTION 3.13 | Intellectual Property; Licenses, Etc. | |
| SECTION 3.14 | Solvency. | |
| SECTION 3.15 | Federal Reserve Regulations. | |
| SECTION 3.16 | Use of Proceeds. | |
| SECTION 3.17 | Anti-Corruption Laws and Sanctions. | |
| SECTION 3.18 | Security Documents. | |
| SECTION 3.19 | Insurance. | |
| SECTION 3.20 | Franchise Agreements. | |
| ARTICLE IV CONDITIONS | | |
| SECTION 4.01 | Effective Date. | |
| SECTION 4.02 | Each Credit Event after the Effective Date. | |
| ARTICLE VAFFIRMATIVE COVENANTS | | |
| SECTION 5.01 | Financial Statements and Other Information. | |
| SECTION 5.02 | Notices of Material Events. | |
| SECTION 5.03 | Information Regarding Collateral. | |
| SECTION 5.04 | Existence; Conduct of Business. | |
| SECTION 5.05 | Payment of Taxes, etc. | |
| SECTION 5.06 | Maintenance of Properties. | |
| SECTION 5.07 | Insurance. | |
| SECTION 5.08 | Books and Records; Inspection and Audit Rights. | |
| SECTION 5.09 | Compliance with Laws. | |
| SECTION 5.10 | Use of Proceeds. | |
| SECTION 5.11 | Additional Subsidiaries. | |
| SECTION 5.12 | Further Assurances. | |
| SECTION 5.13 | Franchise Agreements. | |
| SECTION 5.14 | Certain Post-Closing Obligations. | |
| ARTICLE VI NEGATIVE COVENANTS | | |
| SECTION 6.01 | Indebtedness; Certain Equity Securities. | |
| SECTION 6.02 | Liens. | |
| SECTION 6.03 | Fundamental Changes; Lead Borrower Covenant . | |
| SECTION 6.04 | Investments, Loans, Advances, Guarantees and Acquisitions. | |
| SECTION 6.05 | Asset Sales. | |
| SECTION 6.06 | Sale and Leaseback Transactions. | |
| SECTION 6.07 | Restricted Payments; Certain Payments of Indebtedness. | |
| SECTION 6.08 | Transactions with Affiliates. | |
| SECTION 6.09 | Restrictive Agreements. | |
| SECTION 6.10 | Financial Maintenance Covenants. | |
| SECTION 6.11 | Changes in Fiscal Periods. | |
| SECTION 6.12 | Amendment of Financing Documents. | |
| SECTION 6.13 | Franchise Agreements. | |
| SECTION 6.14 | Anti-Layering. | |
| SECTION 6.15 | Badcock. | 145 |
| -ii- |
Table of Contents
(continued)
| Page | ||
| ARTICLE VII EVENTS OF DEFAULT | | |
| SECTION 7.01 | Events of Default. | |
| SECTION 7.02 | Right to Cure. | |
| SECTION 7.03 | Application of Proceeds. | |
| ARTICLE VIII ADMINISTRATIVE AGENT | | |
| SECTION 8.01 | Appointment and Authority. | |
| SECTION 8.02 | Rights as a Lender. | |
| SECTION 8.03 | Exculpatory Provisions. | |
| SECTION 8.04 | Reliance by Agents. | |
| SECTION 8.05 | Delegation of Duties. | |
| SECTION 8.06 | Resignation of Administrative Agent; Mergers. | |
| SECTION 8.07 | Non-Reliance on Agents and Lenders. | |
| SECTION 8.08 | [Reserved]. | |
| SECTION 8.09 | Administrative Agent May File Proofs of Claim. | |
| SECTION 8.10 | No Waiver; Cumulative Remedies; Enforcement. | |
| SECTION 8.11 | Withholding Taxes. | |
| SECTION 8.12 | Credit Bidding. | |
| SECTION 8.13 | Erroneous Payments. | 159 |
| ARTICLE IX MISCELLANEOUS | | |
|
SECTION 9.01 |
Notices. | |
| SECTION 9.02 | Waivers; Amendments. | |
| SECTION 9.03 | Expenses; Indemnity; Damage Waiver. | |
| SECTION 9.04 | Successors and Assigns. | |
| SECTION 9.05 | Survival. | |
| SECTION 9.06 | Counterparts; Integration; Effectiveness. | |
| SECTION 9.07 | Severability. | |
| SECTION 9.08 | Right of Setoff. | |
| SECTION 9.09 | Governing Law; Jurisdiction; Consent to Service of Process. | |
| SECTION 9.10 | WAIVER OF JURY TRIAL. | |
| SECTION 9.11 | Headings. | |
| SECTION 9.12 | Confidentiality. | |
| SECTION 9.13 | USA PATRIOT Act. | |
| SECTION 9.14 | Release of Liens and Guarantees. | |
| SECTION 9.15 | No Advisory or Fiduciary Responsibility. | |
| SECTION 9.16 | Interest Rate Limitation. | |
| SECTION 9.17 | Intercreditor Agreements | |
| SECTION 9.18 | Judgment Currency | |
| SECTION 9.19 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | |
| SECTION 9.20 | Acknowledgement Regarding Any Supported QFCs | |
| -iii- |
| SCHEDULES: | ||
| Schedule 2.01 | — | Commitments and Loans |
| Schedule 2.02 | — | First Amendment Effective Date Badcock Material Real Property |
| Schedule 3.03 | — | Government Approvals; No Conflicts |
| Schedule 3.06 | — | Litigation and Environmental Matters |
| Schedule 3.12 | — | Subsidiaries |
| Schedule 3.20 | — | Franchise Agreements |
| Schedule 5.14(a) | — | Certain Post-Closing Obligations |
| Schedule 6.01 | — | Existing Indebtedness |
| Schedule 6.02 | — | Existing Liens |
| Schedule 6.04(e) | — | Existing Investments |
| Schedule 6.05(k) | — | Specified Disposition |
| Schedule 6.08 | — | Existing Affiliate Transactions |
| Schedule 6.09 | — | Existing Restrictions |
| Schedule 9.01 | — | Notices |
| EXHIBITS: | ||
| Exhibit A | — | Form of Assignment and Assumption |
| Exhibit B | — | Form of Guarantee Agreement |
| Exhibit C | — | Form of Perfection Certificate |
| Exhibit D | — | Form of Collateral Agreement |
| Exhibit E | — | Form of Compliance Certificate |
| Exhibit F | — | [Reserved] |
| Exhibit G | — | Form of Solvency Certificate |
| Exhibit H | — | Form of Closing Certificate |
| Exhibit I | — | Form of Master Intercompany Note |
| Exhibit J | — | Form of Specified Discount Prepayment Notice |
| Exhibit K | — | Form of Specified Discount Prepayment Response |
| Exhibit L | — | Form of Discount Range Prepayment Notice |
| Exhibit M | — | Form of Discount Range Prepayment Offer |
| Exhibit N | — | Form of Solicited Discounted Prepayment Notice |
| Exhibit O | — | Form of Solicited Discounted Prepayment Offer |
| Exhibit P | — | Form of Acceptance and Prepayment Notice |
| Exhibit Q-1 | — | Form of United States Tax Compliance Certificate 1 |
| Exhibit Q-2 | — | Form of United States Tax Compliance Certificate 2 |
| Exhibit Q-3 | — | Form of United States Tax Compliance Certificate 3 |
| Exhibit Q-4 | — | Form of United States Tax Compliance Certificate 4 |
| Exhibit R | — | Form of Note |
| Exhibit S | — | Form of Notice of Borrowing |
| Exhibit T | — | Form of Interest Election Request |
| -iv- |
SECOND LIEN CREDIT AGREEMENT, dated as of March 10, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”) and FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), the Lenders from time to time party hereto and ALTER DOMUS (US) LLC, as Administrative Agent and as Collateral Agent.
The parties hereto agree as follows:
ARTICLE
I
Definitions
SECTION 1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified below:
“A Team” means A Team Sales, LLC, a Delaware limited liability company.
“ABL Agent” means JPM, as agent under the ABL Credit Agreement or any successor thereto acting in such capacities.
“ABL Credit Agreement” means (i) that certain Third Amended and Restated Loan and Security Agreement, as in effect on the First Amendment Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement), among each Loan Party party thereto, certain lenders party thereto and the ABL Agent, and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent asset-based revolving credit facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not an ABL Credit Agreement hereunder. Any reference to the ABL Credit Agreement hereunder shall be deemed a reference to any ABL Credit Agreement then in existence.
“ABL Intercreditor Agreement” means (a) that certain Amended and Restated Intercreditor Agreement, dated as of the First Amendment Effective Date, by and among the Collateral Agent, the First Lien Agent, the Badcock First Lien Agent, the Badcock Second Lien Agent and the ABL Agent, and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement among the ABL Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the ABL Credit Agreement and the other ABL Loan Documents), the Agents (or any of them) and the First Lien Agent (and any other Persons party thereto), that is reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
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“ABL Loan Documents” shall have the meaning ascribed to the term “Financing Agreements” in the ABL Credit Agreement.
“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Acceptable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“Acceptable Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Acceptance and Prepayment Notice” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D)(2) substantially in the form of Exhibit P.
“Acceptance Date” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“Accepting Lenders” has the meaning specified in Section 2.24(a).
“Acquired Company” means PSP Midco, LLC, a Delaware limited liability company.
“Acquired EBITDA” means, with respect to any Pro Forma Entity, for any period, the amount of Consolidated EBITDA of such Pro Forma Entity (determined as if references to the Borrower and its Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“Acquired Entity or Business” has the meaning given such term in the definition of “Consolidated EBITDA.”
“Acquired Subsidiaries” means the Acquired Company and its subsidiaries.
“Acquisition” means the acquisition of the Acquired Company and the Acquired Subsidiaries pursuant to the Acquisition Agreement.
“Acquisition Agreement” means that certain Amended and Restated Equity Purchase Agreement dated as of March 3, 2021 (including the schedules, exhibits and disclosure letters thereto) by and among the Acquired Company, FG Newco PSP, Lead Borrower, PSP Holdings, LLC, Sentinel Capital Partners VI-A, L.P., Sentinel PSP Blocker, Inc., PSP Intermediate, LLC, Sentinel Capital Partners, L.L.C. and PSP Midco Holdings, LLC.
“Additional Lender” means any Additional Term Lender.
“Additional Term Lender” means, at any time, any bank, financial institution or other institutional lender or investor that agrees to provide any portion of any Credit Agreement Refinancing Indebtedness with respect to any existing Term Loans or Term Commitments, as applicable, pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval not to be unreasonably withheld, conditioned or delayed) and the Lead Borrower.
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“Adjusted LIBO Rate” means, subject to Section 2.14(b), with respect to any Eurodollar Borrowing, for any Interest Period, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate as in effect at such time for such Interest Period and (ii) the Statutory Reserve Rate; provided that the Adjusted LIBO Rate for any Interest Period shall not be less than 1.00% per annum.
“Administrative Agent” means Alter Domus, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Administrative Agent Fee Letter” means that certain Administrative Agent Fee Letter, dated as of the Effective Date, by and among the Borrower and the Administrative Agent.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affected Class” has the meaning specified in Section 2.24(a).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“After Year End Payment” has the meaning assigned to such term in Section 2.11(d).
“Agent” means the Administrative Agent and the Collateral Agent, and any successors and assigns in such capacity, and “Agents” means two or more of them.
“Agent Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Agent Parties” has the meaning given to such term in Section 9.01(c).
“Aggregate Cure Amount” has the meaning assigned to such term in Section 7.02(a).
“Agreement” has the meaning given to such term in the preliminary statements hereto.
“Agreement Currency” has the meaning given to such term in Section 9.18.
“Alter Domus” means Alter Domus (US) LLC.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%; provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above.
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“Ancillary Document” has the meaning assigned to such term in Section 9.06.
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, and all other applicable laws, rules, and regulations concerning or relating to bribery or corruption.
“Applicable Account” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“Applicable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Applicable Rate” means, (a) with respect to any Initial Term Loans maintained as ABR Loans, 6.50% per annum, and with respect to any Initial Term Loans maintained as Eurodollar Loans, 7.50% per annum, and (b) with respect to any Other Term Loans, as set forth in the applicable Refinancing Amendment or Loan Modification Agreement.
“Approved Bank” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Asset Sale Prepayment Percentage” means 100%; provided that, if at any time the Secured Net Leverage Ratio is (i) less than or equal to 3.06 to 1.00 and greater than 2.56 to 1.00 (as set forth in the most recent Compliance Certificate delivered to the Administrative Agent for any fiscal quarter or fiscal year of the Lead Borrower in accordance with Section 5.01, provided that for purposes of calculating the Secured Net Leverage Ratio for this definition, the Consolidated EBITDA of any Person acquired pursuant to a Limited Condition Transaction shall not be included until such Limited Condition Transaction is consummated), the applicable Asset Sale Prepayment Percentage shall instead be 50% and (ii) less than or equal to 2.56 to 1.00 (as set forth in the most recent Compliance Certificate delivered to the Administrative Agent for any fiscal quarter or fiscal year of the Lead Borrower in accordance with Section 5.01, provided that for purposes of calculating the Secured Net Leverage Ratio for this definition, the Consolidated EBITDA of any Person acquired pursuant to a Limited Condition Transaction shall not be included until such Limited Condition Transaction is consummated), the applicable Asset Sale Prepayment Percentage shall instead be 0%.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“Auction Agent” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
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“Audited Financial Statements” means (a) the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of the Lead Borrower ended on or about December 31, 2019 and (b) the audited consolidated balance sheet of PSP and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of PSP, ended on or about December 31, 2019.
“Available Amount” means, as of any date of determination, a cumulative amount equal to (without duplication and without duplication of any amount included in the Available Equity Amount):
(a) [Reserved], plus
(b) the sum of an amount (which amount shall not be less than zero) equal to the sum of (x) Excess Cash Flow (but not less than zero in any period) for the fiscal year of the Lead Borrower ending on or about December 31, 2021 and (y) Excess Cash Flow for each succeeding completed fiscal year as of such date, in each case, that was not required to prepay Term Loan Borrowings pursuant to Section 2.11(d) or Term Loan Borrowings (as defined in the First Lien Credit Agreement) pursuant to Section 2.11(d) of the First Lien Credit Agreement, plus
(c) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower and its Subsidiaries on Investments made using the Available Amount (not to exceed the original amount of such Investments), plus
(d) [Reserved], plus
(e) the Net Proceeds of a sale or other Disposition received by the Borrower or any Subsidiary of Investments made using the Available Amount, plus
(f) [Reserved], plus
(g) [Reserved], plus
(h) the aggregate amount of any Retained Declined Proceeds and Retained Asset Sale Proceeds.
“Available Equity Amount” means a cumulative amount equal to (without duplication, and without duplication of any amount included in the Available Amount):
(a) without duplication of any amount included in the Available Amount, the Net Proceeds of new public or private issuances after the Effective Date of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) of the Lead Borrower, plus
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(b) capital contributions received by the Lead Borrower after the Effective Date in cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash capital contributions) in respect of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), plus
(c) the net cash proceeds received by the Borrower or any Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower or any Subsidiary on Investments made using the Available Equity Amount (not to exceed the original amount of such Investments).
“Available General RP Capacity Amount” means (i) the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.07(a)(xv) plus (ii) the amount of prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing that may be made at the time of determination pursuant to Section 6.07(b)(vi)(A) minus (iii) the sum of the amount of the Available General RP Capacity Amount utilized by the Borrower or any Subsidiary prior to such time to make (a) Restricted Payments pursuant to Section 6.07(a)(xv), (b) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(A), (c) Investments pursuant to Section 6.04(m)(A)(ii) utilizing the Available General RP Capacity Amount or (d) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(B) utilizing the Available General RP Capacity Amount.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.14(e).
“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Badcock Acquisition” means the “Badcock Acquisition” as defined in the First Amendment.
“Badcock Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Badcock Security Documents as security for the Secured Obligations. For the avoidance of doubt, Collateral does not constitute “Badcock Collateral”.
“Badcock Collateral Agreement” means the Second Lien Collateral Agreement, dated as of the First Amendment Effective Date, between Badcock and the Collateral Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
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“Badcock Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent and the Lenders shall have received from Badcock
(i) a counterpart of the Badcock Guarantee Agreement duly executed and delivered on behalf of Badcock, and
(ii) a counterpart of the Badcock Collateral Agreement duly executed and delivered on behalf of Badcock,
in each case under this clause (a) together with opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b) all outstanding Equity Interests of each direct Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of Badcock, shall have been pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;
(c) (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Badcock as payee and all such obligors as payors in the form of the Badcock Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Badcock Collateral owned by Badcock, all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Badcock Intellectual Property Security Agreements required by this Agreement, the Badcock Security Documents, Requirements of Law and reasonably requested by the Collateral Agent or the Required Lenders to be filed, delivered, registered or recorded to create the Liens intended to be created by the Badcock Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Badcock Security Documents, the Intercreditor Agreements and the other provisions of the term “Badcock Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording no later than the tenth (10th) Business Day following the First Amendment Effective Date (other than with respect to Uniform Commercial Code financing statements); and
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(e) the Collateral Agent shall have received (i) counterparts of a Badcock Mortgage with respect to each Badcock Material Real Property duly executed and delivered by Badcock; provided, that, to the extent any Badcock Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Collateral Agent will cooperate with the Lead Borrower in order to minimize the amount of tax payable in connection with such Badcock Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Badcock Mortgage to the book value of such Badcock Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Badcock Mortgage as a first priority Lien on the Mortgaged Property described therein (subject to the terms of the Intercreditor Agreements), free of any other Liens except as expressly permitted by Section 6.02 and Section 6.15, together with such customary lender’s endorsements as the Collateral Agent or the Required Lenders may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Badcock Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Badcock Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Badcock Mortgaged Property, and if any Badcock Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Administrative Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Badcock Mortgaged Property is located regarding the enforceability of the Badcock Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent and the Required Lenders, (v) a survey or existing survey together with a no change affidavit of such Badcock Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent and the Required Lenders, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Badcock Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s); provided further that, with respect to any First Amendment Effective Date Badcock Material Real Property, the requirements set forth in this clause (e) shall not be required to be satisfied until the date set forth on Schedule 2.02 for such First Amendment Effective Date Badcock Material Real Property, or such longer time period as agreed by the Required Lenders in their reasonable discretion.
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of the Loan Parties (other than Badcock) or (ii) particular assets of Badcock, if, solely for purposes of this clause (a)(ii), and for so long as the Required Lenders and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Badcock Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Badcock Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents, in which case Badcock shall be required to use commercially reasonable efforts to cause the Collateral Agent to be a party to such control agreements or control or similar arrangements; (d) in no event shall Badcock be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall the Collateral Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall Badcock be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Badcock Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall Badcock be required to complete any filings or other action with respect to security interests in Badcock Intellectual Property beyond the filing of Badcock Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Badcock Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Badcock Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Required Lenders may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets and any other obligations under this definition where they determine that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Badcock Security Documents.
“Badcock First Lien Agent” means JPM, as administrative agent and collateral agent under the Badcock First Lien Credit Agreement, or any successor thereto acting in such capacities.
“Badcock First Lien Credit Agreement” means that certain First Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the Badcock First Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement).
“Badcock First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock First Lien Credit Agreement.
“Badcock Guarantee Agreement” means the Second Lien Guarantee Agreement, dated as of the First Amendment Effective Date, between Badcock and the Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
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“Badcock Intellectual Property” has the meaning assigned to such term in the Badcock Collateral Agreement.
“Badcock Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Badcock Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Badcock Collateral that can be perfected by the filing of such security agreements, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Intercreditor Agreement” means that certain that certain Four Lien Intercreditor Agreement, dated as of the First Amendment Effective Date, by and among the Collateral Agent, the First Lien Agent, the Badcock First Lien Agent and the Badcock Second Lien Agent and acknowledged by Badcock, as it may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Badcock Master Intercompany Note” means the Master Intercompany Note, dated the First Amendment Effective Date, pursuant to which Badcock is the “payee” and the Lead Borrower and its Subsidiaries (other than Badcock) are the “payors”.
“Badcock Material Real Property” means (a) the real property described on Schedule 2.02 (the “First Amendment Effective Date Badcock Material Real Property”) and (b) any other real property (including fixtures) (i) located in the United States, (ii) first acquired by Badcock after the First Amendment Effective Date and (iii) owned (but not leased or ground-leased) by Badcock with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Material Real Property does not constitute “Badcock Material Real Property”.
“Badcock Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Badcock Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Badcock Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent, the Required Lenders and the Borrower.
“Badcock Mortgaged Property” means each parcel of Badcock Material Real Property with respect to which a Badcock Mortgage is granted pursuant to the “Badcock Collateral and Guarantee Requirement”, Section 5.12(a) or Section 5.12(c).
“Badcock Pledged Equity Interests” has the meaning set forth in the Badcock Collateral Agreement.
“Badcock Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the Badcock Second Lien Credit Agreement, or any successor thereto acting in such capacities.
“Badcock Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the Badcock Second Lien Agent and the lenders from time to time party thereto, as in effect on the First Amendment Effective Date as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement).
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“Badcock Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Badcock Second Lien Credit Agreement.
“Badcock Security Documents” means the Badcock Collateral Agreement, the Badcock Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Badcock Collateral and Guarantee Requirement” and/or Section 5.12(a) (solely as it may relate to Badcock) or Section 5.12(c) to secure any of the Secured Obligations.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Basel III” means: (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated; (ii) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
“Benchmark” means, initially, the LIBO Rate; provided that if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to the LIBO Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.14(b).
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“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Required Lenders for the applicable Benchmark Replacement Date:
(a) the sum of: (1) Term SOFR and (2) the related Benchmark Replacement Adjustment;
(b) the sum of: (1) Daily Simple SOFR and (2) the related Benchmark Replacement Adjustment;
(c) the sum of: (1) the alternate benchmark rate that has been selected by the Required Lenders (in consultation with the Administrative Agent and the Lead Borrower) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time and (2) the related Benchmark Replacement Adjustment;
provided that, in the case of clause (a), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Required Lenders in their reasonable discretion and notified to the Administrative Agent. If the Benchmark Replacement as determined pursuant to clause (a), (b) or (c) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(a) for purposes of clauses (a) and (b) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Required Lenders and is administratively feasible for the Administrative Agent:
(1) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
(2) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(b) for purposes of clause (c) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Required Lenders and the Lead Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities;
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provided that, in the case of clause (a) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Required Lenders in their reasonable discretion and notified to the Administrative Agent; provided further, that any such screen or other information service shall be administratively feasible for the Administrative Agent to access.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Required Lenders decide may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Required Lenders decide that adoption of any portion of such market practice is not administratively feasible or if the Required Lenders determine that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Required Lenders decide is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents); provided that any such changes shall be administratively feasible for the Administrative Agent.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof);
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
(c) in the case of an Early Opt-in Election, the first Business Day after the Administrative Agent provides notice thereof to the Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
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“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors, the NYFRB, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board of Directors” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
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“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States of America.
“Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Borrower Materials” has the meaning assigned to such term in Section 5.01.
“Borrower Offer of Specified Discount Prepayment” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
“Borrower Solicitation of Discount Range Prepayment Offers” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“Borrower Solicitation of Discounted Prepayment Offers” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $500,000.
“Borrowing Request” means a written request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by Requirements of Law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any Capitalized Leases; provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”). For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
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“Capitalized Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person (a) as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income Tax purposes); provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”).
“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and its Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrower and its Subsidiaries.
“Cash Management Obligations” means (a) obligations of the Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“Casualty Event” means any event that gives rise to the receipt by the Borrower or any Subsidiary of any insurance proceeds or condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“Change in Law” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including for purposes of Section 2.15.
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“Change of Control” means (x)
the acquisition of beneficial ownership, directly or indirectly, by any Person or group, other than the Permitted Holders (directly or
indirectly, including through one or more holding companies), of Equity Interests representing 35% or more of the aggregate ordinary
voting power represented by the issued and outstanding Equity Interests in the Lead Borrower and the percentage of the aggregate ordinary
voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the
Lead Borrower held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one or more holding
companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint
(and do so designate, nominate or appoint) a majority of the Board of Directors of the Lead Borrower or (y) any “change of control”
or similar event under the ABL Credit Agreement or,
the First Lien Credit Agreement, the Badcock First Lien Credit Agreement or
the Badcock Second Lien Credit Agreement.
For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase “Person or group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of the Lead Borrower directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
“Class” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Initial Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is an Initial Term Loan Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments and Other Term Loans that have different terms and conditions shall be construed to be in different Classes.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations. For the avoidance of doubt, Badcock Collateral does not constitute “Collateral”.
“Collateral Agent” means Alter
Domus, in its capacity as collateral agent hereunder and thereunderunder
the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Collateral Agreement” means the Second Lien Collateral Agreement among the Borrower, each other Loan Party (other than Badcock) and the Collateral Agent, substantially in the form of Exhibit D.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent and the Lenders shall have received from
(i)
each Borrower and Subsidiary (other than any Excluded Subsidiary or
Badcock) either (x) ain
the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Guarantee Agreement duly executed and
delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including
by ceasing to be an Excluded Subsidiary but excluding Badcock),
a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
and
(ii)
each Borrower and Subsidiary (other than any Excluded Subsidiary or
Badcock) either (x) ain
the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Collateral Agreement duly executed
and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including
by ceasing to be an Excluded Subsidiary but excluding Badcock),
a supplement to the Collateral Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
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in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent or the Required Lenders, opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b)
subject to Section 5.14, all outstanding Equity Interests of the Borrower and each Subsidiary (other than (i) any Equity
Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than
a Borrower or Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent
constituting “securities” within the meaning of the UCC)) owned by or on behalf of any Loan Party,
(other than Badcock), shall have been pledged pursuant to the Collateral
Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity
reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial
Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank; provided,
that, with respect to any Equity Interests of Badcock (which the Lead Borrower hereby agrees shall be evidenced by a certificate following
the First Amendment Effective Date), the requirements set forth in this clause (b) (including the issuance of such certificate) shall
not be required to be satisfied until the date that is sixty (60) days following the First Amendment Effective Date, or such longer time
period as agreed by the First Lien Agent in its reasonable discretion;
(c) subject to Section 5.14, (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties (other than Badcock) as payees and all such obligors as payors in the form of the Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Collateral owned by any Loan Party (other than Badcock), all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements required by this Agreement, the Security Documents, Requirements of Law and reasonably requested by the Collateral Agent or the Required Lenders to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Security Documents, the Intercreditor Agreements and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; and
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(e)
the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly executed
and delivered by the record owner of such Mortgaged Property; provided, that, to the extent any Mortgaged Property is located in
a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Collateral
Agent will cooperate with the Borrower or the applicable Loan Party in order to minimize the amount of tax payable in connection with
such Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the
amount secured by such Mortgage to the book value of such Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation
results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked
unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien
of each such Mortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as expressly
permitted by Section 6.02, together with such customary lender’s endorsements (other
than a creditor’s rights endorsement) as the Collateral Agent or the Required Lenders may reasonably request to
the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall
accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in
an amount equal to the fair marketbook
value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower
be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan”
Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged
Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard
area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance
as provided in Section 5.07(b), (iv) opinions, addressed to the Administrative Agent and the Secured Parties, from counsel qualified
to opine in each jurisdiction where a Mortgaged Property is located regarding the enforceability of the Mortgage and
such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent and the Required Lenders,
(v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 20162021
Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date
of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent and the Required Lenders, and (vi) evidence
of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection
with recording the Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of Badcock or (ii) particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if, solely for purposes of this clause (a)(ii), and for so long as the Required Lenders and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to the Borrower and its Affiliates (including the imposition of withholding or other material taxes)), outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents, in which case the applicable Loan Parties shall be required to use commercially reasonable efforts to cause the Collateral Agent to be a party to such control agreements or control or similar arrangements; (d) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall the Collateral Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall any Loan Party be required to complete any filings or other action with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required, except to the extent required under the Loan Documents with respect to distribution centers of the Loan Parties; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Required Lenders may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where they determine that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.
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“Commitment” means with respect to any Lender, the Term Commitment or Other Term Commitment of any Class or any combination thereof (as the context requires).
“Commitment Parties” means
KayneIrradiant
Solutions Fund, L.P., KAFRGIFRG
Investors II, L.P., HVS XXXIV LLC, D3V XI LLC, PIF Onshore XVII LP, RSF XVIII LLC and CO Finance LVS VII LLC.
“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.
“Compliance Certificate” has the meaning assigned to such term in Section 5.01(e).
“Consolidated Cash Interest Charges” means, for any period, the total interest expense of the Borrower and its Subsidiaries for such period determined on a consolidated basis net of any interest income, which shall be determined on a cash basis only and solely in respect of Indebtedness of the type described in the definition of Consolidated Total Indebtedness and excluding, for the avoidance of doubt, (i) any non-cash interest expense and any capitalized interest, whether paid or accrued, (ii) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (iii) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses (including agency costs, amendment, consent or other front end, one-off or similar non-recurring fees), (iv) any expenses resulting from discounting of indebtedness in connection with the application of recapitalization accounting or purchase accounting, (v) penalties or interest related to taxes and any other amounts of non-cash interest resulting from the effects of acquisition method accounting or pushdown accounting, (vi) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (vii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (viii) any one-time cash costs associated with breakage in respect of Swap Agreements for interest rates, (ix) any payments with respect to make whole premiums, commissions or other breakage costs of any Indebtedness, (x) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (xi) expensing of bridge, arrangement, structuring, commitment, fronting or other financing fees, (xii) fees and expenses (including any penalties and interest relating to Taxes but excluding any bona fide interest expense) associated with the consummation of the Transactions, (xiii) agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (xiv) fees (including any ticking fees) and expenses (including any penalties and interest relating to Taxes) associated with any Investment not prohibited by Section 6.04 or the issuance of Equity Interests or Indebtedness (in each case excluding any bona fide interest expense).
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“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, plus:
(a) without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financing activities, plus (F) amortization or write-off of deferred financing fees, debt issuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing fees and expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received in connection with the purchasing or procurement of goods or services under any purchasing card or similar program;
(ii) provision for taxes based on income, profits, revenue or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges;
(iv) [reserved];
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(v) net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness;
(vi) severance, relocation, integration and facilities’ opening costs and expenses and other business optimization costs and expenses and operating improvements (including related to new product introductions and any operating expenses, losses or charges related to the implementation of cost savings initiatives, operating expense reductions and other similar initiatives), recruiting fees, signing costs, reserve, retention, recruiting, relocation and signing bonuses and expenses, transition costs, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), contract terminations, professional and consulting fees incurred in connection with any of the foregoing and other one-time and nonoperational costs and expenses;
(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income, excluding cash distributions in respect thereof;
(ix) [reserved];
(x) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(xi) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xii) any gain relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clause (c)(iv) below;
(xiii) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xiv) charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered by indemnification provisions or by any insurance provider in connection with the Transactions, a Permitted Acquisition or any other acquisition or Investment, disposition or any Casualty Event, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (xiv) (and if not so reimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the next measurement period);
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(xv) cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (c) below for any previous period and not added back;
(xvi) Earn-Out payments, contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments incurred in connection with the Acquisition and/or any acquisition or other investment (including any acquisition or other investment consummated prior to the Effective Date) which are paid or accrued during the applicable period; and
(xvii) other adjustments (i) identified to the Commitment Parties prior to the Effective Date, (ii) set forth in (A) the Model or (B) the quality of earnings report prepared by independent registered public accountants of recognized national standing or any other accounting firm reasonably acceptable to the Commitment Parties and delivered to the Commitment Parties in connection with the Transactions or (iii) contemplated by the Acquisition Agreement; plus
(b) without duplication, (i) the amount of “run rate” cost savings, operating expense reductions and synergies related to any of the Transactions, any Specified Transaction, any restructuring, any business optimization activities, cost saving initiatives and operating improvements or other initiatives, actions or events (each of the foregoing, an “Event”) that are reasonably identifiable and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Event (or, if the underlying Event is any of the Transactions, within 18 months after the Effective Date) (including actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower) (which cost savings, operating expense reductions and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that no cost savings, operating expense reductions or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions, other operating improvements or synergies that are included above or in the definition of “Pro Forma Basis” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided, further that the aggregate amount of addbacks to Consolidated EBITDA pursuant this clause (b) for any period, excluding any addbacks for such period pursuant to this clause (b) where the underlying Event is any of the Transactions, shall not exceed 20.0% of Consolidated EBITDA for such period (calculated after giving effect to such addbacks); less
(c) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business);
(ii) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
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(iii) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period;
(iv) any loss relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xi) and (a)(xii) above;
(v) the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary added (and not deducted in such period) to Consolidated Net Income;
(vi) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or cash reserve for a potential cash item that reduced Consolidated EBITDA in any prior period, any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase Consolidated EBITDA in such prior period, and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business; and
(vii) any amount included in Consolidated Net Income of such Person for such period attributable to non-controlling interests pursuant to the application of FASB Accounting Standards Codification Topic 810-10-45;
in each case, as determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP; provided that:
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
(II) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
(III) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to the Transactions, an “Acquired Entity or Business”), based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) in the case of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting, the Consolidated EBITDA of such Person multiplied by the ownership percentage of the Borrower or applicable Subsidiary therein;
(IV) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by the Borrower or any Subsidiary during such period (each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “Sold Entity or Business”), based on the Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Administrative Agent (for further delivery to the Lenders); and
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(V) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any non-cash expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder).
Notwithstanding the foregoing, Consolidated EBITDA
shall be deemed to equal (a) $127,130,374 for the fiscal quarter of the Lead Borrower ended on or about
March 31, 2020, (b) $80,121,961 for the fiscal quarter of the Lead Borrower ended on
or about June 30, 2020, (c) $73,342,974 for the fiscal quarter of the
Lead Borrower ended on or about September 30, 2020, (d) $59,648,397102,145,028
for the fiscal quarter of the Lead Borrower ended on or about December 31, 2020 and,
(eb) $25,460,393135,453,700
for the fiscal monthquarter
of the Lead Borrower ended on or about JanuaryMarch
31, 2021, (c) $129,457,547 for
the fiscal quarter of the Lead Borrower ended on or about June 30, 2021
and (d) $115,698,793 for the fiscal quarter of the Lead Borrower
ended on or about September 30, 2021 (it being understood that such amounts are subject to adjustments, as and to the extent
otherwise contemplated in this Agreement, in connection with any calculation on a Pro Forma Basis (including,
for the avoidance of doubt, in respect of any disposition of Badcock Collateral during the relevant periods)); provided
that such amounts of Consolidated EBITDA for any such fiscal quarter shall be adjusted to include, without duplication, any cost savings
that would otherwise be included pursuant to clause (b) of this definition.
“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) unusual, or non-recurring gains or losses for such period,
(b) the cumulative effect of a change in accounting principles during such period;
(c) any Transaction Costs incurred during such period,
(d) any fees, costs and expenses (including (x) any transaction or retention bonus or similar payment and (y) any indemnities) incurred during such period, or any amortization thereof for such period, in connection with or in relation to any acquisition (including any acquisition of a franchisee), non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, incurrence, issuance or repayment of debt or similar transaction, issuance of equity securities, option buyouts, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument or similar transaction (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
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(e) any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
(f) accruals and reserves that are established or adjusted as a result of the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on Earn-Outs) or changes as a result of the adoption or modification of accounting policies during such period,
(g) stock-based award compensation expenses (including any one-time compensation related to unvested options outstanding as of the Effective Date),
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) any income (loss) from Investments recorded using the equity method,
(j) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration,
(k) any unrealized gain or loss due solely to fluctuations in currency values and the related tax effects, determined in accordance with GAAP,
(l) [Reserved],
(m) (A) the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of the Lead Borrower or any of its direct or indirect parent companies in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case, to the extent permitted in the Loan Documents,
(n) any costs or expenses incurred by the Borrower or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrower or Net Proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),
(o) the Consolidated Net Income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, and
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(p) any non-cash goodwill impairment charges or other intangible asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of ASC 350 or other non-cash asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of SFAS 144.
There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefits related to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for any period the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its Subsidiaries), as a result of the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
In addition, to the extent included in the Consolidated Net Income of such Person and its Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall (i) exclude any expenses and charges that are reimbursed by indemnification or other reimbursement provisions in connection with any acquisition or other investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder and (ii) include the amount of business interruption insurance proceeds received and, to the extent covered by insurance and actually reimbursed, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption.
“Consolidated Secured Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral.
“Consolidated Total Indebtedness”
means, as of any date of determination, (i) the aggregate amount of Indebtedness of the Lead Borrower and its Subsidiaries outstanding
on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness
resulting from the application of the acquisition method accounting in connection with the Transactions or any Permitted Acquisition (or
other Investment not prohibited hereunder)) consisting only of third-party Indebtedness for borrowed money, drawn but unreimbursed obligations
under letters of credit, letters of guaranty and bankers’ acceptances and third-party debt obligations evidenced by bonds, debentures,
loan agreements, promissory notes or similar instruments, and, in each case, without duplication, Guarantees by the Lead Borrower and
its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, in respect of any of the foregoing
Indebtedness of any other Person minus (ii) the sum of (x) unrestricted cash and cash equivalents of the Lead Borrower and its
Subsidiaries in an aggregate amount not to exceed $150,000,000 and (y) cash and cash equivalents restricted in favor of the Administrative
Agent, the Collateral Agent or any Lender (which may also include cash and cash equivalents securing other indebtedness (including Indebtedness
under the ABL Loan Documents or,
the First Lien Loan Documents, the Badcock First Lien Loan Documents or the
Badcock Second Lien Loan Documents) secured by a Lien on the Collateral
and the Badcock Collateral).
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“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, excluding the current portion of current and deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of Loans to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by the Lead Borrower and its Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (z) the effects of acquisition method accounting.
“Contract Consideration” has the meaning assigned to such term in the definition of “Excess Cash Flow”.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b) or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning specified in Section 9.20.
“COVID-19 Pandemic” means the global spread of the coronavirus illness, which was declared to be a pandemic by the World Health Organization on March 11, 2020.
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“Credit Agreement Refinancing Indebtedness” means Indebtedness issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) by the Borrower or any other Loan Party in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans (“Refinanced Debt”); provided that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (plus any premium, accrued interest, original issue discount and fees and expenses incurred in connection with such exchange, extension, renewal, replacement or refinancing), (b) does not mature earlier than or have a Weighted Average Life to Maturity shorter than the Refinanced Debt (other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (c) if such Indebtedness is unsecured or secured by the Collateral and the Badcock Collateral on a junior lien basis to the Secured Obligations, does not (1) mature prior to the date that is 91 days after the maturity date of the Refinanced Debt (or if later, 91 days after the Latest Maturity Date), (2) have a Weighted Average Life to Maturity shorter than the Refinanced Debt (or any later maturing Term Facility then in effect) plus 91 days, or (3) have mandatory prepayment, redemption or offer to purchase events more onerous than those with respect to Refinanced Debt (and shall otherwise be subject to the same terms as the Refinanced Debt) (in each case other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (c) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (d) [reserved], (e) shall not be guaranteed by any entity that is not a Loan Party, (f) in the case of any secured Indebtedness (i) is not secured by any assets not securing the Secured Obligations, (ii) if not comprising Indebtedness hereunder, is subject to the relevant Intercreditor Agreement(s) and (iii) in the case of Refinanced Debt that was secured on a junior basis to the Secured Obligations, shall be secured on a junior basis to the Secured Obligations; provided that any unsecured Refinanced Debt shall not be refinanced with secured Credit Agreement Refinancing Indebtedness, (g) in the case of Refinanced Debt that is subordinated in right of payment to the Secured Obligations, shall be subordinated on the same basis, (h) has covenants, events of default and guarantees (excluding, for avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions) of any such Indebtedness, that are not materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the Refinanced Debt (or, with respect to any Permitted First Priority Refinancing Debt, than the Indebtedness under the First Lien Credit Agreement) (as determined by the Lead Borrower in good faith) unless (1) the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (2) any such provisions apply after the Latest Maturity Date at the time of such refinancing, (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower or (4) such terms reflect market terms and conditions (taken as a whole) at the time of such refinancing (as determined by the Lead Borrower in good faith) and are also added for the benefit of the Lenders of the Initial Term Loans (to the extent remaining outstanding after the incurrence or issuance of such refinancing Indebtedness) (it being understood to the extent that any such terms are added for the benefit of the Lenders of the Initial Term Loans, no consent shall be required from the Administrative Agent or any such Lenders of the Initial Term Loans), and (i) (1) if such Indebtedness is secured on a pari passu basis with the Liens securing the Secured Obligations, such Indebtedness may participate on a pro rata basis or a less than a pro rata basis (but not greater than a pro rata basis) in any mandatory repayments or prepayments in respect of the Term Loans and (2) if such Indebtedness is secured on a senior priority basis relative to the Liens securing the Secured Obligations, such Indebtedness may participate on a greater than pro rata, pro rata or less than pro rata basis in any mandatory repayments or prepayments in respect of the Term Loans; provided that a certificate of a Responsible Officer delivered to the Administrative Agent (to be promptly distributed by the Administrative Agent to the Lenders) at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Required Lenders notify the Lead Borrower within such five (5) Business Day period that they disagree with such determination (including a reasonably detailed description of the basis upon which they disagree). For the avoidance of doubt, such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
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“Cure Amount” has the meaning assigned to such term in Section 7.02(a).
“Cure Expiration Date” has the meaning assigned to such term in Section 7.02(a).
“Cure Right” has the meaning assigned to such term in Section 7.02(a).
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Required Lenders in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
“Debtor Relief Laws” means the Bankruptcy Code, 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 upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Lead Borrower or the Administrative Agent, or any other Lender, as applicable, in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any other Lender, as applicable, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or any other Lender’s, as applicable, receipt of such certification in form and substance satisfactory to it and the Administrative Agent or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Lead Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition or, if converted to cash after 180 days, the lesser of (a) the consideration in cash or cash equivalents received from such conversion and (b) the fair market value of such non-cash consideration at the time of such conversion).
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“Discount Prepayment Accepting Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“Discount Range” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Notice” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C)(1) substantially in the form of Exhibit L.
“Discount Range Prepayment Offer” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit M, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“Discount Range Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Discounted Prepayment Determination Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Discounted Prepayment Effective Date” means in the case of a Borrower Offer of Specified Discount Prepayment or Borrower Solicitation of Discount Range Prepayment Offer, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable, unless a shorter period is agreed to between the Borrower and the Auction Agent.
“Discounted Term Loan Prepayment” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Dispose” and “Disposition” each has the meaning assigned to such term in Section 6.05.
“Disposed EBITDA” means, with respect to any Sold Entity or Business for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Borrower and its Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.
“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
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(a) matures or is mandatorily redeemable or contains any mandatory put, redemption or repayment provision (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests);
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof; or
(d) in the case of any preferred Equity Interest, provides for scheduled payments of dividends and/or distributions in cash;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided, however, that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after, or payment thereunder is subject to the prior, repayment in full of all the Loans and all other Loan Document Obligations that are accrued and payable and the termination of the Commitments, (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of the Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Borrower or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person and (iii) any Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for a requirement of payment of dividends or distributions in violation of clauses (a) or (b) above shall not constitute a Disqualified Equity Interest if the terms of such Equity Interest (x) give the applicable issuer the option to elect to pay such dividends or distributions on a non-cash basis and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under Section 6.07 of this Agreement or would result in an Event of Default hereunder.
“Disqualified Lenders” means (i) those Persons identified by the Lead Borrower to the Commitment Parties in writing prior to the Effective Date as being “Disqualified Lenders”, (ii) those Persons who are competitors of the Lead Borrower, the Acquired Company and/or any of their Subsidiaries or Persons Controlling or Controlled by any of the foregoing, in each case, identified by the Lead Borrower to the Commitment Parties (or on and following the Effective Date, the Administrative Agent) from time to time in writing (including by email) which designation shall become effective three (3) Business Days after the delivery of each such written designation to the Administrative Agent, but which shall not apply retroactively to disqualify any persons that have previously acquired, or entered into a trade to acquire, an assignment or participation interest in the Loan and (iii) in the case of each Person identified pursuant to clauses (i) and (ii) above, any of their Affiliates (other than any such Affiliate that is primarily engaged in, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the primary Disqualified Lender does not possess the power to direct or cause the direction of the investment policies of such entity referenced in clause (ii) above, unless separately identified by the Lead Borrower pursuant to clause (i) above) that are either (x) identified in writing by the Lead Borrower to the Commitment Parties (or, on and following the Effective Date, the Administrative Agent) from time to time or (y) clearly identifiable as Affiliates on the basis of such Affiliate’s name. Such list of Disqualified Lenders shall be available for inspection upon request by any Lender. Notwithstanding anything to the contrary contained in this Agreement, (a) each Borrower and the Lenders acknowledge and agree that the Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to assignments or participations to a Disqualified Lender and (b) each Borrower and the Lenders agree that the Administrative Agent shall have no responsibility or obligation to determine whether any Lender or potential Lender is a Disqualified Lender and the Administrative Agent shall have no liability with respect to any assignment or participation made to a Disqualified Lender.
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“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.
“Early Opt-in Election” means, if the then-current Benchmark is USD LIBOR, the delivery of a notification by the Required Lenders to the Administrative Agent (with a copy to the Lead Borrower) that (i) at least five currently outstanding dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review) and (ii) the Lead Borrower and the Required Lenders (by affirmative vote) have made a joint election to trigger a fallback from the LIBO Rate.
“Earn-Outs” means, with respect to any Person, obligations of such Person arising from Permitted Acquisitions or other Investments permitted hereunder which are payable to the sellers thereunder in their capacity as such based on the achievement of specified financial results or other criteria or milestones over time.
“ECF Percentage” means, with respect to the prepayment required by Section 2.11(d) with respect to any fiscal year of the Lead Borrower, 50%; provided, that, if the Secured Net Leverage Ratio (prior to giving effect to the applicable prepayment pursuant to Section 2.11(d), but after giving effect to any voluntary prepayments made pursuant to Section 2.11(a) prior to the date of such prepayment) as of the end of the applicable fiscal year is (a) less than or equal to 3.06 to 1.00 but greater than 2.81 to 1.00, the ECF Percentage shall be reduced to 25.0% for such fiscal year and (b) less than or equal to 2.81 to 1.00, the ECF Percentage shall be reduced to 0.00% for such fiscal year.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
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“Effective Date” means March 10, 2021.
“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than the Borrower or any of its Affiliates), other than, in each case, (i) a natural person (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person), (ii) a Defaulting Lender or (iii) a Disqualified Lender; provided that a Disqualified Lender will constitute an Eligible Assignee solely to the extent that such assignment is consented to in writing by the Lead Borrower.
“Environmental Laws” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“Environmental Liability” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity
Grant” means Equity Interests issued within 365 days after May 1, 2020 by Liberty/Revolution Top Parent to
Brent Turner; provided that no more than 5% of the Equity Interests issued by Liberty/Revolution
Top Parent as of May 1, 2020 may be so issued.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Title IV and Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 4001(b) of ERISA or Section 414 of the Code.
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“ERISA Event” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability, or the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity 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.
“Erroneous Payment” has the meaning assigned to such term in Section 8.13(a).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital and long-term account receivables for such period,
(iv) an amount equal to the aggregate net non-cash loss on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income, and
(v) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) gains, less:
(b) the sum, without duplication, of:
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(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income pursuant to the last sentence of the definition of “Consolidated Net Income” to the extent such amounts are due but not received during such period) and cash charges included in clauses (a) through (j) of the definition of “Consolidated Net Income” (other than cash charges to the extent financed with the proceeds of long-term Indebtedness (other than revolving Indebtedness)),
(ii) the amount of capital expenditures made in cash or accrued during such period, except to the extent that such capital expenditures were financed with the proceeds of (x) long term Indebtedness of the Borrower or its Subsidiaries (other than revolving Indebtedness) or (y) the issuance of Equity Interests,
(iii) (x) the aggregate amount of all principal payments of Indebtedness (including the principal component of payments in respect of Capitalized Leases, but excluding (A) all principal payments of Indebtedness to the extent reducing the required prepayment of Term Loans pursuant to Section 2.11(d) as a result of the application of clauses (i) through (v) of the first proviso thereof, (B) all prepayments of revolving loans except to the extent there is an equivalent permanent reduction in commitments thereunder and (C) all principal payments of Indebtedness to the extent financed with long-term Indebtedness (other than revolving Indebtedness)) and (y) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, to the extent not financed with long-term Indebtedness (other than revolving Indebtedness),
(iv) an amount equal to the aggregate net non-cash gain on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
(v) increases in Consolidated Working Capital and long-term account receivables for such period,
(vi) cash payments by the Borrower and its Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness,
(vii) the aggregate amount of payments and expenditures actually made by the Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such payments and expenditures are not expensed during such period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries other than revolving Indebtedness or (y) the issuance of Equity Interests,
(viii) cash payments by the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries or (y) the issuance of Equity Interests,
(ix) without duplication of amounts deducted from Excess Cash Flow in respect of a prior period, at the option of the Lead Borrower, the aggregate consideration (including Earn-Outs) required to be paid in cash by the Borrower and its Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “Contract Consideration”) entered into prior to or during such period relating to capital expenditures, Permitted Acquisitions or other Investments permitted hereunder (other than intercompany Investments or Investments in cash equivalents) to be consummated or made during the period of four consecutive fiscal quarters of Lead Borrower following the end of such period (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)); provided that to the extent the aggregate amount actually utilized to finance such capital expenditures, Permitted Acquisitions or other applicable Investments during such subsequent period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such subsequent period of four consecutive fiscal quarters,
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(x) the amount of cash rent payments made in such period to the extent they exceed the amount of rent payments deducted in determining Consolidated Net Income for such period,
(xi) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, and
(xii) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) losses or charges.
“Excess Cash Flow Period” has the meaning set forth in Section 2.11(d).
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.
“Excluded Accounts” means (a) Zero Balance Accounts (provided that, upon any such account ceasing to be a Zero Balance Account, such account shall cease to be an Excluded Account), (b) Store Accounts, (c) accounts into which government receivables and government reimbursement payments are deposited, (d) payroll accounts (including accounts used for the disbursement of payroll, payroll taxes and other employee wage and benefit payments, including 401(k) and other retirement plans, rabbi trusts for deferred compensation and health care benefits), (e) withholding and trust accounts, escrow and other fiduciary accounts, (f) Manual Sweeping Accounts, (g) Deposit Accounts, Securities Accounts and commodity accounts that (x) individually have a daily balance of not more than $100,000 and (y) together with all other Deposit Accounts, Securities Accounts and commodity accounts constituting Excluded Accounts under this clause (g), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or commodity accounts and (h) consisting solely of cash or Cash Equivalents securing Indebtedness permitted by Section 6.01(a)(xxvi) to the extent such security constitutes Liens permitted by Section 6.02(xxiii).
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“Excluded Assets” means, (a) any fee-owned real property that is not Material Real Property, all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters) and any real property that contains improvements and is located in an area determined (as of the First Amendment Effective Date with respect to real property owned on the First Amendment Effective Date and as of the date of acquisition of any real property acquired after the First Amendment Effective Date) by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (b) motor vehicles, railcars, trailers, aircraft, aircraft engines, construction and earth moving equipment and other assets subject to certificates of title or ownership (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (d) commercial tort claims with an individual value, as determined by the Lead Borrower in good faith, of less than $5,000,000 and commercial tort claims for which no complaint or counterclaim has been filed in a court of competent jurisdiction, (e) Equity Interests in any Person (other than any Wholly Owned Subsidiaries) to the extent the pledge thereof to the Collateral Agent is not permitted by the terms of such Person’s organizational, incorporation or joint venture documents, (f) [Reserved], (g) Equity Interests of any Immaterial Subsidiary (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries (including real estate special purpose entities), (h) [reserved], (i) any lease, license or other agreement, government approval or franchise with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, such lease, license or other agreement, government approval or franchise (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code, (j) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in each case if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), (k) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act, (l) any asset if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any applicable Requirements of Law, rule or regulation, or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the Uniform Commercial Code or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority, unless such consent, approval, license or authorization has been received in consultation with the Collateral Agent, (m) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Borrower or any Material Subsidiary of the Borrower), under the terms of any applicable organizational or incorporation documents, joint venture agreement or shareholders’ agreement, equity interests in any person other than Material Subsidiaries that are Wholly Owned Subsidiaries after giving effect to the anti-assignment provisions of the UCC or any other applicable Requirements of Law, (n) Excluded Accounts, (o) assets to the extent a security interest in such assets would result in material adverse tax consequences to the Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (p) assets sold to any Person who is not a Loan Party in compliance with the Loan Documents, (q) assets owned by a Subsidiary Loan Party after the release of the Guarantee of such Subsidiary Loan Party pursuant to the Loan Documents, and (r) any assets with respect to which, in the reasonable judgment of the Required Lenders and the Lead Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences as determined by the Lead Borrower and the Required Lenders in good faith) of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.
“Excluded Information” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
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“Excluded Party” has the meaning assigned to such term in Section 9.03(b).
“Excluded Subsidiary” means
(a) any Subsidiary that is not a Wholly Owned Subsidiary of the Lead Borrower, (b) any Subsidiary that is prohibited by applicable
law, rule or regulation or contractual obligation (so long as any such contractual prohibition is not incurred in contemplation of the
acquisition of such Subsidiary, and only for so long as such contractual prohibition shall be continuing) existing on the Effective Date
or, if later, the date such Subsidiary first becomes a Subsidiary, from guaranteeing the Secured Obligations or which would require any
governmental or regulatory consent, approval, license or authorization to do so, unless such consent, approval, license or authorization
has been obtained (c) any Subsidiary acquired pursuant to a Permitted Acquisition or similar Investment financed with secured Indebtedness
permitted to be incurred pursuant to Section 6.01(xx) (and not incurred in contemplation of such Permitted Acquisition or similar
Investment) and any subsidiary thereof that guarantees such Indebtedness, in each case to the extent, and so long as, such secured Indebtedness
prohibits such Subsidiary from becoming a Loan Party, providing a Guarantee of the Secured Obligations or granting Liens on its assets
as security for the Secured Obligations, (d) any direct or indirect U.S. subsidiary of a Subsidiary that is a “controlled foreign
corporation” within the meaning of Section 957 of the Code, and any direct or indirect U.S. Subsidiary that has no material assets
other than the equity of (or equity of and obligations owed to or treated as owed by) one or more direct or indirect non-U.S. subsidiaries
that are “controlled foreign corporations” within the meaning of Section 957 of the Code, (e) any Immaterial Subsidiary, (f)
any other Subsidiary with respect to which, in the reasonable judgment of the Required Lenders and the Lead Borrower (as agreed in writing),
the cost or other consequences (including any adverse tax consequences as determined in good faith by the Borrower and the Required Lenders)
of providing the guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary if the
provision of a guaranty by such Subsidiary would result in material adverse tax consequences to the Lead Borrower (or any direct or indirect
parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (h) any other Subsidiary
excused from becoming a Loan Party pursuant to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”,
(i) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act
of 1940, as amended, (j) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries and (k) any
Foreign Subsidiary; provided that any Immaterial Subsidiary that is a signatory to the Collateral Agreement and the Guarantee Agreement
shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Lead Borrower
has otherwise notified the Administrative Agent; provided further that the Lead Borrower may at any time and in its sole discretion,
with the consent of the Required Lenders (such consent not to be unreasonably withheld, conditioned or delayed), cause any Subsidiary
to not be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents; provided, further, that notwithstanding
the foregoing, no Subsidiary that Guarantees the obligations under the ABL Credit Agreement or,
the First Lien Credit Agreement, the Badcock First Lien Credit Agreement or
the Badcock Second Lien Credit Agreement shall be an Excluded Subsidiary hereunder.
“Excluded Taxes” means, with respect to any Recipient, (a) Taxes imposed on (or measured by) net income (however denominated) and franchise Taxes by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office located in such jurisdiction (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Lead Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office.
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“Existing FRG ABL Credit Agreement” means that certain ABL Credit Agreement, dated as of September 23, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing Term Loan Credit Agreement” means that certain Credit Agreement, dated as of February 14, 2020, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto, GACP Finance Co., LLC, as administrative agent, and Kayne Solutions Fund, L.P., as collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing VSI ABL Credit Agreement” means that certain Second Amended and Restated Loan and Security Agreement, dated as of December 16, 2019, by and among the Loan Parties party thereto as borrowers or guarantors, the lenders from time to time party thereto and JPM, as agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“FG Newco PSPIntermediate
AF” has the meaning assigned to such term in the preliminary statements hereto.
“FG Newco Intermediate
AFPSP” has the meaning assigned to such
term in the preliminary statements hereto.
“Financial Maintenance Covenants” means the covenants set forth in Section 6.10.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or corporate controller of the Lead Borrower, another officer of the Lead Borrower with similar responsibilities, or the chief executive officer or chief operating officer of the Lead Borrower.
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“Financing Transactions” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party and (b) the borrowing of Loans hereunder and the use of the proceeds thereof.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Amendment” means that certain First Amendment to Second Lien Credit Agreement, dated as of the First Amendment Effective Date, among the Borrower, the other Loan Parties party thereto and the Agents.
“First Amendment Effective Date” means November 22, 2021.
“First Amendment Effective Date Badcock Material Real Property” has the meaning assigned to such term in the definition of the term “Badcock Material Real Property.”
“First Lien Agent” means JPM, as administrative agent and collateral agent under the First Lien Credit Agreement, or any successor thereto acting in such capacities.
“First Lien Credit Agreement”
means (i) that certain First Lien Credit Agreement, as in effect on the First
Amendment Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed
from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement and,
the First Lien/Second Lien Intercreditor Agreement and, prior to Payment in
Full of Badcock Obligations, the Badcock Intercreditor Agreement), among each Loan Party party
thereto, the lender(s) party thereto and the First Lien Agent and (ii) any other credit agreement, loan agreement, note agreement,
promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation
that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement
and, the First
Lien/Second Lien Intercreditor Agreement and, prior to Payment in Full of Badcock
Obligations, the Badcock Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under
(x) the credit agreement referred to in clause (i) or (y) any subsequent first lien term loan facility, unless the agreement or instrument
related thereto expressly provides that it is not intended to be and is not a First Lien Credit Agreement hereunder. Any reference to
the First Lien Credit Agreement hereunder shall be deemed a reference to any First Lien Credit Agreement then in existence. For
the avoidance of doubt, the Badcock First Lien Credit Agreement shall not constitute a “First Lien Credit Agreement” hereunder.
“First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the First Lien Credit Agreement.
“First Lien/Second Lien Intercreditor
Agreement” means (a) that certain Amended and Restated First
Lien/Second Lien Intercreditor Agreement, dated as of the First Amendment Effective
Date, by and among the Agent andAgents,
the First Lien Agent, the Badcock First Lien Agent and the Badcock Second Lien
Agent, and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed
from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement between the
First Lien Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the First Lien Credit
Agreement and the other First Lien Loan Documents) and the Agents (or any of them) (and any other Persons party thereto), that is reasonably
acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as may be amended, amended and restated, modified, supplemented,
extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
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“Fixed Amounts” has the meaning assigned to such term in Section 1.07(b).
“Fixed Charge Coverage Ratio” means, for any period of four fiscal quarters of the Lead Borrower, the ratio of (a) Consolidated EBITDA for such period minus (i) all Unfinanced Capital Expenditures for such period and (ii) cash taxes paid (including in the form of tax distributions) for such period (net of cash refunds received during such period) to (b) the sum of (i) Consolidated Cash Interest Charges paid or payable currently for such period plus (ii) scheduled amortization of Funded Debt (including Capitalized Leases) paid or payable currently in cash for such period.
“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means the applicable benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate (as specified as of the Effective Date in the definition of LIBO Screen Rate).
“Foreign Lender” has the meaning assigned to such term in Section 2.17(e)(ii).
“Foreign Prepayment Event” has the meaning assigned to such term in Section 2.11(g).
“Foreign Subsidiary” means each Subsidiary that is organized under or incorporated in the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.
“Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Lead Borrower and its Subsidiaries.
“Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any Loan Party or Subsidiary of a Loan Party to comply with any applicable law, rule, regulation or order of any Governmental Authority.
“Franchise Laws” means all applicable laws, rules, regulations, orders, binding guidance or other requirements of the United States Federal Trade Commission or any other Governmental Authority relating to the relationship between franchisor and franchisees or to the offer, sale, termination, non-renewal or transfer of a franchise.
“Franchise Rights” mean the rights of a franchisee of any Loan Party or Subsidiary within any specified geographic area.
“Funded Debt” means all Indebtedness
of the Borrower and its Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within
one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than
one year from such date, including Indebtedness in respect of the Loans and in respect of the Loans under and as defined in each of the
ABL Credit Agreement and,
the First Lien Credit Agreement, the Badcock First Lien Credit Agreement and
the Badcock Second Lien Credit Agreement.
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“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations or Capitalized Leases shall be determined in accordance with the definitions of such terms.
“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“Governmental Authority” means any (i) federal, state, local, municipal, or other government, (ii) governmental or quasi-Governmental Authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (iii) body exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). 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 in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
“Guarantee Agreement” means the Second Lien Guarantee Agreement among the Loan Parties (other than Badcock) and the Administrative Agent, substantially in the form of Exhibit B.
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“Hazardous Materials” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
“IBA” has the meaning specified in Section 1.09.
“Identified Participating Lenders” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Identified Qualifying Lenders” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“Immaterial Subsidiary” means any Subsidiary other than a Material Subsidiary.
“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.
“Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness or in the form of Qualified Equity Interests of the Borrower or any of its direct or indirect parent entities, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.
“Incurrence Based Amounts” has the meaning assigned to such term in Section 1.07(b).
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (w) trade accounts payable in the ordinary course of business, (x) any Earn-Out obligation, purchase price adjustment or similar obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid within thirty (30) days after being due and payable, (y) liabilities associated with customer prepayments and deposits and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business (iv) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (v) Indebtedness of any Person that is a direct or indirect parent of the Borrower appearing on the balance sheet of the Borrower, or solely by reason of push down accounting under GAAP, (vi) any non-compete or consulting obligations incurred in connection with a Permitted Acquisition, (vii) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (viii) for the avoidance of doubt, any Qualified Equity Interests issued by the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and its Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).
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“Indemnified Taxes” means Taxes imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document, other than Excluded Taxes and Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Information” has the meaning assigned to such term in Section 9.12(a).
“Initial Term Loan Commitment” means the commitment of a Lender to make Initial Term Loans, and “Initial Term Loan Commitments” means such commitments of all Lenders. The aggregate amount of the Initial Term Loan Commitments as of the Effective Date is $300,000,000.
“Initial Term Loan Lender” means a Lender with an Initial Term Loan Commitment or an outstanding Initial Term Loan.
“Initial Term Loans” means the Term Loans made on the Effective Date pursuant to Section 2.01.
“Intellectual Property” has the meaning assigned to such term in the Collateral Agreement.
“Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Collateral that can be perfected by the filing of such security agreements.
“Intercreditor Agreement” means the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement, the Badcock Intercreditor Agreement, the Parity Lien Intercreditor Agreement and/or the Junior Lien Intercreditor Agreement, as the context may require.
“Interest Election Request” means a written request by the Borrower to convert or continue a Term Loan Borrowing in accordance with Section 2.07.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and on the Term Maturity Date and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and on the Term Maturity Date.
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“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Eurodollar Borrowing and ending on the date that is one, two, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if agreed to by each Lender participating therein, twelve months or such other period less than one month thereafter as the Borrower may elect, unless such twelve month or other period is administratively infeasible for the Administrative Agent); provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period and (c) no Interest Period shall extend beyond the Term Maturity Date. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available for dollars) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available for dollars) that exceeds the Impacted Interest Period, in each case, at such time.
“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 or Indebtedness or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of the Borrower and the Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms)) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be 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 in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
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“Investment-Linked Refinancing Transaction” means the refinancing in full of the Term Facility undertaken in connection with (x) the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary, of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person or (y) any similar Investment. Any determination by the Required Lenders with respect to whether an Investment-Linked Refinancing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Initial Term Loans.
“Investors” means the one or more co-investors and other investors (which may include existing shareholders, board members, management or other rollover investors of the Acquired Company) who are holders of Equity Interests in the Borrower (or any direct or indirect parent thereof) on the Effective Date after giving effect to the Transactions, together with their Affiliates.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“JPM” means JPMorgan Chase Bank, N.A.
“Judgment Currency” has the meaning assigned to such term in Section 9.18.
“Junior Financing” means (a) any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any Subsidiary) for borrowed money in a principal amount in excess of $11,500,000 that is secured on a junior basis to the Secured Obligations, unsecured or contractually subordinated in right of payment or right of lien to the Loan Document Obligations and (b) any Permitted Refinancing in respect of the foregoing.
“Junior Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral and the Badcock Collateral on a junior basis (but without regard to the control of remedies) in customary form reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
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“Latest Maturity Date” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan or any Other Term Commitment, in each case as extended in accordance with this Agreement from time to time.
“LCA Election” has the meaning assigned to such term in Section 1.06.
“LCA Test Date” has the meaning assigned to such term in Section 1.06.
“Lead Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Legal Reservations” has the meaning assigned to such term in Section 3.02.
“Lender Fee Letter” means, individually and collectively, (a) that certain letter agreement, dated as of March 4, 2021, by and among the Lead Borrower, HVS XXXIV LLC, D3V XI LLC, PIF Onshore XVII LP, RSF XVIII LLC and CO Finance LVS VII LLC and (b) that certain letter agreement, dated as of February 24, 2021, by and among the Lead Borrower and Kayne Anderson Capital Advisors, L.P.
“Lender Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Liberty
Area Development Rights” means certain development rights allotted or sold, or able to be allotted or sold,
to an area developer to market and sell territories within a specified geographic area to eligible franchisees.
“Liberty
Franchise Rights” mean the rights of a franchisee of any Liberty Party within any specified geographic area.
“Liberty
Parties” means Franchise Group Intermediate L 1, LLC, a Delaware limited liability company, and each of its
Subsidiaries.
“Liberty/Revolution
Top Parent” means Franchise Group Intermediate L, LLC, a Delaware limited liability company.
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBO Rate shall be the Interpolated Rate.
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“LIBO Screen” has the meaning assigned to such term in the definition of “LIBO Screen Rate”.
“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for dollars for a period equal in length to such Interest Period as displayed on such day and time on the applicable Bloomberg LIBOR screen page (or, in the event such rate does not appear on the applicable Bloomberg LIBOR screen page, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion) (the “LIBO Screen”); provided that if the LIBO Screen Rate as so determined would be less than 1.00%, such rate shall be deemed to 1.00% for the purposes of this Agreement.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, ground lease, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Limited Condition Transaction” means any Permitted Acquisition or other investment, incurrence of Indebtedness, Restricted Payment or repayment, repurchase or redemption of Indebtedness permitted hereunder by the Borrower or one or more of its Subsidiaries.
“Loan Document Obligations” means (a) the due and punctual payment in cash by the Borrower of (i) the principal of the Loans and all accrued and unpaid interest thereon at the Applicable Rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents to which it is a party, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment in cash and performance of all other monetary obligations of the Borrower under or pursuant to each of the Loan Documents to which it is a party and (c) the due and punctual payment and performance of all the monetary obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents to which it is a party (including interest and monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Loan Documents” means this Agreement, any Refinancing Amendment, any Loan Modification Agreement, the Guarantee Agreement, the Badcock Guarantee Agreement, the Collateral Agreement, the Badcock Collateral Agreement, the other Security Documents, the other Badcock Security Documents, each Intercreditor Agreement then in effect, each Lender Fee Letter, the Administrative Agent Fee Letter and, except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e).
“Loan Modification Agreement” means a Loan Modification Agreement, in form reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Accepting Lenders, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
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“Loan Modification Offer” has the meaning specified in Section 2.24(a).
“Loan Parties” means the Borrower and any Subsidiary Loan Parties.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Majority in Interest”, when used in reference to Lenders of any Class, means, at any time, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
“Make-Whole Premium” means, with respect to any applicable prepayment of Loans, the excess of (a) the “present value” as of the date of such prepayment of (i) 102% of the principal amount of the Loans being prepaid plus (ii) all required interest payments due on the Loans being prepaid through, with respect to any Make-Whole Premium due in accordance with Section 2.11(b)(i)(x), the six-month anniversary of the Effective Date (excluding interest accrued prior to such prepayment date), and with respect to any Make-Whole Premium due in accordance with Section 2.11(b)(i)(y), the nine-month anniversary of the Effective Date (excluding interest accrued prior to such prepayment date), over (b) the principal amount of the Loans being prepaid; provided, that the Make-Whole Premium may in no event be less than zero. For purposes of this definition, “present value” with respect to each of clauses (a)(i) and (a)(ii) hereof shall be computed using a discount rate applied quarterly equal to the Treasury Rate as of such prepayment date plus 50 basis points.
“Manual Sweeping Accounts” shall have the meaning ascribed to the term “Manual Sweeping Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Master Agreement” has the meaning assigned to such term in the definition of “Swap Agreement”.
“Master Intercompany
Note” means the Amended and Restated Master Intercompany
Note substantially in the form of Exhibit I.,
dated the First Amendment Effective Date, pursuant to which the Lead Borrower and its Subsidiaries (other than Badcock) are the “payees”
and the Lead Borrower and its Subsidiaries are the “payors”.
“Material Adverse Effect” means (a) on the Effective Date or with respect to any representations and warranties made as of the Effective Date (any date prior thereto), a Company Material Adverse Effect (as defined in the Acquisition Agreement as in effect on the Effective Date) and (b) otherwise, a circumstance or condition that would materially and adversely affect (i) the business, results of operations or financial condition of the Lead Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Loan Parties, taken as a whole, to perform their payment obligations under the applicable Loan Documents or (iii) the rights and remedies, taken as a whole, of the Agents and the Lenders under the Loan Documents.
“Material Indebtedness” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $57,500,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
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“Material Intellectual Property” means any intellectual property owned by the Borrower or any of its Subsidiaries, the loss of which would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
“Material Non-Public Information” means material non-public information with respect to the Lead Borrower or its Affiliates, or the respective securities of any of the foregoing for purposes of United States Federal and state securities laws.
“Material Real Property” means real property (including fixtures) (i) located in the United States, (ii) first acquired by any Loan Party (other than Badcock) after the Effective Date and (iii) owned (but not leased or ground-leased) by any Loan Party (other than Badcock) with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Badcock Material Real Property does not constitute “Material Real Property”.
“Material Subsidiary” means each Wholly Owned Subsidiary that, as of the last day of the fiscal quarter of the Lead Borrower most recently ended, had net revenues or total assets for such quarter in excess of 2.5% of the consolidated net revenues or total assets, as applicable, of the Lead Borrower and its Subsidiaries for such fiscal quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Lead Borrower most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or total assets, as applicable, of the Borrower and its Subsidiaries for such fiscal quarter, the Lead Borrower shall designate at its sole discretion one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as Borrower is in compliance with the foregoing.
“Maximum Rate” has the meaning assigned to such term in Section 9.16.
“Model” means the model delivered by the Lead Borrower to the Commitment Parties on or prior to the Effective Date.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Mortgage” means a mortgage,
deed of trust, assignment of leases and rentsdeed
to secure debt or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for the
benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise
modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent, the Required
Lenders and the Borrower.
“Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted pursuant to the “Collateral and Guarantee Requirement”, Section 5.11, Section 5.12 or Section 5.14 (if any).
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“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Proceeds” means, with
respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any
cash or Permitted Investments received in respect of any Designated Non-Cash Consideration or other non-cash proceeds (including any cash
payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or
Earn-Out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds
that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that
are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by the Borrower and its Subsidiaries
in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary
expenses and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition
of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount
of all payments that are permitted hereunder and are made by the Borrower and its Subsidiaries as a result of such event to repay Indebtedness
(other than (xA)
the Loans or, (yB)
other pari passu or juniorin
respect of the Collateral, Indebtedness secured by a lien on thesuch
Collateral that is pari passu or junior to the lien on such Collateral
securing the Secured Obligations and (C) in respect of the Badcock Collateral, Indebtedness secured by a lien on such Badcock Collateral
that is pari passu or junior to the lien on such Badcock Collateral securing the Secured Obligations) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds
thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to
or for the account of the Borrower or its Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated
with such asset and retained by the Borrower or any Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to
be payable) and the amount of any reserves established by the Borrower and its Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of
any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower
at such time of Net Proceeds in the amount of such reduction.
“Non-Accepting Lender” has the meaning assigned to such term in Section 2.24(c).
“Non-Cash Charges” means (a) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization of intangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from the application of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisition method accounting, (e) depreciation and amortization (including amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (including non-cash charges related to deferred rent) (provided, in each case, that if any non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).
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“Non-Cash Compensation Expense” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(c).
“Non-Wholly Owned Subsidiary” means any Subsidiary other than a Wholly Owned Subsidiary.
“Not Otherwise Applied” means, with reference to the Available Amount or the Available Equity Amount, that such amount was not previously applied pursuant to 6.04(m), 6.07(a)(vii) and 6.07(b)(vii).
“Note” means a promissory note of the Borrower, in substantially the form of Exhibit R, payable to a Lender in a principal amount equal to the principal amount of the Term Loans of such Lender.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the average rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from three federal fund brokers of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Offered Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Offered Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Organizational Documents” means, with respect to any Person, the charter, articles of association or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of any present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient (x) having executed, delivered, become a party to, performed its obligations or received payments under, received or perfected a security interest under or enforced any Loan Documents or engaged in any other transaction pursuant to this Agreement or (y) having sold or assigned an interest in any Loan Documents).
“Other Taxes” means any and all present or future recording, stamp, documentary or similar Taxes arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“Other Term Commitments” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
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“Other Term Loans” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Parity Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral (and from and after Payment in Full of Badcock Obligations, the Badcock Collateral) on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations in customary form reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Participant” has the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” has the meaning assigned to such term in Section 9.04(c)(ii).
“Participating Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Payment in Full of Badcock Obligations” means, collectively, (i) the termination of all Commitments (under and as defined in the Badcock First Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock First Lien Credit Agreement) (other than contingent indemnification obligations) and (ii) the termination of all Commitments (under and as defined in the Badcock Second Lien Credit Agreement) and the payment in full of all Secured Obligations (as defined in the Badcock Second Lien Credit Agreement) (other than contingent indemnification obligations).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Perfection Certificate” means a certificate substantially in the form of Exhibit C.
“Perfection Requirements” means
the need for appropriate filings, registrations, endorsements, notarizations, stampings and/or notifications of the Security Documents
or, the Badcock Security Documents,
the Collateral or the Badcock Collateral and any other steps or
actions necessary in any jurisdiction or under any laws or regulations in order to (i)
create or perfect the Liens on the Collateral granted by the Loan Parties (other
than Badcock) in favor of the Secured Parties, (ii) create or perfect the Liens on the Badcock Collateral granted by Badcock in
favor of the Secured Parties and/or to(iii)
achieve the relevant priority expressed therein or in the Intercreditor Agreements (including the delivery of any stock certificate or
promissory note required to be delivered pursuant to the applicable Loan Documents).
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“Permitted Acquisition” means
the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary of any Equity Interests in,
or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line
or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests
in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a
merger or consolidation between any Subsidiary and such Person), or (ii) such Person is merged into or consolidated with a Subsidiary
and such Subsidiary is the surviving entity of such merger or consolidation, (b) the business of such Person, or such assets, as
the case may be, constitute a Similar Business (or assets with respect thereto), (c) with respect to each such purchase or other acquisition,
all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets
in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term
“Collateral and Guarantee Requirement” to the extent applicable shall have been taken to the extent required by Sections
5.11 or 5.12 (or shall be taken within the time periods set forth in this Agreement or such later date as agreed to by the
Required Lenders in their sole discretion) (other than with respect to any Subsidiary of such newly created or acquired Subsidiary that
is an Excluded Subsidiary), (d) subject to Section 1.06, after giving effect to any such purchase or other acquisition no
Event of Default shall have occurred and be continuing, (e) the total consideration paid in connection with all such purchases and acquisitions
of the Equity Interests in any Person which will not become a Loan Party (within the time periods set forth in this Agreement), or all
or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line
of business of) any Person if substantially all of such assets will not become owned by a Loan Party (or a Person that will become a Loan
Party within the time periods set forth in this Agreement), shall not exceed $23,000,000 in the aggregate, unless financed with the proceeds
of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts
and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement),
(f) after giving effect to such purchase or acquisition, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.31 to
1.00 and (g) the total consideration paid in connection with (xi)
any individual purchase or acquisition shall not exceed $75,000,000 and (yii)
all such purchases and acquisitions shall not exceed $250,000,000 in the aggregate (in each case with respect to this clause (g) calculated
without giving effect to any non-cash consideration or consideration paid with the proceeds of substantially concurrent capital contributions
or issuances or sales of Equity Interests).
“Permitted Amendment” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders and/or (c) additional covenants or other provisions (i) with respect to which the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (ii) to the extent any such provisions apply after the Latest Maturity Date at the time of such Loan Modification Offer, or (iii) to the extent such terms shall be reasonably satisfactory to the Required Lenders and the Lead Borrower.
“Permitted ECF Recalculation Considerations” has the meaning assigned to such term in Section 2.11(d).
“Permitted Encumbrances” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(b) Liens with respect to outstanding motor vehicle fines and Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ Liens and other similar Liens arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, in each case so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
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(c) Liens incurred, pledges or deposits made in the ordinary course of business (i) in connection with payroll taxes, workers’ compensation, unemployment insurance and other social security legislation, public liability laws or similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary or otherwise supporting the payment of items of the type set forth in the foregoing clause (i);
(d) Liens incurred or deposits made to secure the performance of tenders, bids, trade contracts, customer claims, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) easements, licenses, servitudes, restrictive covenants, rights-of-way, restrictions, encroachments, protrusions, zoning restrictions and other similar encumbrances and title defects affecting real property that, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(f) leases or subleases of real or personal property granted to other Persons (as lessee thereof) that do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(g) rights of future tenants pursuant to written leases entered into in accordance with the terms hereof;
(h) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j) and any pledge and/or deposit securing any settlement of threatened litigation;
(i) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for the account of the Borrower or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01 and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(j) Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made in respect of operating leases entered into by the Borrower or any of its Subsidiaries;
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(k) rights of recapture of unused real property (other than any Mortgaged Property or any Badcock Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(l) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(m) liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any of the Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(n) Liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property or Badcock Intellectual Property, or covenants not to sue with respect to Intellectual Property or Badcock Intellectual Property, made in the ordinary course of business;
(o) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(p) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long as such Liens are not exercised or except where the exercise of such Liens would not reasonably be expected to have a Material Adverse Effect;
(q) Liens or security given to public utilities or to any municipality or Governmental Authority when required by the utility, municipality or Governmental Authority in connection with the supply of services or utilities to the Borrower or any of its Subsidiaries;
(r) servicing agreements, development agreements, site plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of the assets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of the business activities of the Borrower and its Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect; and
(s) Liens securing Priority Obligations;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money other than Liens referred to in clauses (d) and (k) above securing obligations under letters of credit or bank guarantees or similar instruments related thereto and in clause (g) above, in each case to the extent any such Lien would constitute a Lien securing Indebtedness for borrowed money.
“Permitted First Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations (as defined in the First Lien Credit Agreement), (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“Permitted Holders” means (a) Vintage Capital Management, LLC, (b) Brian Kahn, (c) Lauren Kahn, (d) Tributum, L.P., (e) Stefac LP, (f) Vintage Tributum, L.P., (g) Kahn Capital Management, LLC, (h) Vintage Vista GP, LLC, (i) Andrew Laurence, (j) B. Riley FBR, Inc., (k) Bryant R. Riley, (l) any direct or indirect current or former equity holders of Buddy’s Newco, LLC or Franchise Group New Holdco, LLC, (m) Samjor Family LP, (n) Vintage RTO, L.P. and (o) any Affiliates, general partners, limited partners, investment managers, investment advisors, investment funds or direct or indirect equity holders, successors or assigns of any of the foregoing.
“Permitted Investments” means any of the following, to the extent owned by the Borrower or any Subsidiary:
(a) dollars, euros, Swiss francs, Sterling, Canadian dollars, or such other currencies held by it from time to time in the ordinary course of business;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) any member nation of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged in support thereof;
(c) time deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S. banks and $100,000,000 (or the dollar equivalent as of the date of determination) in the case of foreign banks (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above;
(f) marketable short-term money market and similar highly liquid funds substantially all of the assets of which are comprised of securities of the types described in clauses (b) through (e) above;
(g) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, the United Kingdom, Canada, Switzerland, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
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(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s;
(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) demand deposit accounts holding cash;
(l) interest bearing instruments with a maximum maturity of 180 days in respect of which the obligor is a G7 government or other G7 governmental agency or a G7 financial institution with credit ratings from S&P of at least “A-2” or the equivalent thereof or from Moody’s of at least “P-2” or the equivalent thereof;
(m) other short-term investments of a type analogous to the foregoing utilized by Foreign Subsidiaries;
(n) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (m) above; and
(o) any guarantee or indemnity for the obligations of a Subsidiary in connection with a Subsidiary claiming exemption from audit, the preparation and filing of its accounts or other similar exemptions (including under section 394C, 448C or 479C of the Companies Act 2006 or other similar or equivalent provisions).
“Permitted Junior Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of secured notes or secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a junior basis to the Secured Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted Junior Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Parity Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, exchanged or extended except (i) by an amount equal to unpaid accrued interest and premium thereon plus underwriting discounts, other amounts paid, and fees and expenses (including upfront fees, original issue discount or initial yield payments) incurred, in connection with such modification, refinancing, refunding, renewal or extension, (ii) by an amount equal to any existing revolving commitments unutilized thereunder to the extent that the portion of any existing and unutilized revolving commitment being refinanced was permitted to be drawn under Section 6.01 immediately prior to such refinancing (other than by reference to a Permitted Refinancing) and such drawing shall be deemed to have been made and (iii) to the extent such excess amounts is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(xii) and (a)(xxvi), Indebtedness resulting from such modification, refinancing, refunding, renewal, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended; provided that the foregoing requirements of this clause (b) shall not apply to the extent such Indebtedness constitutes a customary bridge facility, so long as the long-term Indebtedness into which any such bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to conditions customary for similar conversions or exchanges (c) if the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms not materially less favorable, taken as a whole, to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended, (d) such Permitted Refinancing is not secured by a Lien on any assets other than the collateral securing, and, to the extent secured by the Collateral and the Badcock Collateral, with no higher priority than the Liens securing, the Indebtedness being refinanced, except for accessions and additions to such property and replacements and proceeds thereof (unless permitted to be secured by another provision of Section 6.02), (e) if unsecured, such Indebtedness shall remain unsecured (unless permitted to be secured by another provision of Section 6.02) and (f) no Loan Party that was not an obligor with respect to the Indebtedness being refinanced shall be an obligor under the Permitted Refinancing and if the Indebtedness being refinanced was (or was required to be) subject to an Intercreditor Agreement, the holders of such Permitted Refinancing (if such Indebtedness is secured) or their authorized representative on their behalf, shall become party to such Intercreditor Agreement, in each case providing for the same (or lesser) lien priority renewed, exchanged or extended. For the avoidance of doubt, it is understood that a Permitted Refinancing may constitute a portion of an issuance of Indebtedness in excess of the amount of such Permitted Refinancing; provided that such excess amount is otherwise permitted to be incurred under Section 6.01. For the avoidance of doubt, it is understood and agreed that a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness to the extent such successive Permitted Refinancings satisfy the foregoing requirements.
“Permitted Unsecured Refinancing Debt” means any unsecured Indebtedness incurred by the Loan Parties in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that such Indebtedness constitutes Credit Agreement Refinancing Indebtedness. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity, whether existing as of the Effective Date or subsequently created or coming to exist.
“Plan” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to such term in Section 5.01.
“Pledged Equity Interests” has the meaning set forth in the Collateral Agreement.
“Post-Transaction Period” means, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter of the Lead Borrower immediately following the date on which such Specified Transaction is consummated.
“Prepayment Event” means:
(a)
(I) the Disposition described on Schedule 6.05(k), (II) Dispositions
by Badcock pursuant to Section 6.05(f) and Section 6.05(u) and/or (IIIII)
any other non-ordinary course sale, transfer or other disposition of any property or asset of the Borrower or any of its Subsidiaries
pursuant to Section 6.05(k) or the occurrence of any other Casualty Event, in each case of this clause (IIIII)
resulting in aggregate Net Proceeds exceeding (A) with respect to any single transaction or series of related transactions, the greater
of $8,000,000 and 2.5% of Consolidated EBITDA individually or (B) with respect to all dispositions pursuant to Section 6.05(k)
or Casualty Events in each case not excluded pursuant to previous clause (A), the greater of $16,000,000 and 5.0% of Consolidated EBITDA
in the aggregate in any fiscal year of the Lead Borrower, other than dispositions constituting a sale and leaseback transaction to the
extent consummated substantially contemporaneously with the acquisition by the Borrower or such Subsidiary of the property subject to
such sale and leaseback transaction; provided that, for the avoidance of doubt, in each case of this clause (IIIII),
(x) only Net Proceeds in excess of such amount shall be subject to the mandatory prepayment provisions set forth in Section 2.11(c)
and (y) no Prepayment Event shall occur in any fiscal year of the Lead Borrower until the Net Proceeds received during such fiscal year
that are subject to clause (B) above exceed the amount set forth in clause (B) above; or
(b) the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 (other than Credit Agreement Refinancing Indebtedness) or permitted by the Required Lenders pursuant to Section 9.02.
“Prepayment Percentage”
means (xw) with
respect to a Prepayment Event described in clause (a)(I) of the definition of Prepayment Event, 100%, (yx)
with respect to a Prepayment Event described in clause (a)(II) of the definition of Prepayment Event,
100%, (y) with respect to a Prepayment Event described in clause (a)(III) of the definition of Prepayment Event, the Asset
Sale Prepayment Percentage and (z) with respect to a Prepayment Event described in clause (b) of the definition of Prepayment Event, 100%.
“Prime Rate” means the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases quoting a prime rate of the type described, either (a) the per annum rate quoted as the base rate on such corporate loans in a different national publication as reasonably selected by Administrative Agent or (b) the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent).
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“Priority Obligation” means any obligation that is secured by a Lien on any Collateral and/or any Badcock Collateral in favor of a Governmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by the applicable Security Documents and/or Badcock Security Documents, as the case may be, including any such Lien securing amounts owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pension fund obligations.
“Pro Forma Basis,” “Pro Forma Compliance” and “Pro Forma Effect” mean, as to any Person, for any events as described below that occur subsequent to the commencement of a period for which the effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four (4) consecutive fiscal quarter of the Lead Borrower period ended on or before the occurrence of such event (the “Reference Period”):
(a) in making any determination of Consolidated EBITDA or any component thereof or the determination of financial ratios and tests hereunder, effect shall be given to the Transactions, any Specified Transaction made during the applicable Test Period and any synergies, operating improvements, operating expense reductions or cost savings pertaining to the business of the Borrower or any of its Subsidiaries, in each case, that occurred during the Reference Period or with respect to any such event or transaction included in the definition of Specified Transactions and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Specified Transaction, synergies, operating improvements, operating expense reductions or cost savings (or, with respect to the Transactions, within 18 months of the Effective Date) (including, in each case, actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower), net of the amount of actual benefits realized, and without duplication of any such amount included in Consolidated EBITDA pursuant to the definition thereof;
(b) in making any determination on a Pro Forma Basis, of Pro Forma Compliance or of Pro Forma Effect, (i) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under the Loan Documents or otherwise) issued, incurred, assumed or repaid during the Reference Period (or with respect to Indebtedness repaid, during the Reference Period or subsequent to the end of the Reference Period and prior to, or simultaneously with, the event for which the calculation of any such ratio is made) shall be deemed to have been issued, incurred, assumed or repaid at the beginning of such period, (ii) such calculation shall be made without regard to the netting of any cash proceeds of Indebtedness incurred in connection with the relevant transactions, (iii) in the case of any Indebtedness in the nature of a revolving credit facility, the entire principal amount of such credit facility shall be deemed to have been fully drawn and (iv) interest expense of such Person attributable to interest on any Indebtedness for which pro forma effect is being given as provided in preceding clause (i) bearing floating interest rates shall be computed on a pro forma basis at the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination,
(c) [Reserved], and
(d) income statement items (whether positive or negative) attributable to all property acquired or disposed of in such relevant transaction shall be included as if such transaction had occurred as of the first day of the relevant Test Period. Whenever a financial ratio or test or covenant is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which financial statements of the Borrower were delivered pursuant to Section 5.01(a) or (b).
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“Pro Forma Disposal Adjustment” means, for any Test Period that includes all or a portion of a fiscal quarter of the Lead Borrower included in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Lead Borrower in good faith as a result of contractual arrangements between the Borrower or any Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Period and which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal.
“Pro Forma Entity” means any Acquired Entity or Business.
“Pro Forma Financial Statements” has the meaning assigned to such term in Section 3.04(c).
“Proposed Change” has the meaning assigned to such term in Section 9.02(c).
“PSP” means Pet Supplies “Plus”, LLC, a Delaware limited liability company.
“Public Company Costs” means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and charges relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursement, charges relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.
“Public Lender” has the meaning assigned to such term in Section 5.01.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning specified in Section 9.20.
“Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
“Qualifying Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the LIBO Rate, 11:00 a.m. (London time) on the day that is two Business Days prior to the date of such setting, and (2) if such Benchmark is not the LIBO Rate, the time determined by the Required Lenders in their reasonable discretion, and notified to the Administrative Agent.
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“Refinanced Debt” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower executed by each of (a) the Lead Borrower, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“Register” has the meaning assigned to such term in Section 9.04(b)(iv).
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the partners, directors, officers, employees, trustees, agents, controlling persons, advisors and other representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, emptying, escaping, pumping, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
“Relevant Governmental Body” means the Board of Governors or the NYFRB, or a committee officially endorsed or convened by the Board of Governors or the NYFRB, or any successor thereto.
“Removal Effective Date” has the meaning assigned to such term in Section 8.06.
“Representative” means, with respect to any series of Indebtedness permitted by this Agreement to be secured by the Collateral and/or the Badcock Collateral on a senior, pari passu or junior or “silent” subordinated basis, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Required Lenders” means, at any time, Lenders having Term Loans and unused Commitments representing more than 50% of the aggregate Term Loans and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and the unused Commitments of each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Requirements of Law” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resignation Effective Date” has the meaning assigned to such term in Section 8.06.
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“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies or partnerships that do not have officers, any manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary, assistant secretary, company secretary or director of a Loan Party, and as to the Lead Borrower, any Financial Officer. 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 Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.
“Retained Asset Sale Proceeds” means any proceeds of any Prepayment Event described in clause (a) of the definition of the term “Prepayment Event” that are not required to be used to prepay Term Loan Borrowings pursuant to Section 2.11(c) or Term Loan Borrowings (as defined in the First Lien Credit Agreement) pursuant to Section 2.11(c) of the First Lien Credit Agreement.
“Retained Declined Proceeds” has the meaning assigned to such term in Section 2.11(e).
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned 50% or more by any such Person in the foregoing clauses (a) and (b), or (d) any Person otherwise the subject of Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
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“Secured Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Secured Obligations” means the Loan Document Obligations.
“Secured Parties” means (a) each Lender, (b) the Administrative Agent, (c) the Collateral Agent, (d) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the permitted successors and assigns of each of the foregoing.
“Security Documents” means
the Collateral Agreement, the Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant
to the “Collateral and Guarantee Requirement”
and/or Section 5.11, Section 5.12 or(a)
(other than as it may relate to Badcock), Section 5.12(b) or Section 5.14 to secure any of the Secured Obligations.
“Securities Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Similar Business” means (1) any business conducted by the Borrower or any Subsidiary on the Effective Date or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to (including non-core incidental businesses acquired in connection with any permitted Investment), or a reasonable extension, development or expansion of, the businesses that the Borrower and its Subsidiaries conduct or propose to conduct on the Effective Date.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the NYFRB, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Sold Entity or Business” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“Solicited Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Solicited Discounted Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solicited Discounted Prepayment Notice” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit N.
“Solicited Discounted Prepayment Offer” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit O, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
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“Solicited Discounted Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solvent” means, with respect to the Lead Borrower and its Subsidiaries, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Lead Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities, (ii) the Lead Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital and (iii) the Lead Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For the purposes of this definition, capitalized terms used and not defined in this Agreement shall have the meanings provided for in Exhibit G.
“Specified Acquisition Agreement Representations” means such of the representations and warranties in the Acquisition Agreement made by, or with respect to, the Acquired Company and its subsidiaries and its businesses as are material to the interests of the Lenders, but only to the extent that the Borrower (or any of its Affiliates) has the right (taking into account any applicable cure provisions) to terminate its or such Affiliates’ obligations under the Acquisition Agreement or decline to consummate the Acquisition (in accordance with the terms thereof) as a result of a breach of such representations and warranties in the Acquisition Agreement.
“Specified Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Notice” means an irrevocable written notice of the Borrower Offer of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit J.
“Specified Discount Prepayment Response” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit K, to a Specified Discount Prepayment Notice.
“Specified Discount Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“Specified Representations” means the representations and warranties of the Borrower, and to the extent applicable, the other Loan Parties, set forth in Section 3.01(a), Section 3.01(b) (as it relates to the organizational power and authority to execute, deliver and perform obligations under each Loan Document to which each applicable Person is a party after giving effect to the Transactions), Section 3.02, Section 3.03(b)(i) (with respect to the incurrence of the loans and the provision of the Guarantees, in each case under the Loan Documents, and the granting of the security interests in the Collateral to secure the Secured Obligations), Section 3.08, Section 3.14, Section 3.15, Section 3.17(a) (with respect to the use of proceeds of the Term Facility on the Effective Date), 3.17(b) (with respect to the PATRIOT Act), and Section 3.18 (as it relates to the creation, validity and perfection of the security interests in the Collateral).
“Specified Transaction” means, with respect to any period, any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
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“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, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board of Governors. Eurodollar Loans shall be deemed to be subject to such reserve, liquid asset or similar requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D of the Board of Governors or any other applicable law, rule or regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Store Accounts” shall have the meaning ascribed to the term “Store Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Submitted Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Submitted Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held (unless parent does not Control such entity), or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent; in each case, whether existing as of the Effective Date or subsequently created or coming to exist.
“Subsidiary” means any subsidiary of the Lead Borrower (unless otherwise specified or the context otherwise requires).
“Subsidiary Loan Party” means (i) each Subsidiary of the Lead Borrower (other than FG Newco PSP, Valor and FG Newco Intermediate AF) that is party to the Guarantee Agreement and (ii) Badcock.
“Successor Borrower” has the meaning assigned to such term in Section 6.03(a)(iv).
“Supported QFC” has the meaning specified in Section 9.20.
“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
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“Tax Restructuring” means any
reorganizations and other activities related to tax planning and tax reorganization (as determined by Lead Borrower in good faith) entered
into after the Effective Date so long as such Tax Restructuring does not materially impair the Guarantee or,
the Badcock Guarantee, the security interests of the Agents and the Lenders under the Security Documents in the Collateral
or the security interests of the Agents and the Lenders under the Badcock Security
Documents in the Badcock Collateral, taken as a whole, and Borrower and its Subsidiaries otherwise comply with Sections
5.11 and 5.12.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Commitment” means, with respect to each Lender, the Initial Term Loan Commitment, if any, of such Lender to make Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a Refinancing Amendment or (iii) a Loan Modification Agreement. The amount of each Lender’s Term Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Term Commitment, Loan Modification Agreement or Refinancing Amendment, as the case may be. As of the Effective Date, the total Term Commitment is $300,000,000.
“Term Facility” means the Term Loans provided to or for the benefit of the Borrower pursuant to the terms of this Agreement.
“Term Lender” means a Lender with a Term Commitment or an outstanding Term Loan.
“Term Loans” means, individually or collectively as the context requires, Initial Term Loans and Other Term Loans.
“Term Maturity Date” means (a) in the case of the Initial Term Loans, September 10, 2026 and (b) in the case of any Other Term Loan, the date set forth in the applicable documentation in respect thereof.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
“Test Period” means, at any date of determination, the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time for which financial statements are delivered pursuant to Section 5.01(a) or (b); provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time.
“Total Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
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“Transaction Costs” means all fees, premiums, costs and expenses incurred or payable by the Borrower or any other Subsidiary in connection with the Transactions.
“Transactions” means (a) the Acquisition, (b) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents and the incurrence of the Term Facility and the funding of the Initial Term Loans on the Effective Date, (c) the consummation of the other transactions contemplated by this Agreement on the Effective Date, (d) the consummation of any other transactions in connection with the foregoing, (e) the repayment of the existing Indebtedness under the Existing Term Loan Credit Agreement and the termination of such Existing Term Loan Credit Agreement and the documents related thereto, (f) the repayment of the existing Indebtedness under the Existing FRG ABL Credit Agreement and the termination of the Existing FRG ABL Credit Agreement and the documents related thereto, (g) the execution and delivery of the ABL Credit Agreement and the other ABL Loan Documents (to the extent entered into on or after the Effective Date or otherwise originally entered into in connection with the ABL Credit Agreement rather than the Existing VSI ABL Credit Agreement), the creation or continuation on or after the Effective Date of the Liens pursuant to the Collateral Documents (as defined in the ABL Credit Agreement) and the incurrence or continuance of any borrowings thereunder to be incurred or continued on the Effective Date, (h) the execution and delivery of the First Lien Credit Agreement and the other First Lien Loan Documents, the creation on or after the Effective Date of the Liens pursuant to the Security Documents (as defined in the First Lien Credit Agreement) and the incurrence of any borrowings thereunder to be incurred on the Effective Date and (i) the payment of the Transaction Costs related thereto.
“Treasury Rate” means, as of any prepayment date, the yield to maturity as of such date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to such date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such date to the nine month anniversary of the Effective Date; provided, that the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.
“Type,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
“U.S. Special Resolution Regimes” has the meaning specified in Section 9.20.
“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, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral or the Badcock Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the terms “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
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“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unaudited Financial Statements” means (a) the unaudited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of the Lead Borrower ended on or about September 30, 2020 and (b) the unaudited consolidated balance sheet of PSP and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of PSP ended on or about September 30, 2020.
“Unfinanced Capital Expenditures”
means, for any period, capital expenditures paid in cash (other than cash constituting proceeds of long-term Indebtedness (other than
revolving Indebtedness)) during such period, other than (a) the purchase price paid in connection with a Permitted Acquisition or other
similar Investment not prohibited by this Agreement and expenditures made in connection with the Transactions, (b) the purchase price
of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase
price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (c) expenditures
made with the proceeds of Dispositions, Casualty Events or similar dispositions or events that are not required to be applied to repay
Indebtedness pursuant to the terms of this Agreement, the ABL Credit Agreement or,
the First Lien Credit Agreement, the Badcock First Lien Credit Agreement or
the Badcock Second Lien Credit Agreement, (d) expenditures made in leasehold improvements, to the extent reimbursed by the
landlord, (e) expenditures to the extent actually paid for by any Person other than any Borrower or Subsidiary and for which no Borrower
or Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation in respect of the
relevant expenditures to such Person, (f) property, plant and equipment taken in settlement of accounts and (g) that portion of interest
on Indebtedness incurred for capital expenditures which is capitalized in accordance with GAAP.
“United States Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(e)(ii)(C).
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“Valor” has the meaning assigned to such term in the preliminary statements hereto.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wholly Owned Subsidiary” means
any Subsidiary that is a wholly owned subsidiary. Notwithstanding the foregoing, Liberty/Revolution Top
Parent shall be deemed a Wholly Owned Subsidiary of each Borrower so long as Liberty/Revolution Top Parent would be a Wholly Owned Subsidiary
of each Borrower if not for the Equity Grant.
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“wholly owned subsidiary” means, with respect to any Person at any date, a subsidiary of such Person of which securities or other ownership interests representing 100% of the Equity Interests (other than (a) directors’ qualifying shares and (b) nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law) are, as of such date, owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Zero Balance Accounts” shall
meanmeans Deposit Accounts in which a balance of
zero is maintained by the depository institution at all times by automatically transferring funds from a master Deposit Account to such
Zero Balance Account in an amount only large enough to cover checks presented and other debits to such account, such that any such Zero
Balance Account maintains an overnight balance of zero dollars at all times.
SECTION 1.02 Classification of Loans and Borrowings.
For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Class (e.g., an “Initial Term Loan”) or by Type (e.g., a “Eurodollar Loan” or “ABR Loan”) or by Class and Type (e.g., a “Eurodollar Initial Term Loan”). Borrowings also may be classified and referred to by Class (e.g., an “Initial Term Loan Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Initial Term Loan Borrowing”).
SECTION 1.03 Terms Generally.
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, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document, including all schedules, exhibits and other attachments thereto and as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) 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.
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SECTION 1.04 Accounting Terms; GAAP.
(a) 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 in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Notwithstanding anything to the contrary herein, but subject to Section 1.09, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio, the Secured Net Leverage Ratio, the Fixed Charge Coverage Ratio and any other financial ratio or test that are calculated with respect to any Test Period during which a Specified Transaction occurs shall be calculated on a Pro Forma Basis. Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Specified Transaction has occurred or (y) any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Subsidiaries or any joint venture since the beginning of such Test Period has consummated any Specified Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Specified Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of (x) calculating compliance with Section 6.10, if applicable and (y) the determination of “ECF Percentage”, in each case, the date of the required calculation shall be the last day of the Test Period, and no Specified Transaction occurring thereafter shall be taken into account).
SECTION 1.05 Effectuation of Transactions.
All references herein to the Borrower and its Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Transactions that occurred on the Effective Date, unless the context otherwise requires.
SECTION 1.06 Limited Conditionality Acquisition.
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDA or total assets or whether a Default or Event of Default has occurred and is continuing or any representations and warranties have been complied with, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred and is continuing shall, at the option of the Lead Borrower (the Lead Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or the date of the declaration or making of such Restricted Payment constituting a Limited Condition Transaction or of the giving of irrevocable (which may be conditional) notice with respect to a repayment, repurchase or redemption of Indebtedness constituting a Limited Condition Transaction, or, as an alternative option with respect to Permitted Acquisitions or investments constituting Limited Condition Transactions, the date of a public announcement of an intention to make an offer in respect of the target of such Permitted Acquisition or investment (the “LCA Test Date”) after giving Pro Forma Effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such transactions occurred at the beginning of the applicable Test Period, and for the avoidance of doubt, if any of such ratios or other provisions are exceeded as a result of fluctuations in such ratio or amount (including due to fluctuations in Consolidated EBITDA of the Borrower or such person subject to such Limited Condition Transaction) or other provisions at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder. If the Lead Borrower has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall be calculated (and tested) on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) had been consummated on the LCA Test Date.
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SECTION 1.07 Certain Determinations.
(a) Notwithstanding anything to the contrary herein, for purposes of the covenants described in Article V and Article VI, if any transaction or action would be permitted pursuant to one or more provisions described therein, the Borrower may divide and classify such transaction or action within the relevant covenant (or other provisions) in any manner that complies with such covenant (or other provision) set forth therein, and may later divide and reclassify any such transaction or action so long as the transaction or action (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception (or other provisions) as of the date of such reclassification; provided that if any financial ratio or test governing any applicable Incurrence Based Amount would be satisfied in any subsequent period following the utilization of any Fixed Amount, such reclassification shall be deemed to have automatically occurred if not elected otherwise by the Lead Borrower; provided, further, that such reclassification shall not be permitted with respect to (i) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(i), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(i), (ii) the Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents, which shall only be permitted under Section 6.01(a)(xxxi), or Liens with respect to the Loans (as defined in the ABL Credit Agreement), which shall only be permitted under Section 6.02(xvii) and (iii) the Indebtedness consisting of the Initial Term Loans (as defined in the First Lien Credit Agreement), which shall only be permitted under Section 6.01(a)(xxxii), or Liens with respect to the Initial Term Loans (as defined in the First Lien Credit Agreement), which shall only be permitted under Section 6.02(xxi). For the avoidance of doubt, if the applicable date for meeting any requirement hereunder or under any other Loan Document falls on a day that is not a Business Day, compliance with such requirement shall not be required until noon on the first Business Day following such applicable date.
(b) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio or test (including any Total Net Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence.
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(c) Notwithstanding the foregoing, for purposes of any determination under Article V, Article VI or Article VII or any determination under any other provision of this Agreement subject to any Dollar limitation, threshold or basket, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars based on the relevant currency exchange rate in effect on the applicable date of determination (rounded to the nearest currency unit, with 0.5 or more of a currency unit being rounded upward); provided, however, that for purposes of determining compliance with Article VI with respect to any amount in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness, Lien or Investment is incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payment in respect of any Junior Financing is made or such transaction with an Affiliate is entered into; provided, further, that, for the avoidance of doubt, the foregoing provisions of this Section 1.07(c) shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness, Lien or Investment may be incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payments in respect of any Junior Financing may be made or such transaction with an Affiliate may be entered into at any time under such Sections. For purposes of any determination of Consolidated Total Indebtedness, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates used in preparing the most recently delivered financial statements pursuant to Section 5.01(a) or Section 5.01(b) adjusted to reflect the currency translation effects, determined in accordance with GAAP, of any Swap Agreements permitted hereunder for currency exchange risks with respect to the applicable currency in effect on the date of determination of the dollar equivalent thereof. Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.
SECTION 1.08 Divisions.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
SECTION 1.09 Interest Rates; LIBOR Notification.
The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. Upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, Section 2.14(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (i) any such alternative, successor or replacement rate implemented pursuant to Section 2.14(b), whether upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, and (ii) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.14(c)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability. Without limiting the Administrative Agent’s obligations under this Agreement to determine interest rates as and to the extent set forth in this Agreement, the Administrative Agent shall not be under any obligation to (i) to monitor, determine or verify the unavailability or cessation of the LIBO Rate (or other applicable benchmark index) or whether or when there has occurred any Benchmark Transition Event, Benchmark Replacement Date or Benchmark Unavailability Period, or (ii) to select, determine or designate any Benchmark Replacement, or other successor or replacement benchmark index, or (iii) to select, determine or designate any Benchmark Replacement Adjustment, or other modifier to any replacement or successor index (provided, that the Administrative Agent may be required to calculate Benchmark Replacement Adjustments or other modifiers as and to the extent set forth herein), or (iv) to determine whether or what Benchmark Replacement Conforming Changes are necessary or advisable, if any, in connection with any of the foregoing.
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ARTICLE
II
The Credits
SECTION 2.01 Commitments.
Subject to the terms and conditions set forth herein, each Initial Term Loan Lender severally agrees to make an Initial Term Loan to the Borrower denominated in dollars on the Effective Date in a principal amount equal to its Initial Term Loan Commitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
(b) Subject to Section 2.14, each Term Loan Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement;
(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Eurodollar Borrowing that results from a continuation of an outstanding Eurodollar Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of twelve (12) Eurodollar Borrowings outstanding.
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SECTION 2.03 Requests for Borrowings.
To request a Term Loan Borrowing, the Lead Borrower shall notify the Administrative Agent of such request in writing by electronic mail or overnight courier (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing, (b) in the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, one (1) Business Day before the date of the proposed Borrowing; provided that any notice given in connection with Borrowings on the Effective Date (including Eurodollar Borrowings) may be given not later than 2:00 p.m., New York City time, one (1) Business Day before the Effective Date; provided further that, in each case, the Administrative Agent may in its discretion accept any later request. Each such written Borrowing Request shall be signed by the Lead Borrower substantially in the form of Exhibit S and shall be irrevocable. Each such written Borrowing Request shall specify the following information:
(i) whether the requested Borrowing is to be a Borrowing of Initial Term Loans and/or a Borrowing of any other Class (specifying the Class thereof);
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and
(vii) except in the case of any Borrowing that is made on the Effective Date, that as of the date of such Borrowing, the conditions set forth in Sections 4.02(a) and 4.02(b) are satisfied.
If no election as to the Type of Borrowing is specified as to any Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
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SECTION 2.04 [Reserved].
SECTION 2.05 [Reserved].
SECTION 2.06 Funding of Borrowings.
(a)
Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available
funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. Upon satisfaction or waiver of the conditions precedent specified herein applicable to such Loan and
receipt of all requested funds from each Lender (provided, for avoidance of doubt, that this sentence shall not limit any obligations
of the Lenders to provide such funds), Administrative Agent will make such Loans available to the Borrower by promptly wiring the amounts
so received, in like funds, to an account of the Borrower designated by the Lead Borrower in the applicable Borrowing Request. Unless
Lead Borrower has notified the Administrative Agent in writing (which notification may be by email) by not later than 5:00 p.m. (New York
City time) on the Effective Date that it has not received the funds from KAFRGIFRG
Investors II, L.P. and KayneIrradiant
Solutions Fund, L.P., Administrative Agent shall deem those funds funded and make the appropriate recordations in the Register.
(b) [Intentionally Omitted].
(c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
SECTION 2.07 Interest Elections.
(a) Each Term Loan Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Lead Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Lead Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section 2.07, the Lead Borrower shall notify the Administrative Agent of such election in writing by electronic mail or overnight courier by the time that a Borrowing Request would be required under Section 2.03 if the Lead Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such written Interest Election Request shall be irrevocable and shall be signed by the Lead Borrower and shall be substantially in the form of Exhibit T.
(c) Each written Interest Election Request shall specify the following information in compliance with Section 2.03:
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(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Lead Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Lead Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.08 Termination and Reduction of Commitments.
(a) Unless previously terminated, on the Effective Date, the Term Commitments in effect on such date shall terminate upon the making of the relevant Term Loans.
(b) The Lead Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000 unless such amount represents all of the remaining Commitments of such Class.
(c) The Lead Borrower shall notify the Administrative Agent, in writing, of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 no later than 2:00 p.m., New York City time, at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
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SECTION 2.09 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement. In the event of any inconsistency between the entries made pursuant to paragraphs (b) and (c) of this Section 2.09, the accounts maintained by the Administrative Agent pursuant to paragraph (c) of this Section 2.09 shall control.
(e) Any Lender may request that the Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
SECTION 2.10 Repayment of Term Loans.
(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Term Loan Borrowings with respect to the Other Term Loans as specified in the applicable Refinancing Amendment or Loan Modification Agreement; provided, with respect to this clause (a), that any such payment due on a date that is not a Business Day shall instead be due on the next preceding Business Day.
(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) Notwithstanding anything contained herein to the contrary, any prepayment of a Term Loan Borrowing of any Class (i) pursuant to Section 2.11(a) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10 as directed by the Lead Borrower (and absent such direction in direct order of maturity), and (ii) pursuant to Section 2.11(c) or 2.11(d) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10, or, except as otherwise provided in any Refinancing Amendment or Loan Modification Agreement, pursuant to the corresponding section of such Refinancing Amendment or Loan Modification Agreement, as applicable, in direct order of maturity.
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(d) Prior to any repayment of any Term Loan Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Loan Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11 Prepayment of Loans.
(a) (i)(i) Subject to clause (b) below, the Lead Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty.
(ii) Notwithstanding anything in any Loan Document to the contrary but subject to clause (b) below, so long as no Default or Event of Default has occurred and is continuing, the Borrower or any of its Subsidiaries may offer to prepay all or a portion of the outstanding Term Loans on the following basis:
(A) the Borrower or any of its Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “Discounted Term Loan Prepayment”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that the Borrower or any of its Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by the Borrower or any of its Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date the Borrower or any of its Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the Borrower’s or any of its Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers; provided, further, that each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“Excluded Information”), (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
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(B) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “Specified Discount Prepayment Amount”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “Specified Discount”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Specified Discount Prepayment Response Date”).
(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “Discount Prepayment Accepting Lender”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
(3) If there is at least one Discount Prepayment Accepting Lender, the Borrower or any of its Subsidiaries will make prepayment of outstanding Term Loans pursuant to this subsection (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to paragraph (2) above; provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “Specified Discount Proration”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date, (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date and (IV) the Administrative Agent of the Discounted Prepayment Effective Date, and the aggregate principal amount, tranche and Types of Loans to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by the Borrower or any of its Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(C) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “Discount Range Prepayment Amount”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “Discount Range”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by the Borrower or any of its Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Discount Range Prepayment Response Date”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “Submitted Discount”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “Submitted Amount”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). The Borrower or any of its Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “Applicable Discount”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following paragraph (3)) at the Applicable Discount (each such Lender, a “Participating Lender”).
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(3) If there is at least one Participating Lender, the Borrower or any of its Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “Identified Participating Lenders”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Discount Range Proration”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, (IV) if applicable, each Identified Participating Lender of the Discount Range Proration and (V) the Administrative Agent of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid at the Applicable Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(D) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate dollar amount of the Term Loans (the “Solicited Discounted Prepayment Amount”) and the tranche or tranches of Term Loans that the Borrower or any of its Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Solicited Discounted Prepayment Response Date”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “Offered Discount”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “Offered Amount”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
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(2) The Auction Agent shall promptly provide the Borrower or any of its Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. The Borrower or any of its Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to the Borrower or any of its Subsidiaries (the “Acceptable Discount”), if any. If the Borrower or any of its Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by the Borrower or any of its Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this paragraph (2) (the “Acceptance Date”), the Borrower or any of its Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from the Borrower or any of its Subsidiaries by the Acceptance Date, the Borrower or any of its Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “Discounted Prepayment Determination Date”), the Auction Agent will determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “Acceptable Prepayment Amount”) to be prepaid by the Borrower or any of its Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If the Borrower or any of its Subsidiaries elects to accept any Acceptable Discount, then the Borrower or any of its Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “Qualifying Lender”). The Borrower or any of its Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “Identified Qualifying Lenders”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Solicited Discount Proration”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) the Borrower or any of its Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration and (V) the Administrative Agent of the Discounted Prepayment Effective Date, the Acceptable Discount, the Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be repaid at the Applicable Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to such Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to such Borrower shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(E) In connection with any Discounted Term Loan Prepayment, the Borrower or any of its Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from the Borrower or any of its Subsidiaries in connection therewith.
(F) If any Term Loan is prepaid in accordance with subsections (B) through (D) above, the Borrower or any of its Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. The Borrower or any of its Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, in immediately available funds not later than 11:00 a.m. (New York City time) on the Discounted Prepayment Effective Date and all such prepayments shall be applied to the remaining principal installments (if any) of the relevant tranche of Term Loans on a pro rata basis across such installments. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by the Borrower or any of its Subsidiaries.
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(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of the Borrower or any of its Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and its respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
(J) The Borrower or any of its Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by such Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
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(b) (i) In the event that the Borrower (x) on or prior to the date that is six (6) months after the Effective Date, (I) prepays, repays, refinances, repurchases, substitutes or replaces, in each case, voluntarily, all of the Initial Term Loans in connection with an Investment-Linked Refinancing Transaction, or (II) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in an Investment-Linked Refinancing Transaction (including in the case of any required assignment pursuant to Section 9.02(c)), the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender (including each Lender holding Initial Term Loans immediately prior to the consummation of such Investment-Linked Refinancing Transaction that withholds its consent to such Investment-Linked Refinancing Transaction and is replaced as a Non-Consenting Lender pursuant to Section 9.02(c)), (A) in the case of clause (I), a premium equal to the Make-Whole Premium on the aggregate principal amount of the Initial Term Loans so prepaid, repaid, refinanced, substituted or replaced and (B) in the case of clause (II), a fee equal to the Make-Whole Premium on the aggregate principal amount of the Initial Term Loans that are the subject of such Investment-Linked Refinancing Transaction outstanding immediately prior to such amendment, modification, waiver or consent, (y) on or prior to the date that is nine (9) months after the Effective Date, (I) other than in connection with or resulting in an Investment-Linked Refinancing Transaction, prepays, repays, refinances, repurchases, substitutes or replaces, in each case, voluntarily, all or any portion of the Initial Term Loans (including through the incurrence of Credit Agreement Refinancing Indebtedness or as a result of a Prepayment Event under clause (b) of the definition thereof), or all or any portion of the Initial Term Loans become due in advance of their stated maturity by acceleration pursuant to the terms hereof and are so repaid, or (II) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a transaction referred to in clause (I) of this clause (y) (including in the case of any required assignment pursuant to Section 9.02(c)), the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender (including each Lender holding Initial Term Loans immediately prior to the consummation of such amendment, modification, waiver or consent that withholds its consent to such amendment, modification, waiver or consent and is replaced as a Non-Consenting Lender pursuant to Section 9.02(c)), (A) in the case of clause (I), a premium equal to the Make-Whole Premium on the aggregate principal amount of the Initial Term Loans so prepaid, repaid, refinanced, substituted or replaced or (B) in the case of clause (II), a fee equal to the Make-Whole Premium on the aggregate principal amount of the Initial Term Loans outstanding immediately prior to such amendment, modification, waiver or consent with respect to which a transaction referred to in clause (I) of this clause (y) has been effected pursuant to such amendment, modification waiver or consent, or (z) (I) prepays, repays, refinances, repurchases, substitutes or replaces, in each case, voluntarily, all or any portion of the Initial Term Loans (including through the incurrence of Credit Agreement Refinancing Indebtedness or as a result of a Prepayment Event under clause (b) of the definition thereof), or all or any portion of the Initial Term Loans become due in advance of their stated maturity by acceleration pursuant to the terms hereof, or (II) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a transaction referred to in clause (I) of this clause (z) (including in the case of any required assignment pursuant to Section 9.02(c)), the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender (including each Lender holding Initial Term Loans immediately prior to the consummation of such amendment, modification, waiver or consent that withholds its consent to such amendment, modification, waiver or consent and is replaced as a Non-Consenting Lender pursuant to Section 9.02(c)), solely to the extent no premium, fee or other payment is due pursuant to clauses (x) or (y) of this Section 2.11(b)(i) with respect thereto, (A) in the case of clause (I), a premium equal to 2.00% of the aggregate principal amount of the Initial Term Loans so prepaid, repaid, refinanced, substituted or replaced, or (B) in the case of clause (II), a fee equal to 2.00% of the aggregate principal amount of the Initial Term Loans outstanding immediately prior to such amendment, modification, waiver or consent with respect to which a transaction referred to in clause (I) of this clause (z) has been effected pursuant to such amendment, modification waiver or consent. It is understood and agreed that the Make-Whole Premium or other premium, as the case may be, applicable at the time of a prepayment, repayment, refinancing, repurchase, substitution, replacement, amendment, modification waiver, consent or acceleration as described above in this paragraph (a “Premium Event”) shall constitute part of the Loan Document Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s lost profits as a result thereof. Any Make-Whole Premium or other premium payable under the terms of this Agreement shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination, and the Borrower agrees that it is reasonable under the circumstances currently existing. EACH LOAN PARTY EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING MAKE-WHOLE PREMIUM OR OTHER PREMIUM IN CONNECTION WITH SUCH PREMIUM EVENT. The Borrower expressly agrees (to the fullest extent that it may lawfully do so) that: (A) each applicable Make-Whole Premium or other premium described in this Section 2.11(b) above is reasonable for the circumstances with respect to which it is required and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) each of the Make-Whole Premium and the other premium described in this Section 2.11(b) above shall be payable if and when due notwithstanding the then-prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Lenders and the Borrower giving specific consideration in this transaction for such agreement to pay any applicable Make-Whole Premium or other premium described in this Section 2.11(b) if and when due; and (D) the Borrower shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Borrower expressly acknowledges that its agreement to pay any Make-Whole Premium or other premium described in this Section 2.11(b) if and when due to the Lenders as herein described is a material inducement to the Lenders to provide the Commitments and make the Loans. For the avoidance of doubt, the Administrative Agent shall have no obligation to calculate, or to verify the Borrower’s or any Lender’s calculation of, any Make-Whole Premium or other premium due under this Agreement.
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(ii) All voluntary prepayments shall be applied to the Term Facility. All voluntary prepayments of the Term Facility shall be applied to the remaining amortization payments (if any) under such Term Facility, as directed by the Lead Borrower (and absent such direction, in direct order of maturity thereof), including to any Class of extending or existing Term Loans in such order as the Lead Borrower may designate.
(c)
In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries
in respect of any Prepayment Event (other than any Prepayment Event in respect of ABL Priority Collateral (as defined in the ABL Intercreditor
Agreement), to the extent such Prepayment Event is in respect of ABL Priority Collateral, as determined by the Lead Borrower in good faith)
the Borrower shall, within five (5) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described
in clause (b) of the definition of “Prepayment Event”, on the date of such Prepayment Event), prepay Term Loan Borrowings
(with respect to a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, (x) to the extent
resulting from the incurrence of Credit Agreement Refinancing Indebtedness, limited to the applicable Refinanced Debt and (y) otherwise,
on a pro rata basis among all Term Loan Borrowings) in an aggregate amount equal to the Prepayment Percentage (or, with respect
to Net Proceeds in respect of a Prepayment Event triggered by clause (b) of the definition of “Prepayment Event”,
100%) of the amount of such Net Proceeds; provided that, in the case of any event described in clause (a)(IIIII)
of the definition of the term “Prepayment Event”, if the Borrower or any of the Subsidiaries invest (or commit to invest)
the Net Proceeds from such event (or a portion thereof) within 12 months after receipt of such Net Proceeds in the business of the Borrower
and the other Subsidiaries (including any acquisitions permitted under Section 6.04 and capital expenditures), then no prepayment
shall be required pursuant to this paragraph in respect of such Net Proceeds in respect of such event (or the applicable portion of such
Net Proceeds, if applicable) except to the extent of any such Net Proceeds therefrom that have not been so invested (or committed to be
invested) by the end of such 12-month period (or if committed to be so invested within such 12-month period, have not been so invested
within 180 days after the end of such 12-month period), at which time a prepayment shall be required in an amount equal to such Net Proceeds
that have not been so invested (or committed to be invested); provided further that (1) the Lead Borrower may elect to deem expenditures
that otherwise would be permissible reinvestments that occur prior to receipt of the Net Proceeds by or on behalf of the Borrower or any
of its Subsidiaries in respect of any Prepayment Event triggered by clause (a)(IIIII)
of the definition of the term “Prepayment Event” to have been reinvested in accordance with this Section 2.11(c), so
long as such deemed expenditure shall have been made no earlier than the earlier of execution of a definitive agreement and consummation
of such transaction, in each case, for such Prepayment Event triggered by clause (a)(IIIII)
of the definition of the term “Prepayment Event”; (2) the Borrower may use a portion of such Net Proceeds in respect
of a Prepayment Event triggered by clause (a)(IIIII)
of the definition of “Prepayment Event” to prepay or repurchase any Credit Agreement Refinancing Indebtedness that is secured
on a pari passu basis with the Term Loans, in each case in an amount not to exceed the product of (x) the amount of such Net Proceeds
and (y) a fraction, the numerator of which is the outstanding principal amount of such Credit Agreement Refinancing Indebtedness and the
denominator of which is the aggregate outstanding principal amount of Term Loans and such Credit Agreement Refinancing Indebtedness, and
such amount so used shall reduce on a dollar-for-dollar basis, any prepayment amount due hereunder in respect of such Net Proceeds and
(3) the foregoing reinvestment rights shall not be applicable and the Borrower shall be required to prepay Term Loan Borrowings with 100%
of the Net Proceeds of any Prepayment Event triggered by (i) clause (a)(IIIII)
of the definition of “Prepayment Event” with respect to any non-ordinary course sale, transfer or other disposition of any
property or asset of the Borrower or any of its Subsidiaries pursuant to Section 6.05(k) if the Total Net Leverage Ratio, determined
on a pro forma basis after giving effect to any such Prepayment Event, is greater than the Total Net Leverage Ratio immediately prior
to giving effect to such Prepayment Event and (ii) clause (a)(I) or (a)(II)
of the definition of “Prepayment Event”.
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(d) Following the end of each fiscal year of the Lead Borrower, commencing with the fiscal year ending on or about December 31, 2021 (each, an “Excess Cash Flow Period”), the Borrower shall prepay Term Loan Borrowings in an aggregate amount equal to the ECF Percentage (after giving effect to any adjustment pursuant to the Permitted ECF Recalculation Considerations (as defined below)) of Excess Cash Flow for such fiscal year; provided that such amount shall be reduced, at the option of the Borrower, by the aggregate amount (other than any amount applied to reduce the prepayment required under this clause (d) in respect of any prior year) of: (i) voluntary prepayments of Term Loans (as defined in the First Lien Credit Agreement) or Term Loans during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) of the First Lien Credit Agreement or Section 2.11(a)(ii) hereof shall be limited to the actual amount of such cash prepayment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (ii) (A) voluntary prepayments of (x) Indebtedness under the Badcock First Lien Credit Agreement and/or the Badcock Second Lien Credit Agreement and (y) Indebtedness secured on a pari passu basis with the Term Loans that are incurred under Incremental Facilities, Incremental Equivalent Debt, Credit Agreement Refinancing Indebtedness or Ratio Debt secured on a pari passu basis with the Term Loans (each of the foregoing capitalized terms in this clause (ii)(A), as defined in the First Lien Credit Agreement), in each case, during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) of the First Lien Credit Agreement or similar provisions therein shall be limited to the actual amount of such cash prepayment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests) and (B) voluntary prepayments of Indebtedness secured on a pari passu basis with the Term Loans that are incurred under Credit Agreement Refinancing Indebtedness during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction as a result of prepayments pursuant to Section 2.11(a)(ii) or similar provisions herein shall be limited to the actual amount of such cash prepayment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (iii) except to the extent deducted in the calculation of Excess Cash Flow, the amount of any reduction in the outstanding amount of any Term Loans (as defined in the First Lien Credit Agreement) resulting from any assignment made in accordance with Section 9.04(g) of the First Lien Credit Agreement or Term Loans resulting from any assignment made in accordance with Section 9.04(g) during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below (provided that such reduction shall be limited to the actual amount of cash paid in connection with the relevant assignment) (in each case, excluding all such prepayments funded with the proceeds of other long-term Indebtedness (other than revolving Indebtedness) or Disqualified Equity Interests), (iv) prepayments of revolving loans under the ABL Credit Agreement or any other revolving credit facility secured by a Lien on the Collateral and the Badcock Collateral ranking pari passu with the Lien on the Collateral and the Badcock Collateral securing the ABL Credit Agreement or senior or pari passu with the Lien on the Collateral and the Badcock Collateral securing the Indebtedness hereunder, in each case, to the extent accompanied by a permanent reduction in commitments therefor and not financed with the incurrence of other long-term Indebtedness (other than revolving Indebtedness or Disqualified Equity Interests), in each case, during such fiscal year or, at the option of the Borrower, after such fiscal year and prior to the time such prepayment is due as provided below,
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(v) except to the extent deducted in the calculation of Excess Cash Flow, without duplication
of any Contract Consideration already deducted in a previous Excess Cash Flow Period, capital expenditures, Permitted Acquisitions or
other Investments not prohibited by this Agreement (other than Investments among the Borrower and its Subsidiaries and Investments in
cash or Permitted Investments) during such fiscal year and, at the option of the Borrower, after fiscal year-end and prior to the date
such prepayment is due as provided below (or committed during such period to be used for such purposes within the succeeding twelve month
period, in each case subject to reversal of such deduction if any such committed amount is not actually expended within such twelve-month
period), (vi) except to the extent deducted in the calculation of Excess Cash Flow, Restricted Payments (other than Restricted Payments
made by any Borrower or Subsidiary to any other Borrower or Subsidiary) and prepayments, redemptions, purchases, defeasances and other
payments in respect of any Junior Financing, in each case, during such fiscal year or, at the option of the Borrower, after such fiscal
year and prior to the time such prepayment is due as provided below (or committed during such period to be used for such purposes within
the succeeding twelve month period, in each case subject to reversal of such deduction if any such committed amount is not actually expended
within such twelve-month period), (vii) (A) regularly scheduled principal payments in respect of (x)
any Term Loans (as defined in the First Lien Credit Agreement) or,
(y) Indebtedness under the Badcock First Lien Credit Agreement and/or the Badcock Second Lien Credit Agreement or (z) Indebtedness
secured on a pari passu basis with the Term Loans (as defined in the First Lien Credit Agreement) that are incurred under Incremental
Facilities (as defined in the First Lien Credit Agreement), Incremental Equivalent Debt (as defined in the First Lien Credit Agreement),
Credit Agreement Refinancing Indebtedness (as defined in the First Lien Credit Agreement) or Ratio Debt (as defined in the First Lien
Credit Agreement) secured on a pari passu basis with the Term Loans (as defined in the First Lien Credit Agreement) and (B) regularly
scheduled principal payments in respect of any Indebtedness secured on a pari passu basis with the Term Loans that are incurred
under Credit Agreement Refinancing Indebtedness and (viii) transaction costs and expenses related to items set forth in the preceding
clauses (i) through (vii) (any payments described in the foregoing clauses (i) through (viii) of this proviso that
are made after the end of the applicable Excess Cash Flow Period but prior to the making of the applicable prepayment in respect of such
Excess Cash Flow Period being referred to herein as an “After Year End Payment”); provided that (1) an Excess
Cash Flow payment pursuant to this clause (d) shall only be required with respect to amounts in excess of $10,000,000 for
any Excess Cash Flow Period (and only such excess amount shall be applied to the payment thereof) and (2) following the making of any
After Year End Payment, (i) the Secured Net Leverage Ratio shall be recalculated giving Pro Forma Effect to such After Year End Payment
as if such payment were made during the applicable Excess Cash Flow Period and the ECF Percentage for purposes of making such Excess Cash
Flow prepayment shall be determined by reference to such recalculated Secured Net Leverage Ratio and (ii) such After Year End Payment
shall not be applied to the calculation of the Secured Net Leverage Ratio in connection with the determination of the ECF Percentage for
purposes of (and shall not reduce the required amount of) any subsequent Excess Cash Flow payment in another Excess Cash Flow Period (the
foregoing the “Permitted ECF Recalculation Considerations”). Notwithstanding anything to the contrary in the foregoing,
the Borrower may use a portion of such amount of Excess Cash Flow (as so reduced) in respect of any such fiscal year of the Lead Borrower
that would otherwise be required to be applied to prepay Term Loans to prepay or repurchase any Credit Agreement Refinancing Indebtedness
that is secured by the Collateral and the Badcock Collateral on
a pari passu basis with the Term Loans to the extent such other Indebtedness and the Liens securing such other Indebtedness are
permitted hereunder, in each case in an amount not to exceed the product of (A) the amount of Excess Cash Flow (as so reduced) in respect
of such fiscal year otherwise required to be applied to prepay Term Loan Borrowings (without giving effect to this sentence) and (B) a
fraction, the numerator of which is the outstanding principal amount of such Credit Agreement Refinancing Indebtedness and the denominator
of which is the aggregate outstanding principal amount of Term Loans and such Credit Agreement Refinancing Indebtedness. Each prepayment
pursuant to this paragraph shall be made on or before the date that is five Business Days after the date on which financial statements
are required to be delivered pursuant to Section 5.01(a) with respect to the fiscal year for which Excess Cash Flow is being
calculated.
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(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any mandatory prepayment of Term Loan Borrowings made at a time when Term Loan Borrowings of more than one Class remain outstanding, the Borrower shall select Term Loan Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Loan Borrowings (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent in writing by electronic mail or overnight courier no later than 2:00 p.m., New York City time, two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined (to the extent remaining after compliance with any applicable mandatory prepayment provisions of the ABL Credit Agreement and the First Lien Credit Agreement) shall be retained by the Borrower and added to the Available Amount (such amounts, “Retained Declined Proceeds”). Any Lender that fails to provide written notice to the Administrative Agent in the time frame set forth above shall be deemed to have accepted the prepayment. Optional prepayments of Term Loan Borrowings shall be allocated among the Classes of Term Loan Borrowings as directed by the Borrower, and in the absence of a designation by the Borrower, in direct order of maturity (to the extent relevant), and subject to the foregoing, the Administrative Agent shall apply such prepayments in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16; provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c) or (d), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Eurodollar Loans.
(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) or mandatory prepayment pursuant to Section 2.11(c) or (d) in writing by electronic mail or overnight courier of any prepayment hereunder (i) in the case of voluntary prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment, (ii) in the case of voluntary prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment or (iii) in the case of a mandatory prepayment, not later than 2:00 p.m., New York City time, three (3) Business Days prior to the date of such prepayment (or, in each case, such later date or date which the Administrative Agent may agree to in its sole discretion). Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and subject to Section 2.11(b), shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
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(g)
Notwithstanding any other provisions of Section 2.11(c) or (d), (A) to the extent that any of or all the Net Proceeds
of any Prepayment Event set forth in clause (a)(IIIII)
of the definition thereof by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.11(c) (a “Foreign
Prepayment Event”) or Excess Cash Flow of a Foreign Subsidiary giving rise to a payment pursuant to Section 2.11(d) are
prohibited by, would violate or conflict with, or be delayed by, applicable local law from being repatriated to the Borrower, the portion
of such Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in Section
2.11(c) or (d), as the case may be, and such amounts may be retained by such Subsidiary so long, but only so long, as the Lead
Borrower determined in good faith that the applicable local law will not permit repatriation to the Borrower and once the Lead Borrower
has determined in good faith that such repatriation of any of such affected Net Proceeds or Excess Cash Flow is permitted under the applicable
local law, such repatriation will be effected as soon as practicable and such repatriated Net Proceeds or Excess Cash Flow will be applied
(net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c)
or (d), as applicable, (B) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation
of any or all of the Net Proceeds of any Foreign Prepayment Event or Excess Cash Flow of a Foreign Subsidiary giving rise to a payment
pursuant to Section 2.11(d) would have a material adverse tax or cost consequence with respect to such Net Proceeds or Excess Cash
Flow, the Net Proceeds or Excess Cash Flow so affected will not be required to be applied to repay Term Loans at the times provided in
Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be retained by such Subsidiary; provided
that if the Lead Borrower determines in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event
or Excess Cash Flow so affected would no longer have a material adverse tax consequence with respect to such Net Proceeds or Excess Cash
Flow, such Net Proceeds or Excess Cash Flow shall be applied (net of additional taxes payable or reserved against as a result thereof)
to the repayment of the Term Loans pursuant to Section 2.11(c) or Section 2.11(d), as applicable, and (C) to the extent
that and for so long as the Lead Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign
Prepayment Event or Excess Cash Flow would conflict with the fiduciary duties of a Subsidiary’s directors, or result in, or could
reasonably be expected to result in, a material risk of personal or criminal liability for any officer, director, employee, manager, member
or management or consultant of such Subsidiary, the Net Proceeds or Excess Cash Flow so affected will not be required to be applied to
repay Term Loans at the times provided in Section 2.11(c) or Section 2.11(d), as the case may be, and such amounts may be
retained by such Subsidiary.
(h) Notwithstanding anything to the contrary herein, until the Discharge of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) has occurred, the Borrower shall only be required to make mandatory prepayments pursuant to Sections 2.11(c) and (d) by applying any such amounts that are otherwise (i.e., in the absence of this clause (h)) required to be used to make a mandatory prepayment pursuant to Sections 2.11(c) or (d) and that are declined or waived by the holders of the First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) (provided, for avoidance of doubt, if the applicable First Lien Loan Documents (as defined in the First Lien/Second Lien Intercreditor Agreement) provide that mandatory payments that are declined or waived by certain holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) thereunder shall be offered to any other holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement), such payments shall not be considered declined or waived for purposes of this clause (h) until such payments shall have been declined or waived by all applicable holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor)) as a mandatory repayment of Loans, and such mandatory repayment shall be made in accordance with the requirements of this Section 2.11 within five (5) Business Days after the applicable deadline for the holders of such First Lien Obligations to decline or waive such payment; provided, further, that notwithstanding anything to the contrary in this Agreement, a mandatory prepayment of the Term Loans with any amounts with respect to which the holders of the First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) have declined or waived a prepayment shall not be subject to any prepayment premium or fee pursuant to Section 2.11(b) hereof.
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SECTION 2.12 Fees.
(a) [Reserved].
(b) [Reserved].
(c) The Borrower agrees to pay (i) to the Administrative Agent, for its own account, fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent in the Administrative Agent Fee Letter and (ii) to the Commitment Parties (or their Affiliates) and/or the Administrative Agent, as applicable, for their accounts or the accounts of the Lenders (as specified therein), fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Commitment Parties in each Lender Fee Letter.
(d) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 any principal of or interest on any Loan or any fee or other amount payable by any Loan Party under a Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, all overdue principal amounts of the Loans shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of the principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided, further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
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(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Benchmark Unavailability; Benchmark Replacement Setting.
(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
(1) the Administrative Agent or the Required Lenders determine (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate of the LIBO Rate, as applicable (including because the LIBO Screen Rate is not available or published on a current basis), for such Interest Period; provided that no Benchmark Transition Event or Early Opt-in Election shall have occurred at such time; or
(2) the Administrative Agent or the Required Lenders determine that for any reason the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
then in each such case, the Administrative Agent shall give notice thereof to the Lead Borrower and the Lenders in writing by telecopy, electronic mail, facsimile or overnight courier as promptly as practicable thereafter and, until the Administrative Agent notifies the Lead Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, then such Borrowing shall be made as an ABR Borrowing; provided, however, that, in each case, the Lead Borrower may revoke any Borrowing Request that is pending when such notice is received.
(b) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 2.14), if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.
(c) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Required Lenders (in consultation with the Lead Borrower) will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, without the Administrative Agent’s express written consent, the Administrative Agent shall not be bound to follow or agree to any Benchmark Replacement Conforming Changes that would (i) increase or materially change or affect the duties, obligations or liabilities of the Administrative Agent (including without limitation the imposition or expansion of discretionary authority), or reduce, eliminate, limit or otherwise change any right, privilege or protection of the Administrative Agent, in each case, in a manner that would be materially adverse to the interests of the Administrative Agent, or (ii) otherwise materially and adversely affect the Administrative Agent, in each case of clauses (i) and (ii) hereof, as determined by the Administrative Agent in its reasonable judgment.
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(d) Notices; Standards for Decisions and Determinations. The Required Lenders will promptly notify, in writing, the Lead Borrower and the Administrative Agent of any occurrence of a Benchmark Transition Event or Early Opt-in Election, and the applicable Benchmark Replacement and Benchmark Replacement Date with respect thereto, and upon receipt of such notice, the Administrative Agent will promptly (and in any event within one (1) Business Day) notify the Lenders of such Benchmark Transition Event or Early Opt-in Election and its related Benchmark Replacement and Benchmark Replacement Date. Promptly (and in any event within one (1) Business Day) upon receipt of notice thereof from the Required Lenders, the Administrative Agent will notify the Lenders of, as applicable, (i) the effectiveness of any Benchmark Replacement Conforming Changes, (ii) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (iii) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lenders (or any group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14. In the event that the LIBO Rate or applicable Benchmark is not available on any determination date, then unless the Administrative Agent is notified, in writing, of a replacement Benchmark in accordance with the provisions of this Agreement within two (2) Business Days, the Administrative Agent shall use the interest rate in effect for the immediately prior Interest Period.
(e) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or the LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time (including the LIBO Screen, if applicable) or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Required Lenders may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service (including the LIBO Screen, if applicable) for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Required Lenders may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor, and the Required Lenders shall promptly notify the Administrative Agent and the Lead Borrower of any such modification. In the event that the applicable Benchmark is not available on any determination date, then unless the Administrative Agent is notified of a replacement Benchmark in accordance with the provisions of this Agreement within two (2) Business Days, the Administrative Agent shall use the interest rate in effect for the immediately prior Interest Period.
(f) Benchmark Unavailability Period. Upon the Lead Borrower’s receipt of notice from the Required Lenders of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Eurodollar Borrowing of, conversion to or continuation of Eurodollar Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to ABR Loans. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.
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SECTION 2.15 Increased Costs.
(a) 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 by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate);
(ii) subject the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document to any Taxes (other than Indemnified Taxes, Other Taxes or Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred or reduction actually suffered; provided that the Borrower shall not be liable for such compensation if, in the case of requests for reimbursement under clause (ii) above resulting from a market disruption, (A) the relevant circumstances are not generally affecting the banking market or (B) the applicable request has not been made by the Majority in Interest of Term Lenders with respect to Term Loans; provided, further, that to the extent any such costs or reductions are incurred by any Lender as a result of any requests, rules, guidelines or directives enacted or promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Basel III, then such Lender shall be compensated pursuant to this Section 2.15(a) only to the extent such Lender is imposing such charges on similarly situated borrowers where the terms of other syndicated credit facilities permit it to impose such charges.
(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.
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(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than one hundred and eighty (180) days prior to the date that such Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.16 Break Funding Payments.
In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. Such loss, cost or expense shall in no event exceed that which would have been incurred by such Lender had it funded each Eurodollar Loan made by it at the Adjusted LIBO Rate for such Loan by a matching deposit or other borrowing in the applicable interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt of such demand. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements.
SECTION 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
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(b) The Borrower shall timely pay to the relevant Governmental Authority in accordance with Requirements of Law or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c) The Borrower, jointly and severally, shall indemnify the Administrative Agent and each Lender within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document, as the case may be (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) (such Lender, a “Foreign Lender”) shall deliver (to the extent it is legally entitled to do so) to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Administrative Agent) whichever of the following is applicable:
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(A) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty,
(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit Q-1, Q-2, Q-3 or Q-4, as applicable, to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to such Borrower as described in Section 881(c)(3)(C) of the Code (any such certificate a “United States Tax Compliance Certificate”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable (provided that, if the Lender is a partnership and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
(E) any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
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(f) If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of Taxes as to which it has been indemnified pursuant to this Section 2.17 or with respect to which additional amounts have been paid pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees promptly to repay the amount paid over to the Borrower pursuant to this Section 2.17(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority (provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary in this Section 2.17(f), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrowers pursuant to this Section 2.17(f) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Notwithstanding anything to the contrary, this Section 2.17(f) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person.
(g) The agreements in this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(h) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.
(i) Each Lender shall severally indemnify the Administrative Agent, within thirty (30) days after written demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting any obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Lenders by the Administrative Agent, shall be conclusive absent manifest error.
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest or fees, or of amounts payable under Sections 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as may be specified by the Administrative Agent, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension. All payments or prepayments of any Loan shall be made in dollars, all payments of accrued interest payable on a Loan shall be made in dollars, and all other payments under each Loan Document shall be made in dollars.
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(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (B) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) [Intentionally Omitted].
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a) or Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and to be applied to, any future funding obligations of such Lender under any such Section.
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SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall (at the request of the Lead Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder affected by such event, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender is a Defaulting Lender, then the Lead Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Lead Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued but unpaid fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Lead Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
SECTION 2.20 [Reserved].
SECTION 2.21 Refinancing Amendments.
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans), in the form of Other Term Loans or Other Term Commitments; provided that the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment (or reduction) of outstanding Indebtedness being so refinanced, as the case may be, and accompanied by any prepayment premium payable thereon in accordance with the terms hereof. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $5,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section.
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(b) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments. Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to Section 2.05(j) or this Section 2.22(a)(ii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 2.05(j) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(b)
Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting
Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as
of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect
to any cash Collateralcollateral),
such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions
as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders, whereupon
that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees
accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except
to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute
a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.23 Illegality.
If any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted LIBO Rate, or to determine or charge interest rates based upon the Adjusted LIBO Rate, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Loans denominated in dollars or to convert ABR Loans denominated in dollars to Eurodollar Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted LIBO Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three (3) Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Loans denominated in dollars of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted LIBO Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted LIBO Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted LIBO Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Each Lender agrees to notify the Administrative Agent and the Lead Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted LIBO Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
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SECTION 2.24 Loan Modification Offers.
(a) At any time after the Effective Date, the Lead Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “Loan Modification Offer”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “Affected Class”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Lead Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “Accepting Lenders”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by the Lead Borrower, each applicable Accepting Lender and the Administrative Agent; provided that no Permitted Amendment shall become effective unless the Lead Borrower shall have delivered to the Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall be reasonably requested by the Administrative Agent in connection therewith. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “Non-Accepting Lender”) then after receipt of consents from Lenders constituting the Required Lenders hereunder, the Lead Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11(a)(i)) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
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ARTICLE
III
Representations and Warranties
The Borrower represents and warrants to the Lenders and each Agent that (limited, on the Effective Date, to the Specified Representations):
SECTION 3.01 Organization; Powers.
Each of the Borrower and its Subsidiaries (a) is duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the relevant jurisdictions) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdictions) in, every jurisdiction where such qualification is required, except, with respect to clause (a) above (other than with respect to the Borrower), clause (b) above (other than with respect to the Borrower) and clause (c) above, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.02 Authorization; Enforceability.
This Agreement has been duly authorized, executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law, (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in any legal opinion delivered to an Agent in connection with any Loan Document (together, the “Legal Reservations”) and (iv) the Perfection Requirements.
SECTION 3.03 Governmental Approvals; No Conflicts.
Except as set forth in Schedule 3.03 and subject to the Legal Reservations and the Perfection Requirements, the execution, delivery and performance by any Loan Party of this Agreement or any other Loan Document (a) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of the Borrower or any other Loan Party, or (ii) any Requirements of Law applicable to the Borrower or any other Loan Party, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon the Borrower or any Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by the Borrower or any Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except Liens created under the Loan Documents or permitted by Section 6.02, except (in the case of each of clauses (a), (b)(ii), (c) and (d)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, or imposition of Lien, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
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SECTION 3.04 Financial Condition; 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, including the notes thereto and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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, including the notes thereto.
(b) The Unaudited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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.
(c) The Borrower has heretofore furnished to the Commitment Parties the consolidated pro forma balance sheet of the Lead Borrower and its Subsidiaries as of and for the period of twelve fiscal months of the Lead Borrower ended on or about September 30, 2020 (the “Pro Forma Financial Statements”), which have been prepared in good faith, based on assumptions believed by the Lead Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respects on a pro forma basis the estimated financial position of the Lead Borrower and its Subsidiaries as at the fiscal quarter of the Lead Borrower ended on or about September 30, 2020, assuming that the Transactions had actually occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of operations).
(d) Since the Effective Date, there has been no Material Adverse Effect.
SECTION 3.05 Properties.
Each of the Borrower and its Subsidiaries has good title to, or valid interests in, all its real and personal property material to its business, if any (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters.
(a) Except as set forth in Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Subsidiaries that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any of its Subsidiaries (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, to the knowledge of the Borrower, become subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) has, to the knowledge of the Borrower, any basis to reasonably expect that the Borrower or any of its Subsidiaries will become subject to any Environmental Liability.
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SECTION 3.07 Compliance with Laws.
Each of the Borrower and its Subsidiaries is in compliance with all Requirements of Law applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08 Investment Company Status.
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
SECTION 3.09 Taxes.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Borrower and each Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets otherwise due and payable (whether or not shown on a Tax return), except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against the Borrower or any Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 ERISA; Labor Matters.
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as would not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect, (i) each employee benefit plan (as defined in Section 3(2) of ERISA) that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of the Borrower, threatened in writing claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
(d) Except as would not reasonably be expected to have a Material Adverse Effect, (i) none of the Borrower or its Subsidiaries has experienced any labor strike or work stoppage or other collective labor dispute by employees due to labor disagreements and (ii) each of the Borrower and its Subsidiaries is in compliance in all respects with any collective bargaining agreement to which it is a party.
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SECTION 3.11 Disclosure.
(a) As of the First Amendment Effective Date, the written reports, financial statements, certificates or other written factual information (other than projections and information of a general economic or industry specific nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered thereunder (as modified or supplemented by other information so furnished), when taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial information, the Borrower represents only that such information, when taken as a whole, was prepared in good faith based upon assumptions believed by it to be reasonable at the time delivered, it being understood that (i) any such projected financial information is merely a prediction as to future events and is not to be viewed as fact, (ii) such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower or any of its Subsidiaries and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
(b) As of the First Amendment Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification (if any) provided pursuant to Section 4.01(l) is true and correct in all respects.
SECTION 3.12 Subsidiaries.
As of the First Amendment Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and each of its subsidiaries in, each subsidiary of the Lead Borrower.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as would not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Borrower, each of the Borrower and its Subsidiaries owns, licenses or possesses the right to use all Intellectual Property and Badcock Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of the Borrower, no Intellectual Property or Badcock Intellectual Property owned by the Borrower or any Subsidiary and used in the operation of its business as currently conducted infringes upon the Intellectual Property or Badcock Intellectual Property of any Person except for such infringements that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property or the Badcock Intellectual Property is pending or, to the knowledge of the Borrower, threatened in writing against the Borrower or any Subsidiary, which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Solvency.
Immediately after the consummation of each of the Transactions that occurred on the Effective Date (including the execution and delivery of this Agreement, the making of the Loans and the use of proceeds of such Loans on the date hereof) and the transactions contemplated by the First Amendment, the Lead Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
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SECTION 3.15 Federal Reserve Regulations.
None of the Borrower or any of its Subsidiaries is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
SECTION 3.16 Use of Proceeds.
The Borrower will use the proceeds of the Initial Term Loans made on the Effective Date to directly or indirectly finance the Transactions and to fund any original issue discount or upfront fees payable in connection therewith.
SECTION 3.17 Anti-Corruption Laws and Sanctions.
(a) The Borrower and each of its Subsidiaries will not, directly or to their knowledge indirectly, use the proceeds of the Loans to fund any activity or business with any Person, or in any country or territory that, at the time of such funding, is the subject of Sanctions, or in violation of any Anti-Corruption Laws, the USA PATRIOT Act, any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of Treasury and any successor Governmental Authority, or other applicable anti-money laundering or anti-terrorism laws.
(b) The Borrower and its Subsidiaries and, to the knowledge of the Borrower, the officers, directors, employees and agents of the Borrower and its Subsidiaries are in compliance in all material respects with applicable Anti-Corruption Laws and applicable Sanctions, the USA PATRIOT Act, and other applicable anti-money laundering and anti-terrorism laws.
(c) (i) None of the Borrower or its Subsidiaries and (ii) to the knowledge of the Borrower or its Subsidiaries, none of their respective directors, officers, employees and agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.
(d) The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance in all material respects by the Borrower and its Subsidiaries with applicable Anti-Corruption Laws and applicable Sanctions.
SECTION 3.18 Security Documents.
Subject to Section 5.14,
the Legal Reservations and the Perfection Requirements, (a) the
Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding
and enforceable security interest in the Collateral described therein and proceeds and products thereof and
(b) the Badcock Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a
legal, valid, binding and enforceable security interest in the Badcock Collateral described therein and proceeds and products thereof.
In the case of (i) Pledged Equity Interests and Badcock Pledged
Equity Interests represented by certificates, (x) if and when such certificates are delivered to the Collateral Agent or (y) when
financing statements in appropriate form are filed in the appropriate filing offices, and (ii) the
other Collateral described in the Collateral Agreement, which can be perfected by filing a financing statement, when financing statements
in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Collateral Agreement have
been completed and (iii) the other Badcock Collateral described in the Badcock
Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed
in the appropriate filing offices and such other filings as are required in the Badcock Collateral Agreement have been completed,
the Lien created by the Collateral Agreement or the Badcock Collateral Agreement,
as applicable, shall constitute, to the extent such perfection is required by the Collateral Agreement or
the Badcock Collateral Agreement, as applicable, a fully perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in such Collateral or the Badcock Collateral,
as applicable, and the proceeds and products thereof, as security for the Secured Obligations.
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SECTION 3.19 Insurance.
The Borrower and each of its Subsidiaries maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) were financially sound and responsible at the time the relevant coverage was last placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business.
SECTION 3.20 Franchise Agreements.
(a) Schedule 3.20 sets forth a complete and accurate list as of the First Amendment Effective Date of all Franchise Agreements to which any Loan Party or any of their Subsidiaries is a party.
(b) Except as set forth on Schedule 3.20, as of the First Amendment Effective Date, to the knowledge of the Loan Parties, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein which conflicts, or potentially conflicts, with any grant of exclusive rights to a territory granted under any other Franchise Agreement. Except as set forth in Schedule 3.20, as of the First Amendment Effective Date, no current franchisee under a Franchise Agreement has given written notice to a Loan Party’s management during the six (6) month period before the First Amendment Effective Date of its intention to rescind or terminate (with or without cause) any Franchise Agreement.
(c) Except as could not reasonably be expected to have a Material Adverse Effect, (i) each Loan Party has prepared and maintained each of its Franchise Disclosure Documents, in an accurate and correct manner, (ii) each Loan Party has filed all required Franchise Disclosure Documents required by law in all states and jurisdictions requiring registration and approval prior to any offers or sales of franchises in such states, and (iii) each Loan Party has filed all material changes, amendments, renewals thereto on a timely and accurate basis as required under, and required by applicable Requirements of Law. Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party’s Franchise Disclosure Documents were prepared in compliance with applicable Franchise Laws and disclosure guidelines, and there were no misrepresentations or omissions of information in any Franchise Disclosure Documents at the time such Loan Party was using such Franchise Disclosure Documents. Each Franchise Agreement complies, and the offer and sale of such Franchise Agreement complied, in each case at the time such offer and sale was made, with all Franchise Laws, except to the extent of any non-compliance therewith which could not reasonably be expected to have a Material Adverse Effect.
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ARTICLE
IV
Conditions
SECTION 4.01 Effective Date.
The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) and the Lenders shall have received from each party hereto a counterpart of this Agreement signed on behalf of such party (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement).
(b) The Administrative Agent and the Lenders shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, and such local counsel as may be reasonably requested by the Required Lenders in the jurisdictions of organization of any Loan Party, each in form and substance reasonably satisfactory to the Required Lenders. The Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent and the Lenders shall have received (i) a certificate of each Loan Party, dated the Effective Date, with appropriate insertions, or otherwise in form and substance reasonably satisfactory to the Required Lenders, executed by any Responsible Officer of such Loan Party, and including or attaching the documents referred to in paragraph (d) of this Section 4.01, and (ii) a certificate of the Lead Borrower, dated the Effective Date, substantially in the form of Exhibit H, executed by any Responsible Officer of the Lead Borrower.
(d) The Administrative Agent and the Lenders shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) with respect to each Loan Party executing the Loan Documents, an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of such Loan Party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party, certified as of the Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(e) (i) The Administrative Agent shall have received all fees required to be paid on the Effective Date pursuant to the Administrative Agent Fee Letter and reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees and expenses of a single counsel to the Administrative Agent) required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least two (2) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower) and (ii) the Commitment Parties (or their Affiliates) and/or the Administrative Agent, as applicable, shall have received all fees in respect of the Term Facility required to be paid on the Effective Date pursuant to each Lender Fee Letter and reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees and expenses of a single counsel to the Commitment Parties) required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least two (2) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower); provided, that any or all such amounts referred to in this clause (e) may, at the option of the Lead Borrower, be offset against the proceeds of the initial Loans made hereunder.
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(f) The Collateral and Guarantee Requirement (other than in accordance with Section 5.14) shall have been satisfied and the Administrative Agent and the Lenders shall have received a completed Perfection Certificate dated the Effective Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby; provided that if, notwithstanding the use by the Borrower of commercially reasonable efforts without undue burden or expense to cause the Collateral and Guarantee Requirement to be satisfied on the Effective Date, the requirements thereof (other than (i) the execution and delivery of the Guarantee Agreement and the Collateral Agreement by the Loan Parties, (ii) subject to the Intercreditor Agreements, the creation and perfection of security interests in the Equity Interests of the Borrower and each Subsidiary owned by or on behalf of any Loan Party (provided that such Equity Interests are not Excluded Assets or owned or held by an Excluded Subsidiary), with respect to Equity Interests in the Acquired Company and the Acquired Subsidiaries, to the extent received on the Effective Date, and (iii) delivery of Uniform Commercial Code financing statements with respect to perfection of security interests in the assets of the Loan Parties that may be perfected by the filing of a financing statement under the Uniform Commercial Code) are not satisfied as of the Effective Date, the satisfaction of such requirements shall not be a condition to the availability of the initial Loans on the Effective Date (but shall be required to be satisfied as promptly as practicable after the Effective Date or otherwise within the period specified in Schedule 5.14, or such later date as the Required Lenders may otherwise reasonably agree). Notwithstanding the foregoing, no Collateral shall be subject to any other pledges, security interest or mortgages, except for the Liens permitted under this Agreement.
(g) Since the date of the Acquisition Agreement, there shall not have occurred a Company Material Adverse Effect (as defined in the Acquisition Agreement).
(h) The Commitment Parties shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) The Specified Acquisition Agreement Representations shall be true and correct to the extent required by the definition thereof on and as of the Effective Date and the Specified Representations shall be true and correct in all material respects (or, if qualified by materiality, in all respects) on and as of the Effective Date; provided that, in each case, to the extent that any such representation expressly refers to an earlier date, such representation shall be true and correct in all material respects as of such earlier date.
(j) The Acquisition shall have been consummated, or substantially simultaneously with the borrowing of the Initial Term Loans on the Effective Date, shall be consummated, in all material respects in accordance with the terms of the Acquisition Agreement.
(k) The Administrative Agent and the Lenders shall have received (i) a certificate from the chief financial officer or equivalent Responsible Officer of the Lead Borrower certifying as to the solvency (as of the Effective Date) of the Lead Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, in substantially the form attached hereto as Exhibit G and (ii) certificates with respect to insurance policies of the Loan Parties as required under Section 5.07, all in form and substance reasonably satisfactory to the Required Lenders.
(l) (i) The Administrative Agent shall have received at least three (3) Business Days before the Effective Date all documentation and other information about the Loan Parties that the Administrative Agent reasonably determines is required by United States regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the USA PATRIOT Act, including, without limitation, a duly executed W-9 tax form (or such other applicable IRS tax form) of Borrower and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Administrative Agent and each initial Lender that requests a Beneficial Ownership Certification will have received, at least three (3) Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower, in each case of clauses (i) and (ii), to the extent that the Administrative Agent has reasonably requested such items in writing delivered to the Loan Parties at least ten (10) Business Days prior to the Effective Date.
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(m) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof.
(n) The Administrative Agent (or its counsel) and the Lenders shall have received from each party thereto (i) a counterpart of the ABL Intercreditor Agreement signed on behalf of such party and (ii) a counterpart of the First Lien/Second Lien Intercreditor Agreement signed on behalf of such party.
(o) The Administrative Agent shall have received from Borrower a counterpart of the Administrative Agent Fee Letter signed on behalf of such party.
SECTION 4.02 Each Credit Event after the Effective Date.
After the Effective Date, the obligation of each Lender to make a Loan on the occasion of any Borrowing, is subject to the satisfaction of the following conditions:
(a) In the case of any Borrowing, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, in each case, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(b) At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.
(c) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof with respect to such Borrowing.
Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section 4.02) shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 4.02.
ARTICLE
V
Affirmative Covenants
From and after the Effective Date and until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Loan Document shall have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information.
Borrower and its Subsidiaries will furnish to the Administrative Agent, on behalf of each Lender:
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(a) (i) on or before the date that is 90 days after the end of each fiscal year of the Lead Borrower, commencing with the fiscal year of the Lead Borrower ended on or about December 31, 2021, the audited consolidated balance sheet and audited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case, in comparative form the figures for the previous fiscal year, all reported on by BDO, Deloitte or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any material qualification or exception as to the scope of such audit (other than with respect to, or resulting from, (A) an upcoming maturity date of any indebtedness for borrowed money or (B) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money)) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Lead Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year;
(b) (i) on or before the date that is 30 days after the end of each of the first three fiscal quarters of each fiscal year of the Lead Borrower, commencing with the first fiscal quarter of the Lead Borrower ended after the Effective Date, the unaudited consolidated balance sheet and unaudited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case, in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of the Lead Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter;
(c) [reserved];
(d) not later than ten (10) Business Days of any delivery of financial statements under paragraph (a) above, a reasonably detailed annual budget for the Borrower and its Subsidiaries on a consolidated basis, in a form customarily prepared by the Lead Borrower or otherwise as may be reasonably agreed between the Lead Borrower and the Required Lenders (it being agreed that such annual budget shall not be provided to Public Lenders);
(e) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate (a “Compliance Certificate”) of a Financial Officer in the form of Exhibit E hereof (i) certifying as to whether a Default then exists and, if a Default does then exist, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations (A) to the extent the Financial Maintenance Covenants are then required to be tested, demonstrating compliance with the Financial Maintenance Covenants, and (B) in the case of financial statements delivered under paragraph (a) above, beginning with the financial statements for the fiscal year of the Lead Borrower ending on or about December 31, 2021, of Excess Cash Flow for such fiscal year;
(f) [reserved];
(g) [reserved];
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(h) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by the Borrower or any Subsidiary with the SEC or with any national securities exchange; and
(i) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing.
Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing the Form 10-K or 10-Q (or the equivalent), as applicable, of the Borrower (or a parent company thereof) filed with the SEC within the applicable time periods required by applicable law and regulations; provided that such materials are accompanied by a report and opinion of BDO, Deloitte or any other independent registered public accounting firm of nationally recognized standing, 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 the scope of such audit (other than with respect to, or resulting solely from, (i) an upcoming maturity date of any indebtedness for borrowed money or (ii) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money).
Documents required to be delivered pursuant to Section 5.01(a), (b) or (h) (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 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
Notwithstanding anything to the contrary herein, neither the Borrower nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s obligations under this Section 5.01) to any third party.
The Borrower hereby acknowledges that (a) the Administrative Agent may make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or its Affiliates’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”; provided that the Borrower’s failure to comply with this sentence shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials as “PUBLIC”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (e) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information.
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SECTION 5.02 Notices of Material Events.
Promptly after any Responsible Officer of the Borrower or any Subsidiary obtains knowledge thereof, the Borrower or the applicable Subsidiary will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default or Event of Default (other than any Default resulting from any non-compliance with Section 5.01);
(b) the occurrence of any ERISA Event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect;
(c) any litigation, or governmental investigation or proceeding pending against the Borrower or any of its Subsidiaries which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect; and
(d) any other development or event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days or such longer period as reasonably agreed to by the Administrative Agent) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or incorporation or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property or Badcock Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
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(b) Not later than five (5) Business Days after delivery of financial statements pursuant to Section 5.01(a), the Lead Borrower shall deliver to the Administrative Agent a certificate executed by a Responsible Officer of the Lead Borrower (i) setting forth any material changes to the information required pursuant to the Perfection Certificate or confirming that there has been no material change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section 5.03 and (ii) identifying any Wholly Owned Subsidiary that has become, or ceased to be, a Material Subsidiary or an Excluded Subsidiary during the most recently ended fiscal quarter of the Lead Borrower.
SECTION 5.04 Existence; Conduct of Business.
The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Material Intellectual Property and Governmental Approvals used in the conduct of its business, except to the extent (other than with respect to the preservation of the existence of the Borrower) that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
SECTION 5.05 Payment of Taxes, etc.
The Borrower will, and will cause each of its Subsidiaries to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by the Borrower or any of its Subsidiaries or (b) the failure to make payment would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 5.06 Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (subject to casualty, condemnation and ordinary wear and tear), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.07 Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. Each such general liability policy of insurance (other than directors and officers policies, workers compensation policies and business interruption insurance), to the extent covering Collateral or Badcock Collateral and to the extent that Collateral Agent can be granted an insurable interest therein, shall (i) in the case of each such general liability policy, name the Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each such casualty insurance policy, contain a loss payable clause or mortgagee endorsement that names the Collateral Agent, on behalf of the Lenders as the loss payee or mortgagee thereunder.
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(b) If any portion of any Mortgaged Property or Badcock Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party to (i) if required by the Flood Insurance Laws or other applicable law, maintain, or cause to be maintained, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
SECTION 5.08 Books and Records; Inspection and Audit Rights.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards) consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or its Subsidiary, as the case may be. The Borrower will, and will cause each of its Subsidiaries that is a Loan Party to, permit any representatives designated by the Administrative Agent or any Lender, during normal business hours and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuance of an Event of Default, only the Required Lenders (or any larger group of Lenders) acting jointly may exercise the visitation and inspection rights under this Section 5.08; provided, further, that the Lenders shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants.
(b) The Lead Borrower will, within 30 days (or, after using commercially reasonable efforts to schedule such call at a later date agreed to by the Required Lenders at their sole discretion) after the date of the delivery (or, if later, required delivery) of the quarterly and annual financial information pursuant to Sections 5.01(a) and (b), hold a conference call or teleconference, at a time selected by the Lead Borrower and reasonably acceptable to the Required Lenders, with all of the Lenders that choose to participate, to review the financial results of the previous fiscal quarter or fiscal year of the Lead Borrower, as the case may be, of the Lead Borrower (it being understood that any such call may be combined with any similar call held for any of the Lead Borrower’s other lenders or security holders).
SECTION 5.09 Compliance with Laws.
(a) The Borrower will, and will cause each of its Subsidiaries to, comply with its Organizational Documents and all Requirements of Law (including ERISA, Environmental Laws, the USA PATRIOT Act, Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, the U.S. Foreign Corrupt Practices Act of 1977 and other anti-money laundering, anti-corruption, sanctions and anti-terrorism laws) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
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(b) The Borrower will not request any Borrowing, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (i) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country except to the extent permissible for a Person required to comply with Sanctions, (ii) in any manner that would result in the violation of any Sanctions applicable to the Borrower and its Subsidiaries or to the knowledge of the Borrower, any other party hereto or (iii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any legislation.
SECTION 5.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans for the purposes set forth in Section 3.16.
SECTION 5.11 Additional Subsidiaries.
(a)
If (i) any additional Subsidiary is formed or acquired after the Effective Date (other
than Badcock), (ii) if any Subsidiary ceases to be an Excluded Subsidiary
or (iii) if the Borrower, at its option, elects to cause a Domestic Subsidiary, or to
the extent reasonably acceptable to the Required Lenders, a Foreign Subsidiary that is not a Wholly Owned Subsidiary (including any consolidated
Affiliate in which the Borrower and its Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party, then, the Borrower will,
within thirty (30) days (or such longer period as may be agreed to by the Required Lenders in their reasonable discretion) after such
newly formed or acquired Subsidiary is formed or acquired or such Subsidiary ceases to be an Excluded Subsidiary or the Borrower has made
such election, notify the Administrative Agent thereof, and will cause such Subsidiary (unless such Subsidiary is an Excluded Subsidiary)
to satisfy the Collateral and Guarantee Requirement with respect to such Subsidiary and with respect to any Equity Interest in or Indebtedness
of such Subsidiary owned by or on behalf of any Loan Party within thirty (30) days after such notice (or such longer period as the Required
Lenders shall reasonably agree) and the Administrative Agent shall have received a completed Perfection Certificate (or supplement thereof)
with respect to such Subsidiary signed by a Responsible Officer, together with all attachments contemplated thereby.
(b) Within sixty (60) days (or, to the extent any new Material Subsidiary is organized or incorporated under the laws of a jurisdiction in which no existing Loan Party is organized or incorporated, within ninety (90) days) (or, in each case, such longer period as otherwise provided in this Agreement or as the Required Lenders may reasonably agree) after the Borrower identifies any new Material Subsidiary (other than Badcock) pursuant to Section 5.03(b), all actions (if any) required to be taken with respect to such Subsidiary in order to satisfy the Collateral and Guarantee Requirement shall have been taken with respect to such Subsidiary, to the extent not already satisfied pursuant to Section 5.11(a).
(c) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within ninety (90) days, following the formation or acquisition of such real property or such Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Required Lenders in their reasonable discretion.
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SECTION 5.12 Further Assurances.
(a) The Borrower will, and will cause each Loan Party to, 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, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, in each case, to cause the “Collateral and Guarantee Requirement” (or the “Badcock Collateral and Guarantee Requirement” in the case of Badcock) to be and remain satisfied, all at the expense of the Loan Parties.
(b) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Material Real Property or improvements thereto or any interest therein, are acquired by the Borrower or any other Loan Party (other than Badcock) or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent or the Required Lenders to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”. In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party (other than Badcock), as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Required Lenders in their reasonable discretion.
(c) If, after the First Amendment Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Badcock Material Real Property or improvements thereto or any interest therein, are acquired by Badcock (other than assets constituting Badcock Collateral under a Badcock Security Document that become subject to the Lien created by such Badcock Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause Badcock to take, such actions as shall be necessary and reasonably requested by the Administrative Agent or the Required Lenders to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Badcock Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Badcock Collateral and Guarantee Requirement”. In the event any Badcock Material Real Property is mortgaged pursuant to this Section 5.12(c), Badcock shall be required to comply with the “Badcock Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Badcock Material Real Property or such longer time period as agreed by the Required Lenders in their reasonable discretion.
SECTION 5.13 Franchise Agreements.
The Borrower will, and will cause each Loan Party to, satisfy and perform in all material respects all obligations of each such Person under each Franchise Agreement, except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
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SECTION 5.14 Certain Post-Closing Obligations.
As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14(a) or such later date as the Required Lenders agree to in writing, including to reasonably accommodate circumstances unforeseen on the Effective Date, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedules 5.14(a) and 5.14(b), as applicable, that, where such actions are to be taken to reasonably accommodate circumstances unforeseen on the Effective Date, would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Collateral Agent or the Required Lenders pursuant to its or their authority as set forth in the definition of the term “Collateral and Guarantee Requirement”.
ARTICLE
VI
Negative Covenants
From and after the Effective Date and until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable (other than (i) contingent amounts not yet due and (ii) Cash Management Obligations) under any Loan Document have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of the Borrower and any of the Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Section 2.21);
(ii) Indebtedness outstanding on the First Amendment Effective Date and any Permitted Refinancing thereof; provided that any Indebtedness in excess of $6,900,000 for the most recently ended Test Period as of such time, shall only be permitted if set forth on Schedule 6.01;
(iii) Guarantees by the Borrower and its Subsidiaries in respect of Indebtedness of the Borrower or any Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is otherwise permitted by Section 6.04, (B) no Guarantee by any Subsidiary of any Junior Financing or any unsecured Indebtedness for borrowed money that constitutes Material Indebtedness shall be permitted unless such Subsidiary shall have also provided a Guarantee of the applicable Loan Document Obligations pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement, as the case may be, and (C) if the Indebtedness being guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(iv) Indebtedness of the Borrower or any Subsidiary owing to the Borrower or any Subsidiary, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date (or the date of acquisition of such Subsidiary) or such later date as the Required Lenders may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to material adverse tax consequences) on terms (i) not materially less favorable, taken as a whole, to the Lenders as those set forth in the Master Intercompany Note and the Badcock Master Intercompany Note or (ii) otherwise reasonably satisfactory to the Required Lenders;
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(v) (A) Indebtedness (including Capital Lease Obligations and purchase money indebtedness) incurred, issued or assumed by the Borrower or any Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that, in the case of any purchase money Indebtedness, such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement; provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) (excluding any Capital Lease Obligations incurred pursuant to a sale and leaseback transaction permitted under Section 6.06) shall not exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(vi) Indebtedness in respect of Swap Agreements not incurred for speculative purposes;
(vii) [reserved];
(viii) [reserved];
(ix) [reserved];
(x) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xi) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, Earn-Outs, incentive non-competes and other contingent obligations) or other similar arrangements incurred or assumed in connection with any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xii) (A) Indebtedness of the Borrower or any of the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xii) shall not exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiii) (A) Indebtedness of, incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures in an aggregate outstanding principal amount not to exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
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(xiv)
[reserved];
(xiv) Indebtedness (A) incurred pursuant to the Badcock First Lien Credit Agreement and the other Badcock First Lien Loan Documents in an aggregate principal amount not to exceed $425,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the Badcock First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement and (B) incurred pursuant to the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Loan Documents in an aggregate principal amount not to exceed $150,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the Badcock Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the Parity Lien Intercreditor Agreement;
(xv) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xvi) Indebtedness supported by a letter of credit, in a principal amount not to exceed the face amount of such letter of credit;
(xvii) (A) Indebtedness arising from an agreement providing for indemnification obligations or obligations in respect of purchase price (including earn-outs) or other similar adjustments incurred in any Permitted Acquisition, any other Investment or any Disposition, in each case permitted under this Agreement, and (B) Indebtedness arising from guaranties, letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments securing the performance pursuant to any such agreement described in clause (A);
(xviii) Permitted Unsecured Refinancing Debt and any Permitted Refinancing thereof;
(xix) (A) Permitted First Priority Refinancing Debt (subject to clause (xxxii) of this Section 6.01(a)) and any Permitted Refinancing thereof, (B) Permitted Parity Priority Refinancing Debt and any Permitted Refinancing thereof and (C) Permitted Junior Priority Refinancing Debt and any Permitted Refinancing thereof;
(xx) (A)(I) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into the Borrower or any Subsidiary) after the Effective Date as a result of any Permitted Acquisition or any other Investment not prohibited by Section 6.04, or (II) Indebtedness of any Person that is assumed by the Borrower or any Subsidiary in connection with an acquisition of assets by the Borrower or such Subsidiary in any Permitted Acquisition or any other Investment not prohibited by Section 6.04; provided that such Indebtedness is not incurred in contemplation of such Permitted Acquisition or other Investment and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further, that the aggregate principal amount of Indebtedness at any time outstanding under this clause (xx) shall not exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;
(xxi) (A) Indebtedness of any Subsidiary that is not a Loan Party; provided that the aggregate principal amount of Indebtedness of which the primary obligor or a guarantor is a Subsidiary that is not a Loan Party outstanding in reliance of this clause (xxi) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
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(xxii) Indebtedness incurred by the Borrower or any of the Subsidiaries in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligations regarding workers compensation claims;
(xxiii) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(xxiv) (x) Indebtedness representing deferred compensation or stock-based compensation owed to employees, consultants or independent contractors of the Borrower or its Subsidiaries incurred in the ordinary course of business or consistent with past practice and (y) Indebtedness consisting of obligations of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries under deferred compensation to employees, consultants or independent contractors of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries or other similar arrangements incurred by such Persons in connection with the Transactions, any Permitted Acquisition or any other Investment not prohibited by Section 6.04;
(xxv) Indebtedness consisting of unsecured promissory notes issued by the Borrower or any Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, successors, executors, administrators, heirs, legatees or distributees, in each case to finance the purchase or redemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) to the extent permitted by Section 6.07(a);
(xxvi) (A) letters of credit or bank guarantees (exclusive of letters of credit issued pursuant to the ABL Credit Agreement) and similar instruments incurred by the Borrower and the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xxvi) shall not exceed the greater of $18,400,000 and 5.75% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxvii) Capital Lease Obligations arising under any sale and leaseback transaction permitted hereunder in reliance upon Section 6.05(f);
(xxviii) to the extent constituting Indebtedness, motor vehicle leases in the ordinary course of business;
(xxix) Indebtedness of any Loan Parties or Subsidiaries incurred in connection with any non-payment of rent by such Loan Parties or Subsidiaries caused by the COVID-19 Pandemic to the extent the landlord or other party to which such rent is due has accepted such temporary non-payment and has not declared a default under any applicable lease; provided that the aggregate outstanding amount of such Indebtedness attributable to unpaid rent shall not at any time exceed $11,500,000 for the most recently ended Test Period as of such time of determination;
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(xxx)
unsecured Indebtedness owing to area developers and/or franchisees incurred by the Liberty Parties
solely for the purpose of repurchasing Liberty Area Development Rights and/or Liberty Franchise Rights as permitted under clauses (y)
and (z) of Section 6.04; provided that (i) such Indebtedness
shall not bear interest, and (ii) the aggregate outstanding principal amount of such Indebtedness shall not at any time exceed the greater
of $18,400,000 and 5.75% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;[reserved];
(xxxi) Indebtedness incurred pursuant to any ABL Credit Agreement and the other ABL Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $250,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Collateral Agent (or the Agents) the ABL Intercreditor Agreement;
(xxxii) Indebtedness incurred pursuant to any First Lien Credit Agreement and the other First Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount, together with any Permitted First Priority Refinancing Debt, not to exceed $1,100,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the First Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the First Lien/Second Lien Intercreditor Agreement; and
(xxxiii) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxii) above.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, issue any preferred Equity Interests or any Disqualified Equity Interests, except (A) in the case of the Borrower, preferred Equity Interests that are Qualified Equity Interests and (B)(x) preferred Equity Interests issued to and held by the Borrower or any Subsidiary and (y) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (B) (x) any such issuance of preferred Equity Interests that are not Qualified Equity Interests shall constitute incurred Indebtedness and be subject to the provisions set forth in Sections 6.01(a) and (b) (and shall only be permitted if the incurrence of such Indebtedness would have been permitted thereunder) and (y) if so incurred, any cash payments made with respect to such preferred Equity Interests shall constitute Restricted Payments and shall be subject to Section 6.07(a).
For purposes of determining compliance with any dollar denominated restriction on the incurrence of Indebtedness, the dollar equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided, however, that if such Indebtedness is a Permitted Refinancing incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance such dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Permitted Refinancing does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness the Borrower or any Subsidiary may incur pursuant to this Section 6.01 shall not be deemed exceeded by fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of any extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness.
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With respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence.
This Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral.
SECTION 6.02 Liens.
The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens existing on the First Amendment Effective Date (provided that any Lien securing Indebtedness or other obligations in excess of $6,900,000 shall only be permitted if set forth on Schedule 6.02) and any modifications, replacements, renewals or extensions thereof; provided that (A) such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof, and (B) the obligations secured or benefited by such modified, replacement, renewal or extension Lien are permitted by Section 6.01;
(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property and Badcock Intellectual Property) that do not (A) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor or licensee under any lease or license entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased or licensed;
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(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection, (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(ix) Liens on property or other assets of any Subsidiary that is not a Loan Party, which Liens secure Indebtedness or other obligations of such Subsidiary or another Subsidiary that is not a Loan Party, in each case permitted by this Agreement;
(x) Liens granted by a Subsidiary that is not a Loan Party in favor of any Subsidiary or the Borrower and Liens granted by a Loan Party in favor of any other Loan Party;
(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition);
(xii) any interest or title of a lessor or sublessor under leases or subleases (other than leases constituting Capital Lease Obligations) entered into by the Borrower or any Subsidiary in the ordinary course of business;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by the Borrower or any Subsidiary in the ordinary course of business;
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(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and its Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
(xvii) Liens securing Obligations (as defined in the ABL Credit Agreement) under the ABL Credit Agreement and the other ABL Loan Documents; provided that the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens securing Indebtedness permitted under Section 6.01(a)(xix);
(xx) Liens on real property other than the Mortgaged Properties or the Badcock Mortgaged Properties;
(xxi) Liens securing Secured Obligations (as defined in the First Lien Credit Agreement) under the First Lien Credit Agreement and the other First Lien Loan Documents; provided that the First Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) prior to Payment in Full of Badcock Obligations, the Badcock Intercreditor Agreement;
(xxii) Liens securing Indebtedness permitted under Section 6.01(a)(xii);
(xxiii) Liens on cash and Permitted Investments to secure Indebtedness permitted under Section 6.01(a)(x) or (xxvi);
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) Liens securing Indebtedness permitted under Section 6.01(a)(xxi);
(xxviii) other Liens; provided that at the time of the granting of and after giving Pro Forma Effect to any such Lien and the obligations secured thereby (including the use of proceeds thereof) the lesser of (x) the aggregate outstanding face amount of obligations secured by Liens existing in reliance on this clause (xxviii) and (y) the fair market value of the assets securing such obligations shall not exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period;
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(xxix)
Liens in favor of credit card issuers and credit card processors arising in the ordinary course of business securing the obligation
to pay customary fees and expenses in connection with credit card arrangements; and
(xxx)
Liens on motor vehicles securing Indebtedness permitted by clause (xxviii) of Section 6.01.;
and
(xxxi) Liens securing (A) Secured Obligations (as defined in the Badcock First Lien Credit Agreement) under the Badcock First Lien Credit Agreement and the other Badcock First Lien Loan Documents; provided that the Badcock First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement and (B) Secured Obligations (as defined in the Badcock Second Lien Credit Agreement) under the Badcock Second Lien Credit Agreement and the other Badcock Second Lien Loan Documents; provided that the Badcock Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (y) the Parity Lien Intercreditor Agreement.
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness.
SECTION 6.03 Fundamental Changes; Lead Borrower Covenant .
(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that:
(i) (A) any Subsidiary (other than a Borrower) may merge or consolidate with a Borrower; provided that a Borrower shall be the continuing or surviving Person and (B) any Subsidiary (other than a Borrower) may merge or consolidate with one or more other Subsidiaries; provided that when any Subsidiary Loan Party is merging or consolidating with another Subsidiary the continuing or surviving Person shall be a Subsidiary Loan Party; provided further that if the continuing or surviving Person is not a Subsidiary Loan Party, as applicable, the acquisition of such Subsidiary Loan Party by such surviving non-Loan Party Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Subsidiary that is not a Loan Party may merge or consolidate with or into any other Subsidiary that is not a Loan Party and (B) any Subsidiary may liquidate or dissolve or change its legal form if the Borrower determines in good faith that such action is in the best interests of the Borrower and its Subsidiaries and is not materially disadvantageous to the Lenders;
(iii) (x) any Borrower, other than the Lead Borrower, may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to a Borrower and (y) any Subsidiary may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or another Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment must be a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Lead Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04;
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(iv) a Borrower may merge or consolidate with (or Dispose of all or substantially all of its assets to) any other Person (including another Borrower); provided that (A) a Borrower shall be the continuing or surviving Person (or, if one of the parties to such merger, consolidation or Disposal is the Lead Borrower, then the Lead Borrower shall be the continuing or surviving Person) or (B) if the Person formed by or surviving any such merger or consolidation (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) is not a Borrower or is a Person into which the Borrower has been liquidated (any such Person, the “Successor Borrower”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States, any State thereof or the District of Columbia, (2) the Successor Borrower shall expressly assume all the obligations of a Borrower under this Agreement and the other Loan Documents to which such Borrower is a party, pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Required Lenders, (3) each Loan Party other than such Borrower, unless it is the other party to such merger or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Required Lenders, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement, and (4) such Borrower shall have delivered to the Administrative Agent and the Lenders a certificate of a Responsible Officer and an opinion of counsel, each stating that such merger or consolidation complies with this Agreement; provided further that if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, such Borrower under this Agreement and the other Loan Documents; provided further that such Borrower will use commercially reasonable efforts to provide any documentation and other information about the Successor Borrower as shall have been reasonably requested in writing by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act; provided, further, that a Successor Borrower may not succeed to or be substituted for the Lead Borrower pursuant to this clause (iv);
(v) the Borrower and its Subsidiaries may undertake or consummate any Tax Restructuring;
(vi) [Reserved];
(vii) any Subsidiary may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be a Borrower or a Subsidiary, which together with each of the Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12; and
(viii) any Subsidiary may effect a merger, dissolution, liquidation, consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
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(b) Neither the Borrower, nor any Subsidiary Loan Party, shall amend or permit any amendments to such Person’s Organizational Documents after the Effective Date in any manner that (when taken as a whole) would be materially adverse to Lenders.
(c) The Lead Borrower will not conduct, transact or otherwise engage in any material business or material operations other than (i) the ownership and/or acquisition of the Equity Interests of its Subsidiaries and any other Persons engaged in a Similar Business (subject to Section 6.04), (ii) the performance of obligations under and compliance with its Organizational Documents, or other Requirement of Law (including the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance), ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of any of its Subsidiaries, and including in connection with the maintenance of its status as public company and any activities related or incidental thereto, including compliance with Requirements of Law and requirements, rules, regulations and guidance (whether or not binding) of the SEC and Nasdaq, Inc., (iii) subject to Section 6.04, repurchases of Indebtedness through open market purchases and Dutch auctions (to the extent not in violation hereof and to the extent any Loans so purchased are automatically and irrevocably cancelled after repurchase), the making of any loan to any officers, directors, managers, members of management, consultants or independent contractors and the making of any Investment in any of its Subsidiaries, (iv) participating in tax, accounting and other administrative matters related to the Lead Borrower and its Subsidiaries, (v) the entry into, and exercise of rights and performance of its obligations under and in connection with the Loan Documents and Guarantees of other Indebtedness not prohibited from being incurred under this Agreement by the Lead Borrower and its Subsidiaries, including borrowings under this Agreement, the ABL Credit Agreement, the First Lien Credit Agreement, the Badcock First Lien Credit Agreement, the Badcock Second Lien Credit Agreement and any other Indebtedness not prohibited from being incurred under this Agreement, (vi) any issuance or registration of its Qualified Equity Interests for sale or resale (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Qualified Equity Interests), including the costs, fees and expenses related thereto, (vii) holding of any cash and Permitted Investments, (viii) the payment of dividends or making of distributions, making of loans and contributions to the capital of its Subsidiaries and any other Persons engaged in a Similar Business and guaranteeing the obligations of its Subsidiaries and making Investments, in each case, not in violation of Article VI of this Agreement, (ix) incurring fees, costs and expenses relating to overhead and general operating expenses including professional fees for legal, tax and accounting issues and paying taxes, (x) providing indemnification for its current and former officers, directors, managers, members of management, employees, advisors, consultants or independent contractors, (xi) performing of its obligations under the Acquisition Agreement and the other documents and agreements related thereto or contemplated thereby, (xii)(1) the payment of Public Company Costs or (2) activities reasonably incidental to the consummation of a Tax Restructuring, (xiii) activities incidental to the businesses or activities described in the foregoing clauses and (xiv) any business or other activities that are identical, reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the business and activities conducted by or proposed to be conducted by the Lead Borrower on or immediately prior to the Effective Date.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
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(b) loans or advances to officers, members of the Board of Directors and employees of the Borrower and its Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of the Borrower (or any direct or indirect parent thereof) (provided that the amount of such loans and advances made in cash to such Person shall be immediately contributed to the Lead Borrower in cash as common equity or Qualified Equity Interests and shall not increase the Available Equity Amount or constitute Aggregate Cure Amounts) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time in reliance on this clause (iii) not to exceed $17,250,000 for the most recently ended Test Period as of such time;
(c)
Investments by any Borrower or Subsidiary in any Borrower or Subsidiary; provided, that (i)
Investments by any Loan Parties in any Subsidiaries that are not a Loan Party shall not exceed an aggregate outstanding amount
of the greater of $18,400,000 and 5.75% of Consolidated EBITDA for the most recently ended Test Period as of such time;
and (ii) prior to Payment in Full of Badcock Obligations, Investments by any
Borrower or any Subsidiary (other than Badcock) in Badcock pursuant to this clause (c) shall not exceed an aggregate outstanding amount
equal to the sum of (A) $28,750,000 plus (B) the Available Equity Amount (assuming that each reference in such definition to “Effective
Date” refers to the “First Amendment Effective Date”);
(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the First Amendment Effective Date (provided that any Investment in an amount greater than $6,900,000 shall only be permitted if set forth on Schedule 6.04(e)) and any modification, replacement, renewal, reinvestment or extension thereof and (ii) Investments existing on the First Amendment Effective Date by any Borrower or any Subsidiary in any Borrower or any Subsidiary and any modification, renewal or extension thereof; provided, in each case, that the amount of the Investment as of the First Amendment Effective Date (or, if later, the date of the initial making of such Investment) is not increased except by the terms of such Investment to the extent, in the event such increase is in excess of $6,900,000 for the most recently ended Test Period as of such time, set forth on Schedule 6.04(e) or as otherwise permitted by this Section 6.04;
(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h)
(A) Permitted Acquisitions and,
(B) the Badcock Acquisition and (C) intercompany Investments required
(as determined by the Lead Borrower in good faith) to consummate Permitted Acquisitions and
the Badcock Acquisition;
(i) Investments in connection with the Transactions;
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
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(l) loans and advances to any equity holder of the Lead Borrower (or any direct or indirect parent thereof) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such holder (or such parent) in accordance with Section 6.07(a);
(m) additional Investments (other than Investments in Badcock prior to Payment in Full of Badcock Obligations) and other acquisitions; provided that the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid (excluding the Net Proceeds from the issuance of such Qualified Equity Interests) in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of (A) (i) the greater of $46,000,000 and 14.375% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition; plus (ii) the Available General RP Capacity Amount at such time; plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (C) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (D) Investments in an aggregate outstanding amount not to exceed the portion, if any, of any unused amounts available under Section 6.07(a)(v) or 6.07(a)(xv) for Restricted Payments on the relevant date of determination that the Borrower elects to apply pursuant to this Section 6.04(m); provided that any Investment made in reliance on preceding clause (B) shall be subject to (x) no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 having occurred and be continuing or resulting therefrom and (y) before and after giving Pro Forma Effect to such Investment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.56 to 1.00 as of the end of the most recently ended Test Period as of such time;
(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments (other than Investments in Badcock prior to Payment in Full of Badcock Obligations) and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests;
(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary (provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(q) receivables owing to the Borrower or any Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
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(s) Investments in the Borrower or any Subsidiary in connection with any Tax Restructuring;
(t) [reserved];
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;
(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, Badcock Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) Investments in joint ventures (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in joint ventures) in an aggregate outstanding amount not to exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period;
(y) [reserved];
(z) [reserved];
(y) repurchases
of Liberty Area Development Rights; provided that (A) the aggregate purchase price for repurchases
of Liberty Area Development Rights shall not exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA during any fiscal year
of the Lead Borrower and (B) no Event of Default exists or would result therefrom;
(z) repurchases
of Liberty Franchise Rights; provided that (A) the aggregate purchase price for repurchases of
Liberty Franchise Rights shall not exceed the greater of $18,400,000 and 5.75% of Consolidated EBITDA during any fiscal year of the Lead
Borrower and (B) no Event of Default exists or would result therefrom;
(aa) Investments in Similar Businesses (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in Similar Businesses) in an aggregate outstanding amount not to exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period;
(bb)
(i) Investments arising as a result of sale and leaseback
transactions permitted by Section 6.06 hereto; and and
(ii) to the extent constituting Investments, Investments by Badcock consisting of guarantees by Badcock of operating lease liabilities
of lessees to the owners of real property sold by Badcock pursuant to and in accordance with Section 6.05(u) (solely with respect to the
real property that was the subject of any such sale); and
(cc) loans and advances to franchisees in the ordinary course of business (A) in connection with the sale of Franchise Rights or (B) to provide working capital to franchisees; provided that (i) such loans and advances in excess of $750,000 individually shall be evidenced by promissory notes and any such promissory notes shall be pledged to the Collateral Agent to the extent required by the Security Documents and (ii) the aggregate outstanding principal amount of such loans and advances made in reliance on this clause (cc) shall not exceed $11,500,000 for the most recently ended Test Period at any time.
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Notwithstanding anything to the contrary in this Section 6.04, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Material Intellectual Property (except for non-exclusive leases or non-exclusive licenses with respect thereto) as of the Effective Date owned by any Loan Party or any interest in any Franchise Agreement may be contributed and/or assigned as an Investment or otherwise transferred to (i) any non-Loan Party or (ii) prior to Payment in Full of Badcock Obligations, Badcock.
SECTION 6.05 Asset Sales.
The Borrower will not, and will not permit any of its Subsidiaries to, (i) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it or (ii) permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to the Borrower or a Subsidiary in compliance with Section 6.04(c)) (each, a “Disposition” and the term “Dispose” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable to maintain, in the conduct of the business of the Borrower and its Subsidiaries (including allowing any registration or application for registration of any Intellectual Property or Badcock Intellectual Property that is no longer used or useful, or economically practicable to maintain, to lapse, go abandoned, be dedicated to the public domain or be invalidated);
(b) Dispositions of inventory and other assets in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property;
(d)
Dispositions of property to the Borrower or a Subsidiary; provided that if the transferor in such a transaction is a Loan
Party, then (i)(i) the transferee must be a Loan Party (other than, prior to
Payment in Full of Badcock Obligations, Badcock), (ii) to the extent constituting an Investment, such Investment must
be a Permitted Investment in a Subsidiary that is not a Loan Party or, prior
to Payment in Full of Badcock Obligations, Badcock, in each case, in accordance with Section 6.04 or (iii) to the
extent constituting a Disposition to a Subsidiary that is not a Loan Party, or,
prior to Payment in Full of Badcock Obligations, Badcock, such Disposition is for fair market value (as determined in good
faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in
a Subsidiary that is not a Loan Party or, prior to Payment in Full of Badcock
Obligations, Badcock, in each case, in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03 and Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
(f) Dispositions of property pursuant to sale and leaseback transactions permitted by Section 6.06 hereto;
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(g) Dispositions of Permitted Investments;
(h) Dispositions of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, abandonments, licenses, sublicenses or other disposals (including of Intellectual Property and Badcock Intellectual Property), in each case, (A) granted in the ordinary course of business or (B) that do not materially interfere with the business of the Borrower and its Subsidiaries, taken as a whole;
(j) transfers of property subject to Casualty Events;
(k) Dispositions of property to Persons other than Subsidiaries (including the sale or issuance of Equity Interests of a Subsidiary and including the sale of real property) for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of (x) with respect to any single transaction or series of related transactions, $11,500,000 or (y) with respect to all other Dispositions in any fiscal year of the Lead Borrower not excluded from the requirements of this proviso pursuant to the immediately preceding subclause (x), $23,000,000, the Borrower or any Subsidiary shall receive not less than 75% of such consideration in excess of the amounts referred to subclauses (x) and (y) in the form of cash or Permitted Investments; provided, however, that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of the Borrower or such Subsidiary or in the footnotes thereto) of the Borrower or such Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of the Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by the Borrower or such Subsidiary from such transferee that are converted by the Borrower or such Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result of such Disposition (other than intercompany debt owed to the Borrower or its Subsidiaries), to the extent that the Borrower and all of the Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash and (D) any Designated Non-Cash Consideration received by the Borrower or such Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $28,750,000, with the fair market value (as determined in good faith by the Lead Borrower) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash; provided, further, that, other than in respect of the Disposition described on Schedule 6.05(k), no Event of Default shall have occurred and be continuing at the time of, and after giving effect to, any Disposition made pursuant to this clause (k);
(l) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(m) Dispositions or forgiveness of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;
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(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of the Borrower and its Subsidiaries and (B) made to obtain the approval of any applicable antitrust authority in connection with a Permitted Acquisition;
(o) Dispositions of assets that are not Collateral or Badcock Collateral in an aggregate amount not to exceed the greater of $9,200,000 and 2.875% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(p) transfers of condemned property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) any Disposition of the Equity Interests of any Immaterial Subsidiary;
(r) other Dispositions in an aggregate amount not to exceed the greater of $9,200,000 and 2.875% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(s) the
sale by the Liberty Parties of Liberty Area Development Rights, Liberty Franchise Rights, and store locations (and customer lists and
other assets related thereto), in each case in the ordinary course of business and consistent with past practice; provided
further that no Event of Default under paragraph (a), (b),
(d) (solely as a result of an Event of Default due to failure to comply with a Financial Maintenance
Covenant, subject to the cure rights set forth in Section 7.02 and solely after the expiration
of the applicable Cure Expiration Date), (h) or (i) of
Section 7.01 shall have occurred and be continuing at the time of, and after giving effect to,
any Disposition made pursuant to this clause (s); and
(s) [reserved];
(t)
sales or other dispositions by any Borrower or any Subsidiary of assets in connection with the closing or sale of a retail store
location (the closure of a store is not in and of itself the disposition of assets), warehouse, distribution center or corporate office
of such Borrower or Subsidiary in the ordinary course of business of such Borrower or Subsidiary, which sale or disposition consists of
leasehold interests in the premises of such store or distribution center, the equipment and fixtures located at such premises and the
books and records relating exclusively and directly to the operations of such store or distribution center; provided, that, such
sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction.;
and
(u) Dispositions of Badcock Collateral for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
Notwithstanding anything to the contrary in this Section 6.05, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Loan Party shall, directly or indirectly, sell or otherwise transfer (except for non-exclusive leases or non-exclusive licenses with respect thereto) any Material Intellectual Property as of the Effective Date or any interest in any Franchise Agreement to (i) any non-Loan Party or (ii) prior to Payment in Full of Badcock Obligations, Badcock.
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SECTION 6.06 Sale and Leaseback Transactions.
The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible
property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred,
except for (i) sale and leaseback transactions in an aggregate amount not to exceed the greater of $18,400,000 and 5.75% of Consolidated
EBITDA and, (ii)
any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less
than the fair market value (as determined in good faith by the Lead Borrower) of such fixed or capital asset and is consummated within
270 days after the Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset
and (iii) any sale and leaseback transactions of Badcock Collateral so long
as such sale is for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:
(i) each Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary; provided that in the case of any such Restricted Payment by a Subsidiary that is not a Wholly Owned Subsidiary of the Borrower, such Restricted Payment is made to the Borrower and/or any Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments made on or substantially contemporaneously with the Effective Date to consummate the Transactions, including to finance the payment of Transaction Costs;
(iv) repurchases of Equity Interests in the Borrower or any Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments used to redeem, acquire, retire, repurchase or settle the Borrower’s Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Lead Borrower (or any direct or indirect parent thereof), and its Subsidiaries (in each case, other than the executive management (i.e., the CEO, the CFO, any executive vice presidents and any similar executive management positions)), upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date not to exceed $11,500,000 in any fiscal year of the Lead Borrower with unused amounts in any fiscal year being carried over solely to the next succeeding fiscal years; provided that such amount in any fiscal year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower or the Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors the Borrower or any Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward solely to the next subsequent fiscal year; provided further that cancellation of Indebtedness owning to the Borrower or any Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Borrower or any Subsidiary in connection with a repurchase of Equity Interests of the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
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(vi) [reserved];
(vii) in addition to the foregoing Restricted Payments, the Borrower may make additional Restricted Payments, in an aggregate amount, when taken together with the aggregate amount of loans and advances previously made pursuant to Section 6.04(m) in lieu of Restricted Payments permitted by this clause (vii), not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any Restricted Payment made in reliance on preceding clause (A) shall be subject to, (x) no Event of Default having occurred and be continuing or resulting therefrom (tested at the time of declaration of such Restricted Payment) and (y) before and after giving Pro Forma Effect to such Restricted Payment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.21 to 1.00 as of the end of the most recently ended Test Period (tested at the time of declaration of such Restricted Payment);
(viii) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions;
(ix) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
(x) Restricted Payments to pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xi) payments made or expected to be made by the Borrower or any Subsidiary in respect of withholding or similar Taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
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(xii) [Reserved];
(xiii) [Reserved];
(xiv) [Reserved];
(xv) additional Restricted Payments in an amount not to exceed $138,000,000; provided that after giving effect to such Restricted Payment no Event of Default exists or would result therefrom;
(xvi) [Reserved]; and
(xvii) additional Restricted Payments (other than Restricted Payments of Equity Interests of any Wholly Owned Subsidiary); provided that after giving effect to such Restricted Payment (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.96 to 1.00 and (B) no Event of Default exists or would result therefrom.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, in each case, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal, premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
(ii) refinancings of Indebtedness to the extent permitted by Section 6.01;
(iii) (1) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of the Borrower and (2) any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
(iv) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that after giving effect to such prepayments, redemptions, purchases, defeasances or other payments (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.96 to 1.00 and (B) no Event of Default exists or would result therefrom;
(v) payments made in connection with, or in order to consummate, the Transactions;
(vi) (A) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing in an aggregate amount not to exceed the greater of $92,000,000 and 28.75% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period plus (B) the amount of Restricted Payments that may be made pursuant to Section 6.07(a)(xv) at such time;
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(vii) additional prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that the aggregate amount of such prepayments, redemptions, purchases, defeasances and other payments made in reliance on this clause (vii), shall not exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments; provided that any prepayments, redemptions, purchases, defeasances and other payments made in reliance on preceding clause (A) shall be subject to, before and after giving Pro Forma Effect to such prepayments, redemptions, purchases, defeasances and other payments, the Total Net Leverage Ratio being less than or equal to 3.21 to 1.00 as of the end of the most recently ended Test Period (tested at the time of distribution or delivery of any irrevocable notice of prepayment, redemption, repurchase or defeasance, as applicable, in respect thereof);
(viii) the prepayment of any Junior Financing owed to the Borrower or a Subsidiary or the prepayment of any Permitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing; provided that (A) no Loan Party shall make any prepayment of any Junior Financing owed to any Subsidiary that is not a Loan Party pursuant to this clause (viii) and (B) prior to Payment in Full of Badcock Obligations, neither the Borrower nor any Subsidiary (other than Badcock) shall make any prepayment of any Junior Financing owed to Badcock pursuant to this clause (viii); and
(ix) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing within one year of the scheduled maturity of such Junior Financing; provided, that after giving effect to such prepayments, redemptions, purchases, defeasances and other payments, no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 exists or would result therefrom.
SECTION 6.08 Transactions with Affiliates.
The Borrower will not, and will not permit any
of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among
any Borrower or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction and (B) transactions involving
aggregate payment or consideration of less than the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended
Test Period as of such time, (ii) on terms not materially less favorable to the Borrower or such Subsidiary as would be obtainable by
such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate (as determined by the majority
of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors
(or any committee thereof) of the Lead Borrower in good faith), (iii) the payment of Transaction Costs, fees and expenses related to the
Transactions, (iv) Dispositions in the form of a sale of furniture and assignment of lease agreements to franchisees in the ordinary course
of business consistent with past practices, so long as the sale thereof is approved by disinterred members of the Board of Directors (or
any committee thereof), (v) issuances of Equity Interests of the Borrower and the Subsidiaries to the extent otherwise permitted by this
Agreement, (vi) employment and severance arrangements and other compensation arrangements between the Borrower and its Subsidiaries and
their respective officers and employees in the ordinary course of business or otherwise in connection with the Transactions (including
loans and advances pursuant to Sections 6.04(b) and 6.04(n)), (vii) investments by Affiliates in Indebtedness and preferred
Equity Interests of the Borrower and the Subsidiaries, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and
indemnities provided on behalf of, members of the Board of Directors, officers and employees of the Lead Borrower (or any direct or indirect
parent thereof) and the Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the
Lead Borrower and its Subsidiaries, (ix) transactions pursuant to agreements in existence or contemplated on the First
Amendment Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is
not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances
in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary
course of business (including any cash management activities related thereto), (xii) transactions with customers, clients, suppliers,
contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course
of business and which are fair to the Borrower and the Subsidiaries, in the reasonable determination of the Lead Borrower, or are on terms
at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) issuance
of the Equity Grant,[reserved], (xiv) customary
payments by the Borrower and any Subsidiaries to any Investors made for any financial advisory, consulting, financing, underwriting or
placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings),
which payments are approved by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested
members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith and (xv) payments by the Borrower and
any Subsidiaries to reimburse any Investors and other Affiliates for any indemnities and reasonable out-of-pocket costs and expenses incurred
in connection with the provision of any financial advisory, consulting, financing, underwriting or placement services or in respect of
other investment banking activities (including in connection with acquisitions, divestitures or financings) by such Investor to Borrower
and any Subsidiaries.
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SECTION 6.09 Restrictive Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a)
restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) [reserved], (4) any documentation governing
Permitted Unsecured Refinancing Debt, Permitted Junior Priority Refinancing Debt, Permitted Parity Priority Refinancing Debt or Permitted
First Priority Refinancing Debt; provided that none of such documentation shall prohibit or limit the Lien in favor of the Collateral
Agent for the benefit of the Secured Parties with respect to the Secured Obligations as in effect on the Effective Date, (5) any documentation
governing Indebtedness incurred pursuant to Section 6.01(a)(xxi) or Section 6.01(a)(xxvi), (6) the ABL Loan Documents or,
the First Lien Loan Documents, the Badcock First Lien Loan Documents or the
Badcock Second Lien Loan Documents or (7) any documentation governing any Permitted Refinancing incurred to refinance any such
Indebtedness referenced in clauses (1) through (6) above;
(b) customary restrictions and conditions in any agreements, instruments, deeds or leases existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
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(d) customary provisions in leases, licenses, sublicenses and other contracts restricting the assignment thereof;
(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary and the restriction or condition set forth in such agreement does not apply to the Lead Borrower or any other Subsidiary;
(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or, in the case of any Junior Financing, are market terms at the time of issuance and are imposed solely on such Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary; and
(m)
customary provisions related to creditworthiness of the tenant contained in real property leases entered into by Subsidiaries,
so long as the Borrower has determined in good faith that such creditworthiness provisions could not reasonably be expected to impair
the ability of the Borrower and its Subsidiaries to meet their ongoing obligations; and.
(n) the
Equity Grant.
SECTION 6.10 Financial Maintenance Covenants.
(a) Maximum Total Net Leverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Total Net Leverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, to be greater than (a) for each fiscal quarter (commencing with the first full fiscal quarter ending after the Effective Date) prior to the fiscal quarter ending on or about December 31, 2022, 4.40 to 1.00 and (b) for each fiscal quarter thereafter (beginning with the fiscal quarter ending on or about December 31, 2022), 3.90 to 1.00.
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(b) Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Fixed Charge Coverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, on a consolidated basis to be less than 1.50 to 1.00.
SECTION 6.11 Changes in Fiscal Periods.
The Lead Borrower will not make any change in its fiscal year; provided, however, that the Lead Borrower may, upon written notice to the Administrative Agent (which the Administrative Agent shall promptly deliver to the Lenders), change its fiscal year to any other fiscal year reasonably acceptable to the Required Lenders, in which case, the Lead Borrower and the Required Lenders will, and are hereby authorized by the Lenders and the Administrative Agent to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year, without any requirement of consent by any other Lender or other Person (notwithstanding anything to the contrary in Section 9.02); and provided further that the limitation of this Section 6.11 shall not apply with respect to any short year resulting from the Transactions that occurred on the Effective Date.
SECTION 6.12 Amendment of Financing Documents.
The Borrower will not, and will not permit any of its Subsidiaries to, amend, modify, waive, terminate or release any ABL Loan Document, any First Lien Loan Document, any Badcock First Lien Loan Document, any Badcock Second Lien Loan Document or the documentation governing any other Junior Financing, in each case, in a manner restricted by the terms of any applicable intercreditor or subordination agreement.
SECTION 6.13 Franchise Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to, maintain or distribute any Franchise Disclosure Documents, or enter into any Franchise Agreements, in violation of Section 3.20(c).
SECTION 6.14 Anti-Layering.
The Borrower will not, and will not permit any of its Subsidiaries to, create or incur any Indebtedness which is contractually subordinated or contractually junior in right of payment or security to the Indebtedness incurred under the First Lien Loan Documents, unless such Indebtedness is contractually pari passu or contractually junior in right of payment or security, as applicable, to the Loan Document Obligations, in each case, other than the creation or incurrence of Indebtedness under the ABL Loan Documents.
SECTION 6.15 Badcock.
In addition to the restrictions set forth in Sections 6.1 through 6.14, the Borrower will not permit Badcock to, in each case prior to Payment in Full of Badcock Obligations:
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(a) create, incur, assume or permit to exist any Indebtedness, except Indebtedness permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) and (a)(xxxiii) (solely as it relates to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) of Section 6.01) of Section 6.01;
(b) issue any preferred Equity Interests or any Disqualified Equity Interests;
(c) create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except Liens permitted by clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (xii), (xiii), (xv), (xvi), (xviii), (xx), (xxi), (xxiii) (solely in respect of Section 6.01(a)(x)), (xxv), (xxix), (xxx) and (xxxi) of Section 6.02;
(d) merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve;
(e) make or hold any Investment, except Investments permitted by clauses (a), (d), (e), (g), (j), (k), (n), (q), (r), (s), (v), (w) and (bb) of Section 6.04;
(f) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it, except Dispositions permitted by clauses (a), (b), (c), (d), (f), (g), (h), (i), (j), (m), (p), (t) and (u) of Section 6.05; provided that any Disposition by Badcock pursuant to Section 6.05(f) or Section 6.05(u) shall only be permitted hereunder to the extent the Net Proceeds of such Disposition are used to repay Indebtedness in accordance with the terms of the Badcock First Lien Credit Agreement, the Badcock Second Lien Credit Agreement, the First Lien Credit Agreement and this Agreement (without giving effect to any reinvestment rights that would otherwise allow the Borrower and its Subsidiaries to reinvest such Net Proceeds in lieu of making any such repayment); or
(g) allow to be effective any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except to the extent permitted by Section 6.06(iii).
ARTICLE
VII
Events of Default
SECTION 7.01 Events of Default.
If any of the following events (any such event, an “Event of Default”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
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(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any of the Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect (or all respects to the extent already qualified by materiality) when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of thirty (30) days after notice thereof from the Administrative Agent or the Required Lenders to the Borrower;
(d) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of the Borrower), 5.10, 5.14 or in Article VI; provided that any Event of Default due to failure to comply with the Financial Maintenance Covenants is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the Cure Expiration Date for the applicable fiscal quarter of the Lead Borrower;
(e) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01) and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent or the Required Lenders to the Borrower;
(f) [reserved];
(f) any Lien purported to be created under any Badcock Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Badcock Collateral, with the priority required by the applicable Badcock Security Documents, except (i) as a result of the sale or other disposition of the applicable Badcock Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Badcock Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Badcock Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(g)
any event or condition occurs that results in any Material Indebtedness, Indebtedness under the ABL Loan Documents,
Indebtedness under the First Lien Credit Agreement, Indebtedness under the Badcock First Lien Credit Agreement and/or Indebtedness
under the FirstBadcock Second
Lien Credit Agreement becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having
expired) the holder or holders of any such Indebtedness or any trustee or agent on its or their behalf to cause any such Indebtedness
to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided
that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer
or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness
(to the extent such sale, transfer or other disposition is not prohibited under this Agreement) or (ii) termination events or similar
events occurring under any Swap Agreement that constitutes Material Indebtedness, other than on account of failure to make a payment required
as a result of such termination or similar events; provided, further, that an event or condition with respect to the First
Lien Credit Agreement that would otherwise constitute an Event of Default pursuant to this paragraph (g) shall not be an Event of Default
(A) unless such event or condition constitutes a payment “Event of Default” under (and as defined in) the First Lien Credit
Agreement or (B) otherwise, until the earlier of (x) the date on which the Indebtedness under the First Lien Credit Agreement has been
accelerated as a result of such event or condition and (y) the first date on which such event or condition shall have continued unremedied
for a period of 30 days after the initial date of such event or condition (during which the applicable “Event of Default”
under (and as defined in) the First Lien Credit Agreement is not waived or cured);
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(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more final, non-appealable, enforceable judgments for the payment of money in an aggregate amount in excess of $57,500,000 (to the extent not covered by insurance (including self-insurance) as to which the insurer has been notified of such judgment or order and has not denied coverage) shall be rendered against the Borrower and any of the Material Subsidiaries or any combination thereof and the same shall remain undischarged for a period of sixty (60) consecutive days during which execution shall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such Loan Party that are material to the businesses and operations of the Borrower and its Subsidiaries, taken as a whole, to enforce any such judgment;
(k) an ERISA Event occurs that has resulted or would reasonably be expected to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of the Collateral Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of the Collateral Agent or any Secured Party;
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(m) any material provision of any Loan Document or any material Guarantee of the Loan Document Obligations shall for any reason be asserted in writing by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material Guarantee of the Loan Document Obligations by any Loan Party pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement shall cease to be in full force and effect (other than in accordance with the terms of the Loan Documents); or
(o) a Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Lead Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 7.02 Right to Cure.
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that the Borrower and its Subsidiaries fail to comply with the requirements of the Financial Maintenance Covenants as of the last day of any applicable fiscal quarter of the Lead Borrower, at any time after the end of such fiscal quarter until the expiration of the fifteenth (15th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter of the Lead Borrower (or the fiscal year of the Lead Borrower ended on the last day of such fiscal quarter of the Lead Borrower) are required to be delivered pursuant to Sections 5.01(a) or (b), as applicable (such date, the “Cure Expiration Date”), the Lead Borrower shall have the right to issue Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Required Lenders) for cash or otherwise receive cash contributions to the capital of the Lead Borrower as cash common equity or other Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Required Lenders) (collectively, the “Cure Right”). Upon the receipt by the Borrower of the Net Proceeds of such issuance (the “Cure Amount”, and together with the First Lien Cure Amount (as defined below), without duplication, the “Aggregate Cure Amount”) and/or upon the receipt by the Borrower of any Cure Amount (as defined in the First Lien Credit Agreement) (the “First Lien Cure Amount”) pursuant to the First Lien Credit Agreement, the Financial Maintenance Covenants shall be recalculated giving effect to the following pro forma adjustment:
(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Maintenance Covenants and not for any other purpose under this Agreement, by an amount equal to the Aggregate Cure Amount; and
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(ii) if, after giving effect to the foregoing pro forma adjustment (without giving pro forma effect to any repayment of any Indebtedness with any portion of the Aggregate Cure Amount and without netting against the calculation of Consolidated Total Indebtedness any portion of the Aggregate Cure Amount on the balance sheet of the Lead Borrower and its Subsidiaries, in each case, with respect to such fiscal quarter only), the Lead Borrower and its Subsidiaries shall then be in compliance with the requirements of the Financial Maintenance Covenants, the Borrower and its Subsidiaries shall be deemed to have satisfied the requirements of the Financial Maintenance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith (if any) at such date, and, if applicable, the applicable breach or default of the Financial Maintenance Covenants (if any) that had occurred shall be deemed cured for the purposes of this Agreement;
provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by the Borrower (or any other receipt of cash in respect of its Cure Rights).
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Lead Borrower there shall be no more than two (2) fiscal quarters in which the Cure Right is exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times and (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Maintenance Covenants and any amounts in excess thereof shall not be deemed to be a Cure Amount. Notwithstanding any other provision in this Agreement to the contrary, the Aggregate Cure Amount received pursuant to any exercise of the Cure Right or the Cure Right (as defined in the First Lien Credit Agreement) shall be disregarded for purposes of determining any financial ratio based conditions and/or available basket under Article VI of this Agreement (and the Aggregate Cure Amount shall not be credited as an addition to any basket (including the Available Amount or the Available Equity Amount) or for any other calculation). For the avoidance of doubt, no Aggregate Cure Amounts shall be applied to reduce the Indebtedness of the Borrower and its Subsidiaries on a Pro Forma Basis (whether by “cash netting” or otherwise) for purposes of determining compliance with the Financial Maintenance Covenants for the fiscal quarter with respect to which such Cure Right or Cure Right (as defined in the First Lien Credit Agreement) was exercised.
(c) [Reserved].
(d) Notwithstanding anything herein to the contrary, neither the Administrative Agent nor any Lender shall exercise the right to accelerate the Loans under the Term Facility or terminate the Commitments and none of the Administrative Agent, any Lender or any other Secured Party shall exercise any right to foreclose on or take possession of the Collateral or the Badcock Collateral or exercise any remedy solely on the basis of an Event of Default having occurred and being continuing with respect to the Financial Maintenance Covenants, in each case, unless such Event of Default is not cured pursuant to the exercise of the applicable Cure Right on or prior to the applicable Cure Expiration Date (except to the extent that the Lead Borrower has confirmed in writing that it does not intend to provide the Cure Amount).
SECTION 7.03 Application of Proceeds.
(a) Subject to the terms of any applicable Intercreditor Agreement contemplated by this Agreement, in connection with the exercise of remedies provided for in Section 7.01, any amounts received on account of the Secured Obligations (including in respect of any sale of, collection from or other realization upon all or any part of the Collateral or the Badcock Collateral (including any Collateral or Badcock Collateral consisting of cash) or the Guarantees) shall be applied by the Administrative Agent and/or the Collateral Agent, as applicable, to the payment of the Secured Obligations as follows:
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(i) first, to the payment of all reasonable and documented or invoiced out of pocket costs and expenses incurred by the Collateral Agent in connection with such sale, collection, other realization or otherwise and to the payment of all other amounts owing to each of the Administrative Agent, and the Collateral Agent in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all reasonable and documented or invoiced out of pocket court costs and the fees and expenses of its agents, the repayment of all advances made by it under any Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy under any Loan Document, in each case, if and to the extent payable pursuant to the terms of the Loan Documents;
(ii) second, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among such Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution) in accordance with this Agreement;
(iii) third, to any agent of any other junior secured debt, in accordance with any applicable Intercreditor Agreement; and
(iv) fourth, to the Borrower, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Administrative Agent and/or the Collateral
Agent, as applicable, shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance
with this Agreement. In the event that application of payments or,
Collateral proceeds or Badcock Collateral proceeds is to be made after any bankruptcy or insolvency proceeding has been commenced,
references in this Section 7.03(a) with respect to (i) interest shall include interest accruing after the commencement of such
bankruptcy or insolvency proceeding whether or not such interest is an allowed claim in such bankruptcy or insolvency proceeding, and
(ii) any other amounts shall only include amounts that are allowed claims in such bankruptcy or insolvency proceeding.
ARTICLE
VIII
Administrative Agent
SECTION 8.01 Appointment and Authority.
(a) Each of the Lenders hereby irrevocably (i) appoints (A) Alter Domus to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and (B) Alter Domus to act on its behalf as Collateral Agent hereunder and under the other Loan Documents and (ii) authorizes the Administrative Agent and the Collateral Agent (in their capacities as such), as applicable, to take such actions on such Lender’s behalf and to exercise such powers as are delegated to the Administrative Agent and the Collateral Agent, as applicable, by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints Alter Domus to act on its behalf as Collateral Agent under the Security Documents and the Badcock Security Documents and authorizes Alter Domus (in its capacity as Collateral Agent) to take such actions on such Secured Party’s behalf and to exercise such powers as are delegated to the Collateral Agent by the terms hereof or thereof together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirements of Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
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(b) Each of the Lenders and each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints and authorizes the Collateral Agent, as applicable, to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral and Badcock Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and/or the Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents and any Lien on the Badcock Collateral (or any portion thereof) granted under the Badcock Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
SECTION 8.02 Rights as a Lender.
Any Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions.
No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, each Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law;
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity;
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(d) shall in no event be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions;
(e) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable judgment; provided, that the taking or not taking of any action by any Agent in accordance with the direction of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances) shall not be deemed to constitute gross negligence or willful misconduct of such Agent.
(f) shall be deemed not to have knowledge of any Default unless and until written notice describing such Default and clearly labeled as a “Default” or “Event of Default” is given to such Agent by the Borrower or a Lender;
(g) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents or the Badcock Security Documents, (v) the value or the sufficiency of any Collateral or Badcock Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent; and
(h) shall not be responsible for nor have any duty to monitor the performance or any action of the Borrower or other Loan Party, or any of their directors, members, officers, agents, affiliates or employees, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party, and may assume performance by all such Persons of their respective obligations and shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
SECTION 8.04 Reliance by Agents.
Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. As to any matters not expressly provided for in this Agreement and in the other Loan Documents (including enforcement or collection), the Administrative Agent and/or the Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender. Upon request by the Administrative Agent and/or the Collateral Agent, as the case may be, the Required Lenders shall confirm in writing the Administrative Agent’s authority and/or the Collateral Agent’s authority, as the case may be, to take any action in accordance with the terms of the Loan Documents and this Section 8.04 and may refrain from acting until such confirmation has been provided.
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Notwithstanding anything else to the contrary
herein, whenever reference is made in this Agreement, or any other Loan Document, to any discretionary action by, consent, designation,
specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken
or to be (or not to be) suffered or omitted by the Administrative Agent or eitherthe
Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion,
rights or remedies to be made (or not to be made) by the Administrative Agent or eitherthe
Collateral Agent, it is understood that in all cases the Administrative Agent or such Collateral Agent shall be fully justified in failing
or refusing to take any such action if it shall not have received written instruction, advice or concurrence from (i) in the case of the
Administrative Agent, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein
or in any other Loan Document) or (ii) in the case of the Collateral Agent, the Administrative Agent. The Administrative Agent and Collateral
Agent shall have no liability for any failure or delay in taking any actions contemplated above as a result of a failure or delay on the
part of the Required Lenders (or Administrative Agent in the case of the Collateral Agent) to provide such instruction, advice or concurrence.
This provision is intended solely for the benefit of each of the Administrative Agent and the Collateral Agent and its successors and
permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer
any rights or benefits on any party hereto.
Except for any action expressly required of the Administrative Agent or the Collateral Agent hereunder or other Loan Document to which it is a party, it shall in all cases be fully justified in failing or refusing to act unless it shall receive further assurances to its reasonable satisfaction, including indemnification, from the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. No provision of this Agreement or any Loan Document shall require the Administrative Agent or the Collateral Agent to take any action that it reasonably believes to be contrary to applicable law or to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties thereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 8.05 Delegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of any Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Facility as well as activities as such Agent. No Agent shall be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
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SECTION 8.06 Resignation of Administrative Agent; Mergers.
Each Agent may resign upon thirty (30) days’ notice to the Lenders and the Lead Borrower, whether or not a successor Agent has been appointed. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless an Event of Default under Sections 7.01(a), (b), (h) or (i) has occurred and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Agent is replaced, the “Resignation Effective Date”); provided that if the retiring Agent shall notify the Lead Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
If the Person serving as an Agent is a Defaulting Lender, the Required Lenders and the Lead Borrower may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Agent and, with the consent of the Lead Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed and (ii) with respect to any outstanding payment obligations of such retiring or removed Agent) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall (to the extent not already discharged as provided above) be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article VIII and Section 9.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.
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Any corporation or association into which an Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which an Agent is a party, will be and become the successor Agent under this Agreement and related Loan Documents and will have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.
SECTION 8.07 Non-Reliance on Agents and Lenders.
Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agents and/or the Lenders on the Effective Date.
No Lender and no other Secured Party shall have
any right individually to realize upon any of the Collateral or the Badcock
Collateral or to enforce any Guarantee of the Secured Obligations
or the Badcock Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under
the Loan Documents may be exercised solely by the Administrative Agent and the Collateral Agent on behalf of the Lenders and the other
Secured Parties in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent or the Collateral Agent
on any of the Collateral or the Badcock Collateral pursuant to a
public or private sale or other disposition, the Administrative Agent, the Collateral Agent or any Lender may be the purchaser or licensor
of any or all of such Collateral or such Badcock Collateral at any
such sale or other disposition, and the Administrative Agent or such Collateral Agent, as agent for and representative of the Lenders
and the other Secured Parties (but not any Lender, Lenders, Secured Party or Secured Parties in its or their respective individual capacities
unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral or the Badcock
Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase
price for any collateral payable by the Administrative Agent or the Collateral Agent on behalf of the Lenders at such sale or other disposition.
Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and
of, the Badcock Collateral, the Guarantees of the
Secured Obligations and the Badcock Guarantee of the Secured Obligations, to have agreed to the foregoing provisions.
SECTION 8.08 [Reserved].
SECTION 8.09 Administrative Agent May File Proofs of Claim.
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
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(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, and any Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and such Agent and their respective agents and counsel and all other amounts due the Lenders and each Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and, by its acceptance of the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of any Agent and its agents and counsel, and any other amounts due such Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any Secured Party that is not a party hereto any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or any Secured Party that is not a party hereto to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or any Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) any Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as an Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to such Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
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SECTION 8.11 Withholding Taxes.
To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 8.11. The agreements in this Section 8.11 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
SECTION 8.12 Credit Bidding.
The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral and/or the Badcock Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral and/or the Badcock Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral and/or Badcock Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
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SECTION 08.13SECTION 8.13 Erroneous Payments.
(a) Each Lender hereby agrees that (i) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Lender (whether or not known to such Lender) (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect and (ii) to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including, without limitation, waiver of any defense based on “discharge for value” or any similar theory or doctrine. A notice of the Administrative Agent to any Lender under this clause (a) shall be conclusive, absent manifest error.
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(b) Without limiting the immediately preceding clause (a), each Lender hereby further agrees that if it receives a payment from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent, (y) that was not preceded or accompanied by notice of payment, or (z) that such Lender otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each case, if an error has been made each such Lender is deemed to have knowledge of such error at the time of receipt of such Erroneous Payment, and to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar theory or doctrine. Each Lender agrees that, in each such case, it shall promptly (and, in all events, within one Business Day of its knowledge (or deemed knowledge) of such error) notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in all events no later than one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(c) The Borrower and each other Loan Party hereby agrees that (x) in the event an Erroneous Payment (or portion thereof) is not recovered from any Lender that has received such Erroneous Payment (or portion thereof) for any reason (and without limiting the Administrative Agent’s rights and remedies under this Section 8.13), the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party.
(d) In addition to any rights and remedies of the Administrative Agent provided by law, the Administrative Agent shall have the right, without prior notice to any Lender, any such notice being expressly waived by such Lender to the extent permitted by applicable law, with respect to any Erroneous Payment for which a demand has been made in accordance with this Section 8.13 and which has not been returned to the Administrative Agent, to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but excluding trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or any of its Affiliates, branches or agencies thereof to or for the credit or the account of such Lender. The Administrative Agent agrees promptly to notify the Lender after any such setoff and application made by the Administrative Agent; provided, that the failure to give such notice shall not affect the validity of such setoff and application.
(e) Each party’s obligations under this Section 8.13 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.
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ARTICLE
IX
Miscellaneous
SECTION 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, 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 fax or other electronic transmission, as follows:
(i) if to the Borrower, the Administrative Agent or the Collateral Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax or other electronic transmission 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 and other communications 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 Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not 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 (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) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
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(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower 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. The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties 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 Borrower in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.14, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Lead Borrower, the Administrative Agent (to the extent that such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall execute such waiver, amendment or other modification to the extent approved by the Required Lenders) and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or the Collateral Agent, as the case may be, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender or change any ratable sharing or payment provision that directly and adversely affects any Lender (with only such Lenders whose entitlement to a payment under such provisions is reduced being “directly and adversely affected”) without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby, provided that only the consent of the Required Lenders shall be necessary to waive any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan, or the date of any scheduled amortization payment of the principal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date, any scheduled amortization payment or the date for payment of any interest or fees), without the written consent of each Lender directly and adversely affected thereby, (iv) change any of the provisions of this Section without the written consent of each Lender directly and adversely affected thereby; provided that any such change which is in favor of a Class of Lenders holding Loans maturing after the maturity of other Classes of Lenders (and only takes effect after the maturity of such other Classes of Loans or Commitments) will require the written consent of the Required Lenders with respect to each Class directly and adversely affected thereby, (v) change the percentage set forth in the definition of “Required Lenders”, “Majority in Interest” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) subordinate (or have the effect of subordinating) Liens securing any material portion of the Collateral or the Badcock Collateral (other than in connection with debtor-in-possession financing or use of cash collateral in accordance with the terms of the applicable Intercreditor Agreements), without the written consent of each Lender directly and adversely affected thereby, (vii) release (or have the effect of releasing) all or substantially all or any material portion of the value of the Guarantees under the Guarantee Agreement or the Badcock Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender), (viii) release (or have the effect of releasing) all or substantially all or any material portion of the Collateral from the Liens of the Security Documents or the Badcock Collateral from the Liens of the Badcock Security Documents, without the written consent of each Lender (other than a Defaulting Lender) except as expressly provided in the Loan Documents, (ix) change any pro rata sharing and/or payment provisions or any payment “waterfall” herein or in any other Loan Document,
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without the written consent of each Lender directly and adversely affected thereby, or (x) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of the Required Lenders with respect to any Class directly and adversely affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent without the prior written consent of the Administrative Agent or the Collateral Agent, as applicable, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Lead Borrower and the Required Lenders (consent of the Required Lenders not to be unreasonably withheld, conditioned or delayed) in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Required Lenders, or (iii) to add any provisions to any Loan Documents that, in the reasonable judgment of the Required Lenders, are more favorable to the Lenders (or to the applicable subset thereof), (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by the Lead Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time and (D) no Lenders other than the Lenders holding a Majority in Interest of the applicable Class shall be required to waive, amend, supplement or modify the conditions precedent to any Borrowings of Loans of such Class. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Lead Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents, Badcock Security Documents and related documents in connection with this Agreement may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Required Lenders (such consent not to be unreasonably withheld, conditioned or delayed) at the request of the Lead Borrower without the need to obtain the consent of any other Lender or the Administrative Agent if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Required Lenders, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents or (iv) to integrate any Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents, including the relevant Intercreditor Agreement(s). Notwithstanding any other language to the contrary contained herein, with respect to any amendment, waiver or modification to which neither the Administrative Agent’s nor the Collateral Agent’s consent is required, the parties thereto agree to deliver to the Administrative Agent a copy of each such amendment, waiver or modification; provided that, (i) no party shall be liable for its failure to comply with this sentence and (ii) the Administrative Agent shall not be bound by any such amendment unless and until it has received a copy thereof.
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(c) In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders (and, to the extent any Proposed Change requires the consent of Lenders holding Loans of any Class pursuant to clause (iv), (v) or (ix) of paragraph (b) of this Section 9.02, the consent of a Majority in Interest of the outstanding Loans and unused Commitments of such Class) to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “Non-Consenting Lender”), then the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, (i) if no Event of Default under Sections 7.01(a), (b), (h) or (i) exists, permanently prepay all of the Loans of any Class owing by it to, and terminate any Commitments of, such Non-Consenting Lender or (ii) require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consent shall not unreasonably be withheld, conditioned or delayed, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, Term Loans of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
SECTION 9.03 Expenses; Indemnity; Damage Waiver.
(a) The Borrower, jointly and severally, shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Commitment Parties and the Agent (limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of Paul Hastings LLP, Sheppard Mullin Richter & Hampton LLP and Holland & Knight LLP and, if reasonably necessary, of a single firm of local counsel to the Commitment Parties and Agents in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of such other counsel retained with the Lead Borrower’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), in each case incurred in connection with the Term Facility, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof) and (ii) all reasonable and documented out-of-pocket expenses incurred by each Agent or any Lender, including the fees, charges and disbursements of counsel for such Agent and of counsel for the Lenders, in connection with the preservation, enforcement or protection of any rights or remedies (A) in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws), including its rights under this Section 9.03 or (B) in connection with the Loans made hereunder, including all such out-of-pocket costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that such counsel with respect to this clause (ii) shall be limited to one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) for the Agents, taken as a whole, and one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) for the Lenders, taken as a whole (and, in the case of a conflict of interest, where each Agent or any Lender affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel, one additional counsel) and such other counsel as may be retained with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the expenses of counsel shall not include any allocated costs of in-house counsel.
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(b) The Borrower, jointly and severally, shall indemnify each Agent and each Related Party of any of the foregoing Persons (each such Person being called an “Agent Indemnitee”) and each Lender and each Related Party of any of the foregoing Persons (but excluding any such Person to the extent such Person is acting as a financial advisor to the Investors in connection with the Transactions (any such Person to the extent acting in such capacity, an “Excluded Party”)) (each such Person being called a “Lender Indemnitee”; together with the Agent Indemnitees, each, an “Indemnitee”) against, and hold each Indemnitee harmless from (without duplication), any and all losses, claims, damages, liabilities and reasonable and documented out-of-pocket fees and expenses (limited, in the case of legal fees and expenses, to the reasonable and documented fees, charges and disbursements of (A) one counsel for all Agent Indemnitees, to the extent reasonably necessary, and a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Agent Indemnitees, taken as a whole and (B) one counsel for all Lender Indemnitees, to the extent reasonably necessary, and a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Lender Indemnitees, taken as a whole (and solely in the case of an actual or potential conflict of interest, where the Indemnitee affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel after receipt of consent from the Lead Borrower (not to be unreasonably withheld or delayed), of one additional firm of counsel for the affected Indemnitees, and, if reasonably necessary, one additional firm of local counsel in each appropriate material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for such affected Indemnitees, taken as a whole)), incurred by or asserted against any Indemnitee by any third party or by the Borrower or any Subsidiary arising out of, in connection with, or as a result of any claim, litigation, investigation or proceeding (including any inquiry or investigation), regardless of whether any such Indemnitee is a party thereto, whether based on contract, tort or any other theory, relating to (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder, the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the Term Facility or the enforcement of any obligations of a Loan Party hereunder or under any other Loan Document, (ii) any Loan or the use of the proceeds therefrom or (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property, any Badcock Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any Subsidiary, or any other Environmental Liability related in any way to the Borrower or any Subsidiary; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitee (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) other than with respect to any indemnity with respect to an Agent Indemnitee, resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitees (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Agents in their respective capacities) that does not arise from an act or omission by the Borrower or any Subsidiary. This Section 9.03 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
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(c) Each Lender shall indemnify and hold harmless the Agent Indemnitees (to the extent not indefeasibly and timely indemnified by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), based on and to the extent of such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), from and against any and all losses, claims, damages, liabilities and related expenses (including reasonable and documented or invoiced out-of-pocket fees and expenses of one counsel for the Agent Indemnitees, taken as a whole (in addition to, in the event of an actual conflict of interest that arises, one additional counsel (plus one local counsel in each relevant material jurisdiction) for the conflicted Agent Indemnitees, taken as a whole), and excluding any allocated costs of in-house legal counsel and any other third parties and consultants) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any Agent Indemnitee in any way relating to or arising out of or in connection with this Agreement or any other Loan Document or any action taken or omitted to be taken by the Agent Indemnitees. Without limiting the foregoing, each Lender shall promptly following written demand therefor, pay or reimburse the Administrative Agent and the Collateral Agent based on and to the extent of such Lender’s pro rata share of all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of any rights or remedies under this Agreement or the other Loan Documents (including all such out-of-pocket costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Law, and including all respective fees, charges and disbursements of one counsel and a single firm of local counsel for the Agent Indemnitees, to the extent that the Agent Indemnitees are not timely reimbursed for such expenses by or on behalf of the Borrower (solely to the extent, in each case, that the Borrower is required to so indemnify and hold harmless the Agent Indemnitees pursuant to (and subject to the limitations of) paragraph (a) and/or (b) of this Section 9.03). For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the outstanding Loans and unused Commitments at such time (or if such indemnity payment is sought after the date on which the Loans have been paid in full and the Commitments are terminated in accordance with such Lender’s pro rata share immediately prior to the date on which the Loans are paid in full and the Commitments are terminated).
(d) To the extent permitted by applicable law, (i) the Borrower shall not assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such direct or actual damages are determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from (A) the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties or (B) other than with respect to any indemnity with respect to an Agent Indemnitee, a material breach of the Loan Documents by such Indemnitee or its Related Parties and (ii) no Loan Party (or any Affiliate thereof), Investor (or any Affiliate thereof), or Indemnitee shall be liable for any special, indirect, consequential, incidental, exemplary 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 or thereby, the Financing Transactions, any Loan or the use of the proceeds thereof; provided that nothing in this paragraph shall limit any Loan Party’s (or any Affiliate thereof) or Investor’s (or any Affiliate thereof) indemnity and reimbursement obligations to the extent that such indirect, special, punitive or consequential damages are included in any claim by a third party unaffiliated with the applicable Indemnitee with respect to which the applicable Indemnitee is entitled to indemnification as set forth in this Section 9.03.
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(e) All amounts due under this Section 9.03 shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns.
(a) 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 (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. 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 paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) (i)(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent (except with respect to assignments to competitors of the Borrower) not to be unreasonably withheld, conditioned or delayed) of (A) the Lead Borrower; provided that no consent of the Lead Borrower shall be required for an assignment (x) by a Term Lender to any other Lender, any Affiliate of a Lender or any Approved Fund, or (y) if an Event of Default under Sections 7.01(a), (b), (h) or (i) with respect to the Lead Borrower has occurred and is continuing (other than in respect of a proposed assignment to a Disqualified Lender); provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Lead Borrower’s prior written consent; provided further that the Lead Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Lead Borrower or any Subsidiary would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or Term Commitment to (x) a Lender, an Affiliate of a Lender or an Approved Fund or (y) subject to Section 9.04(g), the Borrower or any of its Subsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Lead Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within five (5) Business Days after written notice of such assignment, the Lead Borrower shall be deemed to have consented to such assignment (other than in respect of a proposed assignment to a Disqualified Lender).
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date set forth in the Assignment and Assumption delivered to the Administrative Agent with respect to such assignment) shall not be less than $2,500,000 (and integral multiples of $500,000 in excess thereof), unless the Administrative Agent otherwise consents (such consent not to be unreasonably withheld, conditioned or delayed), (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender or an Affiliate of a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Lead Borrower and the Administrative Agent any tax forms required by Section 2.17(e), all documentation and other information reasonably determined by the Administrative Agent to be required by applicable regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, and an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain Material Non-Public Information about the Borrower, the other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal and interest amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior written notice.
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(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, any “know your customer” information requested by the Administrative Agent, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) 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.
(c) (i)(i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (other than to a Person that is not an Eligible Assignee) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related stated interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form under Section 5f.103-1(c) and proposed Section 1.163-5(b) of the United States Treasury regulations. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining the Participant Register.
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(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable 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 Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Lead Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) [Reserved].
(g) Any Lender may, at any time, assign all or a portion of its Term Loans to the Borrower or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) no proceeds from any loans under any revolving credit facilities will be used to fund such assignments, (ii) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (iii) no Event of Default shall have occurred and be continuing and (iv) each Lender making such assignment to the Borrower or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) the Borrower or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders. Except as otherwise set forth in this Agreement (including in connection with the calculation of Excess Cash Flow prepayments), cancellation of Term Loans in connection with this clause (g) shall not constitute a voluntary or mandatory prepayment of Term Loans.
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(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Lead Borrower. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to make the list of Disqualified Lenders available to such Lender for inspection. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Lead Borrower to such Lender and the Administrative Agent: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee; provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Lead Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
SECTION 9.05 Survival.
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of any Agent.
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SECTION 9.06 Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the Commitment Parties or the syndication of the Loans and Commitments 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 Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent (whether on its own behalf or on behalf of any Lender), any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Loan Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the Administrative Agent, any Lender or any Affiliates or Related Parties of any of the foregoing for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising as a result of the failure of any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
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SECTION 9.07 Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent then such provisions shall be deemed to be in effect only to the extent not so limited.
SECTION 9.08 Right of Setoff.
If an Event of Default under Sections 7.01(a), (b), (h) or (i) shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have.
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York, except that (x) the interpretation of the definition of “Company Material Adverse Effect” (as defined in the Acquisition Agreement) (and whether or not a Company Material Adverse Effect has occurred) for the purpose of Section 4.01(g), (y) the determination of the accuracy of any Specified Acquisition Agreement Representation and whether as a result of any inaccuracy thereof the Borrower or any of its Affiliates have the right to terminate its or their obligations under the Acquisition Agreement and (z) the determination of whether the Acquisition has been consummated in accordance with the terms of the Acquisition Agreement shall in each case be determined pursuant to the Acquisition Agreement, which is governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
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(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 or, to the extent permitted by law, in such Federal court. Each of the 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 any Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or its properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY 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 ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings.
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
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SECTION 9.12 Confidentiality.
(a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors, and actual and potential financing sources, in each case, who need to know such Information in connection with the Transactions (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 and any failure of such Persons acting on behalf of the Administrative Agent or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent or the relevant Lender, as applicable), (ii) to the extent requested by any governmental authority or self-regulatory authority having jurisdiction over the Administrative Agent, any Lender or any Affiliates of any of the foregoing, as applicable, or, based on reasonable advice of counsel, to the extent required by (A) an order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, (B) applicable law or by any subpoena or similar compulsory legal process or (C) in connection with the exercise of remedies or enforcement of rights hereunder in any suit, action or proceeding relating to this Agreement; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by bank accountants or governmental or self-regulatory authorities exercising examination or regulatory authority, each Lender and the Administrative Agent shall notify the Lead Borrower as promptly as practicable of any such requested or required disclosure and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, and provided further that in no event shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Borrower or any of its Subsidiaries, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any direct or indirect contractual counterparty to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency in connection with obtaining a rating; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers (including any numbering, administration or settlement service providers) providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the Term Facility (e.g., identity of the party providing such information to such service provider, maturity dates, interest rates, etc.) on a confidential basis, (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or otherwise by reason of improper disclosure by the Administrative Agent any Lender or any Affiliates or Related Parties of any of the foregoing (including the Persons referred to in clauses (i) above) in violation of any confidentiality obligations owing to the Loan Parties or any Subsidiaries, Affiliates or Related Parties of any of the foregoing or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower or any Subsidiary, which source is not known by the recipient of such information to be subject to a confidentiality obligation, or (viii) to the extent that such information was already in the possession of the Administrative Agent or any Lender prior to any duty or other undertaking of confidentiality or is independently developed by the Administrative Agent or any Lender without the use of such information and without otherwise violating the terms of this Section 9.12. For the purposes hereof, “Information” means all information received from or on behalf of the Borrower or any of its Subsidiaries relating to the Borrower, any of its Subsidiaries or their business. Any Person required to maintain the confidentiality of Information as provided in this Section 9.12 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. Notwithstanding the foregoing, other than as set forth in the proviso below, (x) no such information shall be disclosed to a Disqualified Lender or Excluded Party that constitutes a Disqualified Lender or Excluded Party, as applicable, at the time of such disclosure without the Lead Borrower’s prior written consent and (y) in connection with any proposed assignment of Loans and/or Commitments in accordance with Section 9.04, upon request by the applicable potential assignee therefor, the applicable potential assigning Lender may disclose the list of Disqualified Lenders to such potential assignee solely for purposes of enabling such assignee to make a representation in its applicable Assignment and Assumption that such prospective assignee is an Eligible Assignee, provided, however, that, subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, the list of Disqualified Lenders may be disclosed to any bona fide potential assignee or Participant, so that such potential assignee or Participant can represent and warrant that it is neither a Disqualified Lender nor an Affiliate of a Disqualified Lender.
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(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION 9.12) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
SECTION 9.13 USA PATRIOT Act.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT 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 such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.14 Release of Liens and Guarantees.
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents (including its Guarantee or Badcock Guarantee, as the case may be, of the Secured Obligations) and all security interests created by the Security Documents in Collateral or by the Badcock Security Documents in Badcock Collateral, as the case may be, owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary (including pursuant to a permitted merger with a Subsidiary that is not a Loan Party) or becomes an Excluded Subsidiary (other than solely as a result of such Subsidiary Loan Party ceasing to be a Wholly Owned Subsidiary) or (2) upon the request of the Lead Borrower, in connection with a transaction permitted under this Agreement (but only a transaction (x) in which such Subsidiary Loan Party becomes a bona fide joint venture and the other Person taking an equity interest in such Subsidiary Loan Party takes such equity interest for fair market value (as determined in good faith by the Lead Borrower) and is not an Affiliate of the Borrower (other than as a result of such joint venture), (y) in which such Subsidiary Loan Party does not own or have an exclusive license of any Material Intellectual Property or own any Equity Interests of any Person that owns or is the exclusive licensee of any Material Intellectual Property and (z) the primary purpose (as determined by the Lead Borrower in good faith) of which is not the release of any Guarantee of or Lien on the assets of such Subsidiary Loan Party) as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary. Upon any sale or other transfer by any Loan Party (other than to the Borrower or any Subsidiary Loan Party) of any Collateral and/or Badcock Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral and/or under any Badcock Security Document in any Badcock Collateral, the security interests in such Collateral created by the Security Documents and/or such Badcock Collateral created by the Badcock Security Documents, as the case may be, shall be automatically released. Upon the release of any Subsidiary Loan Party from its Guarantee or Badcock Guarantee, as the case may be, in compliance with this Agreement, the security interest in any Collateral or Badcock Collateral owned by such Subsidiary created by the Security Documents or the Badcock Security Documents, as the case may be, shall be automatically released. Upon termination of the aggregate Commitments and payment in full of all Secured Obligations (other than contingent indemnification obligations), all obligations under the Loan Documents and all security interests created by the Security Documents and the Badcock Security Documents shall be automatically released. In connection with any termination or release pursuant to this Section 9.14, the Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or that Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or that Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement.
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(b) The Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(iv).
(c) Each of the Lenders, and by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to provide any release or evidence of release, termination or subordination contemplated by this Section 9.14. Upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or that Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14.
SECTION 9.15 No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, any of its Affiliates or any other Person and (B) none of the Administrative Agent and the Lenders has any obligation to the Borrower 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; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and none of the Administrative Agent and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
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SECTION 9.16 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 Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
SECTION 9.17 Intercreditor Agreements. Each of the Lenders and, by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, hereby agrees that the Administrative Agent and/or the Collateral Agent may enter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of the Administrative Agent and/or the Collateral Agent (and/or their affiliated designees, representatives or agents) on its behalf as collateral agent, respectively, thereunder. In the event of any conflict between the provisions of this Agreement or any other Loan Document (other than any Intercreditor Agreement) and the provisions of any Intercreditor Agreement, the provisions of such Intercreditor Agreement shall govern and control.
SECTION 9.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with the normal banking procedures the Lenders could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrowers in respect of any such sum due from them to the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the relevant Lender of any sum adjudged to be so due in the Judgment Currency, the relevant Lender may in accordance with the normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender from the Borrowers in the Agreement Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
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SECTION 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
| 1. | the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and |
| 2. | the effects of any Bail-In Action on any such liability, including, if applicable: |
i. a reduction in full or in part or cancellation of any such liability;
| ii. | a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or |
| iii. | the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. |
SECTION 9.20 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
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In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
[Remainder of Page Intentionally Left Blank]
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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.
| FRANCHISE GROUP, INC., as Lead Borrower and a Borrower | ||
| By: | ||
| Name: | ||
| Title: | ||
| FRANCHISE GROUP NEWCO PSP, LLC, as a Borrower | ||
| By: | ||
| Name: | ||
| Title: | ||
| VALOR ACQUISITION, LLC, as a Borrower | ||
| By: | ||
| Name: | ||
| Title: | ||
| FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, as a Borrower | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Second Lien Credit Agreement] |
| ALTER DOMUS (US) LLC, | ||
| solely in its capacities as Administrative Agent and Collateral Agent and not in its individual capacity | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Second Lien Credit Agreement] |
| HVS XXXIV LLC, as a Lender | ||
| By: | ||
| Name: | ||
| Title: Authorized Person | ||
| D3V XI LLC, as a Lender | ||
| By: | ||
| Name: | ||
| Title: Authorized Person | ||
| PIF Onshore XVII LP, as a Lender | ||
| By: | ||
| Name: | ||
| Title: Officer of the Investment Manager | ||
|
RSF XVIII LLC, as a Lender | ||
| By: | ||
| Name: | ||
| Title: Authorized Person | ||
|
| ||
| By: OC III CP LLC, its general partner | ||
| By: | ||
| Name: | ||
| Title: Authorized Person | ||
[Signature Page to Second Lien Credit Agreement] |
|
| ||
| By: | ||
| Name: | ||
| Title: | ||
| IRRADIANT SOLUTIONS MINI-MASTER FUND, L.P. , as a Lender | ||
| By: | ||
| Name: | ||
| Title: | ||
|
| ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Second Lien Credit Agreement]
Exhibit 10.3
EXECUTION VERSION
FLORIDA DOCUMENTARY STAMP TAXES IN THE AMOUNT OF $2,450.00 HAVE BEEN OR WILL BE PAID DIRECTLY TO THE FLORIDA DEPARTMENT OF REVENUE.
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of November 22, 2021 (this “Amendment”), among FRANCHISE GROUP, INC., a Delaware corporation (“FRG”), VALOR ACQUISITION, LLC, a Delaware limited liability company, FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company, FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company, each as a Borrower (as defined in the ABL Loan Agreement (as defined below)), the other Borrowers party to the ABL Loan Agreement, the Guarantors (as defined in the ABL Loan Agreement) party to the ABL Loan Agreement, the lenders party hereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., in its capacities as administrative agent and collateral agent (in such capacities, the “Agent”), which amends that certain Third Amended and Restated Loan and Security Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “ABL Loan Agreement”), by and among FRG, the other Borrowers from time to time party thereto, the Guarantors from time to time party thereto, the lenders from time to time party thereto and the Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Amended ABL Loan Agreement (as defined below).
WHEREAS, FRG has requested certain amendments to the ABL Loan Agreement and certain other Financing Agreements to permit, among other things, the incurrence of additional credit facilities in connection with the acquisition by FRG of W.S. Badcock Corporation, a Florida corporation (the “Badcock Acquisition”);
WHEREAS, Section 11.4 of the ABL Loan Agreement permits certain amendments to the ABL Loan Agreement with the consent of the Borrowers, the Agent and the Required Lenders, including the amendments contemplated herein; and
WHEREAS, each Borrower, the Agent and the Lenders, which constitute the Required Lenders, desire to enter into this Amendment in order to effect the amendments to the ABL Loan Agreement contemplated herein, in each case, on the terms and subject to the conditions set forth in Section 2.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
Section 1.
Amendments to the ABL Loan Agreement. Subject to the satisfaction (or waiver by the Lenders) of the conditions set forth
in Section 2, the ABL Loan Agreement (but excluding the Schedules and Exhibits thereto, which shall remain as in effect immediately
prior to the First Amendment Effective Date), shall be amended by inserting the language indicated in double underlined text (indicated
textually in the same manner as the following example: underlined text)
in Exhibit A hereto and by deleting the language indicated by strikethrough text (indicated textually in the same manner as the
following example: stricken text) in Exhibit A hereto (the ABL Loan Agreement,
as so amended, the “Amended ABL Loan Agreement”).
Section 2. Conditions to Effectiveness. The effectiveness of this Amendment is subject only to the satisfaction (or waiver by the Lenders) of the following conditions precedent (the date on which such conditions have been satisfied (or waived by the Lenders), the “First Amendment Effective Date”):
(a) The Agent shall have received executed counterparts of this Amendment from each Loan Party, the Agent and the Lenders constituting the Required Lenders.
(b) All representations and warranties contained in the Amended ABL Loan Agreement and in the other Financing Agreements shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the First Amendment Effective Date and after giving effect to this Amendment and the Badcock Acquisition, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date).
(c) No Default or Event of Default shall exist or have occurred and be continuing on and as of the First Amendment Effective Date and immediately after giving effect to this Amendment and the Badcock Acquisition.
(d) Each of the following shall be effective concurrently with the effectiveness of this Amendment (and the Agent shall have received duly executed copies of the same): (i) that certain First Amendment to First Lien Credit Agreement, dated as of the First Amendment Effective Date, by the parties thereto; (ii) that certain First Amendment to Second Lien Credit Agreement, dated as of the First Amendment Effective Date, by the parties thereto; and (iii) that certain Amended and Restated Intercreditor Agreement, dated as of the First Amendment Effective Date, among the Agent, the First Lien Agent, the Second Lien Agent, the Badcock First Lien Agent and the Badcock Second Lien Agent, and acknowledged by the Loan Parties.
Section 3. Fees and Expenses. The Borrowers and Guarantors agree to reimburse the Agent for all costs, expenses and fees incurred by the Agent in connection with this Amendment to the extent reimbursable by the Borrowers and Guarantors pursuant to Section 9.22 of the Amended ABL Loan Agreement.
Section 4. Amendments; Counterparts. This Amendment may not be amended or waived except by an instrument in writing signed by each of the parties party hereto. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Amendment shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.
Section 5. Governing Law, Jurisdiction and Waiver of Right to Trial by Jury. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN THE PARTIES HERETO, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK BUT EXCLUDING ANY PRINCIPLES OF CONFLICTS OF LAW OR OTHER RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK. The jurisdiction, service of process, and waiver of right to trial by jury provisions in Section 11.1 of the ABL Loan Agreement are incorporated herein by reference mutatis mutandis.
| 2 |
Section 6. Headings. The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 7. Effect of Amendment.
(a) On and after the First Amendment Effective Date, each reference in the ABL Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the ABL Loan Agreement, and each reference in the other Financing Agreement to the “Loan Agreement”, “thereunder”, “thereof” or words of like import referring to the ABL Loan Agreement, mean and are a reference to the ABL Loan Agreement as modified by this Amendment.
(b) Except as expressly amended hereby, all of the terms and provisions of the ABL Loan Agreement and all other Financing Agreements are and shall remain in full force and effect and are hereby ratified and confirmed. In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably and unconditionally ratifies its grant of security interest and pledge under the Security Agreement and each Financing Agreement and confirms that the liens, security interests and pledges granted thereunder continue to secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred pursuant to this Amendment.
(c) Each of the Loan Parties as debtor, grantor, mortgagor, pledgor, guarantor, assignor, or in any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party, guarantor or indemnitor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Financing Agreements to which it is a party, (ii) ratifies and reaffirms each grant of a lien on, or security interest in, its property made pursuant to the Financing Agreements (including, without limitation, the grant of security made by such Loan Party pursuant to the Collateral Documents) and confirms that such liens and security interests continue to secure the Obligations under the Financing Agreements, in each case subject to the terms thereof, and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty of the Obligations pursuant to the Financing Agreements. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent or Lenders, constitute a waiver of any provision of any of the Financing Agreements or serve to effect a novation of the Obligations.
(d) The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Agent or any Lender under, the ABL Loan Agreement or any of the other Financing Agreements. This Amendment shall be deemed to be a Financing Agreement as defined in the ABL Loan Agreement.
Section 8. No Novation. By its execution of this Amendment, each of the parties hereto acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a supplement of a pre-existing indebtedness and related agreement, as evidenced by the Amended ABL Loan Agreement.
[Signature Pages Follow]
| 3 |
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOP FLORIDA, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
[Signature Page to First Amendment to Third Amended and Restated Loan and Security Agreement]
VALOR ACQUISITION, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
Name: Will Powell
Title: President
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP GROUP, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE, INC.
EDUCATE OPERATING COMPANY,
LLC
LEARNING PARTNERSHIPS, LLC
EDUCATE DIGITAL, LLC
EDUCATE CORPORATE CENTERS
HOLDINGS, LLC
LEARNING SYSTEM OF THE FUTURE,
LLC
OMEGA LEARNING CENTERS, LLC
[Signature Page to First Amendment to Third Amended and Restated Loan and Security Agreement]
MARYLAND LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
[Signature Page to First Amendment to Third Amended and Restated Loan and Security Agreement]
JPMORGAN CHASE BANK, N.A., as the Agent and a Lender
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
[Signature Page to First Amendment to Third Amended and Restated Loan and Security Agreement]
CITIZENS BANK, N.A., as a Lender
By: /s/ Peter Yelle
Name: Peter Yelle
Title: SVP
[Signature Page to First Amendment to Third Amended and Restated Loan and Security Agreement]
Exhibit 10.4
Execution Version
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
dated as of
November 22, 2021
among
JPMORGAN CHASE BANK, N.A.,
as ABL Representative,
JPMORGAN CHASE BANK, N.A.,
as Initial First Lien Term Loan Representative,
ALTER DOMUS (US) LLC,
as Initial Second Lien Term Loan Representative,
JPMORGAN CHASE BANK, N.A.,
as BDK First Lien Term Loan Representative,
ALTER DOMUS (US) LLC,
as BDK Second Lien Term Loan Representative,
FRANCHISE GROUP, INC.,
VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
PET SUPPLIES “PLUS”, LLC, and
OTHER BORROWERS FROM TIME TO TIME PARTY HERETO
as Borrowers
and
THE OTHER LOAN PARTIES FROM TIME TO TIME PARTY HERETO
TABLE OF CONTENTS
| Page No. | |||
| Section 1. | Definitions; Rules of Construction. | 2 | |
| Section 1.1 | UCC Definitions | 2 | |
| Section 1.2 | Defined Terms | 2 | |
| Section 1.3 | Rules of Construction | 24 | |
| Section 2. | Lien Priority. | 25 | |
| Section 2.1 | Lien Subordination | 25 | |
| Section 2.2 | Prohibition on Contesting Liens | 25 | |
| Section 2.3 | Nature of Obligations | 26 | |
| Section 2.4 | No New Liens | 26 | |
| Section 2.5 | Separate Grants of Security and Separate Classification | 27 | |
| Section 2.6 | Agreements Regarding Actions to Perfect Liens | 28 | |
| Section 2.7 | 1L/2L Intercreditor Agreement; Appointment of Designated Term Loan Representative | 30 | |
| Section 3. | Enforcement Rights. | 32 | |
| Section 3.1 | Exclusive Enforcement | 32 | |
| Section 3.2 | Standstill and Waivers | 32 | |
| Section 3.3 | Judgment Creditors | 34 | |
| Section 3.4 | Cooperation; Sharing of Information and Access | 34 | |
| Section 3.5 | No Additional Rights For the Loan Parties Hereunder | 37 | |
| Section 3.6 | Actions Upon Breach | 37 | |
| Section 3.7 | No Payment Subordination | 37 | |
| Section 4. | Application of Proceeds of Senior Collateral; Dispositions and Releases of Lien; Notices and Insurance. | 38 | |
| Section 4.1 | Application of Proceeds | 38 | |
| Section 4.2 | Releases of Liens | 39 | |
| Section 4.3 | Certain Real Property Notices; Insurance | 39 | |
| Section 5. | Insolvency Proceedings. | 40 | |
| Section 5.1 | Enforceability | 40 | |
| Section 5.2 | DIP Financing Matters | 40 | |
| Section 5.3 | Relief From the Automatic Stay | 41 | |
| Section 5.4 | No Contest | 41 | |
| Section 5.5 | Avoidance Issues | 42 | |
| Section 5.6 | Asset Dispositions in an Insolvency Proceeding | 42 | |
| Section 5.7 | Other Matters | 42 | |
| Section 5.8 | Effectiveness in Insolvency Proceedings | 42 | |
| Section 5.9 | Rights as Unsecured Creditors | 43 |
| Section 6. | Term Loan Documents and ABL Documents. | 43 | |
| Section 7. | Purchase Option. | 43 | |
| Section 7.1 | Notice of Exercise | 43 | |
| Section 7.2 | Purchase and Sale | 44 | |
| Section 7.3 | Payment of Purchase Price | 44 | |
| Section 7.4 | Limitation on Representations and Warranties | 45 | |
| Section 8. | Reliance; Waivers; Designation of Hedge/Banking Services Obligations; etc. | 45 | |
| Section 8.1 | Reliance | 45 | |
| Section 8.2 | No Warranties or Liability | 45 | |
| Section 8.3 | No Waivers | 45 | |
| Section 8.4 | Designation of Hedge/Banking Services Obligations | 45 | |
| Section 9. | Obligations Unconditional. | 46 | |
| Section 10. | Miscellaneous. | 46 | |
| Section 10.1 | Rights of Subrogation | 46 | |
| Section 10.2 | Further Assurances | 47 | |
| Section 10.3 | Conflicts | 47 | |
| Section 10.4 | Continuing Nature of Provisions | 47 | |
| Section 10.5 | Amendments; Additional Debt; Waivers | 47 | |
| Section 10.6 | Information Concerning Financial Condition of the Loan Parties | 48 | |
| Section 10.7 | Governing Law | 48 | |
| Section 10.8 | Submission to Jurisdiction; JURY TRIAL WAIVER | 49 | |
| Section 10.9 | Notices | 49 | |
| Section 10.10 | Successors and Assigns | 50 | |
| Section 10.11 | Headings | 50 | |
| Section 10.12 | Severability | 50 | |
| Section 10.13 | Other Remedies | 50 | |
| Section 10.14 | Counterparts; Integration; Effectiveness; Electronic Execution | 50 | |
| Section 10.15 | Additional Loan Parties | 51 | |
| Section 10.16 | No Consequential Damages | 52 | |
| Section 10.17 | Collateral Due Diligence | 52 |
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
AMENDED AND RESTATED Intercreditor Agreement dated as of November 22, 2021 (this “Agreement”), among JPMORGAN CHASE BANK, N.A., in its capacity as agent under the ABL Agreement (as defined below) (in such capacity, with its successors and assigns, and as more specifically defined below, the “ABL Representative”) for the ABL Secured Parties (as defined below), JPMORGAN CHASE BANK, N.A. (“JPMorgan”), in its capacity as collateral agent under the First Lien Term Loan Agreement (as defined below) (in such capacity, with its successors and assigns, and as more specifically defined below, the “Initial First Lien Term Loan Representative”) for the First Lien Term Loan Secured Parties (as defined below), ALTER DOMUS (US) LLC (“Alter Domus”), in its capacity as collateral agent under the Second Lien Term Loan Agreement (as defined below) (in such capacity, with its successors and assigns, and as more specifically defined below, the “Initial Second Lien Term Loan Representative”) for the Second Lien Term Loan Secured Parties (as defined below), JPMorgan, in its capacity as collateral agent under the BDK First Lien Term Loan Agreement (as defined below) (in such capacity, with its successors and assigns, and as more specifically defined below, the “BDK First Lien Term Loan Representative”) for the BDK First Lien Term Loan Secured Parties (as defined below), Alter Domus, in its capacity as collateral agent under the BDK Second Lien Term Loan Agreement (as defined below) (in such capacity, with its successors and assigns, and as more specifically defined below, the “BDK Second Lien Term Loan Representative”) for the BDK Second Lien Term Loan Secured Parties (as defined below), each additional First Lien Term Loan Representative and each additional Second Lien Term Loan Representative that from time to time becomes a party hereto, pursuant to the terms hereof, and acknowledged by each of the Loan Parties (as defined below) party hereto.
WHEREAS, FRANCHISE GROUP, INC., a Delaware corporation (the “Company”), Valor Acquisition, LLC, a Delaware limited liability company, Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company, Pet Supplies “Plus”, LLC, a Delaware limited liability company, and certain Subsidiaries of each of the foregoing (together with the Company, the “Borrowers”), the other Loan Parties from time to time party thereto, the ABL Representative and certain financial institutions and other entities from time to time party thereto, are parties to that certain Third Amended and Restated Loan and Security Agreement dated as of March 10, 2021 (as amended by that certain First Amendment to ABL Credit Agreement, dated as of the date hereof, the “Initial ABL Agreement”), pursuant to which such financial institutions and other entities have agreed to make revolving loans and extend other financial accommodations to the Borrowers, and such revolving loans and other financial accommodations are guaranteed by certain of the Loan Parties;
WHEREAS, the Company, the other Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the Initial First Lien Term Loan Representative, JPMorgan, as administrative agent, and certain financial institutions and other entities are parties to the First Lien Credit Agreement dated as of March 10, 2021 (as amended by that certain First Amendment to First Lien Credit Agreement, dated as of the date hereof, the “Initial First Lien Term Loan Agreement”), pursuant to which such financial institutions and other entities have agreed to make term loans to the Borrowers, and such term loans are guaranteed by certain of the Loan Parties;
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WHEREAS, the Company, the other Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the Initial Second Lien Term Loan Representative, Alter Domus, as administrative agent, and certain financial institutions and other entities are parties to the Second Lien Credit Agreement dated as of March 10, 2021 (as amended by that certain First Amendment to Second Lien Credit Agreement, dated as of the date hereof, the “Initial Second Lien Term Loan Agreement”), pursuant to which such financial institutions and other entities have agreed to make term loans to the Borrowers, and such term loans are guaranteed by certain of the Loan Parties;
WHEREAS, the ABL Representative, the Initial First Lien Term Loan Representative and the Initial Second Lien Term Loan Representative entered into that certain Intercreditor Agreement, dated as of March 10, 2021 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Original Intercreditor Agreement”), which Original Intercreditor Agreement was acknowledged by certain of the Loan Parties;
WHEREAS, the Company, the other Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the BDK First Lien Term Loan Representative, JPMorgan, as administrative agent, and certain financial institutions and other entities are parties to the First Lien Credit Agreement dated as of the date hereof (the “BDK First Lien Term Loan Agreement”), pursuant to which such financial institutions and other entities have agreed to make term loans to the Borrowers, and such term loans are guaranteed by certain of the Loan Parties;
WHEREAS, the Company, the other Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the BDK Second Lien Term Loan Representative, Alter Domus, as administrative agent, and certain financial institutions and other entities are parties to the Second Lien Credit Agreement dated as of the date hereof (the “BDK Second Lien Term Loan Agreement”), pursuant to which such financial institutions and other entities have agreed to make term loans to the Borrowers, and such term loans are guaranteed by certain of the Loan Parties;
WHEREAS, the Loan Parties (other than, until the occurrence of the BDK Joinder Date (as defined below), Badcock) have granted to the ABL Representative security interests in the ABL Collateral as security for payment and performance of the ABL Obligations;
WHEREAS, the Loan Parties have granted to the Initial First Lien Term Loan Representative security interests in the Term Loan Collateral as security for payment and performance of the Initial First Lien Term Loan Obligations;
WHEREAS, the Loan Parties have granted to the Initial Second Lien Term Loan Representative security interests in the Term Loan Collateral as security for payment and performance of the Initial Second Lien Term Loan Obligations;
WHEREAS, the Loan Parties have granted to the BDK First Lien Term Loan Representative security interests in the Term Loan Collateral as security for payment and performance of the BDK First Lien Term Loan Obligations;
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WHEREAS, the Loan Parties have granted to the BDK Second Lien Term Loan Representative security interests in the Term Loan Collateral as security for payment and performance of the BDK Second Lien Term Loan Obligations; and
WHEREAS, in connection with the foregoing, on the date hereof, the Initial First Lien Term Loan Representative, the Initial Second Lien Term Loan Representative, the BDK First Lien Term Loan Representative, the BDK Second Lien Term Loan Representative and, by their acknowledgment, each Loan Party, together with each additional First Lien Term Loan Representative and Second Lien Term Loan Representative that from time to time becomes a party thereto, have entered into an Amended and Restated First Lien/Second Lien Intercreditor Agreement dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Initial 1L/2L Intercreditor Agreement”) which sets forth, as among the Term Loan Secured Parties, among other things, their respective rights and remedies with respect to the Term Loan Collateral.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the existence and sufficiency of which is expressly recognized by all of the parties hereto, the parties agree as follows:
Section 1. Definitions; Rules of Construction.
Section 1.1 UCC Definitions. The following terms which are defined in the Uniform Commercial Code are used herein as so defined (and if defined in more than one Article of the Uniform Commercial Code, shall have the meaning given to such term in Article 9 thereof): Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit, Letter of Credit Rights, Payment Intangibles, Records and Supporting Obligations.
Section 1.2 Defined Terms. The following terms, as used herein, have the following meanings:
“1L/2L Intercreditor Agreement” means (a) the Initial 1L/2L Intercreditor Agreement and (b) any other agreement or agreements (other than this Agreement, the First Lien Term Loan Pari Passu Intercreditor Agreement and the Second Lien Term Loan Pari Passu Intercreditor Agreement) among the First Lien Term Loan Representatives and the Second Lien Term Loan Representatives that defines the relative rights and priorities as among the First Lien Term Loan Representatives and the First Lien Term Loan Secured Parties, on the one hand, and the Second Lien Term Loan Representatives and the Second Lien Term Loan Secured Parties, on the other hand, with respect to the Term Loan Collateral. For the avoidance of doubt, the Badcock Intercreditor Agreement (as defined in the Initial First Lien Term Loan Agreement, the Initial Second Lien Term Loan Agreement, the BDK First Lien Term Loan Agreement and the BDK Second Lien Term Loan Agreement) shall not constitute a “1L/2L Intercreditor Agreement”.
“ABL Agreement” means the collective reference to (a) the Initial ABL Agreement, (b) any Additional ABL Agreement and (c) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Initial ABL Agreement (regardless of whether such replacement, refunding or refinancing is a “working capital” facility, asset-based facility or otherwise), any Additional ABL Agreement or any other agreement or instrument referred to in this clause (c) unless such agreement or instrument expressly provides that it is not intended to be and is not an ABL Agreement hereunder (a “Replacement ABL Agreement”) in each case, in accordance with and subject to the terms hereof. Any reference to the ABL Agreement hereunder shall be deemed a reference to any ABL Agreement then extant.
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“ABL Banking Services Obligations” means, with respect to any Loan Party and its Subsidiaries, any obligations of such Loan Party or Subsidiary owed to any ABL Secured Party (or any of its affiliates) in respect of treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, any direct debit scheme or arrangement, cash pooling services and interstate depository network services), credit card services, stored value card services or other cash management services, to the extent secured by an ABL Lien on ABL Collateral.
“ABL Borrowing Base” means, as of any date of determination thereof, the “Aggregate Borrowing Base” as defined in the ABL Agreement as reflected on the most recent borrowing base certificate received by the ABL Representative pursuant to the ABL Agreement.
“ABL Cap Amount” means, at any time a Second Lien Term Loan Agreement is then extant, an amount equal to the amount permitted under Section 6.01(a)(xxxi) of the Initial Second Lien Term Loan Agreement as in effect on the date of this Agreement (or any equivalent section under any other Second Lien Term Loan Agreement as in effect on the date such other Second Lien Term Loan Agreement is originally entered into).
“ABL Collateral” means all assets, whether now owned or hereafter acquired by any Loan Party, in which a Lien is granted or purported to be granted at any time to any ABL Secured Party as security for any ABL Obligation. Prior to the BDK Joinder Date and solely for purposes of this Agreement, (a) ABL Collateral shall not include any BDK Assets and (b) the ABL Creditors shall have no rights or claims in or to any BDK Assets.
“ABL Creditors” means, collectively, the “Lenders” and the other “Secured Parties”, each as defined in the ABL Agreement or the other ABL Documents.
“ABL Declined Lien” has the meaning set forth in Section 2.4(a).
“ABL DIP Financing” has the meaning set forth in Section 5.2(a).
“ABL DIP Financing Conditions” means (a) each Term Loan Representative retains a Lien on the Collateral to secure its respective Term Loan Obligations (including proceeds thereof arising after the commencement of an Insolvency Proceeding subject to section 552 of the Bankruptcy Code or similar insolvency law) with the same priority as existed prior to the commencement of the Insolvency Proceeding subject to the relative priorities set forth in Section 2, and to the Lien securing the ABL DIP Financing, (b) each Term Loan Representative receives a replacement Lien to secure its respective Term Loan Obligations on post-petition assets to the same extent granted to the lenders providing the ABL DIP Financing (subject to the relative priorities set forth in Section 2 and to the Lien securing the ABL DIP Financing), (c) the aggregate principal amount of the ABL DIP Financing plus the aggregate outstanding principal amount of ABL Obligations under the ABL Documents does not exceed the ABL Cap Amount and (d) any such ABL DIP Financing does not (i) compel any Loan Party to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms are set forth in such documentation or order, provided, the foregoing condition does not prohibit the inclusion of customary milestones for dates by which the plan and disclosure statements must be approved, or (ii) expressly require the liquidation of all or substantially all of the Collateral prior to a default under the ABL DIP Financing documentation or cash collateral order, as applicable, provided, that the foregoing condition does not prohibit the inclusion of customary milestones for the sale of all or substantially all of the Collateral as a going concern.
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“ABL Documents” means the ABL Agreement, each ABL Security Document, each ABL Guarantee and each other “Financing Agreement” as defined in the ABL Agreement.
“ABL Excess Amount” has the meaning assigned to such term in the definition of “ABL Obligations”.
“ABL Guarantee” means any guarantee by any Loan Party of any or all of the ABL Obligations.
“ABL Hedge Obligations” has the meaning assigned to “Hedge Obligations” in the ABL Agreement.
“ABL Insurance Priority Collateral” means any insurance proceeds of any of the items referred to in clauses (a) – (h) of the definition of ABL Priority Collateral.
“ABL Lien” means any Lien created by the ABL Security Documents.
“ABL Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all loans made pursuant to the ABL Agreement or any ABL DIP Financing by the ABL Creditors, (b) all reimbursement obligations (if any) and interest thereon (including without limitation any Post-Petition Interest) with respect to any letter of credit or similar instruments issued pursuant to the ABL Agreement or any ABL DIP Financing, (c) subject to Section 8.4, all ABL Hedge Obligations, (d) subject to Section 8.4, all ABL Banking Services Obligations and (e) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the ABL Documents, in each case whether or not allowed or allowable in an Insolvency Proceeding. To the extent any payment with respect to any ABL Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the relevant Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred. Notwithstanding the foregoing or any other provision of this Agreement, if the sum of the ABL Obligations consisting of, without duplication, (i) the principal amount of loans under the Initial ABL Agreement, any Additional ABL Agreements and the other ABL Documents, or under any ABL DIP Financing, and (ii) the aggregate face amount of all outstanding letters of credit issued or deemed issued under, or otherwise secured under, the Initial ABL Agreement, any Additional ABL Agreements and the other ABL Documents, or under any ABL DIP Financing (all such ABL Obligations described in clauses (i) and (ii) above being collectively referred to herein as the “Capped ABL Obligations”), exceeds the ABL Cap Amount, then the portion of the Capped ABL Obligations exceeding the ABL Cap Amount (such portion being referred to herein as the “ABL Excess Amount”), and all interest, premiums, reimbursement obligations and other amounts accruing on or directly attributable to such ABL Excess Amount, shall be secured by the ABL Security Documents but shall not constitute “ABL Obligations” for all purposes of this Agreement. For avoidance of doubt, ABL Hedge Obligations and ABL Banking Services Obligations shall not be subject to the ABL Cap Amount.
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“ABL Obligations Payment Date” means the first date on which (a) the ABL Obligations (other than those that constitute Unasserted Contingent Obligations and the cash collateralization of all such applicable ABL Hedge Obligations and ABL Bank Product Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty)) have been paid in cash in full (or cash collateralized or defeased in accordance with the terms of the ABL Documents), (b) all commitments to extend credit under the ABL Documents have been terminated, (c) all Hedge Obligations and Banking Services Obligations secured by the ABL Documents have been terminated (or such other arrangements satisfactory to the ABL Secured Parties counterparties thereto have been made), (d) there are no outstanding letters of credit or similar instruments issued under the ABL Documents (other than such as have been cash collateralized or defeased in accordance with the terms of the ABL Documents), and (e) so long as the Term Loan Obligations Payment Date shall not have occurred, the ABL Representative has delivered a written notice to the Designated Term Loan Representative stating that the events described in clauses (a), (b), (c) and (d) have occurred to the satisfaction of the ABL Secured Parties.
“ABL Priority Collateral” means all now owned or hereafter acquired ABL Collateral consisting of the following:
(a) all Accounts (including all Franchisee Receivables) and all credit card receivables, but excluding Accounts which constitute Term Loan Priority Collateral or are Proceeds thereof or arise from the sale, lease, license, assignment or other disposition of Term Loan Priority Collateral;
(b) all Inventory;
(c) all Specified ABL Priority Collateral;
(d) all Deposit Accounts with any bank or other financial institution (including all cash, cash equivalents, financial assets, negotiable instruments and other evidence of payment, and other funds on deposit therein or credit thereto, other than, in each case, to the extent constituting Proceeds of Term Loan Priority Collateral);
(e) all Securities Accounts with any securities intermediary (including all Investment Property held therein or credited thereto, other than, in each case, to the extent constituting Proceeds of Term Loan Priority Collateral);
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(f) all Commodity Accounts with any commodities intermediary (including any and all commodity contracts and all funds and other property held therein or credited thereto, other than, in each case, to the extent constituting Proceeds of Term Loan Priority Collateral);
(g) [reserved];
(h) all accessions to, substitutions for and replacements of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records and any General Intangibles at any time evidencing or arising from any of the foregoing, in each case with respect to the items referred to in the preceding clauses (a) - (g) provided that the Term Loan Representative shall be entitled to a copy of all such books, records and information described in this clause (h); and
(i) all Proceeds, including without limitation, all insurance proceeds (excluding insurance proceeds described in clause (i) of the definition of Term Loan Priority Collateral), Supporting Obligations and products of any and all of the foregoing items referred to in the preceding clauses (a) – (h) and all collateral security and guarantees given by any Person with respect to any of the foregoing items referred to in the preceding clauses (a) – (h);
provided, however, that, any Collateral, regardless of type, received in exchange for ABL Priority Collateral pursuant to an Enforcement Action in accordance with the terms of the ABL Agreement and this Agreement shall be treated as ABL Priority Collateral under this Agreement, the Term Loan Security Documents and the ABL Security Documents; provided, further, that any Collateral of the type that constitutes ABL Priority Collateral, if received in exchange for Term Loan Priority Collateral pursuant to an Enforcement Action in accordance with the terms of the Term Loan Agreement and this Agreement, shall be treated as Term Loan Priority Collateral under this Agreement, the Term Loan Security Documents and the ABL Security Documents; provided, further, that ABL Priority Collateral shall exclude, however, all Term Loan Priority Collateral (other than Term Loan Priority Collateral which is treated as ABL Priority Collateral as set forth in the first proviso above), it being understood and agreed that the ABL Secured Parties remain entitled to the benefit of their junior priority Lien in any such Collateral; and, provided, further, however, that “ABL Priority Collateral” shall include proceeds from the disposition of any Term Loan Priority Collateral permitted by the ABL Agreement and the Term Loan Agreements to the extent such proceeds are used to acquire Collateral that would otherwise constitute ABL Priority Collateral and are not required to be applied to the mandatory prepayment of the Term Loan Obligations pursuant to the Term Loan Documents, unless such proceeds either (a) arise from a disposition of Term Loan Priority Collateral resulting from any Enforcement Action taken by the Term Loan Secured Parties permitted by this Agreement or (b) are deposited in a segregated cash collateral account with the relevant Term Loan Representative to the extent required by the relevant Term Loan Documents.
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“ABL Representative” has the meaning set forth in the introductory paragraph hereof. In the case of any Replacement ABL Agreement, the ABL Representative shall be the Person identified as administrative agent or other representative in such Replacement ABL Agreement.
“ABL Secured Parties” means the ABL Representative, the ABL Creditors and any other holders of the ABL Obligations.
“ABL Security Documents” means the “Collateral Documents” as defined in the ABL Agreement, and any other documents that are designated under the ABL Agreement as “ABL Security Documents” for purposes of this Agreement.
“ABL Standstill Period” has the meaning assigned such term in Section 3.2.
“Access Period” means, with respect to any Real Property or Equipment constituting Term Loan Priority Collateral, the period, following the commencement of any Enforcement Action, which begins on the earlier of (a) the day on which the ABL Representative provides the Designated Term Loan Representative with written notice of its election to request access to such Real Property or Equipment constituting Term Loan Priority Collateral pursuant to Section 3.4(c) and (b) the date on which the ABL Representative receives written notice from the Designated Term Loan Representative that the Designated Term Loan Representative (or its agent) has obtained possession or control of such Real Property or Equipment constituting Term Loan Priority Collateral or has, through the exercise of remedies or otherwise, sold or otherwise transferred such Real Property or Equipment constituting Term Loan Priority Collateral to any third party purchaser or transferee, and ends on the earliest of (i) the day which is 90 days after such date (the “Initial Access Date”) plus such number of days, if any, after the Initial Access Date that it is stayed or otherwise prohibited from exercising remedies with respect to associated ABL Priority Collateral, (ii) the date on which all or substantially all of the ABL Priority Collateral associated with such Real Property or Equipment constituting Term Loan Priority Collateral is sold, collected or liquidated, (iii) the ABL Obligations Payment Date and (iv) the date on which the default which resulted in such Enforcement Action has been cured to the satisfaction of the ABL Representative or waived in writing.
“Additional ABL Agreement” means any agreement approved for designation as such by the ABL Representative and the Designated Term Loan Representative.
“Additional Debt” has the meaning set forth in Section 10.5(c).
“Additional First Lien Term Banking Services Obligations” of any Loan Party means, with respect to any Series of Additional First Lien Term Loan Obligations, any obligations of such Loan Party or Subsidiary owed to any Additional First Lien Term Loan Secured Party (or any of its affiliates) in respect of treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, any direct debit scheme or arrangement, cash pooling services and interstate depository network services), credit card services, stored value card services or other cash management services, to the extent secured by a First Lien Term Loan Lien on Term Loan Collateral under Additional First Lien Term Loan Documents of such Series.
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“Additional First Lien Term Hedge Obligations” of any Loan Party means, with respect to any Series of Additional First Lien Term Loan Obligations, any obligation of such Loan Party pursuant to any Swap Contract entered into by such Loan Party with a counterparty as permitted under and secured by a First Lien Term Loan Lien on Term Loan Collateral under the Additional First Lien Term Loan Documents of such Series.
“Additional First Lien Term Loan Agreement” means (a) the BDK First Lien Term Loan Agreement and (b) any other agreement approved for designation as such by the ABL Representative and the Designated Term Loan Representative.
“Additional First Lien Term Loan Creditors” means, with respect to any Series of Additional First Lien Term Loan Debt, the “Lenders” and the “Secured Parties” (or any similar terms), each as defined in the Additional First Lien Term Loan Agreement or the other Additional First Lien Term Loan Documents of such Series.
“Additional First Lien Term Loan Debt” means Additional Term Loan Debt that constitutes “Additional First Lien Debt” as defined in the 1L/2L Intercreditor Agreement.
“Additional First Lien Term Loan Documents” means, with respect to any Series of Additional First Lien Term Debt, each Additional First Lien Term Loan Agreement of such Series and each other “Loan Document” (or any similar term) as defined in such Additional First Lien Term Loan Agreement.
“Additional First Lien Term Loan Obligations” means, with respect to any Series of Additional First Lien Term Loan Debt, (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the Additional First Lien Term Loan Agreement of such Series or any Term Loan DIP Financing by the Additional First Lien Term Loan Creditors of such Series, (b) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the Additional First Lien Term Loan Documents of such Series, in each case whether or not allowed or allowable in an Insolvency Proceeding, (c) subject to Section 8.4, all Additional First Lien Term Hedge Obligations and (d) subject to Section 8.4, all Additional First Lien Term Banking Services Obligations. To the extent any payment with respect to any Additional First Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
“Additional First Lien Term Loan Representative” has the meaning assigned to such term in the definition of “First Lien Term Loan Representative”.
“Additional Second Lien Term Loan Agreement” means (a) the BDK Second Lien Term Loan Agreement and (b) any other agreement approved for designation as such by the ABL Representative and the First Lien Term Loan Representative.
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“Additional Second Lien Term Loan Creditors” means, with respect to any Series of Additional Second Lien Term Loan Debt, the “Lenders” and the “Secured Parties” (or any similar terms), each as defined in the Additional Second Lien Term Loan Agreement or the other Additional Second Lien Term Loan Documents of such Series.
“Additional Second Lien Term Loan Debt” means Additional Term Loan Debt that constitutes “Additional Second Lien Debt” as defined in the 1L/2L Intercreditor Agreement.
“Additional Second Lien Term Loan Documents” means, with respect to any Series of Additional Second Lien Term Loan Debt, each Additional Second Lien Term Loan Agreement of such Series and each other “Loan Document” (or any similar term) as defined in such Additional Second Lien Term Loan Agreement.
“Additional Second Lien Term Loan Obligations” means, with respect to any Series of Additional Second Lien Term Loan Debt, (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the Additional Second Lien Term Loan Agreement of such Series or any Term Loan DIP Financing by the Additional Second Lien Term Loan Creditors of such Series and (b) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the Additional Second Lien Term Loan Documents of such Series, in each case whether or not allowed or allowable in an Insolvency Proceeding. To the extent any payment with respect to any Additional Second Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
“Additional Second Lien Term Loan Representative” has the meaning assigned to such term in the definition of “Second Lien Term Loan Representative”.
“Additional Term Loan Debt” means any Indebtedness and guarantees thereof that is incurred, issued or guaranteed by a Loan Party (other than the Initial Term Loan Debt) which Indebtedness and guarantees are secured, subject to the terms of this Agreement, on a senior-priority basis by liens on substantially all the assets constituting Term Loan Priority Collateral and on a junior-priority basis by liens on substantially all the assets constituting ABL Priority Collateral; provided, however, that with respect to any such Indebtedness incurred after the date hereof (i) such Indebtedness is permitted to be incurred, secured and guaranteed on such basis by each Term Loan Document and ABL Document, (ii) unless already a party with respect to that Series of Additional Term Debt, the Term Loan Representative for the holders of such Indebtedness shall have become party to this Agreement pursuant to, and by satisfying the conditions set forth in, Section 10.5(c) hereof; and (iii) each of the other requirements of Section 10.5(c) shall have been complied with. Additional Term Loan Debt shall include any Registered Equivalent Notes and guarantees thereof by the Loan Parties issued in exchange therefor.
“Ancillary Document” has the meaning set forth in Section 10.14.
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“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Banking Services Obligations” means ABL Banking Services Obligations and First Lien Term Banking Services Obligations.
“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. §101 et seq.), as amended from time to time.
“Bankruptcy Event” means (a) any insolvency or bankruptcy case or proceeding (including any case under the Bankruptcy Code), or any receivership, custodianship, liquidation, reorganization or other similar case or proceeding, relative to any Loan Party, or to the assets of any Loan Party, (b) any liquidation, dissolution, reorganization or winding up of any Loan Party, whether voluntary or involuntary and whether or not involving solvency or bankruptcy, (c) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Loan Party or (d) any sale, transfer or other disposition of all or substantially all of the assets of any Loan Party in connection with any of the foregoing.
“BDK Assets” means all assets, whether now owned or hereafter acquired by Badcock.
“BDK First Lien Term Banking Services Obligations” of any Loan Party means any obligations of such Loan Party owed to any BDK First Lien Term Loan Secured Party (or any of its affiliates) in respect of treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, any direct debit scheme or arrangement, cash pooling services and interstate depository network services), credit card services, stored value card services or other cash management services, to the extent secured by a BDK First Lien Term Loan Lien on Term Loan Collateral under the BDK First Lien Term Loan Documents.
“BDK First Lien Term Hedge Obligations” of any Loan Party means any obligation of such Loan Party pursuant to any Swap Contract entered into by such Loan Party with a counterparty as permitted under and secured by a BDK First Lien Term Loan Lien on Term Loan Collateral under the BDK First Lien Term Loan Documents.
“BDK First Lien Term Loan Agreement” has the meaning set forth in the recitals to this Agreement.
“BDK First Lien Term Loan Creditors” means the “Lenders” and the “Secured Parties”, each as defined in the BDK First Lien Term Loan Agreement or the other BDK First Lien Term Loan Documents.
“BDK First Lien Term Loan Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the BDK First Lien Term Loan Documents.
“BDK First Lien Term Loan Documents” means the BDK First Lien Term Loan Agreement and each other “Loan Document” as defined in the BDK First Lien Term Loan Agreement.
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“BDK First Lien Term Loan Lien” means any Lien created by the BDK First Lien Term Loan Security Documents.
“BDK First Lien Term Loan Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the BDK First Lien Term Loan Agreement or any Term Loan DIP Financing by the BDK First Lien Term Loan Creditors, (b) all guarantee obligations, indemnities fees, expenses and other amounts payable from time to time pursuant to the BDK First Lien Term Loan Documents, in each case whether or not allowed or allowable in an Insolvency Proceeding, (c) subject to Section 8.4, all BDK First Lien Term Hedge Obligations and (d) subject to Section 8.4, all BDK First Lien Term Banking Services Obligations. To the extent any payment with respect to any BDK First Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
“BDK First Lien Term Loan Representative” has the meaning set forth in the introductory paragraph hereof. In the case of any Replacement First Lien Term Loan Agreement in respect of the BDK First Lien Term Loan Agreement, the BDK First Lien Term Loan Representative shall be the Person identified as such in such Agreement.
“BDK First Lien Term Loan Secured Parties” means the BDK First Lien Term Loan Representative, the BDK First Lien Term Loan Creditors and any other holders of the BDK First Lien Term Loan Obligations.
“BDK First Lien Term Loan Security Documents” means the “Security Documents” (or any similar term) as defined in the BDK First Lien Term Loan Agreement and any documents that are designated under the BDK First Lien Term Loan Agreement as “Term Loan Security Documents” for purposes of this Agreement.
“BDK Joinder Date” has the meaning assigned to the term “Badcock Joinder Date” (or similar term) in the ABL Credit Agreement.
“BDK Second Lien Term Loan Agreement” has the meaning set forth in the recitals to this Agreement.
“BDK Second Lien Term Loan Creditors” means the “Lenders” and the “Secured Parties”, each as defined in the BDK Second Lien Term Loan Agreement or the other BDK Second Lien Term Loan Documents.
“BDK Second Lien Term Loan Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the BDK Second Lien Term Loan Documents.
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“BDK Second Lien Term Loan Documents” means the BDK Second Lien Term Loan Agreement and each other “Loan Document” as defined in the BDK Second Lien Term Loan Agreement.
“BDK Second Lien Term Loan Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the BDK Second Lien Term Loan Agreement or any Term Loan DIP Financing by the BDK Second Lien Term Loan Creditors and (b) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the BDK Second Lien Term Loan Documents, in each case whether or not allowed or allowable in an Insolvency Proceeding. To the extent any payment with respect to any BDK Second Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
“BDK Second Lien Term Loan Representative” has the meaning set forth in the introductory paragraph hereof. In the case of any Replacement Second Lien Term Loan Agreement in respect of the BDK Second Lien Term Loan Agreement, the BDK Second Lien Term Loan Representative shall be the Person identified as such in such Agreement.
“BDK Second Lien Term Loan Secured Parties” means the BDK Second Lien Term Loan Representative, the BDK Second Lien Term Loan Creditors and any other holders of the BDK Second Lien Term Loan Obligations.
“Borrowers” has the meaning set forth in the recitals to this Agreement.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.
“Capped ABL Obligations” has the meaning assigned to such term in the definition of “ABL Obligations”.
“Collateral” means, collectively, all ABL Collateral and all Term Loan Collateral. Prior to the BDK Joinder Date and solely for purposes of this Agreement, (a) Collateral shall not include any BDK Assets and (b) BDK Assets, and the rights of the Term Loan Creditors in respect thereof, shall not be subject to the terms of this Agreement.
“Collateral Due Diligence” means all collateral appraisals, results of field examinations, results of physical inventories and any other tax and lien searches, in each case received by any Representative.
“Common Collateral” means all Collateral that constitutes both ABL Collateral and Term Loan Collateral. Prior to the BDK Joinder Date and solely for purposes of this Agreement, Common Collateral shall not include any BDK Assets.
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“Comparable Security Document” means, in relation to any Senior Collateral subject to any Senior Security Document, that Junior Security Document that creates a security interest in the same Senior Collateral, granted by the same Loan Party, as applicable.
“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.
“Control Representative” has the meaning set forth in Section 2.6(a).
“Copyright Licenses” means any and all agreements granting any right in, to or under Copyrights (whether a Loan Party is licensee or licensor thereunder).
“Copyrights” means all United States, state and foreign copyrights, including but not limited to copyrights in software and databases, and all “Mask Works” (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force, and with respect to any and all of the foregoing: (i) all registrations and applications therefor, (ii) all extensions and renewals thereof, (iii) all rights corresponding thereto throughout the world, (iv) all rights to sue for past, present and future infringements thereof, (v) all licenses, claims, damages and proceeds of suit arising therefrom, and (vi) all payments and royalties and rights to payments and royalties arising out of the sale, lease, license, assignment, or other disposition thereof.
“Designated Term Loan Representative” means (i) at any time prior to the First Lien Term Loan Obligations Payment Date, (x) if there is only one First Lien Term Loan Representative party hereto, such First Lien Term Loan Representative, and (y) where clause (i)(x) does not apply, the First Lien Term Loan Representative designated as the “Applicable Collateral Agent” (or any similar term) pursuant to the First Lien Term Loan Pari Passu Intercreditor Agreement and (ii) at any time after the First Lien Term Loan Obligations Payment Date, (x) if there is only one Second Lien Term Loan Representative party hereto, such Second Lien Term Loan Representative, and (y) where clause (ii)(x) does not apply, the Second Lien Term Loan Representative designated as “Applicable Collateral Agent” (or any similar term) pursuant to the Second Lien Term Loan Pari Passu Intercreditor Agreement.
“DIP Financing” means an ABL DIP Financing or a Term Loan DIP Financing, as applicable.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Enforcement Action” means, with respect to the ABL Obligations or the Term Loan Obligations, the exercise of any rights and remedies with respect to any Common Collateral securing such obligations or the commencement or prosecution of enforcement of any of the rights and remedies under, as applicable, the ABL Documents or the Term Loan Documents, or applicable law, including without limitation the exercise of any rights of set-off or recoupment, and the exercise of any rights or remedies of a secured creditor under the Uniform Commercial Code of any applicable jurisdiction or under the Bankruptcy Code, but excluding, so long as no default or event of default under the Senior Documents is continuing, the collection or application of, or the delivery of any activation notice with respect to, funds from time to time on deposit in (a) any Deposit Account, Securities Account or Commodity Account representing ABL Priority Collateral or (b) any Deposit Account, Securities Account or Commodity Account representing Term Loan Priority Collateral.
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“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.
“First Lien Term Banking Services Obligations” means the Initial First Lien Term Banking Services Obligations and the Additional First Lien Term Banking Services Obligations.
“First Lien Term Hedge Obligations” means the Initial First Lien Term Hedge Obligations and the Additional First Lien Term Hedge Obligations.
“First Lien Term Loan Agreement” means the collective reference to (a) the Initial First Lien Term Loan Agreement, (b) any Additional First Lien Term Loan Agreement and (c) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Initial First Lien Term Loan Agreement, any Additional First Lien Term Loan Agreement or any other agreement or instrument referred to in this clause (c) unless such agreement or instrument expressly provides that it is not intended to be and is not a First Lien Term Loan Agreement hereunder (a “Replacement First Lien Term Loan Agreement”), in each case, in accordance with and subject to the terms hereof. Any reference to the First Lien Term Loan Agreement hereunder shall be deemed a reference to any First Lien Term Loan Agreement then extant.
“First Lien Term Loan Collateral” means all assets, whether now owned or hereafter acquired by any Loan Party, in which a Lien is granted or purported to be granted at any time to any First Lien Term Loan Secured Party as security for any First Lien Term Loan Obligation.
“First Lien Term Loan Creditors” means the Initial First Lien Term Loan Creditors and the Additional First Lien Term Loan Creditors.
“First Lien Term Loan Documents” means the Initial First Lien Term Loan Documents and the Additional First Lien Term Loan Documents.
“First Lien Term Loan Guarantee” means any guarantee by any Loan Party of any or all of the First Lien Term Loan Obligations.
“First Lien Term Loan Lien” means any Lien created by the First Lien Term Loan Security Documents.
“First Lien Term Loan Obligations” means all Initial First Lien Term Loan Obligations and all Additional First Lien Term Loan Obligations.
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“First Lien Term Loan Obligations Payment Date” means the first date on which (a) the First Lien Term Loan Obligations (other than those that constitute Unasserted Contingent Obligations and the cash collateralization of all such applicable First Lien Term Hedge Obligations and First Lien Term Bank Product Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty)) have been paid in cash in full, (b) all commitments to extend credit under the First Lien Term Loan Documents have been terminated, and (c) so long as the ABL Obligations Payment Date shall not have occurred, the First Lien Term Loan Representative has delivered a written notice to the ABL Representative stating that the events described in clauses (a) and (b) have occurred to the satisfaction of the First Lien Term Loan Secured Parties.
“First Lien Term Loan Pari Passu Intercreditor Agreement” means the First Lien Pari Passu Intercreditor Agreement (as defined in the Initial 1L/2L Intercreditor Agreement) or any other agreement or agreements (other than this Agreement and the 1L/2L Intercreditor Agreement) among the First Lien Term Loan Representatives that defines the relative rights and priorities as among the First Lien Term Loan Representatives and First Lien Term Loan Secured Parties with respect to the Term Loan Collateral.
“First Lien Term Loan Representative” means (a) in the case of the Initial First Lien Term Loan Obligations or the Initial First Lien Term Loan Secured Parties, the Initial First Lien Term Loan Representative and (b) in the case of any Additional First Lien Term Loan Obligations and the Additional First Lien Term Secured Parties in respect thereof, each collateral or security agent that is named as the First Lien Term Loan Representative in respect of such Additional First Lien Term Loan Obligations in the applicable Joinder Agreement (or in the case of the BDK First Lien Term Loan Obligations or the BDK First Lien Term Loan Claimholders, the BDK First Lien Term Loan Representative (which for all purposes hereof shall be an “Additional First Lien Term Loan Representative”)) (each, an “Additional First Lien Term Loan Representative”).
“First Lien Term Loan Secured Parties” means the Initial First Lien Term Loan Secured Parties and any Additional First Lien Term Loan Secured Parties in respect of Additional First Lien Term Loan Obligations.
“First Lien Term Loan Security Documents” means the “Security Documents” (or any similar term) as defined in any First Lien Term Loan Agreement and any documents that are designated under any First Lien Term Loan Agreement as “Term Loan Security Documents” for purposes of this Agreement.
“Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Company and its Subsidiaries.
“Franchisee Receivable” shall mean an Account or credit card receivable of a Loan Party owed by an Account Debtor that is a franchisee arising from the sale of Inventory by a Loan Party to such Account Debtor (including any Account or credit card receivable to the extent arising from the sale of Inventory under a Franchise Agreement other than any such Account or credit card receivable (or portion thereof) that consists of fees, royalties, penalties and interest payable under any Franchise Agreement).
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“Hedge Obligations” means the ABL Hedge Obligations and the First Lien Term Hedge Obligations.
“Indebtedness” means all indebtedness for borrowed money. For avoidance of doubt, “Indebtedness” shall not include reimbursement or other obligations in respect of letters of credit, Hedge Obligations or other Banking Services Obligations.
“Initial Access Date” has the meaning assigned to such term in the definition of “Access Period”.
“Initial 1L/2L Intercreditor Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial ABL Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial First Lien Term Banking Services Obligations” of any Loan Party means any obligations of such Loan Party owed to any Initial First Lien Term Loan Secured Party (or any of its affiliates) in respect of treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts, any direct debit scheme or arrangement, cash pooling services and interstate depository network services), credit card services, stored value card services or other cash management services, to the extent secured by a First Lien Term Loan Lien on Term Loan Collateral under the Initial First Lien Term Loan Documents.
“Initial First Lien Term Hedge Obligations” of any Loan Party means any obligation of such Loan Party pursuant to any Swap Contract entered into by such Loan Party with a counterparty as permitted under and secured by a First Lien Term Loan Lien on Term Loan Collateral under the Initial First Lien Term Loan Documents.
“Initial First Lien Term Loan Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial First Lien Term Loan Creditors” means the “Lenders” and the “Secured Parties”, each as defined in the Initial First Lien Term Loan Agreement or the other Initial First Lien Term Loan Documents.
“Initial First Lien Term Loan Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Initial First Lien Term Loan Documents.
“Initial First Lien Term Loan Documents” means the Initial First Lien Term Loan Agreement and each other “Loan Document” as defined in the Initial First Lien Term Loan Agreement.
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“Initial First Lien Term Loan Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the Initial First Lien Term Loan Agreement or any Term Loan DIP Financing by the Initial First Lien Term Loan Creditors, (b) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the Initial First Lien Term Loan Documents, in each case whether or not allowed or allowable in an Insolvency Proceeding, (c) subject to Section 8.4, all Initial First Lien Term Hedge Obligations and (d) subject to Section 8.4, all Initial First Lien Term Banking Services Obligations. To the extent any payment with respect to any Initial First Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
“Initial First Lien Term Loan Representative” has the meaning set forth in the introductory paragraph hereof. In the case of any Replacement First Lien Term Loan Agreement in respect of the Initial First Lien Term Loan Agreement, the Initial First Lien Term Loan Representative shall be the Person identified as such in such Agreement.
“Initial First Lien Term Loan Secured Parties” means the Initial First Lien Term Loan Representative, the Initial First Lien Term Loan Creditors and any other holders of the Initial First Lien Term Loan Obligations.
“Initial Second Lien Term Loan Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial Second Lien Term Loan Creditors” means the “Lenders” and the “Secured Parties”, each as defined in the Initial Second Lien Term Loan Agreement or the other Initial Second Lien Term Loan Documents.
“Initial Second Lien Term Loan Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Initial Second Lien Term Loan Documents.
“Initial Second Lien Term Loan Documents” means the Initial Second Lien Term Loan Agreement and each other “Loan Document” as defined in the Initial Second Lien Term Loan Agreement.
“Initial Second Lien Term Loan Obligations” means (a) all principal of and interest (including without limitation any Post-Petition Interest) and premium (if any) on all indebtedness under the Initial Second Lien Term Loan Agreement or any Term Loan DIP Financing by the Initial Second Lien Term Loan Creditors and (b) all guarantee obligations, indemnities, fees, expenses and other amounts payable from time to time pursuant to the Initial Second Lien Term Loan Documents, in each case whether or not allowed or allowable in an Insolvency Proceeding. To the extent any payment with respect to any Initial Second Lien Term Loan Obligation (whether by or on behalf of any Loan Party, as Proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any ABL Secured Party, any Term Loan Secured Party, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the ABL Secured Parties and the Term Loan Secured Parties, be deemed to be reinstated and outstanding as if such payment had not occurred.
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“Initial Second Lien Term Loan Representative” has the meaning set forth in the introductory paragraph hereof. In the case of any Replacement Second Lien Term Loan Agreement in respect of the Initial Second Lien Term Loan Agreement, the Initial Second Lien Term Loan Representative shall be the Person identified as such in such Agreement.
“Initial Second Lien Term Loan Secured Parties” means the Initial Second Lien Term Loan Representative, the Initial Second Lien Term Loan Creditors and any other holders of the Initial Second Lien Term Loan Obligations.
“Initial Term Debt” means the Initial First Lien Term Debt and the Initial Second Lien Term Debt.
“Insolvency Proceeding” means any proceeding in respect of bankruptcy, insolvency, winding up, receivership, dissolution or assignment for the benefit of creditors, in each of the foregoing events whether under the Bankruptcy Code or any similar federal, state or foreign bankruptcy, insolvency, reorganization, receivership or similar law.
“Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in software, goodwill, customer lists, all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, and Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world.
“Joinder Agreement” means a supplement to this Agreement (a) in the case of Additional First Lien Term Loan Obligations or Additional Second Lien Term Loan Obligations incurred after the date hereof, in the form of Annex II hereto required to be delivered by the applicable Term Loan Representative to each other then-existing Representative pursuant to Section 10.5(c) hereof in order to include such Additional First Lien Term Loan Obligations in respect thereof for the applicable Additional First Lien Term Secured Parties under such Additional First Lien Term Loan Debt or such Additional Second Lien Term Loan Obligations in respect thereof for the applicable Additional Second Lien Term Secured Parties under such Additional Second Lien Term Loan Debt, as the case may be, or (b) in the case of a Loan Party, in the form of Annex III.
“Junior Collateral” means with respect to any Junior Secured Party, any Collateral on which it has a Junior Lien.
“Junior Documents” means, collectively, with respect to any Junior Obligations, any provision pertaining to such Junior Obligation in any Loan Document or any other document, instrument or certificate evidencing or delivered in connection with such Junior Obligation.
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“Junior Liens” means (a) with respect to any ABL Priority Collateral, all Liens securing the Term Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all Liens securing the ABL Obligations.
“Junior Obligations” means (a) with respect to any ABL Priority Collateral, all Term Loan Obligations and (b) with respect to any Term Loan Priority Collateral, all ABL Obligations.
“Junior Representative” means (a) with respect to any ABL Obligations or any ABL Priority Collateral, the Term Loan Representatives and (b) with respect to any Term Loan Obligations or any Term Loan Priority Collateral, the ABL Representative.
“Junior Secured Parties” means (a) with respect to the ABL Priority Collateral, all Term Loan Secured Parties and (b) with respect to the Term Loan Priority Collateral, all ABL Secured Parties.
“Junior Security Documents” means with respect to any Junior Secured Party, the Security Documents that secure the Junior Obligations.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation, assignment, assignation, debenture, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Lien Priority” means with respect to any Lien of the ABL Representative or any Term Loan Representative in the Common Collateral, the order of priority of such Lien specified in Section 2.1.
“Loan Documents” means, collectively, the ABL Documents and the Term Loan Documents.
“Loan Party” means any Borrower and each direct or indirect affiliate or shareholder (or equivalent) of any Borrower or any of its affiliates that is now or hereafter guarantees or becomes a party to any ABL Document or any Term Loan Document, as applicable. All references in this Agreement to any Loan Party shall include such Loan Party as a debtor-in-possession and any receiver or trustee for such Loan Party in any Insolvency Proceeding. For the avoidance of doubt, Badcock shall not constitute a “Loan Party” with respect to the ABL Agreement or any other ABL Document until such time as the BDK Joinder Date has occurred.
“Patent License” means all agreements granting any right in, to, or under Patents (whether any Loan Party is licensee or licensor thereunder).
“Patents” means all United States and foreign patents and certificates of invention, or similar industrial property rights, now or hereafter in force, and with respect to any and all of the foregoing, (i) all applications therefor, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arising therefrom, and (vii) all payments and royalties and rights to payments and royalties arising out of the sale, lease, license, assignment, or other disposition thereof.
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“Payment Default” means the failure to pay, when due, any obligations with respect to the Senior Obligations (including non-payment following acceleration or maturity of the Senior Obligations) after the expiration of any period of grace or notice, if any.
“Person” means any person, individual, sole proprietorship, partnership, joint venture, corporation, limited liability company, unincorporated organization, association, institution, entity, party, including any government and any political subdivision, agency or instrumentality thereof.
“Post-Petition Interest” means any interest or entitlement to fees or expenses or other charges that accrues after the commencement of any Insolvency Proceeding (or would accrue but for the commencement of an Insolvency Proceeding), whether or not allowed or allowable in any such Insolvency Proceeding.
“Priority Collateral” means the ABL Priority Collateral or the Term Loan Priority Collateral, as applicable.
“Proceeds” means (a) all “proceeds,” as defined in Article 9 of the Uniform Commercial Code, with respect to the Common Collateral, and (b) whatever is recoverable or recovered when any Common Collateral is sold, exchanged, collected, or disposed of, whether voluntarily or involuntarily.
“Protective Advances” means any loan or other extension of credit (including any intentional overadvance) which the ABL Representative in its reasonable business judgment under the ABL Agreement determines to be reasonably necessary or desirable to, directly or indirectly, (a) maintain, protect or preserve the value of the Collateral and/or the ABL Representative’s rights therein as determined in the discretion of the ABL Representative, including to preserve the Loan Parties’ business assets and infrastructure (such as the payment of insurance premiums, taxes, necessary suppliers, rent and payroll), (b) commence an Enforcement Action, (c) fund an orderly liquidation or wind-down of the Loan Parties’ assets or business or an Insolvency Proceeding (whether or not occurring prior to or after the commencement of an Insolvency Proceeding), (d) enhance the likelihood, or maximize, the repayment of the ABL Obligations, or (e) pay any other amount chargeable to or required to be paid by the Loan Parties to the ABL Representative or ABL Secured Parties, or which if unpaid could reasonably be expected to result in a Lien having priority over the Liens of the ABL Representative or otherwise adversely affect the ability of the ABL Representative to realize upon the Collateral.
“Real Property” means any right, title or interest in and to real property, including any fee interest, leasehold interest, easement, or license and any other right to use or occupy real property, including any right arising by contract.
“Recovery” has the meaning set forth in Section 5.5.
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“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees and substantially the same collateral provisions) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Related Parties” means, with respect to any specified Person, such Person’s affiliates and the respective directors, officers, partners, members, trustees, employees, agents, administrators, managers, representatives and advisors of such Person and such Person’s affiliates.
“Replacement ABL Agreement” has the meaning set forth in the definition of “ABL Agreement.”
“Replacement First Lien Term Loan Agreement” has the meaning set forth in the definition of “First Lien Term Loan Agreement.”
“Replacement Second Lien Term Loan Agreement” has the meaning set forth in the definition of “Second Lien Term Loan Agreement.”
“Representative” means the ABL Representative or any Term Loan Representative, as applicable.
“Second Lien Term Loan Agreement” means the collective reference to (a) the Initial Second Lien Term Loan Agreement, (b) any Additional Second Lien Term Loan Agreement and (c) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness and other obligations outstanding under the Initial Second Lien Term Loan Agreement, any Additional Second Lien Term Loan Agreement or any other agreement or instrument referred to in this clause (c) unless such agreement or instrument expressly provides that it is not intended to be and is not a Second Lien Term Loan Agreement hereunder (a “Replacement Second Lien Term Loan Agreement”), in each case, in accordance with and subject to the terms hereof. Any reference to the Second Lien Term Loan Agreement hereunder shall be deemed a reference to any Second Lien Term Loan Agreement then extant.
“Second Lien Term Loan Collateral” means all assets, whether now owned or hereafter acquired by any Loan Party, in which a Lien is granted or purported to be granted at any time to any Second Lien Term Loan Secured Party as security for any Second Lien Term Loan Obligation.
“Second Lien Term Loan Creditors” means the Initial Second Lien Term Loan Creditors and/or the Additional Second Lien Term Loan Creditors, as the context requires.
“Second Lien Term Loan Documents” means the Initial Second Lien Term Loan Documents and the Additional Second Lien Term Loan Documents.
“Second Lien Term Loan Guarantee” means any guarantee by any Loan Party of any or all of the Second Lien Term Loan Obligations.
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“Second Lien Term Loan Lien” means any Lien created by the Second Lien Term Loan Security Documents.
“Second Lien Term Loan Obligations” means the Initial Second Lien Term Loan Obligations and the Additional Second Lien Term Loan Obligations.
“Second Lien Term Loan Obligations Payment Date” means the first date on which (a) the Second Lien Term Loan Obligations (other than those that constitute Unasserted Contingent Obligations) have been paid in cash in full, (b) all commitments to extend credit under the Second Lien Term Loan Documents have been terminated, and (c) so long as the ABL Obligations Payment Date shall not have occurred, the Second Lien Term Loan Representative has delivered a written notice to the ABL Representative stating that the events described in clauses (a) and (b) have occurred to the satisfaction of the Second Lien Term Loan Secured Parties.
“Second Lien Term Loan Pari Passu Intercreditor Agreement” means the Second Lien Pari Passu Intercreditor Agreement (as defined in the Initial 1L/2L Intercreditor Agreement) or any other agreement or agreements (other than this Agreement and the 1L/2L Intercreditor Agreement) among the Second Lien Term Loan Representatives that defines the relative rights and priorities as among the Second Lien Term Loan Representatives and Second Lien Term Loan Secured Parties with respect to the Term Loan Collateral.
“Second Lien Term Loan Representative” means (a) in the case of the Initial Second Lien Term Loan Obligations or the Initial Second Lien Term Loan Secured Parties, the Initial Second Lien Term Loan Representative and (b) in the case of any Additional Second Lien Term Loan Obligations and the Additional Second Lien Term Secured Parties in respect thereof, each collateral or security agent that is named as the Second Lien Term Loan Representative in respect of such Additional Second Lien Term Loan Obligations in the applicable Joinder Agreement (or in the case of the BDK Second Lien Term Loan Obligations or the BDK Second Lien Term Loan Claimholders, the BDK Second Lien Term Loan Representative (which for all purposes hereof shall be an “Additional Second Lien Term Loan Representative”)) (each, an “Additional Second Lien Term Loan Representative”).
“Second Lien Term Loan Secured Parties” means the Initial Second Lien Term Loan Secured Parties and the Additional Second Lien Term Loan Secured Parties.
“Second Lien Term Loan Security Documents” means the “Security Documents” (or any similar term) as defined in any Second Lien Term Loan Agreement and any documents that are designated under any Second Lien Term Loan Agreement as “Term Loan Security Documents” for purposes of this Agreement.
“Secured Obligations” means the ABL Obligations, the ABL Excess Amount and the Term Loan Obligations.
“Secured Parties” means the ABL Secured Parties and the Term Loan Secured Parties.
“Security Documents” means, collectively, the ABL Security Documents and the Term Loan Security Documents.
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“Senior Collateral” means with respect to any Senior Secured Party, any Collateral on which it has a Senior Lien.
“Senior Documents” means, collectively, with respect to any Senior Obligation, any provision pertaining to such Senior Obligation in any Loan Document or any other document, instrument or certificate evidencing or delivered in connection with such Senior Obligation.
“Senior Liens” means (a) with respect to the ABL Priority Collateral, all Liens securing the ABL Obligations and (b) with respect to the Term Loan Priority Collateral, all Liens securing the Term Loan Obligations.
“Senior Obligations” means (a) with respect to any ABL Priority Collateral, all ABL Obligations and (b) with respect to any Term Loan Priority Collateral, all Term Loan Obligations.
“Senior Obligations Payment Date” means (a) with respect to any ABL Obligations, the ABL Obligations Payment Date and (b) with respect to any Term Loan Obligations, the Term Loan Obligations Payment Date.
“Senior Representative” means (a) with respect to any ABL Priority Collateral, the ABL Representative and (b) with respect to any Term Loan Priority Collateral, the Designated Term Loan Representative.
“Senior Secured Parties” means (a) with respect to the ABL Priority Collateral, all ABL Secured Parties and (b) with respect to the Term Loan Priority Collateral, all Term Loan Secured Parties.
“Senior Security Documents” means with respect to any Senior Secured Party, the Security Documents that secure the Senior Obligations.
“Series” means (a) with respect to any Term Loan Debt, all such Term Debt represented by the same Term Loan Representative acting in the same capacity, and (b) with respect to any Term Loan Obligations, all such obligations secured in connection with the same Series of Term Loan Debt.
“Specified ABL Priority Collateral” means all Letter of Credit Rights, Chattel Paper, Documents, Instruments, Investment Property and General Intangibles evidencing, governing, arising out of or supporting the property described in clauses (a) and (b) of the definition of “ABL Priority Collateral”.
“Specified Term Loan Priority Collateral” means all Letter of Credit Rights, Chattel Paper, Documents, Instruments, Investment Property and General Intangibles evidencing, governing, arising out of or supporting the property described in clause (c) of the definition of “Term Loan Priority Collateral”.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or, in the case of a partnership, more than fifty percent (50%) of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent
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“Swap Contract” means (a) any and all interest 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 price or bond index swaps or options for 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 such obligations or liabilities under any Master Agreement.
“Term Declined Lien” has the meaning set forth in Section 2.4(b).
“Term Loan Agreement” means any First Lien Term Loan Agreement and any Second Lien Term Loan Agreement.
“Term Loan Collateral” means the First Lien Term Loan Collateral and the Second Lien Term Loan Collateral. Prior to the BDK Joinder Date and solely for purposes of this Agreement, (a) Term Loan Collateral shall not include any BDK Assets and (b) BDK Assets, and the rights of the Term Loan Creditors in respect thereof, shall not be subject to the terms of this Agreement.
“Term Loan Creditors” means the First Lien Term Loan Creditors and the Second Lien Term Loan Creditors.
“Term Loan DIP Financing” has the meaning set forth in Section 5.2(b).
“Term Loan DIP Financing Conditions” means (a) the ABL Representative retains a Lien on the Collateral to secure the ABL Obligations (including proceeds thereof arising after the commencement of an Insolvency Proceeding subject to section 552 of the Bankruptcy Code or similar insolvency law) with the same priority as existed prior to the commencement of the Insolvency Proceeding subject to the relative priorities set forth in Section 2, and to the Lien securing the Term Loan DIP Financing, (b) the ABL Representative receives a replacement Lien to secure the ABL Obligations on post-petition assets to the same extent granted to the lenders providing the Term Loan DIP Financing (subject to the relative priorities set forth in Section 2 and to the Lien securing the Term Loan DIP Financing) and (c) any such Term Loan DIP Financing does not (i) compel any Loan Party to seek confirmation of a specific plan of reorganization for which all or substantially all of the material terms are set forth in such documentation or order, provided, the foregoing condition does not prohibit the inclusion of customary milestones for dates by which the plan and disclosure statements must be approved, or (ii) expressly require the liquidation of all or substantially all of the Collateral prior to a default under the Term Loan DIP Financing documentation or cash collateral order, as applicable, provided, that the foregoing condition does not prohibit the inclusion of customary milestones for the sale of all or substantially all of the Collateral as a going concern.
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“Term Loan Documents” means the First Lien Term Loan Documents and the Second Lien Term Loan Documents.
“Term Loan Guarantee” means any First Lien Term Loan Guarantee and any Second Lien Term Loan Guarantee.
“Term Loan Lien” means any First Lien Term Loan Lien and any Second Lien Term Loan Lien.
“Term Loan Obligations” means the First Lien Term Loan Obligations and the Second Lien Term Loan Obligations.
“Term Loan Obligations Payment Date” means the first date on which both the First Lien Term Loan Obligations Payment Date and the Second Lien Term Loan Obligations Payment Date has occurred.
“Term Loan Priority Collateral” means all now owned or hereafter acquired Collateral consisting of the following:
| (a) | all Real Property; |
| (b) | all Fixtures; |
| (c) | all Equipment; |
| (d) | all Specified Term Loan Priority Collateral; |
| (e) | all Equity Interests of any direct or indirect Subsidiaries of the Company and all other Investment Property (except to the extent ABL Priority Collateral pursuant to clause (e) of the definition of ABL Priority Collateral); |
| (f) | all Intellectual Property; |
| (g) | all Franchise Agreements and all Accounts, Payment Intangibles, fees, royalties, penalties and interest payable, or any other rights under, any Franchise Agreement; |
| (h) | all books and Records relating to the foregoing (including without limitation all books, databases, customer lists, engineer drawings, and Records, whether tangible or electronic which contain any information relating to any of the foregoing); |
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| (i) | all Commercial Tort Claims, business interruption insurance, key man life insurance, representations & warranties insurance policies and tax refunds (except, in each case, to the extent constituting ABL Insurance Priority Collateral); |
| (j) | all other Collateral, other than the ABL Priority Collateral; and |
| (k) | all Proceeds (including without limitation, all insurance proceeds), Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; |
provided, however, that, any Collateral, regardless of type, received in exchange for Term Loan Priority Collateral pursuant to an Enforcement Action in accordance with the terms of the Term Loan Agreement and this Agreement shall be treated as Term Loan Priority Collateral under this Agreement, the Term Loan Security Documents and the ABL Security Documents; provided, further, that any Collateral of the type that constitutes Term Loan Priority Collateral, if received in exchange for ABL Priority Collateral pursuant to an Enforcement Action in accordance with the terms of the ABL Agreement and this Agreement, shall be treated as ABL Priority Collateral under this Agreement, the Term Loan Security Documents and the ABL Security Documents; provided, further, that Term Loan Priority Collateral shall exclude, however, all ABL Priority Collateral (other than ABL Priority Collateral which is treated as Term Loan Priority Collateral as set forth in the first proviso above), it being understood and agreed that the Term Loan Secured Parties remain entitled to the benefit of their junior priority Lien in any such Collateral; and, provided, further, however, that “Term Loan Priority Collateral” shall include Proceeds from the disposition of any ABL Priority Collateral permitted by the ABL Agreement and the Term Loan Agreement to the extent such Proceeds are used to acquire Collateral that would otherwise constitute Term Loan Priority Collateral.
“Term Loan Representative” means the First Lien Term Loan Representative and the Second Lien Term Loan Representative.
“Term Loan Secured Parties” means the First Lien Term Loan Secured Parties and the Second Lien Term Loan Secured Parties.
“Term Loan Security Documents” means the First Lien Term Loan Security Documents and the Second Lien Term Loan Security Documents.
“Term Loan Standstill Period” has the meaning assigned such term in Section 3.2.
“Trade Secret Licenses” means any and all agreements granting any right in or to Trade Secrets (whether a Loan Party is licensee or licensor thereunder).
“Trade Secrets” means all trade secrets and all other confidential or proprietary information and know-how, whether or not reduced to a writing or other tangible form, now or hereafter in force, owned or used in, or contemplated at any time for use in, the business of any Loan Party, including with respect to any and all of the foregoing: (i) all documents and things embodying, incorporating, or referring in any way thereto, (ii) all rights to sue for past, present and future infringement thereof, (iii) all licenses, claims, damages, and proceeds of suit arising therefrom, and (iv) all payments and royalties and rights to payments and royalties arising out of the sale, lease, license, assignment, or other dispositions thereof.
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“Trademark Licenses” means any and all agreements granting any right in or to Trademarks (whether a Loan Party is licensee or licensor thereunder).
“Trademarks” means all United States, state and foreign trademarks, service marks, certification marks, collective marks, trade names, corporate names, d/b/as, business names, fictitious business names, Internet domain names, trade styles, logos, other source or business identifiers, designs and general intangibles of a like nature, rights of publicity and privacy pertaining to the names, likeness, signature and biographical data of natural persons, now or hereafter in force, and, with respect to any and all of the foregoing: (i) all registrations and applications therefor, (ii) the goodwill of the business symbolized thereby, (iii) all rights corresponding thereto throughout the world, (iv) all rights to sue for past, present and future infringement or dilution thereof or for any injury to goodwill, (v) all licenses, claims, damages, and proceeds of suit arising therefrom, and (vi) all payments and royalties and rights to payments and royalties arising out of the sale, lease, license, assignment or other disposition thereof.
“Unasserted Contingent Obligations” shall mean, at any time, ABL Obligations or Term Loan Obligations, as applicable, for taxes, costs, indemnifications, reimbursements, damages and other liabilities (excluding (a) the principal of, and interest and premium (if any) on, and fees and expenses relating to, any ABL Obligation or Term Loan Obligation, as applicable, and (b) with respect to ABL Obligations, contingent reimbursement obligations in respect of amounts that may be drawn under outstanding letters of credit) in respect of which no assertion of liability (whether oral or written) and no claim or demand for payment (whether oral or written) has been made (and, in the case of ABL Obligations or Term Loan Obligations, as applicable, for indemnification, no notice for indemnification has been issued by the indemnitee) at such time.
“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.3 Rules of Construction. 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 (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, refinanced, replaced, renewed, extended or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, refinancings, replacements, renewals, extensions or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) 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.
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Section 2. Lien Priority.
Section 2.1 Lien Subordination. Notwithstanding the date, manner or order of grant, attachment or perfection of any Junior Lien in respect of any Collateral or of any Senior Lien in respect of any Collateral and notwithstanding any provision of the UCC, any applicable law, any Security Document, any alleged or actual defect or deficiency in any of the foregoing or any other circumstance whatsoever, each Junior Representative, on behalf of each Junior Secured Party represented by it, in respect of such Collateral hereby agrees that:
(a) any Senior Lien in respect of such Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be and shall remain senior in all respects and prior to any Junior Lien in respect of such Collateral (whether or not such Senior Lien is subordinated to any Lien securing any other obligation); and
(b) any Junior Lien in respect of such Collateral, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to any Senior Lien in respect of such Collateral;
provided, that notwithstanding anything to the contrary contained in this Agreement, any ABL Liens on any ABL Priority Collateral, insofar as such ABL Liens secure any ABL Excess Amount, shall be junior and subordinate in all respects to all Term Loan Liens on any ABL Priority Collateral.
Section 2.2 Prohibition on Contesting Liens. In respect of any Collateral, each Junior Representative, on behalf of each Junior Secured Party represented by it, in respect of such Collateral agrees that it shall not, and hereby waives any right to:
(a) contest, or support any other Person in contesting, in any proceeding (including any Insolvency Proceeding), the priority, perfection, validity or enforceability of any Senior Lien on such Collateral; or
(b) demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or similar right which it may have in respect of such Collateral or the Senior Liens on such Collateral, except to the extent that such rights are expressly granted in this Agreement.
Section 2.3 Nature of Obligations. Each Term Loan Representative on behalf of itself and the other Term Loan Secured Parties that it represents acknowledges that a portion of the ABL Obligations represents debt that is revolving in nature and that the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that the terms of the ABL Obligations may be modified, extended or amended from time to time, and that the aggregate amount of the ABL Obligations may be increased, extended, renewed, replaced or refinanced, in each event, without notice to or consent by the Term Loan Secured Parties and without affecting the provisions hereof. The ABL Representative on behalf of itself and the other ABL Secured Parties acknowledges that Term Loan Obligations may be extended, renewed, replaced or refinanced without notice to or consent by the ABL Secured Parties and without affecting the provisions hereof. The Lien Priorities provided in Section 2.1 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the ABL Obligations or the Term Loan Obligations, or any portion thereof.
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Section 2.4 No New Liens. (a) Until the ABL Obligations Payment Date, no Term Loan Secured Party shall acquire or hold any Lien on any assets of any Loan Party securing any Term Loan Obligation which assets are not also subject to the Lien of the ABL Representative under the ABL Documents, subject to the Lien Priority set forth in Section 2.1 hereof; provided that this provision will not be violated with respect to any particular ABL Obligations if the ABL Representative is given a reasonable opportunity to accept a Lien on any asset or property and either the Borrower or the ABL Representative states in writing that the ABL Loan Documents in respect thereof prohibit the ABL Representative from accepting a Lien on such asset or the ABL Representative otherwise expressly declines to accept a Lien on such asset (any such prohibited or declined Lien with respect to any particular ABL Obligations, an “ABL Declined Lien”). If any Term Loan Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Loan Party securing any Term Loan Obligation which assets are not also subject to the Lien of the ABL Representative under the ABL Documents, subject to the Lien Priority set forth herein other than any ABL Declined Lien, then the relevant Term Loan Representative (or the relevant Term Loan Secured Party) shall, without the need for any further consent of any other Term Loan Secured Party and notwithstanding anything to the contrary in any other Term Loan Document be deemed to also hold and have held such Lien for the benefit of the ABL Representative as security for the ABL Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the ABL Representative in writing of the existence of such Lien.
(b) Until the Term Loan Obligations Payment Date, no ABL Secured Party shall acquire or hold any Lien on any assets of any Loan Party securing any ABL Obligation which assets are not also subject to the Lien of each Term Loan Representative under the Term Loan Documents, subject to the Lien Priority set forth in Section 2.1 hereof; provided that this provision will not be violated with respect to any particular Series of Term Loan Obligations if the applicable Term Loan Representative is given a reasonable opportunity to accept a Lien on any asset or property and either the Borrower or such Term Loan Representative states in writing that the applicable Term Loan Documents in respect thereof prohibit such Term Loan Representative from accepting a Lien on such asset or the applicable Term Loan Representative otherwise expressly declines to accept a Lien on such asset (any such prohibited or declined Lien with respect to a particular Series of Term Loan Obligations, a “Term Declined Lien”). If any ABL Secured Party shall (nonetheless and in breach hereof) acquire or hold any Lien on any assets of any Loan Party securing any ABL Obligation which assets are not also subject to the Lien of each Term Loan Representative under the Term Loan Documents, subject to the Lien Priority set forth herein, other than any Term Declined Lien, then the ABL Representative (or the relevant ABL Secured Party) shall, without the need for any further consent of any other ABL Secured Party and notwithstanding anything to the contrary in any other ABL Document be deemed to also hold and have held such lien for the benefit of each Term Loan Representative and the other Term Loan Secured Parties as security for the Term Loan Obligations (subject to the Lien Priority and other terms hereof) and shall promptly notify the Term Loan Representative in writing of the existence of such Lien.
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(c) Until the ABL Obligations Payment Date, the parties hereto agree that (except as may be separately agreed in writing by and between any Term Loan Representative and the ABL Representative, each on behalf of itself and the Secured Parties represented thereby), no Term Loan Secured Party shall knowingly acquire or hold any guarantee of Term Loan Obligations by any Person unless such Person also provides a guarantee of the ABL Obligations; provided that Badcock shall not be required to guarantee the ABL Obligations until the BDK Joinder Date. If any Term Loan Secured Party shall (nonetheless and in breach hereof) acquire or hold any guarantee of the Term Loan Obligations by any Person who does not provide a guarantee of the ABL Obligations, then the relevant Term Loan Representative shall, without the need for any further consent of any other Term Loan Secured Party and notwithstanding anything to the contrary in the Term Loan Documents be deemed to also hold and have held such guarantee for the benefit of the ABL Representative and shall promptly notify the ABL Representative in writing of the existence of such guarantee.
(d) Until the Term Loan Obligations Payment Date, the parties hereto agree that (except as may be separately agreed in writing by and between any Term Loan Representative and the ABL Representative, each on behalf of itself and the Secured Parties represented thereby), no ABL Secured Party shall knowingly acquire or hold any guarantee of ABL Obligations by any Person unless such Person also provides a guarantee of the Term Loan Obligations. If any ABL Secured Party shall (nonetheless and in breach hereof) acquire or hold any guarantee of the ABL Obligations by any Person who does not provide a guarantee of the Term Loan Obligations, then the ABL Representative shall, without the need for any further consent of any other ABL Secured Party and notwithstanding anything to the contrary in the ABL Documents be deemed to also hold and have held such guarantee for the benefit of each Term Loan Representative and the other Term Loan Secured Parties and shall promptly notify the Designated Term Loan Representative in writing of the existence of such guarantee.
Section 2.5 Separate Grants of Security and Separate Classification. Each Secured Party acknowledges and agrees that (i) the grants of Liens pursuant to the ABL Security Documents and the Term Loan Security Documents constitute separate and distinct grants of Liens and (ii) because of, among other things, their differing rights in the Common Collateral, the Term Loan Obligations are fundamentally different from the ABL Obligations and should be separately classified in any plan of reorganization proposed or adopted in an Insolvency Proceeding. To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the ABL Secured Parties and the Term Loan Secured Parties in respect of the Common Collateral constitute claims in the same class (rather than separate classes of senior and junior secured claims), then the ABL Secured Parties and the Term Loan Secured Parties hereby acknowledge and agree that all distributions shall be made as if there were separate classes of ABL Obligation claims and Term Loan Obligation claims against the Loan Parties (with the effect being that, to the extent that the aggregate value of the ABL Priority Collateral or Term Loan Priority Collateral is sufficient (for this purpose ignoring all claims held by the other Secured Parties)), the ABL Secured Parties or the Term Loan Secured Parties, respectively, shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of Post-Petition Interest that is available from each pool of Priority Collateral for each of the ABL Secured Parties and the Term Loan Secured Parties, respectively, before any distribution is made in respect of the claims held by the other Secured Parties, with the other Secured Parties hereby acknowledging and agreeing to turn over to the respective other Secured Parties amounts otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the aggregate recoveries.
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Section 2.6 Agreements Regarding Actions to Perfect Liens.
(a) The ABL Representative and each Term Loan Representative hereby acknowledges that, to the extent that it holds, or a third party holds on its behalf, physical possession of or “control” (as defined in the Uniform Commercial Code) over, or is otherwise noted as a lienholder on any certificate of title constituting, Common Collateral pursuant to the ABL Security Documents or the Term Loan Security Documents, as applicable, such possession or control is also for the benefit of each Term Loan Representative and the other Term Loan Secured Parties or the ABL Representative and the other ABL Secured Parties, as applicable, and each agrees to hold or control such Common Collateral as gratuitous bailee and as non-fiduciary agent for the Term Loan Representatives or the ABL Representative, as applicable (such bailment and agency being intended, among other things, to satisfy the requirements of Section 9-313(c), 9-104, 9-105, 9-106 and 9-107 of the UCC and applicable certificate of title laws), solely for the purpose of perfecting the security interest (including any second-priority or third-priority, as the case may be, security interest) granted under the Term Loan Documents and the ABL Documents, as applicable, subject to the terms and conditions of this Section 2.6 (either the ABL Representative or the relevant Term Loan Representative acting in such capacity as a gratuitous bailee, the “Control Representative”). Nothing in this Section 2.6 shall be construed to impose any duty on the ABL Representative or any Term Loan Representative (or any third party acting on either such Person’s behalf) or create any fiduciary relationship with respect to such Common Collateral or provide any Term Loan Representative, any other Term Loan Secured Party, the ABL Representative or any other ABL Secured Party, as applicable, with any rights with respect to such Common Collateral beyond those specified in this Agreement, the ABL Security Documents and the Term Loan Security Documents, as applicable, provided that subsequent to the occurrence of the ABL Obligations Payment Date, the ABL Representative shall (i) first, if the Term Loan Obligations Payment Date has not occurred, deliver to the Designated Term Loan Representative, at the Loan Parties’ sole cost and expense, the Common Collateral in its possession or control together with any necessary endorsements to the extent required by the Term Loan Documents until the Term Loan Obligations Payment Date has occurred and (ii) second, to the extent both the ABL Obligations Payment Date and the Term Loan Obligations Payment Date have occurred, deliver to the Borrowers or direct and deliver such Common Collateral as a court of competent jurisdiction otherwise directs; provided, further, that subsequent to the occurrence of the Term Loan Obligations Payment Date, the relevant Term Loan Representative shall (i) first, if the ABL Obligations Payment Date has not occurred, deliver to the ABL Representative, at the Loan Parties’ sole cost and expense, the Common Collateral in its possession or control together with any necessary endorsements to the extent required by the ABL Documents until the ABL Obligations Payment Date has occurred and (ii) second, to the extent both the Term Loan Obligations Payment Date and the ABL Obligations Payment Date have occurred, deliver to the Borrowers or direct and deliver such Common Collateral as a court of competent jurisdiction otherwise directs. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the ABL Secured Parties and the Term Loan Secured Parties and shall not impose on the ABL Secured Parties or the Term Loan Secured Parties any obligations in respect of the disposition of any Common Collateral (or any proceeds thereof) that would conflict with prior perfected Liens or any claims thereon in favor of any other Person that is not a Secured Party.
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(b) The ABL Representative hereby agrees that after the ABL Obligations Payment Date and upon the written request of the Designated Term Loan Representative, to the extent that the applicable control agreement is in full force and effect and has not been terminated, the ABL Representative shall continue to act as the Control Representative for each Term Loan Representative (solely for the purpose of perfecting the security interest granted under the Term Loan Documents and at the expense of the Loan Parties) with respect to the deposit account, commodity account or securities account that is the subject of such control agreement, until the earlier to occur of (i) 30 days after the ABL Obligations Payment Date and (ii) the date when a control agreement is executed in favor of the relevant Term Loan Representative with respect to such deposit account, commodity account or securities account. Each Term Loan Representative hereby agrees that after the Term Loan Obligations Payment Date and upon the written request of the ABL Representative, to the extent that the applicable control agreement is in full force and effect and has not been terminated, the relevant Term Loan Representative shall continue to act as the Control Representative for the ABL Representative (solely for the purpose of perfecting the security interest granted under the ABL Documents and at the expense of the Loan Parties) with respect to the deposit account, commodity account or securities account that is the subject of such control agreement, until the earlier to occur of (1) 30 days after the Term Loan Obligations Payment Date and (2) the date when a control agreement is executed in favor of the ABL Representative with respect to such deposit account, commodity account or securities account.
(c) Until the Term Loan Obligations Payment Date, the ABL Representative agrees that to the extent it is in possession of any Common Collateral constituting Term Loan Priority Collateral, promptly upon the request of the Designated Term Loan Representative at any time prior to the Term Loan Obligations Payment Date, the ABL Representative shall deliver to the Designated Term Loan Representative any such Term Loan Priority Collateral held by it, and shall use commercially reasonable efforts to cause each ABL Secured Party known to it to be holding such Term Loan Priority Collateral to deliver the same to the Designated Term Loan Representative, together with any necessary endorsements without warranty or representation of any kind (or otherwise allow the Designated Term Loan Representative to obtain control of such Term Loan Priority Collateral).
(d) Until the ABL Obligations Payment Date, each Term Loan Representative agrees that to the extent it is in possession of any Common Collateral constituting ABL Priority Collateral, promptly upon the request of the ABL Representative at any time prior to the ABL Obligations Payment Date, each Term Loan Representative shall deliver to the ABL Representative any such ABL Priority Collateral held by it, and shall use commercially reasonable efforts to cause each Term Loan Secured Party known to it to be holding such ABL Priority Collateral to deliver the same to the ABL Representative, together with any necessary endorsements without warranty or representation of any kind (or otherwise allow the ABL Representative to obtain control of such ABL Priority Collateral).
(e) The ABL Representative shall have no obligation whatsoever to any Term Loan Representative or any Term Loan Secured Parties to ensure that the Common Collateral is genuine or owned by any Loan Party or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.6. The duties or responsibilities of the ABL Representative under this Section 2.6 shall be limited solely to holding or controlling the Common Collateral as gratuitous bailee and non-fiduciary agent in accordance with this Section 2.6 and delivering the Common Collateral upon the ABL Obligations Payment Date as provided in this Section 2.6. No Term Loan Representative shall have any obligation whatsoever to the ABL Representative or any ABL Secured Party to ensure that the Common Collateral is genuine or owned by any Loan Party or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.6. The duties or responsibilities of each Term Loan Representative under this Section 2.6 shall be limited solely to holding or controlling the Common Collateral as gratuitous bailee and non-fiduciary agent in accordance with this Section 2.6 and delivering the Common Collateral upon the Term Loan Obligations Payment Date as provided in this Section 2.6.
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Section 2.7 1L/2L Intercreditor Agreement; Appointment of Designated Term Loan Representative.
(a) The First Lien Term Loan Representative and the Second Lien Term Loan Representative have entered into the 1L/2L Intercreditor Agreement for purposes of defining the relative rights and priorities of the respective Term Loan Secured Parties (as amongst each other) with respect to the Term Loan Collateral. The 1L/2L Intercreditor Agreement addresses only the relative rights and priorities of the respective Term Loan Secured Parties in the Collateral. The purpose of this Agreement is to define the relative rights and priorities of the ABL Secured Parties and the Term Loan Secured Parties in the Collateral (when treating the Term Loan Secured Parties as a single group solely for purposes of this Agreement). As among the First Lien Term Loan Secured Parties and the Second Lien Term Loan Secured Parties, nothing herein is intended to alter their relative rights and obligations, which shall continue to be governed by the 1L/2L Intercreditor Agreement, or to require that such rights and obligations be treated as a single class in any Insolvency or Liquidation Proceeding.
(b) Each Term Loan Representative appoints and designates the Designated Term Loan Representative to act as Designated Term Loan Representative hereunder and the Designated Term Loan Representative hereby accepts such appointment. The ABL Representative may treat the Initial First Lien Term Loan Representative as the Designated Term Loan Representative hereunder until the Initial First Lien Term Loan Representative notifies the ABL Representative in writing that another Term Loan Representative has become the Designated Term Loan Representative hereunder. The Designated Term Loan Representative shall exercise (and is hereby authorized and directed by the Term Loan Representatives to exercise on behalf of the Term Loan Representatives and such other Term Loan Secured Parties) all rights and powers under this Agreement as are delegated to the Designated Term Loan Representative by the terms hereof, together with such other rights and powers as are reasonably incidental thereto. The Term Loan Representatives, on behalf of the applicable Term Loan Secured Parties, agree that any action taken by the Designated Term Loan Representative in accordance with the provisions of this Agreement and the 1L/2L Intercreditor Agreement, and the exercise by the Designated Term Loan Representative of any of the powers set forth herein, together with such other powers as are reasonably incidental thereto, is fully authorized by, and shall be completely binding upon, the Term Loan Representatives and the other Term Loan Secured Parties. Without limiting the generality of the foregoing, the Designated Term Loan Representative shall have the sole and exclusive right (A) to provide any notice to (or receive notice from) the ABL Representative for any notice required to be provided to or by the ABL Representative pursuant to this Agreement and (B) to make or receive any transfer or payment of Collateral (or Proceeds thereof) to or from any ABL Representative to the extent required by this Agreement (including, without limitation, pursuant to Sections 4.1 and 4.3).
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(c) In furtherance of the foregoing, except to the extent this Agreement expressly provides otherwise, the ABL Representative shall deal solely and directly with the Designated Term Loan Representative in connection with the ABL Representative’s rights and obligations under this Agreement. For all purposes of this Agreement, (A) the ABL Representative may (i) rely in good faith, as to matters of fact, on any representation of fact made by the Designated Term Loan Representative (without any duty of investigation) and (ii) assume in good faith (without any duty of investigation), and rely upon, the genuineness, due authority, validity, and accuracy of any certificate, instrument, notice, or other document believed by it in good faith to be genuine and presented by the Designated Term Loan Representative, (B) the ABL Representative shall have no obligation to determine whether such certificate, instrument, notice, or other document is issued in compliance with the terms of the 1L/2L Intercreditor Agreement, and (C) in the event the ABL Representative receives any instructions, notices, or demands from a Term Loan Representative that conflicts with any instructions, notices, or demands from a different Term Loan Representative, the ABL Representative (i) may seek clarification from the Designated Term Loan Representative and rely upon the direction of the Designated Term Loan Representative without further inquiry, (ii) may commence an action or proceeding in any court of competent jurisdiction for the purposes of obtaining a declaratory judgment regarding its obligations hereunder, including, without limitation, a determination as to whether any such instructions, notices or demands violate the terms of this Agreement, and (iii) in any event, shall not be liable to any Term Loan Secured Party for any action taken by the ABL Representative in response to such conflicting instructions, notices or demands unless the action taken by the ABL Representative violates the express terms of this Agreement as determined by a court of competent jurisdiction in a final and nonappealable judgment.
(d) No provision of the 1L/2L Intercreditor Agreement shall limit, modify, or in any way impair the rights of the ABL Representative and the other ABL Secured Parties under this Agreement. Subject to Section 6 hereof, neither the ABL Representative nor the ABL Secured Party shall have any duty of inquiry with respect to the terms of the 1L/2L Intercreditor Agreement or any other Term Loan Documents (other than this Agreement), and when taking any action that may be required by this Agreement or otherwise permitted by the ABL Loan Documents, neither the ABL Representative nor any ABL Secured Party shall have any duty or obligation to determine whether such action complies with any term of the 1L/2L Intercreditor Agreement or any other Term Loan Document (other than this Agreement). Subject to Section 6 hereof, the First Lien Term Loan Representative, the First Lien Term Loan Secured Parties, the Second Lien Term Loan Representative and the Second Lien Term Loan Secured Parties shall not have any duty of inquiry with respect to the terms of any ABL Agreement or any other ABL Loan Documents (other than this Agreement), and when taking any action that may be required by this Agreement or otherwise permitted by the applicable Term Loan Documents, neither the First Lien Term Loan Representative nor the Second Lien Term Loan Representative nor any First Lien Secured Party or any Second Lien Secured Party shall have any duty or obligation to determine whether such action complies with any term of the ABL Loan Documents (other than this Agreement).
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Section 3. Enforcement Rights.
Section 3.1 Exclusive Enforcement. Until the Senior Obligations Payment Date has occurred, whether or not an Insolvency Proceeding has been commenced by or against any Loan Party, the Senior Secured Parties shall have the exclusive right to take and continue any Enforcement Action (including the right to credit bid their debt except that the Junior Secured Parties shall have the right to credit bid so long as the cash proceeds of such bid cause the Senior Obligations Payment Date to occur upon the closing of such credit bid) with respect to the Senior Collateral, without any consultation with or consent of any Junior Secured Party, but subject to the provisos set forth in Sections 3.2 and 5.7. Upon the occurrence and during the continuance of a default or an event of default under the Senior Documents, the Senior Representative and the other Senior Secured Parties may take and continue any Enforcement Action with respect to the Senior Obligations and the Senior Collateral in such order and manner as they may determine in their sole discretion in accordance with the terms and conditions of the Senior Documents.
Section 3.2 Standstill and Waivers. Each Junior Representative, on behalf of itself and the other Junior Secured Parties, agrees that, until the Senior Obligations Payment Date has occurred, but subject to the proviso set forth in Section 5.7:
(i) they will not take or cause to be taken any action, the purpose or effect of which is to make any Lien on any Senior Collateral that secures any Junior Obligation pari passu with or senior to, or to give any Junior Secured Party any preference or priority relative to, the Liens on the Senior Collateral securing the Senior Obligations;
(ii) they will not contest, oppose, object to, interfere with, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any foreclosure, sale, lease, exchange, transfer or other disposition of the Senior Collateral by any Senior Secured Party or any other Enforcement Action taken (or any forbearance from taking any Enforcement Action) in respect of the Senior Collateral by or on behalf of any Senior Secured Party;
(iii) they have no right to (x) direct either the Senior Representative or any other Senior Secured Party to exercise any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents in respect of the Senior Collateral or (y) consent or object to the exercise by the Senior Representative or any other Senior Secured Party of any right, remedy or power with respect to the Senior Collateral or pursuant to the Senior Security Documents with respect to the Senior Collateral or to the timing or manner in which any such right is exercised or not exercised (or, to the extent they may have any such right described in this clause (iii), whether as a junior lien creditor in respect of the Senior Collateral or otherwise, they hereby irrevocably waive such right);
(iv) they will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim against any Senior Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise, with respect to, and no Senior Secured Party shall be liable for, any action taken or omitted to be taken by any Senior Secured Party with respect to the Senior Collateral or pursuant to the Senior Documents in respect of the Senior Collateral;
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(v) they will not commence judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of any Senior Collateral, exercise any right, remedy or power with respect to, or otherwise take any action to enforce their interest in or realize upon, the Senior Collateral;
(vi) they will not seek, and hereby waive any right, to have the Senior Collateral or any part thereof marshaled upon any foreclosure or other disposition of the Senior Collateral;
(vii) notwithstanding the foregoing but subject to Section 4.1(c), any Term Loan Representative may exercise its rights and remedies in respect of the ABL Priority Collateral under the Term Loan Security Documents or applicable law after the passage of a period of 75 days (the “Term Loan Standstill Period”) from the date of delivery of a notice in writing to the ABL Representative of its intention to exercise such rights and remedies, which notice may only be delivered following the occurrence of and during the continuation of an “Event of Default” under and as defined in the Term Loan Agreement for which it is the Term Loan Representative; provided, however, that, notwithstanding the foregoing, in no event shall any Term Loan Secured Party exercise or continue to exercise any such rights or remedies if, notwithstanding the expiration of the Term Loan Standstill Period, (i) any ABL Secured Party shall have commenced and be diligently pursuing the exercise of any of its rights and remedies with respect to all or a material portion of the ABL Priority Collateral (prompt notice of such exercise to be given to the Designated Term Loan Representative) or (ii) an Insolvency Proceeding in respect of any Loan Party shall have been commenced; and provided, that in any Insolvency Proceeding commenced by or against any Loan Party, the Term Loan Representatives and the Term Loan Secured Parties may take any action expressly permitted by Section 5; and
(viii) notwithstanding the foregoing but subject to Section 4.1(c), the ABL Representative may exercise its rights and remedies in respect of the Term Priority Collateral under the ABL Security Documents or applicable law after the passage of a period of 75 days (the “ABL Standstill Period”) from the date of delivery of a notice in writing to the Designated Term Loan Representative of its intention to exercise such rights and remedies, which notice may only be delivered following the occurrence of and during the continuation of an “Event of Default” under and as defined in the ABL Agreement; provided, however, that, notwithstanding the foregoing, in no event shall any ABL Secured Party exercise or continue to exercise any such rights or remedies if, notwithstanding the expiration of the ABL Standstill Period, (i) any Term Secured Party shall have commenced and be diligently pursuing the exercise of any of its rights and remedies with respect to all or a material portion of the Term Loan Priority Collateral (prompt notice of such exercise to be given to the ABL Representative) or (ii) an Insolvency Proceeding in respect of any Loan Party shall have been commenced; and provided, that in any Insolvency Proceeding commenced by or against any Loan Party, the ABL Representative and the ABL Secured Parties may take any action expressly permitted by Section 5(ix).
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Section 3.3 Judgment Creditors. In the event that any Term Loan Secured Party becomes a judgment lien creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the ABL Liens and the ABL Obligations) to the same extent as all other Liens securing the Term Loan Obligations are subject to the terms of this Agreement. In the event that any ABL Secured Party becomes a judgment lien creditor in respect of Common Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Term Loan Liens and the Term Loan Obligations) to the same extent as all other Liens securing the ABL Obligations are subject to the terms of this Agreement.
Section 3.4 Cooperation; Sharing of Information and Access. (a) Each Term Loan Representative, on behalf of itself and the other Term Loan Secured Parties that it represents, agrees that each of them shall take such actions as the ABL Representative shall request in connection with the exercise by the ABL Secured Parties of their rights set forth herein in respect of the ABL Priority Collateral. The ABL Representative, on behalf of itself and the other ABL Secured Parties, agrees that each of them shall take such actions as the Designated Term Loan Representative shall request in connection with the exercise by the Term Loan Secured Parties of their rights set forth herein in respect of the Term Loan Priority Collateral.
(b) In the event that the ABL Representative shall, in the exercise of its rights under the ABL Security Documents or otherwise, receive possession or control of any books and Records of any Loan Party which contain information identifying or pertaining to any of the Term Loan Priority Collateral, the ABL Representative shall promptly notify the Designated Term Loan Representative of such fact and, upon request from the Designated Term Loan Representative and as promptly as practicable thereafter, either make available to the Designated Term Loan Representative such books and Records for inspection and duplication or provide to the Designated Term Loan Representative copies thereof. In the event that any Term Loan Representative shall, in the exercise of its rights under the Term Loan Security Documents or otherwise, receive possession or control of any books and Records of any Loan Party which contain information identifying or pertaining to any of the ABL Priority Collateral, such Term Loan Representative shall promptly notify the ABL Representative Agent of such fact and, upon request from the ABL Representative and as promptly as practicable thereafter, either make available to the ABL Representative such books and Records for inspection and duplication or provide the ABL Representative copies thereof. Each Term Loan Representative hereby irrevocably grants the ABL Representative a non-exclusive worldwide license or right to use, provided such license or right to use shall terminate upon the later of the sale of such Intellectual Property or the 75th day after the ABL Representative starts using such license in connection with marketing any ABL Priority Collateral for sale to the maximum extent permitted by applicable law and to the extent of such Term Loan Representative’s interest therein, exercisable without payment of royalty or other compensation, to use any of the Intellectual Property incorporated in or relating to the ABL Priority Collateral and now or hereafter owned by, licensed to, or otherwise used by the Loan Parties in order for the ABL Representative and the other ABL Secured Parties to purchase, use, market, repossess, possess, store, assemble, manufacture, process, sell, transfer, distribute or otherwise dispose of any asset included in the ABL Priority Collateral in connection with the liquidation, disposition or realization upon the ABL Priority Collateral in accordance with the terms and conditions of the ABL Security Documents and the other ABL Documents. Nothing contained in this Section 3.4 shall restrict the rights of any Term Loan Representative from selling, assigning or otherwise transferring any of the Loan Parties’ Intellectual Property; provided, that each Term Loan Representative agrees that any sale, transfer or other disposition of any of the Loan Parties’ Intellectual Property (whether by foreclosure or otherwise) will be subject to the ABL Representative’s rights as set forth in this Section 3.4. The ABL Representative acknowledges that with respect to the Intellectual Property subject to the foregoing license, any Term Loan Representative or third party purchaser, as owner of such Intellectual Property, shall have such rights of quality control (“quality” being the relevant Loan Party’s standards in effect immediately prior to the ABL Representative’s use of the relevant Intellectual Property) and inspection to the extent reasonably necessary pursuant to applicable law to maintain the validity and enforceability of such Intellectual Property; provided, that if the relevant Term Loan Representative elects to exercise such quality control and/or inspection rights it may retain professionals to do so at the expense of the Loan Parties.
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(c) If any Term Loan Representative, or any agent or representative of any Term Loan Representative, or any receiver, shall, after the commencement of any Enforcement Action, obtain possession or physical control of any of the Term Loan Priority Collateral, the Term Loan Representative shall promptly notify the ABL Representative in writing of that fact, and the ABL Representative shall, within ten Business Days thereafter, notify such Term Loan Representative in writing as to whether the ABL Representative desires to exercise access rights under this Agreement. In addition, if the ABL Representative, or any agent or representative of the ABL Representative, or any receiver, shall obtain possession or physical control of any of the Term Loan Priority Collateral in connection with an Enforcement Action, then the ABL Representative shall promptly notify the Designated Term Loan Representative that the ABL Representative is exercising its access rights under this Agreement and its rights under Section 3.4 under either circumstance. Upon delivery of such notice by the ABL Representative to the Designated Term Loan Representative, the parties shall confer in good faith to coordinate with respect to the ABL Representative’s exercise of such access rights, with such access rights to apply to any Real Property or Equipment constituting Term Loan Priority Collateral access to which is reasonably necessary to enable the ABL Representative during normal business hours to convert ABL Priority Collateral consisting of raw materials and work-in-process into saleable finished goods and/or to transport such ABL Priority Collateral to a point where such conversion can occur, to otherwise prepare ABL Priority Collateral for sale and/or to arrange or effect the sale of ABL Priority Collateral, all in accordance with the manner in which such matters are completed in the ordinary course of business. Consistent with the definition of “Access Period,” access rights will apply to differing parcels of Real Property or items of Equipment constituting Term Loan Priority Collateral at differing times, in which case, a differing Access Period will apply to each such parcel of Real Property and each such item of Equipment. During any pertinent Access Period, the ABL Representative and its agents, representatives and designees shall have an irrevocable, non-exclusive right to have access to, and a rent-free right to use, the relevant Real Property or Equipment constituting Term Loan Priority Collateral for the purposes described above.
(d) The ABL Representative shall take proper and reasonable care under the circumstances of any Term Loan Priority Collateral that is used by the ABL Representative during the Access Period and repair and replace any damage (ordinary wear-and-tear excepted) caused by any act or omission of the ABL Representative or its agents, representatives or designees and the ABL Representative shall comply with all applicable laws in all material respects in connection with its use or occupancy or possession of the ABL Priority Collateral. The ABL Representative shall (i) use the Term Loan Priority Collateral the subject of this Section 3.4 in accordance with applicable law in all material respects, (ii) use commercially reasonable efforts to insure or cause to be insured for damage to the Term Loan Priority Collateral for the benefit of the Term Loan Creditors (and deliver to the Designated Term Loan Representative evidence of such insurance), (iii) reimburse the Designated Term Loan Representative for any incremental additional amounts required to be paid in respect of increases in the cost of utilities, taxes, rent, repair, insurance (without duplication of insurance acquired pursuant to clause (ii) above) and other operating cost of such Term Loan Priority Collateral as a result of the use thereof by the ABL Representative that the Term Loan Representatives or Term Loan Creditors would not have had to pay or be responsible for but for the use thereof by the ABL Representative pursuant to its right hereunder during any such period of actual occupation, use or control, but only to the extent a Loan Party is not otherwise paying any such amounts and to leave such Term Loan Priority Collateral in substantially the same condition as it was at the commencement of such occupancy, use or control (ordinary wear and tear excepted), and (iv) indemnify and hold harmless the Term Loan Representatives and the other Term Loan Secured Parties for any injury or damage to Persons or property (ordinary wear-and-tear excepted) caused by the acts or omissions of Persons under its control; provided, however, that the ABL Representative and the ABL Secured Parties will not be liable for any diminution in the value of Term Loan Priority Collateral caused by the absence of the ABL Priority Collateral therefrom. The ABL Representative and the Term Loan Representatives shall cooperate and use reasonable efforts to ensure that their activities during the Access Period as described above do not interfere materially with the activities of the other as described above, including the right of the Designated Term Loan Representative to show the Term Loan Priority Collateral to prospective purchasers and to ready the Term Loan Priority Collateral for sale. Consistent with the definition of the term “Access Period,” if any order or injunction is issued or stay is granted or is otherwise effective by operation of law that prohibits the ABL Representative from exercising any of its rights hereunder, then the Access Period granted to the ABL Representative under this Section 3.4 shall be stayed during the period of such prohibition and shall continue thereafter for the number of days remaining as required under this Section 3.4. Nothing contained in this Agreement shall restrict the rights of any Term Loan Representative from selling, assigning or otherwise transferring any of the Term Loan Priority Collateral prior to the expiration of the Access Period so long as such Term Loan Representative uses commercially reasonable efforts to obtain from any such purchaser, assignee or transferee thereof an agreement to be bound by the provisions of this Section 3.4; provided further that, nothing contained herein is intended to grant in favor of the ABL Representative any rights greater than those of any Term Loan Representative, including all rights and restrictions and applicable time periods set forth in any applicable landlord waiver or other similar access agreements.
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Section 3.5 No Additional Rights For the Loan Parties Hereunder. Except as provided in Section 3.6 hereof, if any ABL Secured Party or Term Loan Secured Party shall enforce its rights or remedies in violation of the terms of this Agreement, no Loan Party shall be entitled to use such violation as a defense to any action by any ABL Secured Party or Term Loan Secured Party, nor to assert such violation as a counterclaim or basis for set off or recoupment against any ABL Secured Party or Term Loan Secured Party.
Section 3.6 Actions Upon Breach. (a) If any ABL Secured Party or Term Loan Secured Party, contrary to this Agreement, commences or participates in any action or proceeding against any Loan Party or the Common Collateral, such Loan Party, with the prior written consent of the ABL Representative or the Designated Term Loan Representative, as applicable, may interpose as a defense or dilatory plea the making of this Agreement, and any ABL Secured Party or Term Loan Secured Party, as applicable, may intervene and interpose such defense or plea in its or their name or in the name of such Loan Party.
(b) Should any ABL Secured Party or Term Loan Secured Party, contrary to this Agreement, in any way take, attempt to or threaten to take any action with respect to the Common Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fail to take any action required by this Agreement, any ABL Secured Party or Term Loan Secured Party (in its own name or in the name of the relevant Loan Party), as applicable, or the relevant Loan Party, may obtain relief against such ABL Secured Party or Term Loan Secured Party, as applicable, by injunction, specific performance and/or other appropriate equitable relief, it being understood and agreed by each of the ABL Representative on behalf of each ABL Secured Party and each Term Loan Representative on behalf of each Term Loan Secured Party that it represents that (i) the ABL Secured Parties’ or Term Loan Secured Parties’, as applicable, damages from its actions may at that time be difficult to ascertain and may be irreparable, and (ii) each Term Loan Secured Party or ABL Secured Party, as applicable, waives any defense that the Loan Parties and/or the Term Loan Secured Parties and/or ABL Secured Parties, as applicable, cannot demonstrate damage and/or be made whole by the awarding of damages.
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Section 3.7 No Payment Subordination. Nothing in this Agreement shall prohibit the receipt by any Junior Secured Party of the required payments of interest, principal, premium and other amounts owed in respect of the Junior Obligations so long as such receipt is not the direct or indirect result of the exercise by any Junior Secured Party of rights or remedies as a secured creditor (including set-off and recoupment against the Collateral) or enforcement in contravention of this Agreement of any Lien held by any of them or as a result of any other violation by any Junior Secured Party of the express terms of this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies any Senior Secured Party may have with respect to the Senior Collateral.
Section 4. Application of Proceeds of Senior Collateral; Dispositions and Releases of Lien; Notices and Insurance.
Section 4.1 Application of Proceeds.
(a) Application of Proceeds of Senior Collateral. Whether or not any Insolvency Proceeding has been commenced by or against any Loan Party and whether or not any default or event of default under the Senior Documents has occurred, each Senior Representative and Junior Representative hereby agrees that all Senior Collateral, and all Proceeds thereof, received by either of them in connection with the collection, sale or disposition of Senior Collateral from an Enforcement Action or other exercise of remedies or in any Insolvency Proceeding shall be applied,
first, to the payment of all costs and expenses (including reasonable attorneys’ fees and expenses and court costs) of the Senior Representative in connection with such Enforcement Action,
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second, to the payment of the Senior Obligations in accordance with the Senior Documents and, if applicable, the 1L/2L Intercreditor Agreement, the First Lien Term Loan Pari Passu Intercreditor Agreement and/or the Second Lien Term Loan Pari Passu Intercreditor Agreement until the Senior Obligations Payment Date,
third, to the payment of the Junior Obligations in accordance with the Junior Documents and, if applicable, the 1L/2L Intercreditor Agreement, the First Lien Term Loan Pari Passu Intercreditor Agreement and/or the Second Lien Term Loan Pari Passu Intercreditor Agreement until the Junior Obligations Payment Date, and
fourth, in respect of any remaining Common Collateral or Proceeds thereof, to the payment of any ABL Excess Amount, and
fifth, the balance, if any, to the Loan Parties or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
(b) Limited Obligation or Liability. In exercising remedies, whether as a secured creditor or otherwise, the Senior Representative shall have no obligation or liability to the Junior Representative or to any Junior Secured Party, regarding the adequacy of any Proceeds or for any action or omission, save and except solely for an action or omission that breaches the express obligations undertaken by each party under the terms of this Agreement.
(c) Segregation of Collateral; Turnover. Until the occurrence of the Senior Obligations Payment Date, whether or not an Insolvency Proceeding has been commenced by or against any Loan Party, any Senior Collateral that may be received by any Junior Secured Party in violation of this Agreement or under the proviso to Section 3.2 shall be segregated and held in trust and promptly paid over to the Senior Representative, for the benefit of the Senior Secured Parties, in the same form as received, with any necessary endorsements, and each Junior Secured Party hereby authorizes the Senior Representative to make any such endorsements as agent for the Junior Representative (which authorization, being coupled with an interest, is irrevocable).
Section 4.2 Releases of Liens. If in connection with any sale or other disposition pursuant to any Enforcement Action or any other exercise of the Senior Representative’s remedies in respect of the Senior Lien on any Senior Collateral or if in connection with any release, sale or disposition of Senior Collateral permitted pursuant to the terms of the Senior Documents and the terms of the Junior Documents, in each case such sale, release or disposition results in the release of the Senior Lien on any Senior Collateral (other than release of the Senior Lien due to the occurrence of the Senior Obligations Payment Date), the Junior Lien on such Senior Collateral shall be automatically and unconditionally released with no further consent or action of any Person; provided, that each Junior Representative shall retain a Lien on the proceeds of any such Senior Collateral to the extent such proceeds are not applied in accordance with Section 4.1(a). Each Junior Representative shall, at the Loan Parties’ expense, promptly execute and deliver such release documents and instruments and shall take such further actions as the Senior Representative shall request to evidence any release of the Junior Lien described in this Section 4.2. The Junior Representative hereby appoints the Senior Representative and any officer or duly authorized person of the Senior Representative, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power of attorney in the place and stead of the Junior Representative and in the name of the Junior Representative or in the Senior Representative’s own name, from time to time, in the Senior Representative’s sole discretion, for the purposes of carrying out the terms of this Section 4.2, to take any and all appropriate action and to execute and deliver any and all documents and instruments as may be necessary or desirable to accomplish the purposes of this Section 4.2, including, without limitation, any financing statements, endorsements, assignments, releases or other documents or instruments of transfer (which appointment, being coupled with an interest, is irrevocable).
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Section 4.3 Certain Real Property Notices; Insurance. (a) [Reserved].
(b) The Designated Term Loan Representative shall give the ABL Representative at least ten (10) Business Days’ notice prior to commencing any Enforcement Action against any Real Property owned by any Loan Party at which ABL Priority Collateral is stored or otherwise located or to dispossess any Loan Party from such Real Property.
(c) Proceeds of Common Collateral include insurance proceeds and therefore the Lien Priority shall govern the ultimate disposition of casualty insurance proceeds. The ABL Representative shall be named as additional insured or lender loss payee, as applicable, with respect to all insurance policies relating to ABL Priority Collateral and each Term Loan Representative shall be named as additional insured or lender loss payee, as applicable, with respect to all insurance policies relating to Term Loan Priority Collateral. The ABL Representative shall have the sole and exclusive right, as against each Term Loan Representative, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of ABL Priority Collateral. Each Term Loan Representative shall have the sole and exclusive right, as against the ABL Representative, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of Term Loan Priority Collateral. All proceeds of such insurance shall be remitted to the ABL Representative or the relevant Term Loan Representative, as the case may be, and each of the relevant Term Loan Representative and ABL Representative shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds in accordance with Section 4.1.
Section 5. Insolvency Proceedings.
Section 5.1 Enforceability. This Agreement shall be applicable as to Collateral and the Proceeds thereof in existence both before and after the commencement of any Insolvency Proceeding and any succeeding cases in respect thereof. The relative rights of the ABL Secured Parties and the Term Loan Secured Parties in or to any distributions from or in respect of any such Collateral or Proceeds thereof, shall continue after the commencement of any Insolvency Proceeding. Accordingly, the provisions of this Agreement are intended to be and shall be enforceable as a subordination agreement in any Insolvency Proceeding.
Section 5.2 DIP Financing Matters. (a) If any Loan Party becomes subject to any Insolvency Proceeding in the United States at any time prior to the ABL Obligations Payment Date, and if the ABL Representative or the other ABL Secured Parties desire to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the use of ABL Priority Collateral constituting cash collateral under the Bankruptcy Code or to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the provision of such financing to any Loan Party by any third party secured by all or a portion of the ABL Priority Collateral (any such financing, “ABL DIP Financing”), then each Term Loan Representative agrees, on behalf of itself and the other Term Loan Secured Parties that it represents, that each Term Loan Secured Party (i) will be deemed to have consented to, will raise no objection to, nor support any other Person objecting to, the use of such cash collateral or to such ABL DIP Financing and (ii) will subordinate (and will be deemed hereunder to have subordinated) the Term Loan Liens on any ABL Priority Collateral (A) to such ABL DIP Financing on the same terms as the ABL Liens are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), (B) to any adequate protection provided to the ABL Secured Parties and (C) to any “carve-out” for professional fees and customary fees and expenses agreed to by the ABL Representative or the other ABL Secured Parties and approved by the bankruptcy court, in each case so long as such ABL DIP Financing meets all of the applicable ABL DIP Financing Conditions. If such ABL DIP Financing meets all of the applicable ABL DIP Financing Conditions, each Term Loan Representative agrees, on behalf of itself and the other Term Loan Secured Parties that it represents that it shall not object to such ABL DIP Financing in its capacity as a secured creditor (but the foregoing does not restrict any Term Loan Representative from protecting its rights and claims as an unsecured creditor). In no event will any of the ABL Secured Parties seek to obtain a priming Lien on any of the Term Loan Priority Collateral and nothing contained herein shall be deemed to be a consent by any Term Loan Secured Parties to any adequate protection payments using Term Loan Priority Collateral.
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(b) If any Loan Party becomes subject to any Insolvency Proceeding in the United States at any time prior to the Term Loan Obligations Payment Date, and if any Term Loan Representative or the other Term Loan Secured Parties desire to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the use of Term Loan Priority Collateral constituting cash collateral under the Bankruptcy Code or to provide financing to any Loan Party under the Bankruptcy Code or to consent (or not object) to the provision of such financing to any Loan Party by any third party secured by all or a portion of the Term Loan Priority Collateral (any such financing, “Term Loan DIP Financing”), then the ABL Representative agrees, on behalf of itself and the other ABL Secured Parties, that each ABL Secured Party (i) will be deemed to have consented to, will raise no objection to, nor support any other Person objecting to, the use of such cash collateral or to such Term Loan DIP Financing and (ii) will subordinate (and will be deemed hereunder to have subordinated) the ABL Liens on any Term Loan Priority Collateral (A) to such Term Loan DIP Financing on the same terms as the Term Loan Liens are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), (B) to any adequate protection provided to the Term Loan Secured Parties and (C) to any “carve-out” for professional fees and customary fees and expenses agreed to by the Term Loan Representative or the other Term Loan Secured Parties and approved by the bankruptcy court, in each case so long as such Term Loan DIP Financing meets all of the applicable Term Loan DIP Financing Conditions. If such Term Loan DIP Financing meets all of the applicable Term Loan DIP Financing Conditions, the ABL Representative agrees, on behalf of itself and the other ABL Secured Parties that it shall not object to such ABL DIP Financing in its capacity as a secured creditor (but the foregoing does not restrict the ABL Representative from protecting its rights and claims as an unsecured creditor). In no event will any of the Term Loan Secured Parties seek to obtain a priming Lien on any of the ABL Priority Collateral, and nothing contained herein shall be deemed to be a consent by the ABL Secured Parties to any adequate protection payments using ABL Priority Collateral.
(c) All Liens granted to any Term Loan Representative or the ABL Representative in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended to be and shall be deemed to be subject to the Lien Priority and the other terms and conditions of this Agreement.
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Section 5.3 Relief From the Automatic Stay. Until the ABL Obligations Payment Date, each Term Loan Representative agrees, on behalf of itself and the other Term Loan Secured Parties that it represents, that none of them will seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, in each case in respect of any ABL Priority Collateral, without the prior written consent of the ABL Representative; provided that, if the ABL Secured Parties have obtained such relief, then the Term Loan Secured Parties may also seek such relief, it being understood and agreed that the Term Loan Secured Parties may not take any actions which are otherwise prohibited under this Agreement. Until the Term Loan Obligations Payment Date, the ABL Representative agrees, on behalf of itself and the other ABL Secured Parties, that none of them will seek relief from the automatic stay or from any other stay in any Insolvency Proceeding or take any action in derogation thereof, in each case in respect of any Term Loan Priority Collateral, without the prior written consent of the Designated Term Loan Representative; provided that, if the Term Loan Secured Parties have obtained such relief, then the ABL Secured Parties may also seek such relief, it being understood and agreed that the ABL Secured Parties may not take any actions which are otherwise prohibited under this Agreement. In addition, no Term Loan Representative nor the ABL Representative shall seek any relief from the automatic stay with respect to any Common Collateral without providing ten (10) Business Days’ prior written notice to the other, unless otherwise agreed by both the ABL Representative and the Designated Term Loan Representative.
Section 5.4 No Contest. The Junior Representative, on behalf of itself and the Junior Secured Parties, agrees that, prior to the Senior Obligations Payment Date, none of them shall contest (or support any other Person contesting) (a) any request by the Senior Representative or any Senior Secured Party for adequate protection of its interest in the Senior Collateral (unless in contravention of Section 5.2(a) or 5.2(b), as applicable), or (b) any objection by the Senior Representative or any Senior Secured Party to any motion, relief, action, or proceeding based on a claim by the Senior Representative or any Senior Secured Party that its interests in the Senior Collateral (unless in contravention of Section 5.2(a) or 5.2(b), as applicable) are not adequately protected (or any other similar request under any law applicable to an Insolvency Proceeding), so long as any Liens granted to the Senior Representative as adequate protection of its interests are subject to this Agreement.
Section 5.5 Avoidance Issues. If any Senior Secured Party is required in any Insolvency Proceeding or otherwise to disgorge, turn over or otherwise pay to the estate of any Loan Party, because such amount was avoided or ordered to be paid or disgorged for any reason, including without limitation because it was found to be a fraudulent or preferential transfer, any amount (a “Recovery”), whether received as proceeds of security, enforcement of any right of set-off or otherwise, then the Senior Obligations shall be reinstated to the extent of such Recovery and deemed to be outstanding as if such payment had not occurred. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto. The Junior Secured Parties agree that none of them shall be entitled to benefit from any avoidance action affecting or otherwise relating to any distribution or allocation made in accordance with this Agreement, whether by preference or otherwise, it being understood and agreed that the benefit of such avoidance action otherwise allocable to them shall instead be allocated and turned over for application in accordance with the priorities set forth in this Agreement.
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Section 5.6 Asset Dispositions in an Insolvency Proceeding. Neither the Junior Representative nor any other Junior Secured Party shall, in an Insolvency Proceeding or otherwise, oppose any sale or disposition of any Senior Collateral that is supported by the Senior Secured Parties, and the Junior Representative and each other Junior Secured Party will be deemed to have consented under Section 363 of the Bankruptcy Code (and otherwise) to any sale of any Senior Collateral supported by the Senior Secured Parties and to have released their Liens on such assets so long as the rights of the Junior Secured Parties under Section 363(k) of the Bankruptcy Code are not impaired (it being understood that the cash proceeds of any credit bid shall cause the Senior Obligations Payment Date to occur upon the closing of such credit bid) and the proceeds of such sale are applied in accordance with Section 4.1; provided that this Section 5.6 shall not apply to any case of a sale or disposition of Real Property unless the ABL Representative has received at least ten (10) Business Days’ prior notice of the consummation of any such sale.
Section 5.7 Other Matters. To the extent that the Senior Representative or any Senior Secured Party has or acquires rights under Section 363 or Section 364 of the Bankruptcy Code with respect to any of the Junior Collateral, the Senior Representative agrees, on behalf of itself and the other Senior Secured Parties, not to assert any of such rights without the prior written consent of the Junior Representative; provided, that if requested by the Junior Representative, the Senior Representative shall timely exercise such rights in the manner requested by the Junior Representative, including any rights to payments in respect of such rights.
Section 5.8 Effectiveness in Insolvency Proceedings. This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under section 510(a) of the Bankruptcy Code, shall be effective before, during and after the commencement of an Insolvency Proceeding.
Section 5.9 Rights as Unsecured Creditors. Except as expressly provided in this Agreement, nothing contained herein shall affect the rights or claims of any Representative or any Secured Party as an unsecured creditor in any Insolvency Proceeding, and the Representatives and the Secured Parties shall retain all such rights and claims.
Section 6. Term Loan Documents and ABL Documents.
(a) Each Loan Party and the First Lien Term Loan Representative, on behalf of itself and the First Lien Term Loan Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the First Lien Term Loan Documents inconsistent with or in violation of this Agreement without the prior written consent of the ABL Representative.
(b) Each Loan Party and the Second Lien Term Loan Representative, on behalf of itself and the Second Lien Term Loan Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the Second Lien Term Loan Documents inconsistent with or in violation of this Agreement without the prior written consent of the ABL Representative.
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(c) Each Loan Party and the ABL Representative, on behalf of itself and the ABL Secured Parties, agrees that it shall not at any time execute or deliver any amendment or other modification to any of the ABL Documents inconsistent with or in violation of this Agreement without the prior written consent of each Term Loan Representative.
(d) In the event the Senior Representative enters into any amendment, waiver or consent in respect of any of the Senior Security Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any Senior Security Document or changing in any manner the rights of any parties thereunder, in each case solely with respect to any Senior Collateral, then such amendment, waiver or consent shall apply automatically to any comparable provision of the Comparable Security Document without the consent of or action by any Junior Secured Party (with all such amendments, waivers and modifications subject to the terms hereof); provided that, (i) no such amendment, waiver or consent shall have the effect of removing assets subject to the Lien of any Junior Security Document, except to the extent that a release of such Lien is permitted by Section 4.2, (ii) no such amendment, waiver or consent with respect to any provision applicable to the Junior Representative under the Junior Documents shall be made without the prior written consent of the Junior Representative and (iii) notice of such amendment, waiver or consent shall be given to the Junior Representative no later than 30 days after its effectiveness, provided that the failure to give such notice shall not affect the effectiveness and validity thereof.
Section 7. Purchase Option.
Section 7.1 Notice of Exercise. Following the occurrence of (a) a Payment Default under the ABL Documents that remains uncured or unwaived for a period of at least fifteen (15) Business Days, (b) the occurrence of a Bankruptcy Event, (c) acceleration of the ABL Obligations or the exercise of remedies under the ABL Documents, (d) the ABL Representative shall have commenced, or shall have notified the Designated Term Loan Representative that it intends to commence, an Enforcement Action against a material portion of the Senior Collateral, or (e) the revolving loan commitment under the ABL Agreement has been suspended for a period of more than five (5) consecutive Business Days during which the Loan Parties have requested additional advances thereunder, the ABL Creditors will offer the First Lien Term Loan Creditors the option to purchase, and/or the First Lien Term Loan Creditors, acting as a single group, shall have the right to elect to purchase, all (but not less than all) of the ABL Obligations from the ABL Secured Parties. For the avoidance of doubt, the sole consequence of a failure by the ABL Creditors to send such notice to the First Lien Term Loan Creditors following the occurrence of any such event will be that the ten (10) Business Day period set forth in Section 7.2 shall not commence until such notice has been received by the Designated Term Loan Representative.
Section 7.2 Purchase and Sale. If the purchase is being effected through an offer by the ABL Creditors, the First Lien Term Loan Creditors shall irrevocably accept or reject such offer within ten (10) Business Days of the receipt thereof by the Designated Term Loan Representative and the parties shall endeavor to close promptly thereafter. If the First Lien Term Loan Creditors reject such offer (or do not so irrevocably accept such offer within the required timeframe), the ABL Creditors shall have no further obligations pursuant to this Section 7.2 and may take any further actions in their sole discretion in accordance with the ABL Loan Documents and this Agreement. The purchase pursuant to this Section shall be exercised pursuant to documentation mutually acceptable to each of the ABL Representative and the First Lien Term Loan Representative; provided that, the ABL Representative and the other ABL Secured Parties shall retain all rights to be indemnified or held harmless by the Loan Parties in accordance with the terms of the ABL Documents but shall not retain any rights to the security therefor. Each Loan Party hereby consents to any assignment effected to one or more First Lien Term Loan Creditors pursuant to this Section 7.
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Section 7.3 Payment of Purchase Price. Upon the date of such purchase and sale, the relevant First Lien Term Loan Creditors shall (a) pay to the ABL Representative for the benefit of the ABL Creditors as the purchase price therefor the full amount of all the ABL Obligations then outstanding and unpaid (including principal, interest, fees and expenses, including reasonable attorneys’ fees and legal expenses but specifically excluding any prepayment premium, make-whole, termination or similar fees), (b) furnish cash collateral to the ABL Representative in a manner and in such amounts as the ABL Representative determines is reasonably necessary to secure the ABL Representative, the ABL Secured Parties, letter of credit issuing banks and applicable affiliates in connection with any issued and outstanding letters of credit, Hedge Obligations and Banking Services Obligations secured by the ABL Documents, (c) agree to reimburse the ABL Representative, the ABL Secured Parties and letter of credit issuing banks for any loss, cost, damage or expense (including reasonable attorneys' fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding letters of credit as described above and any checks or other payments provisionally credited to the ABL Obligations, and/or as to which the ABL Representative has not yet received final payment, (d) agree to reimburse the ABL Secured Parties and letter of credit issuing banks, in respect of indemnification obligations of the Loan Parties under the ABL Documents as to matters or circumstances known to the ABL Representative at the time of the purchase and sale which would reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to the ABL Secured Parties or letter of credit issuing banks, as applicable, and (e) agree to indemnify and hold harmless the ABL Secured Parties and letter of credit issuing banks, from and against any loss, liability, claim, damage or expense (including reasonable fees and expenses of legal counsel) arising out of any claim asserted by a third party in respect of the ABL Obligations as a direct result of any acts by any First Lien Term Loan Secured Party occurring after the date of such purchase. Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account in New York, New York as the ABL Representative may designate in writing for such purpose.
Section 7.4 Limitation on Representations and Warranties. Such purchase shall be expressly made without representation or warranty of any kind by any selling party (or the ABL Representative) and without recourse of any kind, except that the selling party shall represent and warrant: (a) the amount of the ABL Obligations being purchased from it, (b) that such ABL Secured Party owns the ABL Obligations, free and clear of any Liens or encumbrances and (c) that such ABL Secured Party has the right to assign such ABL Obligations and the assignment is duly authorized.
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Section 8. Reliance; Waivers; Designation of Hedge/Banking Services Obligations; etc.
Section 8.1 Reliance. The ABL Documents are deemed to have been executed and delivered, and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement. Each Term Loan Representative, on behalf of it itself and the other Term Loan Secured Parties that it represents, expressly waives all notice of the acceptance of and reliance on this Agreement by the ABL Representative and the other ABL Secured Parties. The Term Loan Documents are deemed to have been executed and delivered and all extensions of credit thereunder are deemed to have been made or incurred, in reliance upon this Agreement. The ABL Representative, on behalf of itself and the other ABL Secured Parties, expressly waives all notices of the acceptance of and reliance on this Agreement by any Term Loan Representative and the other Term Loan Secured Parties.
Section 8.2 No Warranties or Liability. Each Term Loan Representative and the ABL Representative acknowledges and agrees that none of them has made any representation or warranty with respect to the execution, validity, legality, completeness, collectability or enforceability of any other ABL Document or any other Term Loan Document. Except as otherwise provided in this Agreement, each Term Loan Representative and the ABL Representative will be entitled to manage and supervise the respective extensions of credit to any Loan Party in accordance with law and their usual practices, modified from time to time as they deem appropriate.
Section 8.3 No Waivers. No right or benefit of any party hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of such party or any other party hereto or by any noncompliance by any Loan Party with the terms and conditions of any of the ABL Documents or the Term Loan Documents.
Section 8.4 Designation of Hedge/Banking Services Obligations. With respect to any Hedge Obligations that would otherwise constitute both ABL Obligations and First Lien Term Loan Obligations hereunder, such Hedge Obligations shall solely constitute ABL Obligations for all purposes of this Agreement unless at the time that the applicable Loan Party enters into the related agreement giving rise to the Hedge Obligations, the Company shall designate the related Hedge Obligations hereunder as First Lien Term Loan Obligations in a written designation to the related swap counterparty with a copy to each Representative in which case such Hedge Obligations shall solely constitute First Lien Term Loan Obligations for all purposes of this Agreement. With respect to any Banking Services Obligations that would otherwise constitute both ABL Obligations and First Lien Term Loan Obligations hereunder, such Banking Services Obligations shall solely constitute ABL Obligations for all purposes of this Agreement unless at the time that the applicable Loan Party enters into the related agreement giving rise to the Banking Services Obligations, the Company shall designate the related Banking Services Obligations hereunder as First Lien Term Loan Obligations in a written designation to the related provider of Banking Services Obligations with a copy to each Representative in which case such Banking Services Obligations shall solely constitute First Lien Term Loan Obligations for all purposes of this Agreement.
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Section 9. Obligations Unconditional.
For so long as this Agreement is in full force and effect, all rights, interests, agreements and obligations hereunder of the Senior Representative and the Senior Secured Parties in respect of any Collateral and the Junior Representative and the Junior Secured Parties in respect of such Collateral shall remain in full force and effect regardless of:
(a) any lack of validity or enforceability of any Senior Document or any Junior Document and regardless of whether the Liens of the Senior Representative and Senior Secured Parties are not perfected or are voidable for any reason;
(b) any change in the time, manner or place of payment of, or in any other terms of, all or any of the Senior Obligations or Junior Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any Senior Document or any Junior Document;
(c) any exchange, release or lack of perfection of any Lien on any Collateral or any other asset, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Senior Obligations or Junior Obligations or any guarantee thereof;
(d) the commencement of any Insolvency Proceeding in respect of any Loan Party; or
(e) any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Loan Party in respect of any Secured Obligation or of any Junior Secured Party in respect of this Agreement.
Section 10. Miscellaneous.
Section 10.1 Rights of Subrogation. Each Term Loan Representative, for and on behalf of itself and the Term Loan Secured Parties that it represents, agrees that no payment to the ABL Representative or any ABL Secured Party pursuant to the provisions of this Agreement shall entitle any Term Loan Representative or any Term Loan Secured Party to exercise any rights of subrogation in respect thereof until the ABL Obligations Payment Date. Following the ABL Obligations Payment Date, the ABL Representative agrees to execute such documents, agreements, and instruments as any Term Loan Representative or any Term Loan Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the ABL Obligations resulting from payments to the ABL Representative by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the ABL Representative are paid by such Person upon request for payment thereof. The ABL Representative, for and on behalf of itself and the ABL Secured Parties, agrees that no payment to any Term Loan Representative or any Term Loan Secured Party pursuant to the provisions of this Agreement shall entitle the ABL Representative or any ABL Secured Party to exercise any rights of subrogation in respect thereof until the Term Loan Obligations Payment Date. Following the Term Loan Obligations Payment Date, each Term Loan Representative agrees to execute such documents, agreements, and instruments as the ABL Representative or any ABL Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the relevant Term Loan Obligations resulting from payments to such Term Loan Representative by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by such Term Loan Representative are paid by such Person upon request for payment thereof.
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Section 10.2 Further Assurances. Each Term Loan Representative and the ABL Representative will, at its own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the other parties may reasonably request, in order to protect any right or interest granted or purported to be granted hereby or to enable the ABL Representative or any Term Loan Representative to exercise and enforce its rights and remedies hereunder; provided, however, that no party shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this Section 10.2, to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of this Agreement, and in the event of a controversy or dispute, such party may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this Section 10.2.
Section 10.3 Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of any ABL Document or any Term Loan Document, the provisions of this Agreement shall govern.
Section 10.4 Continuing Nature of Provisions. Subject to Section 5.5, this Agreement shall continue to be effective, and shall not be revocable by any party hereto, until the earlier of (i) the ABL Obligations Payment Date and no ABL Excess Amount remains outstanding and (ii) the Term Loan Obligations Payment Date. This is a continuing agreement and the ABL Secured Parties and the Term Loan Secured Parties may continue, at any time and without notice to the other parties hereto, to extend credit and other financial accommodations, lend monies and provide indebtedness to, or for the benefit of, any Loan Party on the faith hereof.
Section 10.5 Amendments; Additional Debt; Waivers. (a) No amendment or modification of any of the provisions of this Agreement shall be effective unless the same shall be in writing and signed by the ABL Representative and the Term Loan Representatives. Each Loan Party agrees that this Agreement may be amended or modified by the ABL Representative and the Term Loan Representatives without notice to, or the consent of, any Loan Party, provided no Loan Party shall be bound by any such amendment or modification that directly and adversely affects the rights or duties of any Loan Party in any material respect without such Loan Party’s consent.
(b) Notwithstanding the foregoing, without the consent of any Term Loan Secured Party or any ABL Secured Party or any other party hereto, any Representative may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 10.5(c) and upon such execution and delivery, such Representative and Additional Term Loan Secured Parties and Additional Term Loan Obligations of the Series for which such Representative is acting, and each of the respective Obligations owing to them shall, respectively, be subject to the terms hereof.
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(c) To the extent, but only to the extent, permitted by the provisions of the ABL Documents and each of the Term Loan Documents, then extant, the Loan Parties may incur or issue and sell one or more series or classes of Indebtedness under credit agreements, debt facilities, indentures and/or commercial paper facilities after the date hereof (“Additional Debt”) that the Company designates as Additional First Lien Term Loan Debt or Additional Second Lien Term Loan Debt, as applicable. In order to so designate any such Indebtedness as Additional First Lien Term Loan Debt or Additional Second Lien Term Loan Debt, as applicable, such Indebtedness must satisfy the requirements of the definition of Additional Term Loan Debt, and the Company must deliver to each Representative a designation in substantially the form of Annex I hereto. Additionally the Representative in respect of such Additional Term Loan Debt shall have executed and delivered to each other Representative a Joinder Agreement in substantially the form of Annex II hereto whereby such new Representative agrees to be bound by the terms of this Agreement and represents and warrants that the Additional Term Loan Documents, as applicable, provide that the Term Loan Secured Parties thereunder will be subject to and bound by the provisions of this Agreement as First Lien Term Loan Obligations or Second Lien Term Loan Obligations, as the case may be.
Section 10.6 Information Concerning Financial Condition of the Loan Parties. Each Term Loan Representative and the ABL Representative hereby assumes responsibility for keeping itself informed of the financial condition of the Loan Parties and all other circumstances bearing upon the risk of nonpayment of the ABL Obligations or the Term Loan Obligations. Each Term Loan Representative and the ABL Representative hereby agrees that no party shall have any duty to advise any other party of information known to it regarding such condition or any such circumstances (except as otherwise provided in the ABL Documents and Term Loan Documents). In the event any Term Loan Representative or the ABL Representative, in its sole discretion, undertakes at any time or from time to time to provide any information to any other party to this Agreement, it shall be under no obligation (a) to provide any such information to such other party or any other party on any subsequent occasion, (b) to undertake any investigation not a part of its regular business routine, or (c) to disclose any other information.
Section 10.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
Section 10.8 Submission to Jurisdiction; JURY TRIAL WAIVER. (a) Each ABL Secured Party, each Term Loan Secured Party and each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court 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 Agreement, or for recognition or enforcement of any judgment, and each such party hereby 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 or, to the extent permitted by law, in such Federal court. Each such party 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 shall affect any right that any ABL Secured Party or Term Loan Secured Party may otherwise have to bring any action or proceeding against any Loan Party or its properties in the courts of any jurisdiction.
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(b) Each ABL Secured Party, each Term Loan Secured Party and each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so (i) any objection it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (a) of this Section and (ii) the defense of an inconvenient forum to the maintenance of such action or proceeding.
(c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.9. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
(d) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 10.9 Notices. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telecopied, or sent by overnight express courier service or United States mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a telecopy or five days after deposit in the United States mail (certified, with postage prepaid and properly addressed). For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 10.9) shall be as set forth below each party’s name on the signature pages hereof, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
Section 10.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and each of the ABL Secured Parties and Term Loan Secured Parties and their respective successors and assigns, and nothing herein is intended, or shall be construed to give, any other Person any right, remedy or claim under, to or in respect of this Agreement or any Collateral.
Section 10.11 Headings. Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
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Section 10.12 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 10.13 Other Remedies. For avoidance of doubt, it is understood that nothing in this Agreement shall prevent any ABL Secured Party or any Term Loan Secured Party from exercising any available remedy to accelerate the maturity of any indebtedness or other obligations owing under the ABL Documents or the Term Loan Documents, as applicable, or to demand payment under any guarantee in respect thereof.
Section 10.14 Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement or any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement or such Ancillary Document, as applicable. This Agreement shall become effective when it shall have been executed by each party hereto. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by facsimile, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the ABL Representative, the First Lien Term Loan Representative or the Second Lien Term Loan Representative to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the extent the ABL Representative has agreed to accept any Electronic Signature, the ABL Representative shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the First Lien Term Loan Representative, the Second Lien Term Loan Representative or any Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature, (b) to the extent the First Lien Term Loan Representative has agreed to accept any Electronic Signature, the First Lien Term Loan Representative shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the ABL Representative, the Second Lien Term Loan Representative or any Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature, (c) to the extent the Second Lien Term Loan Representative has agreed to accept any Electronic Signature, the Second Lien Term Loan Representative shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the ABL Representative, the First Lien Term Loan Representative or any Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature, and (d) upon the request of the ABL Representative, the First Lien Term Loan Representative or the Second Lien Term Loan Representative, as applicable, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the ABL Representative, the First Lien Term Loan Representative, the Second Lien Term Loan Representative and each Loan Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among any of the parties hereto, Electronic Signatures transmitted by facsimile, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the ABL Representative, the First Lien Term Loan Representative or the Second Lien Term Loan Representative may, at its option, create one or more copies of this Agreement and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of its business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement and/or such Ancillary Document based solely on the lack of paper original copies of this Agreement and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the ABL Representative, the First Lien Term Loan Representative, the Second Lien Term Loan Representative or any of their respective Related Parties for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from, as applicable, the ABL Representative’s, the First Lien Term Loan Representative’s or the Second Lien Term Loan Representative’s reliance on or use of Electronic Signatures and/or transmission by facsimile, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any such liabilities arising as a result of the failure of the ABL Representative, the First Lien Term Loan Representative, the Second Lien Term Loan Representative or any Loan Party, as applicable, to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
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Section 10.15 Additional Loan Parties. The Company shall cause each Person that becomes a Loan Party after the date hereof to become a party to this Agreement by execution and delivery by such Person of a Joinder Agreement in the form of Annex III hereto.
Section 10.16 No Consequential Damages. Neither the ABL Representative nor any Term Loan Representative shall be liable for any indirect, special or consequential damages (including, but not limited to, lost profits) whatsoever, even if it has been informed of the likelihood thereof and regardless of the form or action.
Section 10.17 Collateral Due Diligence. Subject to receipt of a non-reliance letter in favor of the applicable Representative and its affiliates, each Representative shall promptly provide to the other Representative copies of all Collateral Due Diligence with respect to the Loan Parties or the Common Collateral that are prepared by third parties (but excluding internal credit files, attorney-client work product, information and reports prepared by financial advisors or turnaround consultants, and documents and information prepared in anticipation of litigation or in connection with an Insolvency Proceeding); provided, that the recipient Representative shall be responsible for arranging disclosure and reliance with the third party provider. The failure of any Representative to provide any Collateral Due Diligence shall not (i) affect the relative priorities of any Representative’s Liens as provided herein or the validity or effectiveness of any notices or demands as against any Loan Party, (ii) impair the effectiveness of this Agreement, or (iii) give rise to any claim or cause of action or liability by any Representative or Secured Party against any other Representative, Secured Party or any third person preparing such appraisals, examinations or reports. Each Representative, for itself and on behalf of its respective Secured Parties, acknowledges and agrees that the preparation of such Collateral Due Diligence may be subject to the cooperation of the Loan Parties and neither the other Representatives, such other Representatives’ respective Secured Parties nor any of their respective agents, consultants, advisors, counsel or employees makes any representations or warranties whatsoever with respect to the Collateral Due Diligence of any kind, nature, or description, including, without limitation, any representation as to the completeness or accuracy of the Collateral Due Diligence, either at the time that the Collateral Due Diligence was prepared or at the present time and such information is provided for informational purposes only, and may not be relied upon by such other Representatives, such other Secured Parties or any other party, in any manner whatsoever. Each Representative, for itself and on behalf of its respective Secured Parties, further acknowledges and agrees that the Collateral Due Diligence shall not give rise to any claim or cause of action or liability against, and shall be provided without recourse to, the other Representative, such other Representative’s respective Secured Parties or any agent, consultant, advisor, counsel or employees thereof. Each Representative, for itself and on behalf of its respective Secured Parties, agrees that it shall use such Collateral Due Diligence only in connection with its administration under the applicable Senior Documents or Junior Documents. Each Term Loan Representative, on behalf of the Term Loan Secured Parties that it represents, hereby agrees that the granting of access by the ABL Representative to IntraLinks or another similar secure, encrypted and password-protected electronic system customarily used for distribution of such Collateral Due Diligence to ABL Creditors shall satisfy the ABL Representative’s obligations under this Section 10.17 (to the extent Collateral Due Diligence is made available therein). The Loan Parties irrevocably, by their execution of the acknowledgment hereto, authorize each Representative to provide the other Representatives with copies of any Collateral Due Diligence.
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Section 10.18 Badcock and Badcock Assets. Notwithstanding anything herein to the contrary, each of the parties hereto hereby acknowledges and agrees that:
(a) prior to the BDK Joinder Date, (i) no ABL Creditor will have any rights or claims in or to any BDK Assets, (ii) Badcock has not and will not provide a guarantee in favor of any ABL Creditor in respect of the ABL Obligations, (iii) Badcock has not and will not grant, pledge or otherwise provide a Lien on any BDK Assets in favor of any ABL Creditor (nor will any ABL Creditor accept any such Lien) and any such grant, pledge or other action shall be null and void and without effect unless otherwise consented to in writing by each Term Loan Representative and (iv) the BDK Assets shall not be subject to the terms and provisions of this Agreement other than as it relates to this Section 10.18 and other similar provisions in this Agreement that reference Badcock and the BDK Assets for purposes of effecting the matters contained in this Section 10.18;
(b) the Term Loan Creditors have been granted a Lien on certain of the BDK Assets to secure the Term Loan Obligations of such Term Loan Creditors, which Liens, prior to the BDK Joinder Date, are not subject to this Agreement (other than to the extent described in the foregoing clause (a));
(c) Badcock has provided a guarantee in favor of the Term Loan Creditors in respect of the Term Loan Obligations of such Term Loan Creditors and, prior to the BDK Joinder Date, the Term Loan Creditors shall be entitled to seek enforcement or to take any other action in respect of such guarantees without any restriction or condition otherwise imposed by this Agreement;
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(d) from and after the BDK Joinder Date, any Liens on the BDK Assets in favor of any ABL Creditor and/or Term Loan Creditor, and any guarantees by Badcock in favor of the ABL Creditors in respect of the ABL Obligations and the Term Loan Creditors in respect of the Term Loan Obligations of such Term Loan Creditors, as the case may be, shall be subject in all respects to the terms and provisions of this Agreement with the relative priorities and rights and obligations described herein.
Section 10.19 Amendment and Restatement. The Original Intercreditor Agreement is hereby amended and restated, and superseded, in its entirety by this Agreement, which has been executed in renewal, amendment, restatement and modification of, but not in extinguishment of, the obligations under the Original Intercreditor Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
JPMORGAN CHASE BANK, N.A.,
as ABL Representative for and on behalf of the ABL Secured Parties
By: /s/ James A. Knight
Name: James A. Knight
Title: Authorized Officer
Address for Notices:
JPMorgan Chase Bank, N.A.
383 Madison Ave, Floor 23
New York, New York 10179
Attn: James Knight, Franchise Group Credit Officer
Facsimile: (917) 464-7000
Email: james.a.knight@jpmorgan.com
with a copy, which shall not constitute notice, to:
Latham & Watkins LLP,
330 N Wabash Ave
Suite 2800
Chicago IL, 60611
Attention: Zulf Bokhari
Email: zulf.bokhari@lw.com
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
JPMORGAN CHASE BANK, N.A.,
as Initial First Lien Term Loan Representative for and on behalf of the Initial First Lien Term Loan Secured Parties
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
Address for Notices:
JPMorgan Chase Bank, N.A.
383 Madison Ave, Floor 23
New York, New York 10179
Attn: James Knight, Franchise Group Credit Officer
Facsimile: (917) 464-7000
Email: james.a.knight@jpmorgan.com
with a copy, which shall not constitute notice, to:
Latham & Watkins LLP,
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071-1560
Attention: Jason Bosworth
Email: jason.bosworth@lw.com
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
ALTER DOMUS (US) LLC,
solely in its capacity as Initial Second Lien Term Loan Representative for and on behalf of the Initial Second Lien Term Loan Secured
Parties and not in its individual capacity
By: /s/ Matthew Trybula
Name: Matthew Trybula
Title: Associate Counsel
Address for Notices:
225 W. Washington Street, 9th Floor
Chicago, Illinois 60606
Attention: Legal Department and Rick Ledenbach
Email: legal@alterdomus.com and rick.ledenbach@alterdomus.com
With a copy (which shall not constitute notice) to:
150 N. Riverside Plaza, Suite 2700
Chicago, Illinois 60606
Attention: Joshua M. Spencer
Email: joshua.spencer@hklaw.com
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
JPMORGAN CHASE BANK, N.A.,
as BDK First Lien Term Loan Representative for and on behalf of the BDK First Lien Term Loan Secured Parties
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
Address for Notices:
JPMorgan Chase Bank, N.A.
383 Madison Ave, Floor 23
New York, New York 10179
Attn: James Knight, Franchise Group Credit Officer
Facsimile: (917) 464-7000
Email: james.a.knight@jpmorgan.com
with a copy, which shall not constitute notice, to:
Latham & Watkins LLP,
355 South Grand Avenue, Suite 100
Los Angeles, CA 90071-1560
Attention: Jason Bosworth
Email: jason.bosworth@lw.com
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
ALTER DOMUS (US) LLC,
solely in its capacity as BDK Second Lien Term Loan Representative for and on behalf of the BDK Second Lien Term Loan Secured Parties
and not in its individual capacity
By: /s/ Winnalynn N. Kantaris
Name: Winnalynn N. Kantaris
Title: Associate General Counsel
Address for Notices:
225 W. Washington Street, 9th Floor
Chicago, Illinois 60606
Attention: Legal Department and Rick Ledenbach
Email: legal@alterdomus.com and rick.ledenbach@alterdomus.com
With a copy (which shall not constitute notice) to:
150 N. Riverside Plaza, Suite 2700
Chicago, Illinois 60606
Attention: Joshua M. Spencer
Email: joshua.spencer@hklaw.com
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
LOAN PARTIES:
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.
VALOR ACQUISITION, LLC
FRANCHISE GROUP INTERMEDIATE SL, LLC,
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOP FLORIDA, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
BETANCOURT SPORTS NUTRITION, LLC
By: VITAMIN SHOPPE INDUSTRIES LLC, the sole member
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
Name: Will Powell
Title: President
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
W.S. BADCOCK CORPORATION
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Senior Vice President
[SIGNATURE PAGE TO AMENDED AND RESTATED ABL-TERM INTERCREDITOR AGREEMENT – FRG]
Exhibit 10.5
FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT
dated as of
November 22, 2021
among
JPMORGAN CHASE BANK, N.A.,
as the Initial FRG Representative and the Initial FRG Collateral Agent,
JPMORGAN CHASE BANK, N.A.,
as the BDK Representative and the BDK Collateral Agent,
and
each additional Representative and Collateral Agent from time to time party hereto
and acknowledged and agreed to by
FRANCHISE GROUP, INC.,
as the Company and the other Grantors referred to herein
TABLE OF CONTENTS
Page
| Article I. DEFINITIONS | 2 | |
| Section 1.1 | Certain Defined Terms | 2 |
| Section 1.2 | Rules of Interpretation | 10 |
| Article II. PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL | 10 | |
| Section 2.1 | Priority of Claims | 10 |
| Section 2.2 | Actions with Respect to Shared Collateral; Prohibition on Contesting Liens | 13 |
| Section 2.3 | No Interference; Payment Over; Exculpatory Provisions | 14 |
| Section 2.4 | Automatic Release of Liens | 15 |
| Section 2.5 | Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings | 16 |
| Section 2.6 | Reinstatement | 17 |
| Section 2.7 | Insurance and Condemnation Awards | 17 |
| Section 2.8 | Refinancings | 17 |
| Section 2.9 | Gratuitous Bailee/Agent for Perfection | 18 |
| Section 2.10 | Amendments to First Lien Collateral Documents | 19 |
| Section 2.11 | Similar Liens and Agreements | 19 |
| Article III. EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS | 20 | |
| Article IV. THE APPLICABLE COLLATERAL AGENT | 20 | |
| Section 4.1 | Authority | 20 |
| Section 4.2 | Power-of-Attorney | 21 |
| Article V. MISCELLANEOUS | 21 | |
| Section 5.1 | Integration/Conflicts | 21 |
| Section 5.2 | Effectiveness; Continuing Nature of this Agreement; Severability | 22 |
| Section 5.3 | Amendments; Waivers | 22 |
| Section 5.4 | Information Concerning Financial Condition of the Grantors and their Subsidiaries | 23 |
| Section 5.5 | Submission to Jurisdiction; Certain Waivers | 23 |
| Section 5.6 | WAIVER OF JURY TRIAL | 24 |
| Section 5.7 | Notices | 25 |
| Section 5.8 | Further Assurances | 25 |
| Section 5.9 | Agency Capacities | 25 |
| Section 5.10 | GOVERNING LAW. | 26 |
| Section 5.11 | Binding on Successors and Assigns | 26 |
| i |
| Section 5.12 | Section Headings | 26 |
| Section 5.13 | Counterparts | 26 |
| Section 5.14 | Replacement FRG Credit Agreement Obligations | 26 |
| Section 5.15 | Authorization | 28 |
| Section 5.16 | No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights | 28 |
| Section 5.17 | [Reserved] | 28 |
| Section 5.18 | Additional Grantors | 28 |
EXHIBITS
| Exhibit A | - | Form of Joinder Agreement (Replacement FRG Credit Agreement) |
| Exhibit B | - | Form of Replacement FRG Credit Agreement Designation |
| Exhibit C | - | Form of Joinder Agreement (Additional Grantors) |
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This FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is dated as of November 22, 2021, among JPMORGAN CHASE BANK, N.A., as administrative agent for the Initial FRG Claimholders (in such capacity and together with its successors from time to time in such capacity, the “Initial FRG Representative”), and as collateral agent for the Initial FRG Claimholders (in such capacity and together with its successors from time to time in such capacity, the “Initial FRG Collateral Agent”), JPMORGAN CHASE BANK, N.A., as Representative for the BDK Claimholders (in such capacity and together with its successors from time to time in such capacity, the “BDK Representative”), and as collateral agent for the BDK Claimholders (in such capacity and together with its successors from time to time in such capacity, the “BDK Collateral Agent”), and each additional Representative and Collateral Agent from time to time party hereto for the Replacement FRG Claimholders of the Series with respect to which it is acting in such capacity, and acknowledged and agreed to by FRANCHISE GROUP, INC. (the “Company”) and the other Grantors. Capitalized terms used in this Agreement have the meanings assigned to them in Article 1 below.
WHEREAS, reference is made to (i) that certain First Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including by the First Amendment to First Lien Credit Agreement, dated as of the date hereof, in a manner that is not in violation of this Agreement or any other First Lien Document, the “Initial FRG Credit Agreement”), among the Company, Franchise Group Newco PSP, LLC, a Delaware limited liability company (“NewCo PSP”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”) and Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company (“NewCo AF” and, together with the Company, NewCo PSP and Valor, the “Borrowers”), the lenders party thereto, the Initial FRG Representative and the Initial FRG Collateral Agent and (ii) that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time in a manner that is not in violation of this Agreement or any other First Lien Document, the “BDK Credit Agreement”), among the Borrowers, the lenders party thereto, the BDK Representative and the BDK Collateral Agent;
WHEREAS, in connection with (i) the Initial FRG Credit Agreement, certain Subsidiaries of the Company have entered into the Guarantee Agreement (as defined in the Initial FRG Credit Agreement) pursuant to which such Subsidiaries (such current Subsidiaries and any future Subsidiaries of the Company that enter into such Guarantee Agreement, the “Guarantor Subsidiaries”) have agreed to guaranty the Initial FRG Obligations (the “FRG Guaranty”) and (ii) the BDK Credit Agreement, the Guarantor Subsidiaries have agreed to guaranty the BDK Credit Agreement Obligations (the “BDK Guaranty”);
WHEREAS, (i) the obligations of the Borrowers under the Initial FRG Credit Agreement, including the Initial FRG Swap Obligations and the Initial FRG Cash Management Obligations, and the obligations of the Guarantor Subsidiaries under the FRG Guaranty will be secured on a first-priority basis by liens on substantially all the assets of the Borrowers and the Guarantor Subsidiaries, respectively, pursuant to the terms of the Initial FRG Collateral Documents and (ii) the obligations of the Borrowers under the BDK Credit Agreement and the obligations of the Guarantor Subsidiaries under the BDK Guaranty will be secured on a first-priority basis by liens on substantially all the assets of the Borrowers and the Guarantor Subsidiaries, respectively, pursuant to the terms of the BDK Collateral Documents;
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WHEREAS, each of the Initial FRG Credit Agreement Documents and the BDK Credit Agreement Documents provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the Initial FRG Representative (for itself and on behalf of each other Initial FRG Claimholder), the Initial FRG Collateral Agent (for itself and on behalf of each other Initial FRG Claimholder), the BDK Representative (for itself and on behalf of each other BDK Claimholder) and the BDK Collateral Agent (for itself and on behalf of each other BDK Claimholder), intending to be legally bound, hereby agrees as follows:
Article
I.
DEFINITIONS
| Section 1.1 | Certain Defined Terms. |
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Initial FRG Credit Agreement (whether or not then in effect), and the following terms which are defined in the UCC are used herein as so defined (and if defined in more than one article of the UCC shall have the meaning specified in Article 9 thereof): Certificated Security, Commodity Account, Commodity Contract, Deposit Account, Electronic Chattel Paper, Promissory Note, Instrument, Letter of Credit Right, Securities Entitlement, Securities Account and Tangible Chattel Paper. As used in this Agreement, the following terms have the meanings specified below:
“Agreement” has the meaning set forth in the introductory paragraph hereto.
“Applicable Collateral Agent” means (i) until the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the FRG Credit Agreement Collateral Agent and (ii) from and after the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the BDK Collateral Agent.
“Applicable Representative” means (i) until the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the FRG Credit Agreement Representative and (ii) from and after the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the BDK Representative.
“Bankruptcy Case” has the meaning set forth in Section 2.5(b).
“Bankruptcy Code” means Title 11 of the United States Code, as amended.
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“Bankruptcy Law” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.
“BDK Claimholders” means the holders of any BDK Credit Agreement Obligations, the BDK Representative and the BDK Collateral Agent.
“BDK Collateral Agent” has the meaning set forth in the introductory paragraph to this Agreement.
“BDK Collateral Documents” means the Security Documents (as defined in the BDK Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any BDK Credit Agreement Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time); provided that, solely for the purposes of this Agreement, “BDK Collateral Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“BDK Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“BDK Credit Agreement Documents” means the BDK Credit Agreement, each BDK Collateral Document and each of the other agreements, documents and instruments providing for or evidencing any other BDK Credit Agreement Obligations, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time; provided that, solely for the purposes of this Agreement, “BDK Credit Agreement Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“BDK Credit Agreement Obligations” means all amounts owing to any BDK Claimholder pursuant to the terms of any BDK Credit Agreement Document, including all amounts in respect of any principal, interest (including any Post-Petition Interest), premium (if any), penalties, fees, expenses (including fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding. BDK Credit Agreement Obligations shall include any Registered Equivalent Notes and guarantees thereof by the Grantors issued in exchange therefor. For avoidance of doubt, neither the Initial FRG Obligations nor any Replacement FRG Credit Agreement Obligations shall constitute BDK Credit Agreement Obligations.
“BDK Representative” has the meaning set forth in the introductory paragraph to this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.
“Collateral” means all assets and properties subject to, or purported to be subject to, Liens created pursuant to any First Lien Collateral Document to secure one or more Series of First Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any First Lien Claimholder; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “Collateral” shall not include any Badcock Collateral (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
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“Collateral Agent” means (i) in the case of any FRG Credit Agreement Obligations, the FRG Credit Agreement Collateral Agent (which in the case of the Initial FRG Obligations shall be the Initial FRG Collateral Agent and in the case of any Replacement FRG Credit Agreement shall be the Replacement FRG Collateral Agent) and (ii) in the case of the BDK Credit Agreement Obligations, the BDK Collateral Agent.
“Company” has the meaning set forth in the introductory paragraph to this Agreement.
“Control Collateral” means any Shared Collateral in the “control” (within the meaning of Section 9-104, 9-105, 9-106, 9-107 or 8-106 of the Uniform Commercial Code of any applicable jurisdiction) of any Collateral Agent (or its agents or bailees), to the extent that control thereof perfects a Lien thereon under the Uniform Commercial Code of any applicable jurisdiction. Control Collateral includes any Deposit Accounts, Securities Accounts, Securities Entitlements, Commodity Accounts, Commodity Contracts, Letter of Credit Rights or Electronic Chattel Paper over which any Collateral Agent has “control” under the applicable Uniform Commercial Code.
“Controlling Claimholders” means (i) at any time when the FRG Credit Agreement Collateral Agent is the Applicable Collateral Agent, the FRG Credit Agreement Claimholders and (ii) at any other time, the Series of First Lien Claimholders whose Collateral Agent is the Applicable Collateral Agent.
“Designation” means a designation of a Replacement FRG Credit Agreement, in each case, in substantially the form of Exhibit B attached hereto.
“DIP Financing” has the meaning set forth in Section 2.5(b).
“DIP Financing Liens” has the meaning set forth in Section 2.5(b).
“DIP Lenders” has the meaning set forth in Section 2.5(b).
“Discharge” means, with respect to any Series of First Lien Obligations, that such Series of First Lien Obligations is no longer secured by, and no longer required to be secured by, any Shared Collateral pursuant to the terms of the applicable First Lien Documents for such Series of First Lien Obligations. The term “Discharged” shall have a corresponding meaning.
“Discharge of FRG Credit Agreement” means, except to the extent otherwise provided in Section 2.6, the Discharge of the FRG Credit Agreement Obligations; provided that the Discharge of FRG Credit Agreement shall be deemed not to have occurred if a Replacement FRG Credit Agreement is entered into until, subject to Section 2.6, the Replacement FRG Credit Agreement Obligations shall have been Discharged.
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“Equity Release Proceeds” has the meaning set forth in Section 2.4(a).
“Event of Default” means an “Event of Default” (or similarly defined term) as defined in any First Lien Document.
“First Lien Claimholders” means (i) the FRG Credit Agreement Claimholders and (ii) the BDK Claimholders.
“First Lien Collateral Documents” means, collectively, (i) the FRG Credit Agreement Collateral Documents and (ii) the BDK Collateral Documents.
“First Lien Documents” means (i) the FRG Credit Agreement Documents and (ii) the BDK Credit Agreement Documents.
“First Lien Obligations” means, collectively, (i) the FRG Credit Agreement Obligations and (ii) the BDK Credit Agreement Obligations.
“FRG Credit Agreement” means (i) the Initial FRG Credit Agreement and (ii) each Replacement FRG Credit Agreement.
“FRG Credit Agreement Claimholders” means (i) the Initial FRG Claimholders and (ii) the Replacement FRG Claimholders.
“FRG Credit Agreement Collateral Agent” means (i) the Initial FRG Collateral Agent and (ii) the Replacement FRG Collateral Agent under any Replacement FRG Credit Agreement.
“FRG Credit Agreement Collateral Documents” means (i) the Initial FRG Collateral Documents and (ii) the Replacement FRG Credit Agreement Collateral Documents.
“FRG Credit Agreement Documents” means (i) the Initial FRG Credit Agreement Documents and (ii) the Replacement FRG Credit Agreement Documents.
“FRG Credit Agreement Obligations” means (i) the Initial FRG Obligations and (ii) the Replacement FRG Credit Agreement Obligations.
“FRG Credit Agreement Representative” means (i) the Initial FRG Representative and (ii) the Replacement FRG Representative under any Replacement FRG Credit Agreement.
“Grantors” means the Company, each of the other Borrowers and each Subsidiary of the Company which has granted a security interest pursuant to any First Lien Collateral Document to secure any Series of First Lien Obligations; provided that, solely for the purposes of this Agreement, “Grantors” shall not include Badcock (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Impairment” has the meaning set forth in Section 2.1(b)(ii).
“Indebtedness” means indebtedness in respect of borrowed money.
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“Initial FRG Cash Management Obligations” means Cash Management Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Claimholders” means the holders of any Initial FRG Obligations, including the “Secured Parties” as defined in the Initial FRG Credit Agreement or in the Initial FRG Collateral Documents, and the Initial FRG Representative and Initial FRG Collateral Agent.
“Initial FRG Collateral Agent” has the meaning set forth in the introductory paragraph to this Agreement.
“Initial FRG Collateral Documents” means the Security Documents (as defined in the Initial FRG Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any Initial FRG Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time); provided that, solely for the purposes of this Agreement, “Initial FRG Collateral Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Initial FRG Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial FRG Credit Agreement Documents” means the Initial FRG Credit Agreement, each Initial FRG Collateral Document and the other Loan Documents (as defined in the Initial FRG Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other Initial FRG Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time; provided that, solely for the purposes of this Agreement, “Initial FRG Credit Agreement Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Initial FRG Obligations” means the Secured Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Swap Obligations” means Secured Swap Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Representative” has the meaning set forth in the introductory paragraph to this Agreement.
“Insolvency or Liquidation Proceeding” means:
(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor;
(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of its assets;
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(c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(d) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Grantor.
“Intervening Creditor” has the meaning set forth in Section 2.1(b)(i).
“Joinder Agreement” means a document in the form of Exhibit A to this Agreement required to be delivered by a Replacement FRG Representative to the BDK Collateral Agent and the BDK Representative pursuant to Section 5.14 of this Agreement in order to create an additional Series of Replacement FRG Credit Agreement Obligations and bind Replacement FRG Claimholders hereunder.
“Lien” means any lien (including judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust (whether contractual, statutory, deemed, equitable, constructive, resulting or otherwise), UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing, including any right of set-off or recoupment.
“Non-Controlling Claimholders” means the First Lien Claimholders which are not Controlling Claimholders.
“Non-Controlling Representative” means, at any time, each Representative that is not the Applicable Representative at such time.
“Non-Controlling Representative Enforcement Date” means, with respect to any Non-Controlling Representative, the date which is 180 days after the occurrence of both (i) an Event of Default (under and as defined in the First Lien Documents under which such Non-Controlling Representative is the Representative) and (ii) each Collateral Agent’s and each other Representative’s receipt of written notice from such Non-Controlling Representative certifying that the First Lien Obligations of the Series with respect to which such Non-Controlling Representative is the Representative are currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the terms of the applicable First Lien Document; provided that the Non-Controlling Representative Enforcement Date shall be stayed and shall not occur and shall be deemed not to have occurred (1) at any time the Applicable Collateral Agent acting on the instructions of the Applicable Representative has commenced and is diligently pursuing any enforcement action with respect to Shared Collateral, (2) at any time the Grantor that has granted a security interest in Shared Collateral is then a debtor under or with respect to (or otherwise subject to) any Insolvency or Liquidation Proceeding or (3) if such Non-Controlling Representative subsequently rescinds or withdraws the written notice provided for in clause (ii).
“Possessory Collateral” means any Shared Collateral in the possession of any Collateral Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code of any jurisdiction or otherwise. Possessory Collateral includes any Certificated Securities, Promissory Notes, Instruments, and Tangible Chattel Paper, in each case, delivered to or in the possession of any Collateral Agent under the terms of the First Lien Collateral Documents.
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“Post-Petition Interest” means interest, fees, expenses and other charges that pursuant to the FRG Credit Agreement Documents or the BDK Credit Agreement Documents, as applicable, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.
“Proceeds” has the meaning set forth in Section 2.1(a).
“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other Indebtedness in exchange or replacement for, such Indebtedness in whole or in part and regardless of whether the principal amount of such Refinancing Indebtedness is the same, greater than or less than the principal amount of the Refinanced Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees and substantially the same collateral) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Replacement FRG Claimholders” means the holders of any Replacement FRG Credit Agreement Obligations, including the “Secured Parties” as defined in the Replacement FRG Credit Agreement or in the Replacement FRG Credit Agreement Collateral Documents, and the Replacement FRG Representative and Replacement FRG Collateral Agent.
“Replacement FRG Collateral Agent” means, in respect of any Replacement FRG Credit Agreement, the collateral agent or person serving in similar capacity under the Replacement FRG Credit Agreement.
“Replacement FRG Collateral Documents” means the Security Documents or Collateral Documents or similar term (as defined in the Replacement FRG Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any Replacement FRG Credit Agreement Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time).
“Replacement FRG Credit Agreement” means any loan agreement, indenture or other agreement that (i) Refinances the FRG Credit Agreement in accordance with Section 2.8 hereof so long as, after giving effect to such Refinancing, the agreement that was the FRG Credit Agreement immediately prior to such Refinancing is no longer secured, and no longer required to be secured, by any of the Collateral and (ii) becomes the FRG Credit Agreement hereunder by designation as such pursuant to Section 5.14.
“Replacement FRG Credit Agreement Documents” means the Replacement FRG Credit Agreement, each Replacement FRG Credit Agreement Collateral Document and the other Loan Documents or similar term (as defined in the Replacement FRG Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other Replacement FRG Credit Agreement Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
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“Replacement FRG Credit Agreement Obligations” means the Secured Obligations or similar term (as defined in the Replacement FRG Credit Agreement).
“Replacement FRG Representative” means, in respect of any Replacement FRG Credit Agreement, the administrative agent, trustee or person serving in similar capacity under the Replacement FRG Credit Agreement.
“Representative” means, at any time, (i) in the case of any Initial FRG Obligations or the Initial FRG Claimholders, the Initial FRG Representative, (ii) in the case of any Replacement FRG Credit Agreement Obligations or the Replacement FRG Claimholders, the Replacement FRG Representative and (iii) in the case of the BDK Credit Agreement Obligations or the BDK Claimholders, the BDK Representative.
“Series” means (a) with respect to the First Lien Claimholders, each of (i) the Initial FRG Claimholders (in their capacities as such), (ii) the BDK Claimholders (in their capacities as such) and (iii) the Replacement FRG Claimholders (in their capacities as such), and (b) with respect to any First Lien Obligations, each of (i) the Initial FRG Obligations, (ii) the BDK Credit Agreement Obligations and (iii) the Replacement FRG Credit Agreement Obligations.
“Shared Collateral” means, at any time, Collateral, which for the avoidance of doubt and solely for the purposes of this Agreement, will not include the Badcock Collateral (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement) which the holders of two or more Series of First Lien Obligations (or their respective Representatives or Collateral Agents on behalf of such holders) hold, or purport to hold, or are required to hold pursuant to the First Lien Documents in respect of such Series, a valid security interest or Lien at such time. If more than two Series of First Lien Obligations are outstanding at any time and the holders of less than all Series of First Lien Obligations hold, or purport to hold, or are required to hold pursuant to the First Lien Documents in respect of such Series, a valid security interest or Lien in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of First Lien Obligations that hold, or purport to hold, or are required to hold pursuant to the First Lien Documents in respect of such Series, a valid security interest or Lien in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not hold, or purport to hold, or is required to hold pursuant to the First Lien Documents in respect of such Series, a valid security interest or Lien in such Collateral at such time.
“Subsidiary” means, with respect to any Person, any other Person of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of such other Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.
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“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.
“Underlying Assets” has the meaning set forth in Section 2.4(a).
| Section 1.2 | Rules of Interpretation. |
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 herein shall be construed as referring to such agreement, instrument or other document as amended, restated, amended and restated, supplemented or otherwise modified from time to time and any reference herein to any statute or regulations shall include any amendment, renewal, extension or replacement thereof, (ii) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns from time to time, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections and Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.
Article
II.
PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL
| Section 2.1 | Priority of Claims. |
(a) Anything contained herein or in any of the First Lien Documents to the contrary notwithstanding (but subject to Sections 2.1(b) and 2.11(b)), if an Event of Default has occurred and is continuing, and the Applicable Collateral Agent is taking action to enforce rights in respect of any Collateral, or any distribution is made in respect of any Shared Collateral in any Bankruptcy Case of any Grantor or any First Lien Claimholder receives any payment pursuant to any intercreditor agreement (other than this Agreement) or otherwise with respect to any Shared Collateral, the proceeds of any sale, collection or other liquidation of any Shared Collateral or Equity Release Proceeds received by any First Lien Claimholder or received by the Applicable Collateral Agent or any First Lien Claimholder pursuant to any such intercreditor agreement or otherwise with respect to such Collateral and proceeds of any such distribution (subject, in the case of any such distribution, to the sentence immediately following clause THIRD below) to which the First Lien Obligations are entitled under any intercreditor agreement (other than this Agreement) or otherwise (all proceeds of any sale, collection or other liquidation of any Collateral comprising either Shared Collateral or Equity Release Proceeds and all proceeds of any such distribution and any proceeds of any insurance covering the Shared Collateral received by the Applicable Collateral Agent and not returned to any Grantor under any First Lien Document being collectively referred to as “Proceeds”), shall be applied by the Applicable Collateral Agent in the following order:
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(i) FIRST, to the payment of all amounts owing to each Collateral Agent (in its capacity as such) and each Representative (in its capacity as such) secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, including all reasonable costs and expenses incurred by each Collateral Agent (in its capacity as such) and each Representative (in its capacity as such) in connection with such collection or sale or otherwise in connection with this Agreement, any other First Lien Document or any of the First Lien Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other First Lien Document and all fees and indemnities owing to such Collateral Agents and Representatives, ratably to each such Collateral Agent and Representative in accordance with the amounts payable to it pursuant to this clause FIRST;
(ii) SECOND, subject to Sections 2.1(b) and 2.11(b), to the extent Proceeds remain after the application pursuant to preceding clause (i), to each Representative for the payment in full of the First Lien Obligations of each Series secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, and, if the amount of such Proceeds are insufficient to pay in full the First Lien Obligations of each Series so secured then such Proceeds shall be allocated among the Representatives of each Series secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, pro rata according to the amounts of such First Lien Obligations owing to each such respective Representative and the other First Lien Claimholders represented by it for distribution by such Representative in accordance with its respective First Lien Documents; and
(iii) THIRD, any balance of such Proceeds remaining after the application pursuant to preceding clauses (i) and (ii), to the Grantors, their successors or assigns from time to time, or to whomever may be lawfully entitled to receive the same, including pursuant to any Junior Lien Intercreditor Agreement or similar term (as defined in the FRG Credit Agreement), if applicable.
If, despite the provisions of this Section 2.1(a), any First Lien Claimholder shall receive any payment or other recovery in excess of its portion of payments on account of the First Lien Obligations to which it is then entitled in accordance with this Section 2.1(a), such First Lien Claimholder shall hold such payment or recovery in trust for the benefit of all First Lien Claimholders for distribution in accordance with this Section 2.1(a).
(b) (i) Notwithstanding the foregoing, with respect to any Shared Collateral or Equity Release Proceeds for which a third party (other than a First Lien Claimholder) has a Lien that is junior in priority to the Lien of any Series of First Lien Obligations but senior (as determined by appropriate legal proceedings in the case of any dispute) to the Lien of any other Series of First Lien Obligations (such third party an “Intervening Creditor”), the value of any Shared Collateral, Equity Release Proceeds or Proceeds which are allocated to such Intervening Creditor shall be deducted on a ratable basis solely from the Shared Collateral, Equity Release Proceeds or Proceeds to be distributed in respect of the Series of First Lien Obligations with respect to which such Impairment (as defined herein) exists.
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(ii) In furtherance of the foregoing and without limiting the provisions of Section 2.3, it is the intention of the First Lien Claimholders of each Series that the holders of First Lien Obligations of such Series (and not the First Lien Claimholders of any other Series) (1) bear the risk of any determination by a court of competent jurisdiction that (x) any of the First Lien Obligations of such Series are unenforceable under applicable law or are subordinated to any other obligations (other than another Series of First Lien Obligations), (y) any of the First Lien Obligations of such Series do not have a valid and perfected security interest in any of the Collateral securing any other Series of First Lien Obligations and/or (z) any intervening security interest exists securing any other obligations (other than another Series of First Lien Obligations) on a basis ranking prior to the security interest of such Series of First Lien Obligations but junior to the security interest of any other Series of First Lien Obligations and (2) not take into account for purposes of this Agreement the existence of any Collateral (other than Equity Release Proceeds) for any other Series of First Lien Obligations that is not Shared Collateral (any such condition referred to in the foregoing clauses (1) or (2) with respect to any Series of First Lien Obligations, an “Impairment” of such Series); provided that the existence of a maximum claim with respect to any real property subject to a mortgage which applies to all First Lien Obligations shall not be deemed to be an Impairment of any Series of First Lien Obligations. In the event of any Impairment with respect to any Series of First Lien Obligations, the results of such Impairment shall be borne solely by the holders of such Series of First Lien Obligations, and the rights of the holders of such Series of First Lien Obligations (including the right to receive distributions in respect of such Series of First Lien Obligations pursuant to Section 2.1) set forth herein shall be modified to the extent necessary so that the effects of such Impairment are borne solely by the holders of the Series of such First Lien Obligations subject to such Impairment. Additionally, in the event the First Lien Obligations of any Series are modified pursuant to applicable law (including pursuant to Section 1129 of the Bankruptcy Code), any reference to such First Lien Obligations or the First Lien Documents governing such First Lien Obligations shall refer to such obligations or such documents as so modified.
(c) It is acknowledged that the First Lien Obligations of any Series may, subject to the limitations set forth in the then existing First Lien Documents and subject to any limitations set forth in this Agreement, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the priorities set forth in Section 2.1(a) or the provisions of this Agreement defining the relative rights of the First Lien Claimholders of any Series.
(d) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any Series of First Lien Obligations granted on the Shared Collateral and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, or any other applicable law or the First Lien Documents or any defect or deficiencies in the Liens securing the First Lien Obligations of any Series or any other circumstance whatsoever (but, in each case, subject to Section 2.1(b)), each First Lien Claimholder hereby agrees that the Liens securing each Series of First Lien Obligations on any Shared Collateral shall be of equal priority.
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| Section 2.2 | Actions with Respect to Shared Collateral; Prohibition on Contesting Liens. |
(a) Notwithstanding Section 2.1, (i) only the Applicable Collateral Agent shall act or refrain from acting with respect to Shared Collateral (including with respect to any other intercreditor agreement with respect to any Shared Collateral), (ii) the Applicable Collateral Agent shall act only on the instructions of the Applicable Representative and shall not follow any instructions with respect to such Shared Collateral (including with respect to any other intercreditor agreement with respect to any Shared Collateral) from any Non-Controlling Representative (or any other First Lien Claimholder other than the Applicable Representative) and (iii) no First Lien Claimholder shall or shall instruct any Collateral Agent to, and any other Collateral Agent that is not the Applicable Collateral Agent shall not, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, Shared Collateral (including with respect to any other intercreditor agreement with respect to Shared Collateral), whether under any First Lien Collateral Document (other than the First Lien Collateral Documents applicable to the Applicable Collateral Agent), applicable law or otherwise, it being agreed that only the Applicable Collateral Agent, acting in accordance with the First Lien Collateral Documents applicable to it, shall be entitled to take any such actions or exercise any remedies with respect to such Shared Collateral at such time.
(b) Without limiting the provisions of Section 4.2, each Representative and Collateral Agent that is not the Applicable Collateral Agent hereby appoints the Applicable Collateral Agent as its agent and authorizes the Applicable Collateral Agent to exercise any and all remedies under each First Lien Collateral Document with respect to Shared Collateral and to execute releases in connection therewith.
(c) Notwithstanding the equal priority of the Liens securing each Series of First Lien Obligations granted on the Shared Collateral, the Applicable Collateral Agent (acting on the instructions of the Applicable Representative) may deal with the Shared Collateral as if such Applicable Collateral Agent had a senior and exclusive Lien on such Shared Collateral. No Non-Controlling Representative, Non-Controlling Claimholder or Collateral Agent that is not the Applicable Collateral Agent will contest, protest or object to any foreclosure proceeding or action brought by the Applicable Collateral Agent, the Applicable Representative or the Controlling Claimholders or any other exercise by the Applicable Collateral Agent, the Applicable Representative or the Controlling Claimholders of any rights and remedies relating to the Shared Collateral. The foregoing shall not be construed to limit the rights and priorities of any First Lien Claimholder, Collateral Agent or Representative with respect to any Collateral not constituting Shared Collateral.
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(d) The BDK Collateral Agent and the BDK Representative agree that they will not accept any Lien on any Collateral for the benefit of any BDK Credit Agreement Obligations (other than funds deposited for the satisfaction, discharge or defeasance of the BDK Credit Agreement) other than pursuant to the First Lien Collateral Documents, and by executing this Agreement (or a Joinder Agreement), each such Collateral Agent and each such Representative and the Series of First Lien Claimholders for which it is acting hereunder agree to be bound by the provisions of this Agreement and the other First Lien Collateral Documents applicable to it.
(e) Each of the First Lien Claimholders agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or on behalf of any of the First Lien Claimholders in all or any part of the Collateral or the provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair (i) the rights of any Collateral Agent or any Representative to enforce this Agreement or (ii) the rights of any First Lien Claimholder to contest or support any other Person in contesting the enforceability of any Lien purporting to secure obligations not constituting First Lien Obligations.
| Section 2.3 | No Interference; Payment Over; Exculpatory Provisions. |
(a) Each First Lien Claimholder agrees that (i) it will not challenge or question or support any other Person in challenging or questioning in any proceeding the validity or enforceability of any First Lien Obligations of any Series or any First Lien Collateral Document or the validity, attachment, perfection or priority of any Lien under any First Lien Collateral Document or the validity or enforceability of the priorities, rights or duties established by or other provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any First Lien Claimholder from challenging or questioning the validity or enforceability of any First Lien Obligations constituting unmatured interest or the validity of any Lien relating thereto pursuant to Section 502(b)(2) of the Bankruptcy Code, (ii) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral by the Applicable Collateral Agent, (iii) except as provided in Section 2.2, it shall have no right to and shall not otherwise (A) direct the Applicable Collateral Agent or any other First Lien Claimholder to exercise any right, remedy or power with respect to any Shared Collateral (including pursuant to any other intercreditor agreement) or (B) consent to, or object to, the exercise by, or any forbearance from exercising by, the Applicable Collateral Agent or any other First Lien Claimholder represented by it of any right, remedy or power with respect to any Collateral, (iv) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Applicable Collateral Agent or any other First Lien Claimholder represented by it seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Collateral and (v) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any of the Applicable Collateral Agent or any other First Lien Claimholder to (i) enforce this Agreement or (ii) contest or support any other Person in contesting the enforceability of any Lien purporting to secure obligations not constituting First Lien Obligations.
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(b) Each First Lien Claimholder hereby agrees that if it shall obtain possession of any Shared Collateral or shall realize any proceeds or payment in respect of any Shared Collateral, pursuant to any First Lien Collateral Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies (including pursuant to any intercreditor agreement), at any time prior to the Discharge of each of the First Lien Obligations, then it shall hold such Shared Collateral, proceeds or payment in trust for the other First Lien Claimholders having a security interest in such Shared Collateral and promptly transfer any such Shared Collateral, proceeds or payment, as the case may be, to the Applicable Collateral Agent, to be distributed by such Applicable Collateral Agent in accordance with the provisions of Section 2.1(a) hereof, provided, however, that the foregoing shall not apply to any Shared Collateral purchased by any First Lien Claimholder for cash pursuant to any exercise of remedies permitted hereunder.
(c) None of the Applicable Collateral Agent, any Applicable Representative or any other First Lien Claimholder shall be liable for any action taken or omitted to be taken by the Applicable Collateral Agent, such Applicable Representative or any other First Lien Claimholder with respect to any Collateral in accordance with the provisions of this Agreement.
| Section 2.4 | Automatic Release of Liens. |
(a) If, at any time any Shared Collateral is transferred to a third party or otherwise disposed of, in each case, in connection with any enforcement by the Applicable Collateral Agent in accordance with the provisions of this Agreement, then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the other Collateral Agents for the benefit of each Series of First Lien Claimholders (or in favor of such other First Lien Claimholders if directly secured by such Liens) upon such Shared Collateral will automatically be released and discharged upon final conclusion of such disposition as and when, but only to the extent, such Liens of the Applicable Collateral Agent on such Shared Collateral are released and discharged; provided that any proceeds of any Shared Collateral realized therefrom shall be applied pursuant to Section 2.1 hereof. If in connection with any such foreclosure or other exercise of remedies by the Applicable Collateral Agent, the Applicable Collateral Agent or related Applicable Representative of such Series of First Lien Obligations releases any guarantor from its obligation under a guarantee of the Series of First Lien Obligations for which it serves as agent prior to a Discharge of such Series of First Lien Obligations, such guarantor also shall be released from its guarantee of all other First Lien Obligations. If in connection with any such foreclosure or other exercise of remedies by the Applicable Collateral Agent, the equity interests of any Person are foreclosed upon or otherwise disposed of and the Applicable Collateral Agent releases its Lien on the property or assets of such Person, then the Liens of each other Collateral Agent (or in favor of such other First Lien Claimholders if directly secured by such Liens) with respect to any Collateral consisting of the property or assets of such Person will be automatically released to the same extent as the Liens of the Applicable Collateral Agent are released; provided that any proceeds of any such equity interests foreclosed upon where the Applicable Collateral Agent releases its Lien on the assets of such Person on which another Series of First Lien Obligations holds a Lien on any of the assets of such Person (any such assets, the “Underlying Assets”) which Lien is released as provided in this sentence (any such Proceeds being referred to herein as “Equity Release Proceeds” regardless of whether or not such other Series of First Lien Obligations holds a Lien on such equity interests so disposed of) shall be applied pursuant to Section 2.1 hereof.
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(b) Without limiting the rights of the Applicable Collateral Agent under Section 4.2, each Collateral Agent and each Representative agrees to execute and deliver (at the sole cost and expense of the Grantors) all such authorizations and other instruments as shall reasonably be requested by the Applicable Collateral Agent to evidence and confirm any release of Shared Collateral, Underlying Assets or guarantee provided for in this Section.
| Section 2.5 | Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings. |
(a) This Agreement shall continue in full force and effect notwithstanding the commencement of any proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law by or against any Grantor or any of its subsidiaries.
(b) If any Grantor shall become subject to a case (a “Bankruptcy Case”) under the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, each First Lien Claimholder (other than any Controlling Claimholder or any Representative of any Controlling Claimholder) agrees that it will not raise any objection to any such financing or to the Liens on the Shared Collateral securing the same (“DIP Financing Liens”) or to any use of cash collateral that constitutes Shared Collateral, unless a Representative of the Controlling Claimholders shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral (and (i) to the extent that such DIP Financing Liens are senior to the Liens on any such Shared Collateral for the benefit of the Controlling Claimholders, each Non-Controlling Claimholder will subordinate its Liens with respect to such Shared Collateral on the same terms as the Liens of the Controlling Claimholders (other than any Liens of any First Lien Claimholders constituting DIP Financing Liens) are subordinated thereto, and (ii) to the extent that such DIP Financing Liens rank pari passu with the Liens on any such Shared Collateral granted to secure the First Lien Obligations of the Controlling Claimholders, each Non-Controlling Claimholder will confirm the priorities with respect to such Shared Collateral as set forth herein), in each case so long as (A) the First Lien Claimholders of each Series retain the benefit of their Liens on all such Shared Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-à-vis all the other First Lien Claimholders (other than any Liens of the First Lien Claimholders constituting DIP Financing Liens) as existed prior to the commencement of the Bankruptcy Case, (B) the First Lien Claimholders of each Series are granted Liens on any additional collateral pledged to any First Lien Claimholders as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral, with the same priority vis-à-vis the First Lien Claimholders as set forth in this Agreement (other than any Liens of any First Lien Claimholders constituting DIP Financing Liens), (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the First Lien Obligations, such amount is applied pursuant to Section 2.1(a) of this Agreement, and (D) if any First Lien Claimholders are granted adequate protection with respect to the First Lien Obligations subject hereto, including in the form of periodic payments, in connection with such use of cash collateral, the proceeds of such adequate protection are applied pursuant to Section 2.1(a) of this Agreement; provided that the First Lien Claimholders of each Series shall have a right to object to the grant of a Lien to secure the DIP Financing over any Collateral subject to Liens in favor of the First Lien Claimholders of such Series or their Representative that shall not constitute Shared Collateral; provided, further, that the First Lien Claimholders receiving adequate protection shall not object to any other First Lien Claimholder receiving adequate protection comparable to any adequate protection granted to such First Lien Claimholders in connection with a DIP Financing or use of cash collateral.
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(c) If any First Lien Claimholder is granted adequate protection (A) in the form of Liens on any additional collateral, then each other First Lien Claimholder shall be entitled to seek, and each First Lien Claimholder will consent and not object to, adequate protection in the form of Liens on such additional collateral with the same priority vis-à-vis the First Lien Claimholders as set forth in this Agreement, (B) in the form of a superpriority or other administrative claim, then each other First Lien Claimholder shall be entitled to seek, and each First Lien Claimholder will consent and not object to, adequate protection in the form of a pari passu superpriority or administrative claim or (C) in the form of periodic or other cash payments, then the proceeds of such adequate protection must be applied to all First Lien Obligations pursuant to Section 2.1.
| Section 2.6 | Reinstatement. |
In the event that any of the First Lien Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under Title 11 of the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Agreement shall be fully applicable thereto until all such First Lien Obligations shall again have been paid in full in cash. This Section 2.6 shall survive termination of this Agreement.
| Section 2.7 | Insurance and Condemnation Awards. |
As among the First Lien Claimholders, the Applicable Collateral Agent (acting at the direction of the Applicable Representative), shall have the right, but not the obligation, to adjust or settle any insurance policy or claim covering or constituting Shared Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Shared Collateral. To the extent any Collateral Agent or any other First Lien Claimholder receives proceeds of such insurance policy and such proceeds are not permitted or required to be returned to any Grantor under the applicable First Lien Documents, such proceeds shall be turned over to the Applicable Collateral Agent for application as provided in Section 2.1 hereof.
| Section 2.8 | Refinancings. |
The First Lien Obligations of any Series may, subject to Section 5.14, be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction under any First Lien Document) of any First Lien Claimholder of any other Series, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Representative and Collateral Agent of the holders of any such Refinancing Indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing Indebtedness. If such Refinancing Indebtedness is intended to constitute a Replacement FRG Credit Agreement, the Company shall so state in its Designation.
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| Section 2.9 | Gratuitous Bailee/Agent for Perfection. |
(a) The Applicable Collateral Agent shall be entitled to hold any Possessory Collateral constituting Shared Collateral.
(b) Notwithstanding the foregoing, each Collateral Agent agrees to hold any Possessory Collateral constituting Shared Collateral and any other Shared Collateral from time to time in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of each other First Lien Claimholder (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee, solely for the purpose of perfecting the security interest granted in such Shared Collateral, if any, pursuant to the applicable First Lien Collateral Documents, in each case, subject to the terms and conditions of this Section 2.9. Solely with respect to any Deposit Accounts constituting Shared Collateral under the control (within the meaning of Section 9-104 of the UCC) of any Collateral Agent, each such Collateral Agent agrees to also hold control over such Deposit Accounts as gratuitous agent for each other First Lien Claimholder and any assignee solely for the purpose of perfecting the security interest in such Deposit Accounts, subject to the terms and conditions of this Section 2.9.
(c) No Collateral Agent shall have any obligation whatsoever to any First Lien Claimholder to ensure that the Possessory Collateral and Control Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.9. The duties or responsibilities of each Collateral Agent under this Section 2.9 shall be limited solely to holding any Possessory Collateral constituting Shared Collateral or any other Shared Collateral in its possession or control as gratuitous bailee (and with respect to Deposit Accounts, as gratuitous agent) in accordance with this Section 2.9 and delivering the Possessory Collateral constituting Shared Collateral as provided in Section 2.9(e) below.
(d) None of the Collateral Agents or any of the First Lien Claimholders shall have by reason of the First Lien Documents, this Agreement or any other document a fiduciary relationship in respect of the other Collateral Agents or any other First Lien Claimholder, and each Collateral Agent and each First Lien Claimholder hereby waives and releases the other Collateral Agents and First Lien Claimholders from all claims and liabilities arising pursuant to any Collateral Agent’s role under this Section 2.9 as gratuitous bailee with respect to the Possessory Collateral constituting Shared Collateral or any other Shared Collateral in its possession or control (and with respect to the Deposit Accounts, as gratuitous agent).
(e) At any time the Applicable Collateral Agent is no longer the Applicable Collateral Agent, such outgoing Applicable Collateral Agent shall deliver the remaining Possessory Collateral constituting Shared Collateral in its possession (if any) together with any necessary endorsements (which endorsement shall be without recourse and without any representation or warranty), first, to the then Applicable Collateral Agent to the extent First Lien Obligations remain outstanding and second, to the applicable Grantor to the extent no First Lien Obligations remain outstanding (in each case, so as to allow such Person to obtain possession or control of such Shared Collateral) or to whomever may be lawfully entitled to receive the same, including pursuant to any Intercreditor Agreement (as defined in the FRG Credit Agreement), if applicable. The outgoing Applicable Collateral Agent further agrees to take all other action reasonably requested by the then Applicable Collateral Agent at the expense of the Company in connection with the then Applicable Collateral Agent obtaining a first-priority security interest in the Shared Collateral.
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| Section 2.10 | Amendments to First Lien Collateral Documents. |
(a) Without the prior written consent of each other Collateral Agent, each Collateral Agent agrees that no First Lien Collateral Document may be amended, restated, amended and restated, supplemented, replaced or Refinanced or otherwise modified from time to time or entered into to the extent such amendment, supplement, Refinancing or modification, or the terms of any new First Lien Collateral Document, would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement.
(b) In determining whether an amendment to any First Lien Collateral Document is permitted by this Section 2.10, each Collateral Agent may conclusively rely on an officer’s certificate of the Company stating that such amendment is permitted by this Section 2.10.
| Section 2.11 | Similar Liens and Agreements. |
(a) Subject to Section 2.11(b) below, the parties hereto agree that it is their intention that the Collateral be identical for all First Lien Claimholders. In furtherance of, but subject to, the foregoing, the parties hereto agree, subject to the other provisions of this Agreement:
(i) upon request by any Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Shared Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the FRG Credit Agreement Documents and the BDK Credit Agreement Documents; and
(ii) that the documents and agreements creating or evidencing the Liens on Shared Collateral securing the FRG Credit Agreement Obligations and the BDK Credit Agreement Obligations shall, subject to the terms and conditions of Section 5.2, be in all material respects the same forms of documents as one another, except that the documents and agreements creating or evidencing the Liens securing the BDK Credit Agreement Obligations may contain additional provisions as may be necessary or appropriate to establish the intercreditor arrangements among the various separate classes of creditors holding BDK Credit Agreement Obligations.
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Article
III.
EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS
Whenever any Applicable Collateral Agent or any Applicable Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any First Lien Obligations of any Series, or the Shared Collateral subject to any Lien securing the First Lien Obligations of any Series, it may request that such information be furnished to it in writing by each other Representative or each other Collateral Agent and shall be entitled to make such determination or not make any determination on the basis of the information so furnished; provided, however, that if a Representative or a Collateral Agent shall fail or refuse reasonably promptly to provide the requested information, the requesting Applicable Collateral Agent or Applicable Representative shall be entitled to make any such determination or not make any determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Applicable Collateral Agent and each Applicable Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to any Grantor, any First Lien Claimholder or any other person as a result of such determination.
Article
IV.
THE APPLICABLE COLLATERAL AGENT
| Section 4.1 | Authority. |
(a) Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on any Applicable Collateral Agent to any Non-Controlling Claimholder or give any Non-Controlling Claimholder the right to direct any Applicable Collateral Agent, except that each Applicable Collateral Agent shall be obligated to distribute proceeds of any Shared Collateral in accordance with Section 2.1 hereof.
(b) In furtherance of the foregoing, each Non-Controlling Claimholder acknowledges and agrees that the Applicable Collateral Agent shall be entitled, for the benefit of the First Lien Claimholders, to sell, transfer or otherwise dispose of or deal with any Shared Collateral as provided herein and in the First Lien Collateral Documents, as applicable, without regard to any rights to which the Non-Controlling Claimholders would otherwise be entitled as a result of the First Lien Obligations held by such Non-Controlling Claimholders. Without limiting the foregoing, each Non-Controlling Claimholder agrees that none of the Applicable Collateral Agent, the Applicable Representative or any other First Lien Claimholder shall have any duty or obligation first to marshal or realize upon any type of Shared Collateral (or any other Collateral securing any of the First Lien Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Shared Collateral (or any other Collateral securing any First Lien Obligations), in any manner that would maximize the return to the Non-Controlling Claimholders, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Non-Controlling Claimholders from such realization, sale, disposition or liquidation. Each of the First Lien Claimholders waives any claim it may now or hereafter have against any Collateral Agent or Representative of any other Series of First Lien Obligations or any other First Lien Claimholder of any other Series arising out of (i) any actions which any such Collateral Agent, Representative or any First Lien Claimholder represented by it take or omit to take (including actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the First Lien Obligations from any account debtor, guarantor or any other party) in accordance with the First Lien Collateral Documents or any other agreement related thereto or in connection with the collection of the First Lien Obligations or the valuation, use, protection or release of any security for the First Lien Obligations; provided that nothing in this clause (i) shall be construed to prevent or impair the rights of any Collateral Agent or Representative to enforce this Agreement, (ii) any election by any Applicable Representative or any holders of First Lien Obligations, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (iii) subject to Section 2.5, any borrowing, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, by the Company or any of its Subsidiaries, as debtor-in-possession. Notwithstanding any other provision of this Agreement, the Applicable Collateral Agent shall not (i) accept any Shared Collateral in full or partial satisfaction of any First Lien Obligations pursuant to Section 9-620 of the Uniform Commercial Code of any jurisdiction, without the consent of each Representative representing holders of First Lien Obligations for whom such Collateral constitutes Shared Collateral or (ii) “credit bid” for or purchase (other than for cash) Shared Collateral at any public, private or judicial foreclosure upon such Shared Collateral, without the consent of each Representative representing holders of First Lien Obligations for whom such Collateral constitutes Shared Collateral.
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| Section 4.2 | Power-of-Attorney. |
Each Non-Controlling Representative and Collateral Agent that is not the Applicable Collateral Agent, for itself and on behalf of each other First Lien Claimholder of the Series for whom it is acting, hereby irrevocably appoints the Applicable Collateral Agent and any officer or agent of the Applicable Collateral Agent, which appointment is coupled with an interest with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Non-Controlling Representative, Collateral Agent or First Lien Claimholder, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Agreement, including the exercise of any and all remedies under each First Lien Collateral Document with respect to Shared Collateral and the execution of releases in connection therewith.
Article
V.
MISCELLANEOUS
| Section 5.1 | Integration/Conflicts. |
This Agreement, together with the other First Lien Documents and the First Lien Collateral Documents, represents the entire agreement of each of the Grantors and the First Lien Claimholders with respect to the subject matter hereof and thereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. There are no promises, undertakings, representations or warranties by any Representative, Collateral Agent or First Lien Claimholder relative to the subject matter hereof and thereof not expressly set forth or referred to herein or therein. In the event of any conflict between the provisions of this Agreement and the provisions of the First Lien Documents the provisions of this Agreement shall govern and control as to the parties hereto.
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| Section 5.2 | Effectiveness; Continuing Nature of this Agreement; Severability. |
This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement and the First Lien Claimholders of any Series may continue, at any time and without notice to any First Lien Claimholder of any other Series, to extend credit and other financial accommodations and lend monies to or for the benefit of the Company or any Grantor constituting First Lien Obligations in reliance hereon. Each Representative and each Collateral Agent, on behalf of itself and each other First Lien Claimholder represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions. All references to the Company or any other Grantor shall include the Company or such Grantor as debtor and debtor in possession and any receiver, trustee or similar person for the Company or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect with respect to any Representative or Collateral Agent and the First Lien Claimholders represented by such Representative or Collateral Agent and their First Lien Obligations, on the date on which there has been a Discharge of such Series of First Lien Obligations, subject to the rights of the First Lien Claimholders under Section 2.6; provided, however, that such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination.
| Section 5.3 | Amendments; Waivers. |
(a) No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, the Company and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights are directly and adversely affected.
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(b) Notwithstanding the foregoing, without the consent of any First Lien Claimholder, any Representative and Collateral Agent may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 5.14 of this Agreement and upon such execution and delivery, such Representative and Collateral Agent and the Replacement FRG Claimholders and Replacement FRG Credit Agreement Obligations of the Series for which such Representative and Collateral Agent is acting shall be subject to the terms hereof.
(c) Notwithstanding the foregoing, without the consent of any other Representative or First Lien Claimholder, the Applicable Collateral Agent may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any FRG Replacement Credit Agreement Obligations in compliance with the FRG Credit Agreement and the other First Lien Documents.
| Section 5.4 | Information Concerning Financial Condition of the Grantors and their Subsidiaries. |
The Representative and Collateral Agent and the other First Lien Claimholders of each Series shall each be responsible for keeping themselves informed of (a) the financial condition of the Grantors and their Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations. The Representative and Collateral Agent and the other First Lien Claimholders of each Series shall have no duty to advise the Representative, Collateral Agent or First Lien Claimholders of any other Series of information known to it or them regarding such condition or any such circumstances or otherwise. In the event the Representative or Collateral Agent or any of the other First Lien Claimholders, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Representative, Collateral Agent or First Lien Claimholders of any other Series, it or they shall be under no obligation:
(a) to make, and such Representative and Collateral Agent and such other First Lien Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;
(b) to provide any additional information or to provide any such information on any subsequent occasion;
(c) to undertake any investigation; or
(d) to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
| Section 5.5 | Submission to Jurisdiction; Certain Waivers. |
Each of the Company, each other Grantor, each Collateral Agent and each Representative, on behalf of itself and each other First Lien Claimholder represented by it, hereby irrevocably and unconditionally:
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(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the First Lien Collateral Documents (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive (subject to Section 5.5(c) below) general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;
(b) agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;
(c) 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 and that nothing in this Agreement or any other First Lien Document shall affect any right that any Collateral Agent, Representative or other First Lien Claimholder may otherwise have to bring any action or proceeding relating to this Agreement or any other First Lien Document against such Grantor or any of its assets in the courts of any jurisdiction;
(d) 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 First Lien Collateral Document in any court referred to in Section 5.5(a) (and 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);
(e) consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 5.7 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);
(f) agrees that service as provided in Section 5.5(e) above is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and
(g) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.
| Section 5.6 | WAIVER OF JURY TRIAL. |
EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS 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 FIRST LIEN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS (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 EACH SUCH PARTY HERETO, THE COMPANY AND EACH OTHER GRANTOR HAS BEEN INDUCED TO ENTER INTO OR ACKNOWLEDGE THIS AGREEMENT AND THE OTHER FIRST LIEN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
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| Section 5.7 | Notices. |
Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by facsimile, electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or in the Joinder Agreement pursuant to which it becomes a party hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
| Section 5.8 | Further Assurances. |
Each Representative and Collateral Agent, on behalf of itself and each other First Lien Claimholder represented by it, and the Company and each other Grantor, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any Representative and Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.
| Section 5.9 | Agency Capacities. |
Except as expressly provided herein, (a) JPMorgan Chase Bank, N.A. is acting in the capacity of Initial FRG Representative and Initial FRG Collateral Agent solely for the Initial FRG Claimholders, (b) the BDK Representative and the BDK Collateral Agent are acting in the capacities of Representative and Collateral Agent, respectively, solely for the BDK Claimholders, and (c) each Replacement FRG Representative and Replacement FRG Collateral Agent is acting in the capacity of Representative and Collateral Agent, respectively, solely for the Replacement FRG Claimholders.
| Section 5.10 | GOVERNING LAW. |
THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).
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| Section 5.11 | Binding on Successors and Assigns. |
This Agreement shall be binding upon each Representative and each Collateral Agent, the First Lien Claimholders, the Company and the other Grantors, and their respective successors and assigns from time to time. If any of the Representatives and/or Collateral Agents resigns or is replaced pursuant to the applicable First Lien Documents, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement. No provision of this Agreement will inure to the benefit of a trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of any Grantor, including where any such trustee, debtor-in-possession, creditor trust or other representative of an estate is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency or Liquidation Proceeding.
| Section 5.12 | Section Headings. |
Section headings and the Table of Contents used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
| Section 5.13 | Counterparts. |
This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic imaging means), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission (e.g., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
| Section 5.14 | Replacement FRG Credit Agreement Obligations. |
(a) To the extent not prohibited by the provisions of the BDK Credit Agreement, the Company may incur additional Indebtedness as Replacement FRG Credit Agreement Obligations after the date hereof that is secured on an equal and ratable basis with the Liens securing the BDK Credit Agreement Obligations. Any such Replacement FRG Credit Agreement Obligations may be secured by a Lien on a ratable basis, in each case under and pursuant to the applicable Replacement FRG Collateral Documents, if, and subject to the condition that, the Replacement FRG Collateral Agent and the Replacement FRG Representative of any such Replacement FRG Credit Agreement Obligations, acting on behalf of the holders of such Replacement FRG Credit Agreement Obligations, each becomes a party to this Agreement by satisfying the conditions set forth in Section 5.14(b).
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(b) In order for a Replacement FRG Representative and a Replacement FRG Collateral Agent to become a party to this Agreement,
(i) such Replacement FRG Representative and such Replacement FRG Collateral Agent shall have executed and delivered an instrument substantially in the form of Exhibit A (with such changes as may be reasonably approved by the BDK Collateral Agent and such Replacement FRG Representative and Replacement FRG Collateral Agent) pursuant to which such Replacement FRG Representative becomes a Representative hereunder and such Replacement FRG Collateral Agent becomes a Collateral Agent hereunder, and such Replacement FRG Credit Agreement Obligations and the Replacement FRG Claimholders of such Series become subject hereto and bound hereby;
(ii) the Company shall have delivered to each Collateral Agent:
(a) true and complete copies of each of the Replacement FRG Credit Agreement and the Replacement FRG Collateral Documents for such Series, certified as being true and correct by a Responsible Officer of the Company;
(b) a Designation substantially in the form of Exhibit B pursuant to which the Company shall (A) identify the Indebtedness to be designated as Replacement FRG Credit Agreement Obligations and the initial aggregate principal amount or committed amount thereof, (B) specify the name and address of the Replacement FRG Collateral Agent and the Replacement FRG Representative, (C) certify that such Replacement FRG Credit Agreement Obligations are permitted by the BDK Credit Agreement Documents and that the conditions set forth in this Section 5.14 are satisfied with respect to such Replacement FRG Credit Agreement Obligations, and (D) expressly state that such agreement giving rise to the new Indebtedness satisfies the requirements of a Replacement FRG Credit Agreement and the Company elects to designate such agreement as a Replacement FRG Credit Agreement; and
(iii) the Replacement FRG Credit Agreement Documents shall provide, in a manner reasonably satisfactory to the BDK Collateral Agent, that each Replacement FRG Claimholder with respect to such Series of Replacement FRG Credit Agreement Obligations will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Replacement FRG Credit Agreement Obligations.
(c) Upon the execution and delivery of a Joinder Agreement by a Replacement FRG Representative and a Replacement FRG Collateral Agent, in each case, in accordance with this Section 5.14, the BDK Representative and the BDK Collateral Agent shall acknowledge such receipt thereof by countersigning a copy thereof, subject to the terms of this Section 5.14 and returning the same to such Replacement FRG Representative and Replacement FRG Collateral Agent; provided that the failure of the BDK Representative or the BDK Collateral Agent to so acknowledge or return shall not affect the status of such debt as Replacement FRG Credit Agreement Obligations if the other requirements of this Section 5.14 are complied with.
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| Section 5.15 | Authorization. |
By its signature, each Person executing this Agreement, on behalf of such party or Grantor but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.
| Section 5.16 | No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights. |
The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Claimholders in relation to one another. None of the Company, any other Grantor nor any other creditor thereof shall have any rights or obligations hereunder and no such Person is an intended beneficiary or third party beneficiary hereof, except, in each case, as expressly provided in this Agreement, and none of the Company or any other Grantor may rely on the terms hereof (other than Sections 2.4 and 2.8 and Article V). Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the First Lien Obligations as and when the same shall become due and payable in accordance with their terms. Without limitation of any other provisions of this Agreement, each of the Company and each Grantor hereby (a) acknowledges that it has read this Agreement and consents hereto, (b) agrees that it will not take any action that would be contrary to the express provisions of this Agreement and (c) agrees to abide by the requirements expressly applicable to it under this Agreement.
| Section 5.17 | [Reserved]. |
| Section 5.18 | Additional Grantors. |
Each Grantor agrees that it shall ensure that each of its Subsidiaries (other than Badcock) that is or is to become a party to any First Lien Document and which grants or purports to grant a lien on any of its assets shall either execute this Agreement on the date hereof or shall confirm that it is a Grantor hereunder pursuant to a joinder agreement substantially in the form attached hereto as Exhibit C that is executed and delivered by such Subsidiary prior to or concurrently with its execution and delivery of such First Lien Document.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
JPMORGAN CHASE BANK, N.A., | ||
| as Initial FRG Representative and Initial FRG Collateral Agent | ||
| By: /s/ James A. Knight | ||
| Name: James A. Knight | ||
| Title: Executive Director | ||
| JPMorgan Chase Bank, N.A. | ||
| 383 Madison Ave, Floor 23 | ||
| New York, NY 10179 | ||
| Attn: James Knight | ||
| Facsimile: (917) 464-7000 | ||
| Email: james.a.knight@jpmorgan.com | ||
[SIGNATURE PAGE TO FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
JPMORGAN CHASE BANK, N.A., | ||
| as BDK Collateral Agent and BDK Representative | ||
| By: /s/ James A. Knight | ||
| Name: James A. Knight | ||
| Title: Executive Director | ||
| JPMorgan Chase Bank, N.A. | ||
| 383 Madison Ave, Floor 23 | ||
| New York, NY 10179 | ||
| Attn: James Knight | ||
| Facsimile: (917) 464-7000 | ||
| Email: james.a.knight@jpmorgan.com | ||
[SIGNATURE PAGE TO FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
Acknowledged to by:
GRANTORS:
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.,
VALOR ACQUISITION, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
[SIGNATURE PAGE TO FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE FLORIDA, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | President |
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | Chief Executive Officer and President |
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
[SIGNATURE PAGE TO FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
109 Innovation Court, Suite J,
Delaware, OH 43015
Attention: Tiffany McMillan-McWaters
Email: tmcwaters@franchisegrp.com
[SIGNATURE PAGE TO FIRST LIEN PARI PASSU INTERCREDITOR AGREEMENT]
Exhibit 10.6
SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT
dated as of
November 22, 2021
among
ALTER DOMUS (US) LLC,
as the Initial FRG Representative and the Initial FRG Collateral Agent,
ALTER DOMUS (US) LLC,
as the BDK Representative and the BDK Collateral Agent,
and
each additional Representative and Collateral Agent from time to time party hereto
and acknowledged by
FRANCHISE GROUP, INC.,
as the Company and the other Grantors referred to herein
TABLE OF CONTENTS
Page
| Article I. DEFINITIONS | Article I. DEFINITIONS | 2 |
| Section 1.1 | Certain Defined Terms | 2 |
| Section 1.2 | Rules of Interpretation | 10 |
| Article II. PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL | 10 | |
| Section 2.1 | Priority of Claims | 10 |
| Section 2.2 | Actions with Respect to Shared Collateral; Prohibition on Contesting Liens | 13 |
| Section 2.3 | No Interference; Payment Over; Exculpatory Provisions | 14 |
| Section 2.4 | Automatic Release of Liens | 15 |
| Section 2.5 | Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings | 16 |
| Section 2.6 | Reinstatement | 17 |
| Section 2.7 | Insurance and Condemnation Awards | 17 |
| Section 2.8 | Refinancings | 17 |
| Section 2.9 | Gratuitous Bailee/Agent for Perfection | 18 |
| Section 2.10 | Amendments to Second Lien Collateral Documents | 19 |
| Section 2.11 | Similar Liens and Agreements | 19 |
| Article III. EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS | 20 | |
| Article IV. THE APPLICABLE COLLATERAL AGENT | 20 | |
| Section 4.1 | Authority | 20 |
| Section 4.2 | Power-of-Attorney | 21 |
| Article V. MISCELLANEOUS | 21 | |
| Section 5.1 | Integration/Conflicts | 21 |
| Section 5.2 | Effectiveness; Continuing Nature of this Agreement; Severability | 22 |
| Section 5.3 | Amendments; Waivers | 22 |
| Section 5.4 | Information Concerning Financial Condition of the Grantors and their Subsidiaries | 23 |
| Section 5.5 | Submission to Jurisdiction; Certain Waivers | 23 |
| Section 5.6 | WAIVER OF JURY TRIAL | 24 |
| Section 5.7 | Notices | 25 |
| Section 5.8 | Further Assurances | 25 |
| Section 5.9 | Agency Capacities | 25 |
| Section 5.10 | GOVERNING LAW. | 26 |
| Section 5.11 | Binding on Successors and Assigns | 26 |
| i |
| Section 5.12 | Section Headings | 26 |
| Section 5.13 | Counterparts | 26 |
| Section 5.14 | Replacement FRG Credit Agreement Obligations | 26 |
| Section 5.15 | Authorization | 28 |
| Section 5.16 | No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights | 28 |
| Section 5.17 | [Reserved] | 28 |
| Section 5.18 | Additional Grantors | 28 |
EXHIBITS
| Exhibit A | - | Form of Joinder Agreement (Replacement FRG Credit Agreement) |
| Exhibit B | - | Form of Replacement FRG Credit Agreement Designation |
| Exhibit C | - | Form of Joinder Agreement (Additional Grantors) |
| ii |
This SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is dated as of November 22, 2021, among ALTER DOMUS (US) LLC, as administrative agent for the Initial FRG Claimholders (in such capacity and together with its successors from time to time in such capacity, the “Initial FRG Representative”), and as collateral agent for the Initial FRG Claimholders (in such capacity and together with its successors from time to time in such capacity, the “Initial FRG Collateral Agent”), ALTER DOMUS (US) LLC, as Representative for the BDK Claimholders (in such capacity and together with its successors from time to time in such capacity, the “BDK Representative”), and as collateral agent for the BDK Claimholders (in such capacity and together with its successors from time to time in such capacity, the “BDK Collateral Agent”), and each additional Representative and Collateral Agent from time to time party hereto for the Replacement FRG Claimholders of the Series with respect to which it is acting in such capacity, and acknowledged by FRANCHISE GROUP, INC. (the “Company”) and the other Grantors. Capitalized terms used in this Agreement have the meanings assigned to them in Article 1 below.
WHEREAS, reference is made to (i) that certain Second Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, including by the First Amendment to Second Lien Credit Agreement, dated as of the date hereof, in a manner that is not in violation of this Agreement or any other Second Lien Document, the “Initial FRG Credit Agreement”), among the Company, Franchise Group Newco PSP, LLC, a Delaware limited liability company (“NewCo PSP”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”) and Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company (“NewCo AF” and, together with the Company, NewCo PSP and Valor, the “Borrowers”), the lenders party thereto, the Initial FRG Representative and the Initial FRG Collateral Agent and (ii) that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time in a manner that is not in violation of this Agreement or any other Second Lien Document, the “BDK Credit Agreement”), among the Borrowers, the lenders party thereto, the BDK Representative and the BDK Collateral Agent;
WHEREAS, in connection with (i) the Initial FRG Credit Agreement, certain Subsidiaries of the Company have entered into the Guarantee Agreement (as defined in the Initial FRG Credit Agreement) pursuant to which such Subsidiaries (such current Subsidiaries and any future Subsidiaries of the Company that enter into such Guarantee Agreement, the “Guarantor Subsidiaries”) have agreed to guaranty the Initial FRG Obligations (the “FRG Guaranty”) and (ii) the BDK Credit Agreement, the Guarantor Subsidiaries have agreed to guaranty the BDK Credit Agreement Obligations (the “BDK Guaranty”);
WHEREAS, (i) the obligations of the Borrowers under the Initial FRG Credit Agreement, including the Initial FRG Swap Obligations and the Initial FRG Cash Management Obligations, and the obligations of the Guarantor Subsidiaries under the FRG Guaranty will be secured on a second-priority basis by liens on substantially all the assets of the Borrowers and the Guarantor Subsidiaries, respectively, pursuant to the terms of the Initial FRG Collateral Documents and (ii) the obligations of the Borrowers under the BDK Credit Agreement and the obligations of the Guarantor Subsidiaries under the BDK Guaranty will be secured on a second-priority basis by liens on substantially all the assets of the Borrowers and the Guarantor Subsidiaries, respectively, pursuant to the terms of the BDK Collateral Documents;
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WHEREAS, each of the Initial FRG Credit Agreement Documents and the BDK Credit Agreement Documents provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the Initial FRG Representative (for itself and on behalf of each other Initial FRG Claimholder), the Initial FRG Collateral Agent (for itself and on behalf of each other Initial FRG Claimholder), the BDK Representative (for itself and on behalf of each other BDK Claimholder) and the BDK Collateral Agent (for itself and on behalf of each other BDK Claimholder), intending to be legally bound, hereby agrees as follows:
Article
I.
DEFINITIONS
| Section 1.1 | Certain Defined Terms. |
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Initial FRG Credit Agreement (whether or not then in effect), and the following terms which are defined in the UCC are used herein as so defined (and if defined in more than one article of the UCC shall have the meaning specified in Article 9 thereof): Certificated Security, Commodity Account, Commodity Contract, Deposit Account, Electronic Chattel Paper, Promissory Note, Instrument, Letter of Credit Right, Securities Entitlement, Securities Account and Tangible Chattel Paper. As used in this Agreement, the following terms have the meanings specified below:
“Agreement” has the meaning set forth in the introductory paragraph hereto.
“Applicable Collateral Agent” means (i) until the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the FRG Credit Agreement Collateral Agent and (ii) from and after the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the BDK Collateral Agent.
“Applicable Representative” means (i) until the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the FRG Credit Agreement Representative and (ii) from and after the earlier of (y) the Discharge of FRG Credit Agreement and (z) the Non-Controlling Representative Enforcement Date, the BDK Representative.
“Bankruptcy Case” has the meaning set forth in Section 2.5(b).
“Bankruptcy Code” means Title 11 of the United States Code, as amended.
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“Bankruptcy Law” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.
“BDK Claimholders” means the holders of any BDK Credit Agreement Obligations, the BDK Representative and the BDK Collateral Agent.
“BDK Collateral Agent” has the meaning set forth in the introductory paragraph to this Agreement.
“BDK Collateral Documents” means the Security Documents (as defined in the BDK Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any BDK Credit Agreement Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time); provided that, solely for the purposes of this Agreement, “BDK Collateral Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“BDK Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“BDK Credit Agreement Documents” means the BDK Credit Agreement, each BDK Collateral Document and each of the other agreements, documents and instruments providing for or evidencing any other BDK Credit Agreement Obligations, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time; provided that, solely for the purposes of this Agreement, “BDK Credit Agreement Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“BDK Credit Agreement Obligations” means all amounts owing to any BDK Claimholder pursuant to the terms of any BDK Credit Agreement Document, including all amounts in respect of any principal, interest (including any Post-Petition Interest), premium (if any), penalties, fees, expenses (including fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding. BDK Credit Agreement Obligations shall include any Registered Equivalent Notes and guarantees thereof by the Grantors issued in exchange therefor. For avoidance of doubt, neither the Initial FRG Obligations nor any Replacement FRG Credit Agreement Obligations shall constitute BDK Credit Agreement Obligations.
“BDK Representative” has the meaning set forth in the introductory paragraph to this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.
“Collateral” means all assets and properties subject to, or purported to be subject to, Liens created pursuant to any Second Lien Collateral Document to secure one or more Series of Second Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Second Lien Claimholder; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “Collateral” shall not include any Badcock Collateral (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
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“Collateral Agent” means (i) in the case of any FRG Credit Agreement Obligations, the FRG Credit Agreement Collateral Agent (which in the case of the Initial FRG Obligations shall be the Initial FRG Collateral Agent and in the case of any Replacement FRG Credit Agreement shall be the Replacement FRG Collateral Agent) and (ii) in the case of the BDK Credit Agreement Obligations, the BDK Collateral Agent.
“Company” has the meaning set forth in the introductory paragraph to this Agreement.
“Control Collateral” means any Shared Collateral in the “control” (within the meaning of Section 9-104, 9-105, 9-106, 9-107 or 8-106 of the Uniform Commercial Code of any applicable jurisdiction) of any Collateral Agent (or its agents or bailees), to the extent that control thereof perfects a Lien thereon under the Uniform Commercial Code of any applicable jurisdiction. Control Collateral includes any Deposit Accounts, Securities Accounts, Securities Entitlements, Commodity Accounts, Commodity Contracts, Letter of Credit Rights or Electronic Chattel Paper over which any Collateral Agent has “control” under the applicable Uniform Commercial Code.
“Controlling Claimholders” means (i) at any time when the FRG Credit Agreement Collateral Agent is the Applicable Collateral Agent, the FRG Credit Agreement Claimholders and (ii) at any other time, the Series of Second Lien Claimholders whose Collateral Agent is the Applicable Collateral Agent.
“Designation” means a designation of a Replacement FRG Credit Agreement, in each case, in substantially the form of Exhibit B attached hereto.
“DIP Financing” has the meaning set forth in Section 2.5(b).
“DIP Financing Liens” has the meaning set forth in Section 2.5(b).
“DIP Lenders” has the meaning set forth in Section 2.5(b).
“Discharge” means, with respect to any Series of Second Lien Obligations, that such Series of Second Lien Obligations is no longer secured by, and no longer required to be secured by, any Shared Collateral pursuant to the terms of the applicable Second Lien Documents for such Series of Second Lien Obligations. The term “Discharged” shall have a corresponding meaning.
“Discharge of FRG Credit Agreement” means, except to the extent otherwise provided in Section 2.6, the Discharge of the FRG Credit Agreement Obligations; provided that the Discharge of FRG Credit Agreement shall be deemed not to have occurred if a Replacement FRG Credit Agreement is entered into until, subject to Section 2.6, the Replacement FRG Credit Agreement Obligations shall have been Discharged.
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“Equity Release Proceeds” has the meaning set forth in Section 2.4(a).
“Event of Default” means an “Event of Default” (or similarly defined term) as defined in any Second Lien Document.
“FRG Credit Agreement” means (i) the Initial FRG Credit Agreement and (ii) each Replacement FRG Credit Agreement.
“FRG Credit Agreement Claimholders” means (i) the Initial FRG Claimholders and (ii) the Replacement FRG Claimholders.
“FRG Credit Agreement Collateral Agent” means (i) the Initial FRG Collateral Agent and (ii) the Replacement FRG Collateral Agent under any Replacement FRG Credit Agreement.
“FRG Credit Agreement Collateral Documents” means (i) the Initial FRG Collateral Documents and (ii) the Replacement FRG Credit Agreement Collateral Documents.
“FRG Credit Agreement Documents” means (i) the Initial FRG Credit Agreement Documents and (ii) the Replacement FRG Credit Agreement Documents.
“FRG Credit Agreement Obligations” means (i) the Initial FRG Obligations and (ii) the Replacement FRG Credit Agreement Obligations.
“FRG Credit Agreement Representative” means (i) the Initial FRG Representative and (ii) the Replacement FRG Representative under any Replacement FRG Credit Agreement.
“Grantors” means the Company, each of the other Borrowers and each Subsidiary of the Company which has granted a security interest pursuant to any Second Lien Collateral Document to secure any Series of Second Lien Obligations; provided that, solely for the purposes of this Agreement, “Grantors” shall not include Badcock (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Impairment” has the meaning set forth in Section 2.1(b)(ii).
“Indebtedness” means indebtedness in respect of borrowed money.
“Initial FRG Cash Management Obligations” means Cash Management Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Claimholders” means the holders of any Initial FRG Obligations, including the “Secured Parties” as defined in the Initial FRG Credit Agreement or in the Initial FRG Collateral Documents, and the Initial FRG Representative and Initial FRG Collateral Agent.
“Initial FRG Collateral Agent” has the meaning set forth in the introductory paragraph to this Agreement.
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“Initial FRG Collateral Documents” means the Security Documents (as defined in the Initial FRG Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any Initial FRG Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time); provided that, solely for the purposes of this Agreement, “Initial FRG Collateral Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Initial FRG Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“Initial FRG Credit Agreement Documents” means the Initial FRG Credit Agreement, each Initial FRG Collateral Document and the other Loan Documents (as defined in the Initial FRG Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other Initial FRG Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time; provided that, solely for the purposes of this Agreement, “Initial FRG Credit Agreement Documents” shall not include the Badcock Security Documents or the Badcock Master Intercompany Note (each as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement).
“Initial FRG Obligations” means the Secured Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Swap Obligations” means Secured Swap Obligations as defined in the Initial FRG Credit Agreement.
“Initial FRG Representative” has the meaning set forth in the introductory paragraph to this Agreement.
“Insolvency or Liquidation Proceeding” means:
(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor;
(b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of its assets;
(c) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(d) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Grantor.
“Intervening Creditor” has the meaning set forth in Section 2.1(b)(i).
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“Joinder Agreement” means a document in the form of Exhibit A to this Agreement required to be delivered by a Replacement FRG Representative to the BDK Collateral Agent and the BDK Representative pursuant to Section 5.14 of this Agreement in order to create an additional Series of Replacement FRG Credit Agreement Obligations and bind Replacement FRG Claimholders hereunder.
“Lien” means any lien (including judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust (whether contractual, statutory, deemed, equitable, constructive, resulting or otherwise), UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing, including any right of set-off or recoupment.
“Non-Controlling Claimholders” means the Second Lien Claimholders which are not Controlling Claimholders.
“Non-Controlling Representative” means, at any time, each Representative that is not the Applicable Representative at such time.
“Non-Controlling Representative Enforcement Date” means, with respect to any Non-Controlling Representative, the date which is 180 days after the occurrence of both (i) an Event of Default (under and as defined in the Second Lien Documents under which such Non-Controlling Representative is the Representative) and (ii) each Collateral Agent’s and each other Representative’s receipt of written notice from such Non-Controlling Representative certifying that the Second Lien Obligations of the Series with respect to which such Non-Controlling Representative is the Representative are currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the terms of the applicable Second Lien Document; provided that the Non-Controlling Representative Enforcement Date shall be stayed and shall not occur and shall be deemed not to have occurred (1) at any time the Applicable Collateral Agent acting on the instructions of the Applicable Representative has commenced and is diligently pursuing any enforcement action with respect to Shared Collateral, (2) at any time the Grantor that has granted a security interest in Shared Collateral is then a debtor under or with respect to (or otherwise subject to) any Insolvency or Liquidation Proceeding or (3) if such Non-Controlling Representative subsequently rescinds or withdraws the written notice provided for in clause (ii).
“Possessory Collateral” means any Shared Collateral in the possession of any Collateral Agent (or its agents or bailees), to the extent that possession thereof perfects a Lien thereon under the Uniform Commercial Code of any jurisdiction or otherwise. Possessory Collateral includes any Certificated Securities, Promissory Notes, Instruments, and Tangible Chattel Paper, in each case, delivered to or in the possession of any Collateral Agent under the terms of the Second Lien Collateral Documents.
“Post-Petition Interest” means interest, fees, expenses and other charges that pursuant to the FRG Credit Agreement Documents or the BDK Credit Agreement Documents, as applicable, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.
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“Proceeds” has the meaning set forth in Section 2.1(a).
“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other Indebtedness in exchange or replacement for, such Indebtedness in whole or in part and regardless of whether the principal amount of such Refinancing Indebtedness is the same, greater than or less than the principal amount of the Refinanced Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees and substantially the same collateral) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Replacement FRG Claimholders” means the holders of any Replacement FRG Credit Agreement Obligations, including the “Secured Parties” as defined in the Replacement FRG Credit Agreement or in the Replacement FRG Credit Agreement Collateral Documents, and the Replacement FRG Representative and Replacement FRG Collateral Agent.
“Replacement FRG Collateral Agent” means, in respect of any Replacement FRG Credit Agreement, the collateral agent or person serving in similar capacity under the Replacement FRG Credit Agreement.
“Replacement FRG Collateral Documents” means the Security Documents or Collateral Documents or similar term (as defined in the Replacement FRG Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any Replacement FRG Credit Agreement Obligations or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time).
“Replacement FRG Credit Agreement” means any loan agreement, indenture or other agreement that (i) Refinances the FRG Credit Agreement in accordance with Section 2.8 hereof so long as, after giving effect to such Refinancing, the agreement that was the FRG Credit Agreement immediately prior to such Refinancing is no longer secured, and no longer required to be secured, by any of the Collateral and (ii) becomes the FRG Credit Agreement hereunder by designation as such pursuant to Section 5.14.
“Replacement FRG Credit Agreement Documents” means the Replacement FRG Credit Agreement, each Replacement FRG Credit Agreement Collateral Document and the other Loan Documents or similar term (as defined in the Replacement FRG Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other Replacement FRG Credit Agreement Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
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“Replacement FRG Credit Agreement Obligations” means the Secured Obligations or similar term (as defined in the Replacement FRG Credit Agreement).
“Replacement FRG Representative” means, in respect of any Replacement FRG Credit Agreement, the administrative agent, trustee or person serving in similar capacity under the Replacement FRG Credit Agreement.
“Representative” means, at any time, (i) in the case of any Initial FRG Obligations or the Initial FRG Claimholders, the Initial FRG Representative, (ii) in the case of any Replacement FRG Credit Agreement Obligations or the Replacement FRG Claimholders, the Replacement FRG Representative and (iii) in the case of the BDK Credit Agreement Obligations or the BDK Claimholders, the BDK Representative.
“Second Lien Claimholders” means (i) the FRG Credit Agreement Claimholders and (ii) the BDK Claimholders.
“Second Lien Collateral Documents” means, collectively, (i) the FRG Credit Agreement Collateral Documents and (ii) the BDK Collateral Documents.
“Second Lien Documents” means (i) the FRG Credit Agreement Documents and (ii) the BDK Credit Agreement Documents.
“Second Lien Obligations” means, collectively, (i) the FRG Credit Agreement Obligations and (ii) the BDK Credit Agreement Obligations.
“Series” means (a) with respect to the Second Lien Claimholders, each of (i) the Initial FRG Claimholders (in their capacities as such), (ii) the BDK Claimholders (in their capacities as such) and (iii) the Replacement FRG Claimholders (in their capacities as such), and (b) with respect to any Second Lien Obligations, each of (i) the Initial FRG Obligations, (ii) the BDK Credit Agreement Obligations and (iii) the Replacement FRG Credit Agreement Obligations.
“Shared Collateral” means, at any time, Collateral, which for the avoidance of doubt and solely for the purposes of this Agreement, will not include the Badcock Collateral (as defined in each of the Initial FRG Credit Agreement and the BDK Credit Agreement) which the holders of two or more Series of Second Lien Obligations (or their respective Representatives or Collateral Agents on behalf of such holders) hold, or purport to hold, or are required to hold pursuant to the Second Lien Documents in respect of such Series, a valid security interest or Lien at such time. If more than two Series of Second Lien Obligations are outstanding at any time and the holders of less than all Series of Second Lien Obligations hold, or purport to hold, or are required to hold pursuant to the Second Lien Documents in respect of such Series, a valid security interest or Lien in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of Second Lien Obligations that hold, or purport to hold, or are required to hold pursuant to the Second Lien Documents in respect of such Series, a valid security interest or Lien in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not hold, or purport to hold, or is required to hold pursuant to the Second Lien Documents in respect of such Series, a valid security interest or Lien in such Collateral at such time.
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“Subsidiary” means, with respect to any Person, any other Person of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of such other Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.
“Underlying Assets” has the meaning set forth in Section 2.4(a).
| Section 1.2 | Rules of Interpretation. |
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 herein shall be construed as referring to such agreement, instrument or other document as amended, restated, amended and restated, supplemented or otherwise modified from time to time and any reference herein to any statute or regulations shall include any amendment, renewal, extension or replacement thereof, (ii) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns from time to time, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections and Annexes shall be construed to refer to Articles, Sections and Annexes of this Agreement, (v) unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vi) the term “or” is not exclusive.
Article
II.
PRIORITIES AND AGREEMENTS WITH RESPECT TO SHARED COLLATERAL
| Section 2.1 | Priority of Claims. |
(a) Subject to the terms of any other intercreditor agreement to which the Representatives and the Collateral Agents are party, anything contained herein or in any of the Second Lien Documents to the contrary notwithstanding (but subject to Sections 2.1(b) and 2.11(b)), if an Event of Default has occurred and is continuing, and the Applicable Collateral Agent is taking action to enforce rights in respect of any Collateral, or any distribution is made in respect of any Shared Collateral in any Bankruptcy Case of any Grantor or any Second Lien Claimholder receives any payment pursuant to any intercreditor agreement (other than this Agreement) or otherwise with respect to any Shared Collateral, the proceeds of any sale, collection or other liquidation of any Shared Collateral or Equity Release Proceeds received by any Second Lien Claimholder or received by the Applicable Collateral Agent or any Second Lien Claimholder pursuant to any such intercreditor agreement or otherwise with respect to such Collateral and proceeds of any such distribution (subject, in the case of any such distribution, to the sentence immediately following clause THIRD below) to which the Second Lien Obligations are entitled under any intercreditor agreement (other than this Agreement) or otherwise (all proceeds of any sale, collection or other liquidation of any Collateral comprising either Shared Collateral or Equity Release Proceeds and all proceeds of any such distribution and any proceeds of any insurance covering the Shared Collateral received by the Applicable Collateral Agent and not returned to any Grantor under any Second Lien Document being collectively referred to as “Proceeds”), shall be applied by the Applicable Collateral Agent in the following order:
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(i) FIRST, to the payment of all amounts owing to each Collateral Agent (in its capacity as such) and each Representative (in its capacity as such) secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, including all reasonable costs and expenses incurred by each Collateral Agent (in its capacity as such) and each Representative (in its capacity as such) in connection with such collection or sale or otherwise in connection with this Agreement, any other Second Lien Document or any of the Second Lien Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Second Lien Document and all fees and indemnities owing to such Collateral Agents and Representatives, ratably to each such Collateral Agent and Representative in accordance with the amounts payable to it pursuant to this clause FIRST;
(ii) SECOND, subject to Sections 2.1(b) and 2.11(b), to the extent Proceeds remain after the application pursuant to preceding clause (i), to each Representative for the payment in full of the Second Lien Obligations of each Series secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, and, if the amount of such Proceeds are insufficient to pay in full the Second Lien Obligations of each Series so secured then such Proceeds shall be allocated among the Representatives of each Series secured by such Shared Collateral or, in the case of Equity Release Proceeds, secured by the Underlying Assets, pro rata according to the amounts of such Second Lien Obligations owing to each such respective Representative and the other Second Lien Claimholders represented by it for distribution by such Representative in accordance with its respective Second Lien Documents; and
(iii) THIRD, any balance of such Proceeds remaining after the application pursuant to preceding clauses (i) and (ii), to the Grantors, their successors or assigns from time to time, or to whomever may be lawfully entitled to receive the same, including pursuant to any Junior Lien Intercreditor Agreement or similar term (as defined in the FRG Credit Agreement), if applicable.
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If, despite the provisions of this Section 2.1(a), any Second Lien Claimholder shall receive any payment or other recovery in excess of its portion of payments on account of the Second Lien Obligations to which it is then entitled in accordance with this Section 2.1(a), such Second Lien Claimholder shall hold such payment or recovery in trust for the benefit of all Second Lien Claimholders for distribution in accordance with this Section 2.1(a).
(b) (i) Notwithstanding the foregoing, with respect to any Shared Collateral or Equity Release Proceeds for which a third party (other than a Second Lien Claimholder) has a Lien that is junior in priority to the Lien of any Series of Second Lien Obligations but senior (as determined by appropriate legal proceedings in the case of any dispute) to the Lien of any other Series of Second Lien Obligations (such third party an “Intervening Creditor”), the value of any Shared Collateral, Equity Release Proceeds or Proceeds which are allocated to such Intervening Creditor shall be deducted on a ratable basis solely from the Shared Collateral, Equity Release Proceeds or Proceeds to be distributed in respect of the Series of Second Lien Obligations with respect to which such Impairment (as defined herein) exists.
(ii) In furtherance of the foregoing and without limiting the provisions of Section 2.3, it is the intention of the Second Lien Claimholders of each Series that the holders of Second Lien Obligations of such Series (and not the Second Lien Claimholders of any other Series) (1) bear the risk of any determination by a court of competent jurisdiction that (x) any of the Second Lien Obligations of such Series are unenforceable under applicable law or are subordinated to any other obligations (other than another Series of Second Lien Obligations), (y) any of the Second Lien Obligations of such Series do not have a valid and perfected security interest in any of the Collateral securing any other Series of Second Lien Obligations and/or (z) any intervening security interest exists securing any other obligations (other than another Series of Second Lien Obligations) on a basis ranking prior to the security interest of such Series of Second Lien Obligations but junior to the security interest of any other Series of Second Lien Obligations and (2) not take into account for purposes of this Agreement the existence of any Collateral (other than Equity Release Proceeds) for any other Series of Second Lien Obligations that is not Shared Collateral (any such condition referred to in the foregoing clauses (1) or (2) with respect to any Series of Second Lien Obligations, an “Impairment” of such Series); provided that the existence of a maximum claim with respect to any real property subject to a mortgage which applies to all Second Lien Obligations shall not be deemed to be an Impairment of any Series of Second Lien Obligations. In the event of any Impairment with respect to any Series of Second Lien Obligations, the results of such Impairment shall be borne solely by the holders of such Series of Second Lien Obligations, and the rights of the holders of such Series of Second Lien Obligations (including the right to receive distributions in respect of such Series of Second Lien Obligations pursuant to Section 2.1) set forth herein shall be modified to the extent necessary so that the effects of such Impairment are borne solely by the holders of the Series of such Second Lien Obligations subject to such Impairment. Additionally, in the event the Second Lien Obligations of any Series are modified pursuant to applicable law (including pursuant to Section 1129 of the Bankruptcy Code), any reference to such Second Lien Obligations or the Second Lien Documents governing such Second Lien Obligations shall refer to such obligations or such documents as so modified.
(c) It is acknowledged that the Second Lien Obligations of any Series may, subject to the limitations set forth in the then existing Second Lien Documents and subject to any limitations set forth in this Agreement, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the priorities set forth in Section 2.1(a) or the provisions of this Agreement defining the relative rights of the Second Lien Claimholders of any Series.
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(d) Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any Series of Second Lien Obligations granted on the Shared Collateral and notwithstanding any provision of the Uniform Commercial Code of any jurisdiction, or any other applicable law or the Second Lien Documents or any defect or deficiencies in the Liens securing the Second Lien Obligations of any Series or any other circumstance whatsoever (but, in each case, subject to Section 2.1(b)), each Second Lien Claimholder hereby agrees that the Liens securing each Series of Second Lien Obligations on any Shared Collateral shall be of equal priority.
| Section 2.2 | Actions with Respect to Shared Collateral; Prohibition on Contesting Liens. |
(a) Notwithstanding Section 2.1, (i) only the Applicable Collateral Agent shall act or refrain from acting with respect to Shared Collateral (including with respect to any other intercreditor agreement with respect to any Shared Collateral), (ii) the Applicable Collateral Agent shall act only on the instructions of the Applicable Representative and shall not follow any instructions with respect to such Shared Collateral (including with respect to any other intercreditor agreement with respect to any Shared Collateral) from any Non-Controlling Representative (or any other Second Lien Claimholder other than the Applicable Representative) and (iii) no Second Lien Claimholder shall or shall instruct any Collateral Agent to, and any other Collateral Agent that is not the Applicable Collateral Agent shall not, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, Shared Collateral (including with respect to any other intercreditor agreement with respect to Shared Collateral), whether under any Second Lien Collateral Document (other than the Second Lien Collateral Documents applicable to the Applicable Collateral Agent), applicable law or otherwise, it being agreed that only the Applicable Collateral Agent, acting in accordance with the Second Lien Collateral Documents applicable to it, shall be entitled to take any such actions or exercise any remedies with respect to such Shared Collateral at such time.
(b) Without limiting the provisions of Section 4.2, each Representative and Collateral Agent that is not the Applicable Collateral Agent hereby appoints the Applicable Collateral Agent as its agent and authorizes the Applicable Collateral Agent to exercise any and all remedies under each Second Lien Collateral Document with respect to Shared Collateral and to execute releases in connection therewith.
(c) Notwithstanding the equal priority of the Liens securing each Series of Second Lien Obligations granted on the Shared Collateral, the Applicable Collateral Agent (acting on the instructions of the Applicable Representative) may deal with the Shared Collateral as if such Applicable Collateral Agent had a senior and exclusive Lien on such Shared Collateral. No Non-Controlling Representative, Non-Controlling Claimholder or Collateral Agent that is not the Applicable Collateral Agent will contest, protest or object to any foreclosure proceeding or action brought by the Applicable Collateral Agent, the Applicable Representative or the Controlling Claimholders or any other exercise by the Applicable Collateral Agent, the Applicable Representative or the Controlling Claimholders of any rights and remedies relating to the Shared Collateral. The foregoing shall not be construed to limit the rights and priorities of any Second Lien Claimholder, Collateral Agent or Representative with respect to any Collateral not constituting Shared Collateral.
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(d) The BDK Collateral Agent and the BDK Representative agree that they will not accept any Lien on any Collateral for the benefit of any BDK Credit Agreement Obligations (other than funds deposited for the satisfaction, discharge or defeasance of the BDK Credit Agreement) other than pursuant to the Second Lien Collateral Documents, and by executing this Agreement (or a Joinder Agreement), each such Collateral Agent and each such Representative and the Series of Second Lien Claimholders for which it is acting hereunder agree to be bound by the provisions of this Agreement and the other Second Lien Collateral Documents applicable to it.
(e) Each of the Second Lien Claimholders agrees that it will not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or on behalf of any of the Second Lien Claimholders in all or any part of the Collateral or the provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair (i) the rights of any Collateral Agent or any Representative to enforce this Agreement or (ii) the rights of any Second Lien Claimholder to contest or support any other Person in contesting the enforceability of any Lien purporting to secure obligations not constituting Second Lien Obligations.
| Section 2.3 | No Interference; Payment Over; Exculpatory Provisions. |
(a) Each Second Lien Claimholder agrees that (i) it will not challenge or question or support any other Person in challenging or questioning in any proceeding the validity or enforceability of any Second Lien Obligations of any Series or any Second Lien Collateral Document or the validity, attachment, perfection or priority of any Lien under any Second Lien Collateral Document or the validity or enforceability of the priorities, rights or duties established by or other provisions of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any Second Lien Claimholder from challenging or questioning the validity or enforceability of any Second Lien Obligations constituting unmatured interest or the validity of any Lien relating thereto pursuant to Section 502(b)(2) of the Bankruptcy Code, (ii) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral by the Applicable Collateral Agent, (iii) except as provided in Section 2.2, it shall have no right to and shall not otherwise (A) direct the Applicable Collateral Agent or any other Second Lien Claimholder to exercise any right, remedy or power with respect to any Shared Collateral (including pursuant to any other intercreditor agreement) or (B) consent to, or object to, the exercise by, or any forbearance from exercising by, the Applicable Collateral Agent or any other Second Lien Claimholder represented by it of any right, remedy or power with respect to any Collateral, (iv) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Applicable Collateral Agent or any other Second Lien Claimholder represented by it seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Collateral and (v) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any of the Applicable Collateral Agent or any other Second Lien Claimholder to (i) enforce this Agreement or (ii) contest or support any other Person in contesting the enforceability of any Lien purporting to secure obligations not constituting Second Lien Obligations.
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(b) Each Second Lien Claimholder hereby agrees that if it shall obtain possession of any Shared Collateral or shall realize any proceeds or payment in respect of any Shared Collateral, pursuant to any Second Lien Collateral Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies (including pursuant to any intercreditor agreement), at any time prior to the Discharge of each of the Second Lien Obligations, then it shall hold such Shared Collateral, proceeds or payment in trust for the other Second Lien Claimholders having a security interest in such Shared Collateral and promptly transfer any such Shared Collateral, proceeds or payment, as the case may be, to the Applicable Collateral Agent, to be distributed by such Applicable Collateral Agent in accordance with the provisions of Section 2.1(a) hereof, provided, however, that the foregoing shall not apply to any Shared Collateral purchased by any Second Lien Claimholder for cash pursuant to any exercise of remedies permitted hereunder.
(c) None of the Applicable Collateral Agent, any Applicable Representative or any other Second Lien Claimholder shall be liable for any action taken or omitted to be taken by the Applicable Collateral Agent, such Applicable Representative or any other Second Lien Claimholder with respect to any Collateral in accordance with the provisions of this Agreement.
| Section 2.4 | Automatic Release of Liens. |
(a) If, at any time any Shared Collateral is transferred to a third party or otherwise disposed of, in each case, in connection with any enforcement by the Applicable Collateral Agent in accordance with the provisions of this Agreement, then (whether or not any Insolvency or Liquidation Proceeding is pending at the time) the Liens in favor of the other Collateral Agents for the benefit of each Series of Second Lien Claimholders (or in favor of such other Second Lien Claimholders if directly secured by such Liens) upon such Shared Collateral will automatically be released and discharged upon final conclusion of such disposition as and when, but only to the extent, such Liens of the Applicable Collateral Agent on such Shared Collateral are released and discharged; provided that any proceeds of any Shared Collateral realized therefrom shall be applied pursuant to Section 2.1 hereof. If in connection with any such foreclosure or other exercise of remedies by the Applicable Collateral Agent, the Applicable Collateral Agent or related Applicable Representative of such Series of Second Lien Obligations releases any guarantor from its obligation under a guarantee of the Series of Second Lien Obligations for which it serves as agent prior to a Discharge of such Series of Second Lien Obligations, such guarantor also shall be released from its guarantee of all other Second Lien Obligations. If in connection with any such foreclosure or other exercise of remedies by the Applicable Collateral Agent, the equity interests of any Person are foreclosed upon or otherwise disposed of and the Applicable Collateral Agent releases its Lien on the property or assets of such Person, then the Liens of each other Collateral Agent (or in favor of such other Second Lien Claimholders if directly secured by such Liens) with respect to any Collateral consisting of the property or assets of such Person will be automatically released to the same extent as the Liens of the Applicable Collateral Agent are released; provided that any proceeds of any such equity interests foreclosed upon where the Applicable Collateral Agent releases its Lien on the assets of such Person on which another Series of Second Lien Obligations holds a Lien on any of the assets of such Person (any such assets, the “Underlying Assets”) which Lien is released as provided in this sentence (any such Proceeds being referred to herein as “Equity Release Proceeds” regardless of whether or not such other Series of Second Lien Obligations holds a Lien on such equity interests so disposed of) shall be applied pursuant to Section 2.1 hereof.
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(b) Without limiting the rights of the Applicable Collateral Agent under Section 4.2, each Collateral Agent and each Representative agrees to execute and deliver (at the sole cost and expense of the Grantors) all such authorizations and other instruments as shall reasonably be requested by the Applicable Collateral Agent to evidence and confirm any release of Shared Collateral, Underlying Assets or guarantee provided for in this Section.
| Section 2.5 | Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings. |
(a) This Agreement shall continue in full force and effect notwithstanding the commencement of any proceeding under the Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law by or against any Grantor or any of its subsidiaries.
(b) If any Grantor shall become subject to a case (a “Bankruptcy Case”) under the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, each Second Lien Claimholder (other than any Controlling Claimholder or any Representative of any Controlling Claimholder) agrees that it will not raise any objection to any such financing or to the Liens on the Shared Collateral securing the same (“DIP Financing Liens”) or to any use of cash collateral that constitutes Shared Collateral, unless a Representative of the Controlling Claimholders shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral (and (i) to the extent that such DIP Financing Liens are senior to the Liens on any such Shared Collateral for the benefit of the Controlling Claimholders, each Non-Controlling Claimholder will subordinate its Liens with respect to such Shared Collateral on the same terms as the Liens of the Controlling Claimholders (other than any Liens of any Second Lien Claimholders constituting DIP Financing Liens) are subordinated thereto, and (ii) to the extent that such DIP Financing Liens rank pari passu with the Liens on any such Shared Collateral granted to secure the Second Lien Obligations of the Controlling Claimholders, each Non-Controlling Claimholder will confirm the priorities with respect to such Shared Collateral as set forth herein), in each case so long as (A) the Second Lien Claimholders of each Series retain the benefit of their Liens on all such Shared Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-à-vis all the other Second Lien Claimholders (other than any Liens of the Second Lien Claimholders constituting DIP Financing Liens) as existed prior to the commencement of the Bankruptcy Case, (B) the Second Lien Claimholders of each Series are granted Liens on any additional collateral pledged to any Second Lien Claimholders as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral, with the same priority vis-à-vis the Second Lien Claimholders as set forth in this Agreement (other than any Liens of any Second Lien Claimholders constituting DIP Financing Liens), (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the Second Lien Obligations, such amount is applied pursuant to Section 2.1(a) of this Agreement, and (D) if any Second Lien Claimholders are granted adequate protection with respect to the Second Lien Obligations subject hereto, including in the form of periodic payments, in connection with such use of cash collateral, the proceeds of such adequate protection are applied pursuant to Section 2.1(a) of this Agreement; provided that the Second Lien Claimholders of each Series shall have a right to object to the grant of a Lien to secure the DIP Financing over any Collateral subject to Liens in favor of the Second Lien Claimholders of such Series or their Representative that shall not constitute Shared Collateral; provided, further, that the Second Lien Claimholders receiving adequate protection shall not object to any other Second Lien Claimholder receiving adequate protection comparable to any adequate protection granted to such Second Lien Claimholders in connection with a DIP Financing or use of cash collateral.
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(c) If any Second Lien Claimholder is granted adequate protection (A) in the form of Liens on any additional collateral, then each other Second Lien Claimholder shall be entitled to seek, and each Second Lien Claimholder will consent and not object to, adequate protection in the form of Liens on such additional collateral with the same priority vis-à-vis the Second Lien Claimholders as set forth in this Agreement, (B) in the form of a superpriority or other administrative claim, then each other Second Lien Claimholder shall be entitled to seek, and each Second Lien Claimholder will consent and not object to, adequate protection in the form of a pari passu superpriority or administrative claim or (C) in the form of periodic or other cash payments, then the proceeds of such adequate protection must be applied to all Second Lien Obligations pursuant to Section 2.1.
| Section 2.6 | Reinstatement. |
In the event that any of the Second Lien Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under Title 11 of the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Agreement shall be fully applicable thereto until all such Second Lien Obligations shall again have been paid in full in cash. This Section 2.6 shall survive termination of this Agreement.
| Section 2.7 | Insurance and Condemnation Awards. |
As among the Second Lien Claimholders, the Applicable Collateral Agent (acting at the direction of the Applicable Representative), shall have the right, but not the obligation, to adjust or settle any insurance policy or claim covering or constituting Shared Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the Shared Collateral. To the extent any Collateral Agent or any other Second Lien Claimholder receives proceeds of such insurance policy and such proceeds are not permitted or required to be returned to any Grantor under the applicable Second Lien Documents, such proceeds shall be turned over to the Applicable Collateral Agent for application as provided in Section 2.1 hereof.
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| Section 2.8 | Refinancings. |
The Second Lien Obligations of any Series may, subject to Section 5.14, be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction under any Second Lien Document) of any Second Lien Claimholder of any other Series, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Representative and Collateral Agent of the holders of any such Refinancing Indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing Indebtedness. If such Refinancing Indebtedness is intended to constitute a Replacement FRG Credit Agreement, the Company shall so state in its Designation.
| Section 2.9 | Gratuitous Bailee/Agent for Perfection. |
(a) The Applicable Collateral Agent shall be entitled to hold any Possessory Collateral constituting Shared Collateral.
(b) Notwithstanding the foregoing, each Collateral Agent agrees to hold any Possessory Collateral constituting Shared Collateral and any other Shared Collateral from time to time in its possession or control (or in the possession or control of its agents or bailees) as gratuitous bailee for the benefit of each other Second Lien Claimholder (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee, solely for the purpose of perfecting the security interest granted in such Shared Collateral, if any, pursuant to the applicable Second Lien Collateral Documents, in each case, subject to the terms and conditions of this Section 2.9. Solely with respect to any Deposit Accounts constituting Shared Collateral under the control (within the meaning of Section 9-104 of the UCC) of any Collateral Agent, each such Collateral Agent agrees to also hold control over such Deposit Accounts as gratuitous agent for each other Second Lien Claimholder and any assignee solely for the purpose of perfecting the security interest in such Deposit Accounts, subject to the terms and conditions of this Section 2.9.
(c) No Collateral Agent shall have any obligation whatsoever to any Second Lien Claimholder to ensure that the Possessory Collateral and Control Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 2.9. The duties or responsibilities of each Collateral Agent under this Section 2.9 shall be limited solely to holding any Possessory Collateral constituting Shared Collateral or any other Shared Collateral in its possession or control as gratuitous bailee (and with respect to Deposit Accounts, as gratuitous agent) in accordance with this Section 2.9 and delivering the Possessory Collateral constituting Shared Collateral as provided in Section 2.9(e) below.
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(d) None of the Collateral Agents or any of the Second Lien Claimholders shall have by reason of the Second Lien Documents, this Agreement or any other document a fiduciary relationship in respect of the other Collateral Agents or any other Second Lien Claimholder, and each Collateral Agent and each Second Lien Claimholder hereby waives and releases the other Collateral Agents and Second Lien Claimholders from all claims and liabilities arising pursuant to any Collateral Agent’s role under this Section 2.9 as gratuitous bailee with respect to the Possessory Collateral constituting Shared Collateral or any other Shared Collateral in its possession or control (and with respect to the Deposit Accounts, as gratuitous agent).
(e) At any time the Applicable Collateral Agent is no longer the Applicable Collateral Agent, such outgoing Applicable Collateral Agent shall deliver the remaining Possessory Collateral constituting Shared Collateral in its possession (if any) together with any necessary endorsements (which endorsement shall be without recourse and without any representation or warranty), first, to the then Applicable Collateral Agent to the extent Second Lien Obligations remain outstanding and second, to the applicable Grantor to the extent no Second Lien Obligations remain outstanding (in each case, so as to allow such Person to obtain possession or control of such Shared Collateral) or to whomever may be lawfully entitled to receive the same, including pursuant to any Intercreditor Agreement (as defined in the FRG Credit Agreement), if applicable. The outgoing Applicable Collateral Agent further agrees to take all other action reasonably requested by the then Applicable Collateral Agent at the expense of the Company in connection with the then Applicable Collateral Agent obtaining a second-priority security interest in the Shared Collateral.
| Section 2.10 | Amendments to Second Lien Collateral Documents. |
(a) Without the prior written consent of each other Collateral Agent, each Collateral Agent agrees that no Second Lien Collateral Document may be amended, restated, amended and restated, supplemented, replaced or Refinanced or otherwise modified from time to time or entered into to the extent such amendment, supplement, Refinancing or modification, or the terms of any new Second Lien Collateral Document, would be prohibited by, or would require any Grantor to act or refrain from acting in a manner that would violate, any of the terms of this Agreement.
(b) In determining whether an amendment to any Second Lien Collateral Document is permitted by this Section 2.10, each Collateral Agent may conclusively rely on an officer’s certificate of the Company stating that such amendment is permitted by this Section 2.10.
| Section 2.11 | Similar Liens and Agreements. |
(a) Subject to Section 2.11(b) below, the parties hereto agree that it is their intention that the Collateral be identical for all Second Lien Claimholders. In furtherance of, but subject to, the foregoing, the parties hereto agree, subject to the other provisions of this Agreement:
(i) upon request by any Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Shared Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the FRG Credit Agreement Documents and the BDK Credit Agreement Documents; and
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(ii) that the documents and agreements creating or evidencing the Liens on Shared Collateral securing the FRG Credit Agreement Obligations and the BDK Credit Agreement Obligations shall, subject to the terms and conditions of Section 5.2, be in all material respects the same forms of documents as one another, except that the documents and agreements creating or evidencing the Liens securing the BDK Credit Agreement Obligations may contain additional provisions as may be necessary or appropriate to establish the intercreditor arrangements among the various separate classes of creditors holding BDK Credit Agreement Obligations.
Article
III.
EXISTENCE AND AMOUNTS OF LIENS AND OBLIGATIONS
Whenever any Applicable Collateral Agent or any Applicable Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any Second Lien Obligations of any Series, or the Shared Collateral subject to any Lien securing the Second Lien Obligations of any Series, it may request that such information be furnished to it in writing by each other Representative or each other Collateral Agent and shall be entitled to make such determination or not make any determination on the basis of the information so furnished; provided, however, that if a Representative or a Collateral Agent shall fail or refuse reasonably promptly to provide the requested information, the requesting Applicable Collateral Agent or Applicable Representative shall be entitled to make any such determination or not make any determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Applicable Collateral Agent and each Applicable Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to any Grantor, any Second Lien Claimholder or any other person as a result of such determination.
Article
IV.
THE APPLICABLE COLLATERAL AGENT
| Section 4.1 | Authority. |
(a) Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on any Applicable Collateral Agent to any Non-Controlling Claimholder or give any Non-Controlling Claimholder the right to direct any Applicable Collateral Agent, except that each Applicable Collateral Agent shall be obligated to distribute proceeds of any Shared Collateral in accordance with Section 2.1 hereof.
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(b) In furtherance of the foregoing, each Non-Controlling Claimholder acknowledges and agrees that the Applicable Collateral Agent shall be entitled, for the benefit of the Second Lien Claimholders, to sell, transfer or otherwise dispose of or deal with any Shared Collateral as provided herein and in the Second Lien Collateral Documents, as applicable, without regard to any rights to which the Non-Controlling Claimholders would otherwise be entitled as a result of the Second Lien Obligations held by such Non-Controlling Claimholders. Without limiting the foregoing, each Non-Controlling Claimholder agrees that none of the Applicable Collateral Agent, the Applicable Representative or any other Second Lien Claimholder shall have any duty or obligation first to marshal or realize upon any type of Shared Collateral (or any other Collateral securing any of the Second Lien Obligations), or to sell, dispose of or otherwise liquidate all or any portion of such Shared Collateral (or any other Collateral securing any Second Lien Obligations), in any manner that would maximize the return to the Non-Controlling Claimholders, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Non-Controlling Claimholders from such realization, sale, disposition or liquidation. Each of the Second Lien Claimholders waives any claim it may now or hereafter have against any Collateral Agent or Representative of any other Series of Second Lien Obligations or any other Second Lien Claimholder of any other Series arising out of (i) any actions which any such Collateral Agent, Representative or any Second Lien Claimholder represented by it take or omit to take (including actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Second Lien Obligations from any account debtor, guarantor or any other party) in accordance with the Second Lien Collateral Documents or any other agreement related thereto or in connection with the collection of the Second Lien Obligations or the valuation, use, protection or release of any security for the Second Lien Obligations; provided that nothing in this clause (i) shall be construed to prevent or impair the rights of any Collateral Agent or Representative to enforce this Agreement, (ii) any election by any Applicable Representative or any holders of Second Lien Obligations, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (iii) subject to Section 2.5, any borrowing, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, by the Company or any of its Subsidiaries, as debtor-in-possession. Notwithstanding any other provision of this Agreement, the Applicable Collateral Agent shall not (i) accept any Shared Collateral in full or partial satisfaction of any Second Lien Obligations pursuant to Section 9-620 of the Uniform Commercial Code of any jurisdiction, without the consent of each Representative representing holders of Second Lien Obligations for whom such Collateral constitutes Shared Collateral or (ii) “credit bid” for or purchase (other than for cash) Shared Collateral at any public, private or judicial foreclosure upon such Shared Collateral, without the consent of each Representative representing holders of Second Lien Obligations for whom such Collateral constitutes Shared Collateral.
| Section 4.2 | Power-of-Attorney. |
Each Non-Controlling Representative and Collateral Agent that is not the Applicable Collateral Agent, for itself and on behalf of each other Second Lien Claimholder of the Series for whom it is acting, hereby irrevocably appoints the Applicable Collateral Agent and any officer or agent of the Applicable Collateral Agent, which appointment is coupled with an interest with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Non-Controlling Representative, Collateral Agent or Second Lien Claimholder, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Agreement, including the exercise of any and all remedies under each Second Lien Collateral Document with respect to Shared Collateral and the execution of releases in connection therewith.
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Article
V.
MISCELLANEOUS
| Section 5.1 | Integration/Conflicts. |
This Agreement, together with the other Second Lien Documents and the Second Lien Collateral Documents, represents the entire agreement of each of the Grantors and the Second Lien Claimholders with respect to the subject matter hereof and thereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. There are no promises, undertakings, representations or warranties by any Representative, Collateral Agent or Second Lien Claimholder relative to the subject matter hereof and thereof not expressly set forth or referred to herein or therein. In the event of any conflict between the provisions of this Agreement and the provisions of the Second Lien Documents the provisions of this Agreement shall govern and control as to the parties hereto.
| Section 5.2 | Effectiveness; Continuing Nature of this Agreement; Severability. |
This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement and the Second Lien Claimholders of any Series may continue, at any time and without notice to any Second Lien Claimholder of any other Series, to extend credit and other financial accommodations and lend monies to or for the benefit of the Company or any Grantor constituting Second Lien Obligations in reliance hereon. Each Representative and each Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions. All references to the Company or any other Grantor shall include the Company or such Grantor as debtor and debtor in possession and any receiver, trustee or similar person for the Company or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect with respect to any Representative or Collateral Agent and the Second Lien Claimholders represented by such Representative or Collateral Agent and their Second Lien Obligations, on the date on which there has been a Discharge of such Series of Second Lien Obligations, subject to the rights of the Second Lien Claimholders under Section 2.6; provided, however, that such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination.
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| Section 5.3 | Amendments; Waivers. |
(a) No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, the Company and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights are directly and adversely affected.
(b) Notwithstanding the foregoing, without the consent of any Second Lien Claimholder, any Representative and Collateral Agent may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 5.14 of this Agreement and upon such execution and delivery, such Representative and Collateral Agent and the Replacement FRG Claimholders and Replacement FRG Credit Agreement Obligations of the Series for which such Representative and Collateral Agent is acting shall be subject to the terms hereof.
(c) Notwithstanding the foregoing, without the consent of any other Representative or Second Lien Claimholder, the Applicable Collateral Agent may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any FRG Replacement Credit Agreement Obligations in compliance with the FRG Credit Agreement and the other Second Lien Documents.
| Section 5.4 | Information Concerning Financial Condition of the Grantors and their Subsidiaries. |
The Representative and Collateral Agent and the other Second Lien Claimholders of each Series shall each be responsible for keeping themselves informed of (a) the financial condition of the Grantors and their Subsidiaries and all endorsers and/or guarantors of the Second Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the Second Lien Obligations. The Representative and Collateral Agent and the other Second Lien Claimholders of each Series shall have no duty to advise the Representative, Collateral Agent or Second Lien Claimholders of any other Series of information known to it or them regarding such condition or any such circumstances or otherwise. In the event the Representative or Collateral Agent or any of the other Second Lien Claimholders, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Representative, Collateral Agent or Second Lien Claimholders of any other Series, it or they shall be under no obligation:
(a) to make, and such Representative and Collateral Agent and such other Second Lien Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;
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(b) to provide any additional information or to provide any such information on any subsequent occasion;
(c) to undertake any investigation; or
(d) to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
| Section 5.5 | Submission to Jurisdiction; Certain Waivers. |
Each of the Company, each other Grantor, each Collateral Agent and each Representative, on behalf of itself and each other Second Lien Claimholder represented by it, hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the Second Lien Collateral Documents (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive (subject to Section 5.5(c) below) general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;
(b) agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;
(c) 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 and that nothing in this Agreement or any other Second Lien Document shall affect any right that any Collateral Agent, Representative or other Second Lien Claimholder may otherwise have to bring any action or proceeding relating to this Agreement or any other Second Lien Document against such Grantor or any of its assets in the courts of any jurisdiction;
(d) 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 Second Lien Collateral Document in any court referred to in Section 5.5(a) (and 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);
(e) consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 5.7 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);
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(f) agrees that service as provided in Section 5.5(e) above is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and
(g) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.
| Section 5.6 | WAIVER OF JURY TRIAL. |
EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS 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 SECOND LIEN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS (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 EACH SUCH PARTY HERETO, THE COMPANY AND EACH OTHER GRANTOR HAS BEEN INDUCED TO ENTER INTO OR ACKNOWLEDGE THIS AGREEMENT AND THE OTHER SECOND LIEN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO AND EACH OF THE COMPANY AND THE OTHER GRANTORS FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
| Section 5.7 | Notices. |
Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by facsimile, electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or in the Joinder Agreement pursuant to which it becomes a party hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
| Section 5.8 | Further Assurances. |
Each Representative and Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, and the Company and each other Grantor, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any Representative and Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.
| Section 5.9 | Agency Capacities. |
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Except as expressly provided herein, (a) Alter Domus (US) LLC is acting in the capacity of Initial FRG Representative and Initial FRG Collateral Agent solely for the Initial FRG Claimholders, (b) the BDK Representative and the BDK Collateral Agent are acting in the capacities of Representative and Collateral Agent, respectively, solely for the BDK Claimholders, and (c) each Replacement FRG Representative and Replacement FRG Collateral Agent is acting in the capacity of Representative and Collateral Agent, respectively, solely for the Replacement FRG Claimholders.
| Section 5.10 | GOVERNING LAW. |
THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).
| Section 5.11 | Binding on Successors and Assigns. |
This Agreement shall be binding upon each Representative and each Collateral Agent, the Second Lien Claimholders, the Company and the other Grantors, and their respective successors and assigns from time to time. If any of the Representatives and/or Collateral Agents resigns or is replaced pursuant to the applicable Second Lien Documents, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement. No provision of this Agreement will inure to the benefit of a trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of any Grantor, including where any such trustee, debtor-in-possession, creditor trust or other representative of an estate is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency or Liquidation Proceeding.
| Section 5.12 | Section Headings. |
Section headings and the Table of Contents used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
| Section 5.13 | Counterparts. |
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This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic imaging means), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission (e.g., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
| Section 5.14 | Replacement FRG Credit Agreement Obligations. |
(a) To the extent not prohibited by the provisions of the BDK Credit Agreement, the Company may incur additional Indebtedness as Replacement FRG Credit Agreement Obligations after the date hereof that is secured on an equal and ratable basis with the Liens securing the BDK Credit Agreement Obligations. Any such Replacement FRG Credit Agreement Obligations may be secured by a Lien on a ratable basis, in each case under and pursuant to the applicable Replacement FRG Collateral Documents, if, and subject to the condition that, the Replacement FRG Collateral Agent and the Replacement FRG Representative of any such Replacement FRG Credit Agreement Obligations, acting on behalf of the holders of such Replacement FRG Credit Agreement Obligations, each becomes a party to this Agreement by satisfying the conditions set forth in Section 5.14(b).
(b) In order for a Replacement FRG Representative and a Replacement FRG Collateral Agent to become a party to this Agreement,
(i) such Replacement FRG Representative and such Replacement FRG Collateral Agent shall have executed and delivered an instrument substantially in the form of Exhibit A (with such changes as may be reasonably approved by the BDK Collateral Agent and such Replacement FRG Representative and Replacement FRG Collateral Agent) pursuant to which such Replacement FRG Representative becomes a Representative hereunder and such Replacement FRG Collateral Agent becomes a Collateral Agent hereunder, and such Replacement FRG Credit Agreement Obligations and the Replacement FRG Claimholders of such Series become subject hereto and bound hereby;
(ii) the Company shall have delivered to each Collateral Agent:
(a) true and complete copies of each of the Replacement FRG Credit Agreement and the Replacement FRG Collateral Documents for such Series, certified as being true and correct by a Responsible Officer of the Company;
(b) a Designation substantially in the form of Exhibit B pursuant to which the Company shall (A) identify the Indebtedness to be designated as Replacement FRG Credit Agreement Obligations and the initial aggregate principal amount or committed amount thereof, (B) specify the name and address of the Replacement FRG Collateral Agent and the Replacement FRG Representative, (C) certify that such Replacement FRG Credit Agreement Obligations are permitted by the BDK Credit Agreement Documents and that the conditions set forth in this Section 5.14 are satisfied with respect to such Replacement FRG Credit Agreement Obligations, and (D) expressly state that such agreement giving rise to the new Indebtedness satisfies the requirements of a Replacement FRG Credit Agreement and the Company elects to designate such agreement as a Replacement FRG Credit Agreement; and
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(iii) the Replacement FRG Credit Agreement Documents shall provide, in a manner reasonably satisfactory to the BDK Collateral Agent, that each Replacement FRG Claimholder with respect to such Series of Replacement FRG Credit Agreement Obligations will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Replacement FRG Credit Agreement Obligations.
(c) Upon the execution and delivery of a Joinder Agreement by a Replacement FRG Representative and a Replacement FRG Collateral Agent, in each case, in accordance with this Section 5.14, the BDK Representative and the BDK Collateral Agent shall acknowledge such receipt thereof by countersigning a copy thereof, subject to the terms of this Section 5.14 and returning the same to such Replacement FRG Representative and Replacement FRG Collateral Agent; provided that the failure of the BDK Representative or the BDK Collateral Agent to so acknowledge or return shall not affect the status of such debt as Replacement FRG Credit Agreement Obligations if the other requirements of this Section 5.14 are complied with.
| Section 5.15 | Authorization. |
By its signature, each Person executing this Agreement, on behalf of such party or Grantor but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.
| Section 5.16 | No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights. |
The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Second Lien Claimholders in relation to one another. None of the Company, any other Grantor nor any other creditor thereof shall have any rights or obligations hereunder and no such Person is an intended beneficiary or third party beneficiary hereof, except, in each case, as expressly provided in this Agreement, and none of the Company or any other Grantor may rely on the terms hereof (other than Sections 2.4 and 2.8 and Article V). Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the Second Lien Obligations as and when the same shall become due and payable in accordance with their terms. Without limitation of any other provisions of this Agreement, each of the Company and each Grantor hereby (a) acknowledges that it has read this Agreement and consents hereto, (b) agrees that it will not take any action that would be contrary to the express provisions of this Agreement and (c) agrees to abide by the requirements expressly applicable to it under this Agreement.
| Section 5.17 | [Reserved]. |
| Section 5.18 | Additional Grantors. |
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Each Grantor agrees that it shall ensure that each of its Subsidiaries (other than Badcock) that is or is to become a party to any Second Lien Document and which grants or purports to grant a lien on any of its assets shall either execute this Agreement on the date hereof or shall confirm that it is a Grantor hereunder pursuant to a joinder agreement substantially in the form attached hereto as Exhibit C that is executed and delivered by such Subsidiary prior to or concurrently with its execution and delivery of such Second Lien Document.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
| ALTER DOMUS (US) LLC, | ||
as Initial FRG Representative and Initial FRG Collateral Agent | ||
|
By: /s/ Matthew Trybula | ||
| Name: Matthew Trybula | ||
| Title: Associate Counsel | ||
| Alter Domus (US) LLC | ||
| 225 W. Washington Street, 9th Floor | ||
| Chicago, Illinois 60606 | ||
| Attention: Legal Department and Rick Ledenbach | ||
| Facsimile No. (312) 376-0751 | ||
| Email: legal@alterdomus.com | ||
| ALTER DOMUS (US) LLC, | ||
as BDK Representative Agent and BDK Collateral Agent | ||
|
By: /s/ Matthew Trybula | ||
| Name: Matthew Trybula | ||
| Title: Associate Counsel | ||
| Alter Domus (US) LLC | ||
| 225 W. Washington Street, 9th Floor | ||
| Chicago, Illinois 60606 | ||
| Attention: Legal Department and Rick Ledenbach | ||
| Facsimile No. (312) 376-0751 | ||
| Email: legal@alterdomus.com | ||
[SIGNATURE PAGE TO SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
Acknowledged to by:
GRANTORS:
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.,
VALOR ACQUISITION, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
[SIGNATURE PAGE TO SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE FLORIDA, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | President |
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | Chief Executive Officer and President |
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
[SIGNATURE PAGE TO SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT] |
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
109 Innovation Court, Suite J,
Delaware, OH 43015
Attention: Tiffany McMillan-McWaters
Email: tmcwaters@franchisegrp.com
[SIGNATURE PAGE TO SECOND LIEN PARI PASSU INTERCREDITOR AGREEMENT]
Exhibit 10.7
AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT
Dated as of November 22, 2021
among
JPMORGAN CHASE BANK, N.A.,
as the Initial First Lien Representative and the Initial First Lien Collateral Agent for the Initial First Lien Claimholders,
ALTER DOMUS (US) LLC,
as the Initial Second Lien Representative and the Initial Second Lien Collateral Agent for the Initial Second Lien Claimholders,
JPMORGAN CHASE BANK, N.A.,
as the BDK First Lien Representative and the BDK First Lien Collateral Agent for the BDK First Lien Claimholders,
ALTER DOMUS (US) LLC,
as the BDK Second Lien Representative and the BDK Second Lien Collateral Agent for the BDK Second Lien Claimholders,
and
each additional Representative and Collateral Agent from time to time party hereto
and acknowledged by
FRANCHISE GROUP, INC.,
as the Company
and the other
Grantors referred to herein
TABLE OF CONTENTS
| Page | |||
| Section 1. Definitions | 3 | ||
| 1.1 | Defined Terms | 3 | |
| 1.2 | Terms Generally | 20 | |
| 1.3 | Currency Equivalents Generally | 20 | |
| Section 2 Lien Priorities. | 21 | ||
| 2.1 | Relative Priorities | 21 | |
| 2.2 | Prohibition on Contesting Liens | 21 | |
| 2.3 | No New Liens | 22 | |
| 2.4 | Similar Liens and Agreements | 23 | |
| 2.5 | Perfection of Liens | 23 | |
| 2.6 | Nature of First Lien Obligations | 23 | |
| Section 3. Enforcement | 24 | ||
| 3.1 | Exercise of Remedies | 24 | |
| 3.2 | Actions Upon Breach; Specific Performance | 27 | |
| Section 4. Payments | 28 | ||
| 4.1 | Application of Proceeds | 28 | |
| 4.2 | Payments Over | 29 | |
Section 5. Other Agreements |
30 | ||
| 5.1 | Releases | 30 | |
| 5.2 | Insurance | 31 | |
| 5.3 | Amendments to First Lien Loan Documents and Second Lien Loan Documents | 31 | |
| 5.4 | Confirmation of Subordination in Second Lien Collateral Documents | 34 | |
| 5.5 | Gratuitous Bailee/Agent for Perfection | 35 | |
| 5.6 | When Discharge of Obligations Deemed to Not Have Occurred | 36 | |
| 5.7 | Purchase Right | 37 | |
| Section 6. Insolvency or Liquidation Proceedings | 39 | ||
| 6.1 | Finance and Sale Issues | 39 | |
| 6.2 | Relief from the Automatic Stay | 42 | |
| 6.3 | Adequate Protection (Collateral) | 42 | |
| 6.4 | Adequate Protection (Badcock Collateral) | 44 | |
| 6.5 | Avoidance Issues | 46 | |
| 6.6 | Reorganization Securities | 46 | |
| 6.7 | Post-Petition Interest | 47 | |
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| 6.8 | Waiver | 47 | |
| 6.9 | Separate Grants of Security and Separate Classification | 48 | |
| 6.10 | Effectiveness in Insolvency or Liquidation Proceedings | 49 | |
| 6.11 | Discharge of BDK Obligations | 49 | |
| Section 7. Reliance; Waivers; Etc. | 49 | ||
| 7.1 | Reliance | 49 | |
| 7.2 | No Warranties or Liability | 50 | |
| 7.3 | No Waiver of Lien Priorities; No Marshaling | 50 | |
| 7.4 | Obligations Unconditional | 52 | |
| Section 8. Miscellaneous | 52 | ||
| 8.1 | Integration/Conflicts | 52 | |
| 8.2 | Effectiveness; Continuing Nature of this Agreement; Severability | 53 | |
| 8.3 | Amendments; Waivers | 54 | |
| 8.4 | Information Concerning Financial Condition of the Loan Parties and their Subsidiaries | 54 | |
| 8.5 | Subrogation | 55 | |
| 8.6 | Application of Payments | 55 | |
| 8.7 | Additional Debt Facilities | 55 | |
| 8.8 | Agency Capacities | 57 | |
| 8.9 | Submission to Jurisdiction; Certain Waivers | 58 | |
| 8.10 | WAIVER OF JURY TRIAL | 59 | |
| 8.11 | Notices | 59 | |
| 8.12 | Further Assurances | 59 | |
| 8.13 | APPLICABLE LAW | 59 | |
| 8.14 | Binding on Successors and Assigns | 60 | |
| 8.15 | Section Headings | 60 | |
| 8.16 | Counterparts | 60 | |
| 8.17 | Authorization | 60 | |
| 8.18 | No Third Party Beneficiaries; Provisions Solely to Define Relative Rights | 60 | |
| 8.19 | No Indirect Actions | 61 | |
| 8.20 | Additional Grantors | 61 | |
| 8.21 | Amendment and Restatement | 61 | |
EXHIBITS
Exhibit A - Joinder Agreement (Additional Second Lien Debt)
Exhibit B - Joinder Agreement (Additional First Lien Debt)
Exhibit C - Additional Debt Designation
Exhibit D - Joinder Agreement (Additional Grantors)
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FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT
This FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of November 22, 2021 and entered into by and among JPMORGAN CHASE BANK, N.A., as First Lien Representative for the Initial First Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity “Initial First Lien Representative”), and as collateral agent for the Initial First Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity, the “Initial First Lien Collateral Agent”), ALTER DOMUS (US) LLC, as Second Lien Representative for the Initial Second Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity the “Initial Second Lien Representative”), and as collateral agent for the Initial Second Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity the “Initial Second Lien Collateral Agent”), JPMORGAN CHASE BANK, N.A., as First Lien Representative for the BDK First Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity “BDK First Lien Representative”), and as collateral agent for the BDK First Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity, the “BDK First Lien Collateral Agent”), ALTER DOMUS (US) LLC, as Second Lien Representative for the BDK Second Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity the “BDK Second Lien Representative”), and as collateral agent for the BDK Second Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity the “BDK Second Lien Collateral Agent”), and each additional First Lien Representative, First Lien Collateral Agent, Second Lien Representative and Second Lien Collateral Agent that from time to time becomes a party hereto pursuant to Section 8.7, and acknowledged by FRANCHISE GROUP, INC., a Delaware corporation (the “Company”), and the other Grantors (as defined below). Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 below.
RECITALS
The Initial First Lien Representative, the Initial First Lien Collateral Agent, the Initial Second Lien Representative and the Initial Second Lien Collateral Agent entered into that certain First Lien/Second Lien Intercreditor Agreement, dated as of March 10, 2021 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Original Intercreditor Agreement”), which Original Intercreditor Agreement was acknowledged and agreed to by certain of the Grantors;
The Company, Franchise Group Newco PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”), Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF” and together with the Company, FG Newco PSP and Valor individually each a “Borrower” and collectively, the “Borrowers”), the lenders party thereto, the Initial First Lien Representative and the Initial First Lien Collateral Agent have entered into that certain First Lien Credit Agreement, dated as of March 10, 2021 (as amended by that certain First Amendment to First Lien Credit Agreement, dated as of the date hereof, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Initial First Lien Credit Agreement”);
The Borrowers, the lenders party thereto, the Initial Second Lien Representative and the Initial Second Lien Collateral Agent have entered into that certain Second Lien Credit Agreement, dated as of March 10, 2021 (as amended by that certain First Amendment to Second Lien Credit Agreement, dated as of the date hereof, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Initial Second Lien Credit Agreement”);
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The Borrowers, the lenders party thereto, the BDK First Lien Representative and the BDK First Lien Collateral Agent have entered into that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “BDK First Lien Credit Agreement”);
The Borrowers, the lenders party thereto, the BDK Second Lien Representative and the BDK Second Lien Collateral Agent have entered into that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “BDK Second Lien Credit Agreement”);
The Borrowers, certain other Grantors, the lenders party thereto, and JPMorgan Chase Bank, N.A., as agent (in such capacity, together with its successors and permitted assigns in such capacity, the “ABL Agent”) have entered into that certain Third Amended and Restated Credit Agreement, dated as of March 10, 2021 (as amended by that certain First Amendment to ABL Credit Agreement, dated as of the date hereof, and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ABL Credit Agreement”);
In connection with the foregoing, on the date hereof, the Initial First Lien Collateral Agent, the Initial Second Lien Collateral Agent, the ABL Agent, the BDK First Lien Collateral Agent, the BDK Second Lien Collateral Agent and, by their acknowledgment, each Grantor, have entered into an Amended and Restated Intercreditor Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ABL Intercreditor Agreement”) which sets forth, among other things, their respective rights and remedies with respect to the Collateral.
Pursuant to (i) that certain First Lien Guaranty Agreement, dated as March 10, 2021, among the Grantors and the Initial First Lien Representative, each of the Grantors has agreed to guaranty the First Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “First Lien Guaranty”); (ii) that certain Second Lien Guaranty Agreement, dated as of March 10, 2021, among the Grantors and the Initial Second Lien Representative, each of the Grantors has agreed to guarantee the Second Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Second Lien Guaranty”); (iii) that certain First Lien Guaranty Agreement, dated as of the date hereof, among the Grantors and the BDK First Lien Representative, each of the Grantors has agreed to guaranty the BDK First Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “BDK First Lien Guaranty”); (iv) that certain Second Lien Guaranty Agreement, dated as of the date hereof, among the Grantors and the BDK Second Lien Representative, each of the Grantors has agreed to guarantee the BDK Second Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “BDK Second Lien Guaranty”); and (v) the ABL Credit Agreement, each of the Grantors has agreed to guarantee the ABL Obligations;
The obligations of the Borrowers under the Initial First Lien Credit Agreement, the obligations of the Grantors under certain Hedge Agreements and in respect of certain Bank Product Obligations and the obligations of the Grantors under the First Lien Guaranty will be secured (i) on a first-priority basis by liens on the Term Loan Priority Collateral (as defined in the ABL Intercreditor Agreement) and (ii) on a second-priority basis by liens on the ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), respectively, pursuant to the terms of the First Lien Collateral Documents;
The obligations of the Borrowers under the BDK First Lien Credit Agreement, the obligations of the Grantors under certain Hedge Agreements and in respect of certain Bank Product Obligations and the obligations of the Grantors under the BDK First Lien Guaranty will be secured (i) on a first-priority basis by liens on the Term Loan Priority Collateral (as defined in the ABL Intercreditor Agreement) and (ii) on a second-priority basis by liens on the ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), respectively, pursuant to the terms of the BDK First Lien Collateral Documents;
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The obligations of the Borrowers under the Initial Second Lien Credit Agreement and the obligations of the Grantors under the Second Lien Guaranty will be secured (i) on a second-priority basis by liens on the Term Loan Priority Collateral (as defined in the ABL Intercreditor Agreement) and (ii) on a third-priority basis by liens on the ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), respectively, pursuant to the terms of the Second Lien Collateral Documents;
The obligations of the Borrowers under the BDK Second Lien Credit Agreement and the obligations of Grantors under the BDK Second Lien Guaranty will be secured (i) on a second-priority basis by liens on the Term Loan Priority Collateral (as defined in the ABL Intercreditor Agreement) and (ii) on a third-priority basis by liens on the ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), respectively, pursuant to the terms of the BDK Second Lien Collateral Documents;
In furtherance of the foregoing, the First Lien Loan Documents, the Second Lien Loan Documents, the BDK First Lien Loan Documents and the BDK Second Lien Loan Documents provide, among other things, that each First Lien Representative and each First Lien Collateral Agent, on the one hand (each on behalf of its related First Lien Claimholders) and each Second Lien Representative and each Second Lien Collateral Agent, on the other hand (each on behalf of its related Second Lien Claimholders) shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and
In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the Initial First Lien Representative (for itself and on behalf of each other Initial First Lien Claimholder), the Initial First Lien Collateral Agent (for itself and on behalf of each other Initial First Lien Claimholder), the Initial Second Lien Representative (for itself and on behalf of each other Initial Second Lien Claimholder), the Initial Second Lien Collateral Agent (for itself and on behalf of each other Initial Second Lien Claimholder), the BDK First Lien Representative (for itself and on behalf of each other BDK First Lien Claimholder), the BDK First Lien Collateral Agent (for itself and on behalf of each other BDK First Lien Claimholder), the BDK Second Lien Representative (for itself and on behalf of each other BDK Second Lien Claimholder), the BDK Second Lien Collateral Agent (for itself and on behalf of each other BDK Second Lien Claimholder), each other Additional First Lien Representative (for itself and on behalf of each other Additional First Lien Claimholder represented by it), each other Additional First Lien Collateral Agent (for itself and on behalf of each other Additional First Lien Claimholder represented by it), each other Additional Second Lien Representative (for itself and on behalf of each other Additional Second Lien Claimholder represented by it) and each other Additional Second Lien Collateral Agent (for itself and on behalf of each other Additional Second Lien Claimholder represented by it), intending to be legally bound, hereby agrees as follows:
Section 1. Definitions.
1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“ABL Agent” shall have the meaning set forth in the Recitals to this Agreement.
“ABL Credit Agreement” shall have the meaning set forth in the Recitals to this Agreement.
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“ABL Intercreditor Agreement” shall have the meaning set forth in the Recitals to this Agreement.
“ABL Priority Collateral” shall have the meaning set forth in the ABL Intercreditor Agreement as in effect on the date hereof.
“Additional Collateral Agent” means an Additional First Lien Collateral Agent and/or an Additional Second Lien Collateral Agent, as the context may require.
“Additional Debt” has the meaning set forth in Section 8.7.
“Additional First Lien Claimholders” means, with respect to any Series of Additional First Lien Debt, the holders of such Indebtedness, the First Lien Representative with respect thereto, the First Lien Collateral Agent with respect thereto, any trustee or agent therefor under any related Additional First Lien Loan Documents and the beneficiaries of each indemnification obligation undertaken by any Grantor under any related Additional First Lien Loan Documents and the holders of any other Additional First Lien Obligations secured by the First Lien Collateral Documents for such Series of Additional First Lien Debt.
“Additional First Lien Collateral Agent” has the meaning set forth in the definition of “First Lien Collateral Agent”.
“Additional First Lien Debt” means any Indebtedness and guarantees thereof that is incurred, issued or guaranteed by any Grantor other than the Initial First Lien Debt (but including the BDK First Lien Debt), which Indebtedness and guarantees are secured by the First Lien Collateral (or a portion thereof) on a basis senior to the Second Lien Obligations; provided, however, that with respect to any such Indebtedness incurred after the date hereof (i) such Indebtedness is permitted to be incurred, secured and guaranteed on such basis by each First Lien Loan Document and Second Lien Loan Document, (ii) unless already a party with respect to that Series of Additional First Lien Debt, each of the First Lien Representative and the First Lien Collateral Agent for the holders of such Indebtedness shall have become party to (A) this Agreement pursuant to, and by satisfying the conditions set forth in, Section 8.7, (B) the First Lien Pari Passu Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 5.14 thereof and (C) the ABL Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 10.5(c) thereof and (iii) each of the other requirements of Section 8.7 shall have been complied with. The requirements of clause (i) above and clause (2)(C) of Section 8.7(b) shall be tested only as of (x) the date of execution of such Joinder Agreement by the applicable Additional First Lien Collateral Agent and Additional First Lien Representative if the Indebtedness is incurred pursuant to a commitment entered into at the time of such Joinder Agreement and (y) with respect to any later commitment or amendment to those terms to permit such Indebtedness, as of the date of such commitment and/or amendment, in each case, assuming such commitments are fully drawn as of such date. Additional First Lien Debt shall include any Registered Equivalent Notes and guarantees thereof by the Grantors issued in exchange therefor.
“Additional First Lien Loan Documents” means, with respect to any Series of Additional First Lien Debt, the loan agreements, promissory notes, indentures and other operative agreements evidencing or governing such Indebtedness and the First Lien Collateral Documents securing such Series of Additional First Lien Debt.
“Additional First Lien Obligations” means, with respect to any Series of Additional First Lien Debt, (a) all principal, interest (including any Post-Petition Interest), premium (if any), penalties, fees, expenses (including fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursement obligations, damages and other liabilities, and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding, payable with respect to such Additional First Lien Debt, (b) all other amounts payable to the related Additional First Lien Claimholders under the related Additional First Lien Loan Documents (other than in respect of any Indebtedness not constituting Additional First Lien Debt), (c) subject to Section 5.8, any Hedging Obligations and Bank Product Obligations secured under the First Lien Collateral Documents securing such Series of Additional First Lien Debt and (d) any renewals or extensions of the foregoing.
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“Additional First Lien Representative” has the meaning set forth in the definition of “First Lien Representative”.
“Additional Obligations” means the Additional First Lien Obligations and the Additional Second Lien Obligations.
“Additional Representative” means an Additional First Lien Representative and/or an Additional Second Lien Representative, as the context may require.
“Additional Second Lien Claimholders” means, with respect to any Series of Additional Second Lien Debt, the holders of such Indebtedness, the Second Lien Representative with respect thereto, the Second Lien Collateral Agent with respect thereto, any trustee or agent therefor under any related Additional Second Lien Loan Documents and the beneficiaries of each indemnification obligation undertaken by any Grantor under any related Additional Second Lien Loan Documents and the holders of any other Additional Second Lien Obligations secured by the Second Lien Collateral Documents for such Series of Additional Second Lien Debt.
“Additional Second Lien Collateral Agent” has the meaning set forth in the definition of “Second Lien Collateral Agent”.
“Additional Second Lien Debt” means any Indebtedness and guarantees thereof that is incurred, issued or guaranteed by any Grantor other than the Initial Second Lien Debt (but including the BDK Second Lien Debt), which Indebtedness and guarantees are secured by the Second Lien Collateral (or a portion thereof) on a basis junior to the First Lien Obligations; provided, however, that with respect to any such Indebtedness incurred after the date hereof (i) such Indebtedness is permitted to be incurred, secured and guaranteed on such basis by each First Lien Loan Document and Second Lien Loan Document, (ii) unless already a party with respect to that Series of Additional Second Lien Debt, each of the Second Lien Representative and the Second Lien Collateral Agent for the holders of such Indebtedness shall have become party to (A) this Agreement pursuant to, and by satisfying the conditions set forth in, Section 8.7, (B) the Second Lien Pari Passu Intercreditor Agreement pursuant to and by satisfying the conditions set forth therein; and (C) the ABL Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 10.5(c) thereof and (iii) each of the other requirements of Section 8.7 shall have been complied with. The requirements of clause (i) above and clause (2)(C) of Section 8.7(b) shall be tested only as of (x) the date of execution of such Joinder Agreement by the applicable Additional Second Lien Collateral Agent and Additional Second Lien Representative if the Indebtedness in incurred pursuant to a commitment entered into at the time of such Joinder Agreement, and (y) with respect to any later commitment or amendment to those terms to permit such Indebtedness, as of the date of such commitment and/or amendment, in each case, assuming such commitments are fully drawn as of such date. Additional Second Lien Debt shall include any Registered Equivalent Notes and guarantees thereof by the Grantors issued in exchange therefor.
“Additional Second Lien Loan Documents” means, with respect to any Series of Additional Second Lien Debt, the loan agreements, promissory notes, indentures and other operative agreements evidencing or governing such Indebtedness and the Second Lien Collateral Documents securing such Series of Additional Second Lien Debt.
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“Additional Second Lien Obligations” means, with respect to any Series of Additional Second Lien Debt, (a) principal, interest (including without limitation any Post-Petition Interest), premium (if any), penalties, fees, expenses (including, without limitation, fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursement obligations, damages and other liabilities, and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding, payable with respect to such Additional Second Lien Debt, (b) all other amounts payable to the related Additional Second Lien Claimholders under the related Additional Second Lien Loan Documents (other than in respect of any Indebtedness not constituting Additional Second Lien Debt), (c) subject to Section 5.8, any Hedging Obligations and Bank Product Obligations secured under the Second Lien Collateral Documents securing such Series of Additional Second Lien Debt and (d) any renewals or extensions of the foregoing.
“Additional Second Lien Representative” has the meaning set forth in the definition of “Second Lien Representative”.
“Affiliate” means, with respect to a specified Person, (a) any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with the Person specified or is a director or officer of the Person specified or (b) any other Person that directly or indirectly owns 10% or more of any class of equity interests of the Person specified.
“Agreement” has the meaning set forth in the Preamble to this Agreement.
“Applicable BDK Cap Amount” means (i) initially and prior to the Discharge of BDK First Lien Obligations, the BDK First Lien Cap Amount and (ii) from and after the Discharge of BDK First Lien Obligations and prior to the Discharge of BDK Second Lien Obligations, the BDK Second Lien Cap Amount.
“Applicable BDK Claimholders” means the “Applicable Senior Lien Claimholders” as defined in the BDK Intercreditor Agreement.
“Applicable BDK Collateral Agent” means the “Applicable Senior Lien Collateral Agent” as defined in the BDK Intercreditor Agreement.
“Applicable BDK Loan Documents” means (i) if the BDK Junior Lien Claimholder DIP Financing is being provided by the BDK Second Lien Claimholders, the BDK Second Lien Loan Documents, (ii) if the BDK Junior Lien Claimholder DIP Financing is being provided by the First Lien Claimholders (other than the BDK First Lien Claimholders), the First Lien Loan Documents and (iii) if the BDK Junior Lien Claimholder DIP Financing is being provided by the Second Lien Claimholders (other than the BDK Second Lien Claimholders), the Second Lien Loan Documents.
“Applicable BDK Obligations” means (i) initially and prior to the Discharge of BDK First Lien Obligations, the BDK First Lien Obligations and (ii) from and after the Discharge of BDK First Lien Obligations and prior to the Discharge of BDK Second Lien Obligations, the BDK Second Lien Obligations.
“Applicable BDK Representative” means the “Applicable Senior Lien Representative” as defined in the BDK Intercreditor Agreement.
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“Applicable Junior Lien Claimholders” means (i) initially and prior to the Discharge of BDK First Lien Obligations, the BDK Second Lien Claimholders and (ii) from and after the Discharge of BDK First Lien Obligations and prior to the Discharge of BDK Second Lien Obligations, the First Lien Claimholders.
“Applicable Second Lien Loan Documents” means (i) if the Second Lien Claimholder DIP Financing is being provided by the Second Lien Claimholders, the Second Lien Loan Documents and (ii) if the Second Lien Claimholder DIP Financing is being provided by the BDK Second Lien Claimholders, the BDK Second Lien Loan Documents.
“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Bank Product Obligations” means all obligations and liabilities (whether direct or indirect, absolute or contingent, due or to become due or now existing or hereafter incurred) of any Loan Party, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise, which may arise under, out of, or in connection with any credit and debit cards (including commercial credit cards), stored value cards, purchasing cards, treasury, investment, depository, clearing house, wire transfer, overdraft, controlled disbursement, cash management or automated clearing house transfers of funds services, return items, interstate depository network services or any related services, to any Person permitted to be a secured party in respect of such obligations under the applicable First Lien Loan Documents.
“Bankruptcy Case” means a case under the Bankruptcy Code or any other Bankruptcy Law.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.
“BDK Collateral” means the “Collateral” as defined in the BDK Intercreditor Agreement.
“BDK DIP Financing” has the meaning set forth in Section 6.1(a).
“BDK First Lien Cap Amount” means the “First Lien Cap Amount” as defined in the BDK Intercreditor Agreement.
“BDK First Lien Claimholders” means the “Secured Parties” as defined in the BDK First Lien Credit Agreement.
“BDK First Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“BDK First Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“BDK First Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the BDK First Lien Loan Documents.
“BDK First Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
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“BDK First Lien Loan Documents” means the BDK First Lien Credit Agreement and the other “Loan Documents” as defined in the BDK First Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the BDK First Lien Obligations.
“BDK First Lien Obligations” means the “Secured Obligations” as defined in the BDK First Lien Credit Agreement.
“BDK First Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“BDK Intercreditor Agreement” means that certain Four Lien Intercreditor Agreement, dated as of the date hereof, by and among the Initial First Lien Representative, the Initial First Lien Collateral Agent, the Initial Second Lien Representative, the Initial Second Lien Collateral Agent, the BDK First Lien Representative, the BDK First Lien Collateral Agent, the BDK Second Lien Representative and the BDK Second Lien Collateral Agent, and acknowledged by the Loan Parties, as it may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“BDK Junior Lien Adequate Protection Payments” has the meaning set forth in Section 6.4(b).
“BDK Junior Lien Claimholders” means the “Junior Lien Claimholders” as defined in the BDK Intercreditor Agreement.
“BDK Junior Lien Collateral Agents” means each “Junior Lien Collateral Agent” as defined in the BDK Intercreditor Agreement.
“BDK Junior Lien Loan Documents” means (i) initially and prior to the Discharge of BDK First Lien Obligations, the BDK Second Lien Loan Documents, the First Lien Loan Documents and the Second Lien Loan Documents and (ii) from and after the Discharge of BDK First Lien Obligations and prior to the Discharge of BDK Second Lien Obligations, the First Lien Loan Documents and the Second Lien Loan Documents.
“BDK Junior Lien Representatives” means each “Junior Lien Representative” as defined in the BDK Intercreditor Agreement.
“BDK Obligations” means the BDK First Lien Obligations and the BDK Second Lien Obligations.
“BDK Pay-Over Amount” has the meaning set forth in Section 6.4(b).
“BDK Recovery” has the meaning set forth in Section 6.5.
“BDK Second Lien Cap Amount” means the “Second Lien Cap Amount” as defined in the BDK Intercreditor Agreement.
“BDK Second Lien Claimholders” means the “Secured Parties” as defined in the BDK Second Lien Credit Agreement.
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“BDK Second Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“BDK Second Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“BDK Second Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the BDK Second Lien Loan Documents.
“BDK Second Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“BDK Second Lien Loan Documents” means the BDK Second Lien Credit Agreement and the other “Loan Documents” as defined in the BDK Second Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the BDK Second Lien Obligations.
“BDK Second Lien Obligations” means the “Secured Obligations” as defined in the BDK Second Lien Credit Agreement.
“BDK Second Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“BDK Senior Lien Claimholders” means each “Senior Lien Claimholder” as defined in the BDK Intercreditor Agreement.
“BDK Senior Lien Obligations” means the “Senior Lien Obligations” as defined in the BDK Intercreditor Agreement.
“BDK Shortfall” has the meaning set forth in Section 6.4(b).
“Borrower” has the meaning set forth in the Recitals to this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.
“Claimholders” means the First Lien Claimholders and/or the Second Lien Claimholders, as the context may require.
“Collateral” means, at any time, all of the assets and property of any Grantor, whether real, personal or mixed, in which the holders of First Lien Obligations under at least one Series of First Lien Obligations and the holders of Second Lien Obligations under at least one Series of Second Lien Obligations (or their respective Collateral Agents or Representatives) hold, purport to hold or are required to hold, a security interest at such time (or, in the case of the First Lien Obligations, are deemed pursuant to Section 2 to hold a security interest), including any property subject to Liens granted pursuant to Section 6 to secure both First Lien Obligations and Second Lien Obligations. If, at any time, any portion of the First Lien Collateral under one or more Series of First Lien Obligations does not constitute Second Lien Collateral under one or more Series of Second Lien Obligations, then such portion of such First Lien Collateral shall constitute Collateral only with respect to the Second Lien Obligations for which it constitutes Second Lien Collateral and shall not constitute Collateral for any Second Lien Obligations which do not have a security interest in such Collateral at such time. Notwithstanding the foregoing, (i) “Collateral” shall not include BDK Collateral until such time as the Discharge of BDK Obligations has occurred and (ii) from and after Discharge of BDK Obligations, “Collateral” shall include BDK Collateral.
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“Collateral Agent” means any First Lien Collateral Agent and/or any Second Lien Collateral Agent, as the context may require.
“Collateral Documents” means the First Lien Collateral Documents and the Second Lien Collateral Documents.
“Company” has the meaning set forth in the Preamble to this Agreement.
“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.
“Declined Liens” has the meaning set forth in Section 2.3.
“Designated First Lien Collateral Agent” means (i) if at any time there is only one Series of First Lien Obligations with respect to which the Discharge of First Lien Obligations has not occurred, the First Lien Collateral Agent for the First Lien Claimholders in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Collateral Agent” (as defined in the First Lien Pari Passu Intercreditor Agreement) at such time.
“Designated First Lien Representative” means (i) if at any time there is only one Series of First Lien Obligations with respect to which the Discharge of First Lien Obligations has not occurred, the First Lien Representative for the First Lien Claimholders in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Representative” (as defined in the First Lien Pari Passu Intercreditor Agreement) at such time.
“Designated Second Lien Collateral Agent” means (i) if at any time there is only one Series of Second Lien Obligations with respect to which the Discharge of Second Lien Obligations has not occurred, the Second Lien Collateral Agent for the Second Lien Claimholders in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Collateral Agent” (as defined in the Second Lien Pari Passu Intercreditor Agreement) at such time.
“Designated Second Lien Representative” means (i) if at any time there is only one Series of Second Lien Obligations with respect to which the Discharge of Second Lien Obligations has not occurred, the Second Lien Representative for the Second Lien Claimholders in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Representative” (as defined in the Second Lien Pari Passu Intercreditor Agreement) at such time.
“Designation” means a designation of Additional First Lien Debt or Additional Second Lien Debt in substantially the form of Exhibit C attached hereto.
“DIP Financing” has the meaning set forth in Section 6.1(a).
“Discharge” means, except to the extent otherwise provided in Section 5.6:
(a) with respect to any Series of First Lien Obligations or Series of Second Lien Obligations, each of the following has occurred:
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(i) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding) on all Indebtedness outstanding under the applicable First Lien Loan Documents and constituting First Lien Obligations of such Series or the applicable Second Lien Loan Documents and constituting Second Lien Obligations of such Series, as the case may be;
(ii) payment in full in cash of all Hedging Obligations and all Bank Product Obligations constituting First Lien Obligations of such Series secured by the First Lien Collateral Documents, or the cash collateralization of all such applicable Hedging Obligations and Bank Product Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty);
(iii) payment in full in cash of all other First Lien Obligations or Second Lien Obligations under the applicable First Lien Loan Documents or the applicable Second Lien Loan Documents, as the case may be, of such Series that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than any indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time); and
(iv) termination or expiration of all commitments, if any, to extend credit that would constitute First Lien Obligations or Second Lien Obligations, as the case may be, under such Series; and
(b) with respect to any Series of Excess First Lien Obligations, each of the following has occurred:
(i) payment in full in cash of the principal of and interest (including interest accruing thereon on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not interest would be allowed in such Insolvency or Liquidation Proceeding) on all Indebtedness outstanding under the applicable First Lien Loan Documents and constituting Excess First Lien Obligations of such Series;
(ii) payment in full in cash of all Hedging Obligations and all Bank Product Obligations constituting Excess First Lien Obligations of such Series secured by the First Lien Collateral Documents or the cash collateralization of all such applicable Hedging Obligations and Bank Product Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty);
(iii) payment in full in cash of all other Excess First Lien Obligations under the applicable First Lien Loan Documents of such Series that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than any indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time); and
(iv) termination or expiration of all commitments, if any, to extend credit that would constitute Excess First Lien Obligations of such Series.
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The term “Discharged” shall have a corresponding meaning.
“Discharge of BDK First Lien Obligations” means the “Discharge of First Lien Obligations” as defined in the BDK Intercreditor Agreement.
“Discharge of BDK Obligations” means, collectively, the “Discharge of First Lien Obligations” and the “Discharge of Second Lien Obligations”, each as defined in the BDK Intercreditor Agreement.
“Discharge of BDK Second Lien Obligations” means the “Discharge of Second Lien Obligations” as defined in the BDK Intercreditor Agreement.
“Discharge of BDK Senior Lien Obligations” means the “Discharge of Senior Lien Obligations” as defined in the BDK Intercreditor Agreement.
“Discharge of Excess First Lien Obligations” means, except to the extent otherwise provided in Section 5.6, the Discharge of all Excess First Lien Obligations has occurred; provided, that the Discharge of Excess First Lien Obligations shall be deemed not to have occurred if any First Lien Loan Document is Refinanced in accordance with Section 5.3 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.3.
“Discharge of First Lien Obligations” means, except to the extent otherwise provided in Section 5.6, the Discharge of Initial First Lien Obligations and the Discharge of each additional Series of First Lien Obligations constituting First Lien Obligations has occurred; provided, that the Discharge of First Lien Obligations shall be deemed not to have occurred if any First Lien Loan Document is Refinanced in accordance with Section 5.3 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.3. For the avoidance of doubt, a Discharge of First Lien Obligations shall occur even if Excess First Lien Obligations remain outstanding.
“Discharge of Initial First Lien Obligations” means the Discharge of all Initial First Lien Obligations constituting First Lien Obligations has occurred; provided, that the Discharge of Initial First Lien Obligations shall be deemed not to have occurred if any Initial First Lien Loan Document is Refinanced in accordance with Section 5.3 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.3. For the avoidance of doubt, a Discharge of Initial First Lien Obligations shall occur even if Excess First Lien Obligations remain outstanding.
“Discharge of Initial Second Lien Obligations” means the Discharge of all Initial Second Lien Obligations has occurred; provided, that the Discharge of Initial Second Lien Obligations shall be deemed not to have occurred if the Initial Second Lien Credit Agreement is Refinanced in accordance with Section 5.3 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.3.
“Discharge of Second Lien Obligations” means, except to the extent otherwise provided in Section 5.6, the Discharge of Initial Second Lien Obligations and the Discharge of each additional Series of Second Lien Obligations has occurred; provided, that the Discharge of Second Lien Obligations shall be deemed not to have occurred if any Second Lien Loan Document is Refinanced in accordance with Section 5.3 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.3.
“Disposition” has the meaning set forth in Section 5.1(b).
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“Enforcement Action” means any action to:
(a) foreclose, execute, levy, or collect on, take possession or control of (other than for purposes of perfection), sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under the First Lien Loan Documents or the Second Lien Loan Documents (including by way of setoff, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable);
(b) solicit bids from third Persons, approve bid procedures for any proposed disposition of Collateral, conduct the liquidation or disposition of Collateral or engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of valuing, marketing, promoting, and selling Collateral;
(c) receive a transfer of Collateral in satisfaction of Indebtedness or any other Obligation secured thereby; or
(d) otherwise enforce a security interest or exercise another right or remedy, as a secured creditor or otherwise, pertaining to the Collateral at law, in equity, or pursuant to the First Lien Loan Documents or Second Lien Loan Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses, and exercising voting rights in respect of equity interests comprising Collateral).
“Excess First Lien Obligations” means (i) any Obligations that would constitute First Lien Obligations if not for the First Lien Cap Amount and (ii) any Obligations that would constitute BDK First Lien Obligations if not for the BDK First Lien Cap Amount.
“FG Newco Intermediate AF” shall have the meaning set forth in the Recitals to this Agreement.
“FG Newco PSP” shall have the meaning set forth in the Recitals to this Agreement.
“First Lien Cap Amount” means, (x) unless a Grantor shall be subject to any Insolvency or Liquidation Proceeding, $1,100,000,000; and (y) if a Grantor shall be subject to any Insolvency or Liquidation Proceeding the sum of (i) $1,100,000,000 plus (ii) 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the First Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding.
“First Lien Claimholders” means the Initial First Lien Claimholders and any Additional First Lien Claimholders.
“First Lien Collateral” means any “Collateral” or “Pledged Collateral” or similar term as defined in any First Lien Loan Document or any other assets of any Grantor with respect to which a Lien is granted or purported to be granted or required to be granted pursuant to a First Lien Loan Document as security for any First Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any First Lien Claimholder. For the avoidance of doubt, until such time as the Discharge of BDK Obligations has occurred, “First Lien Collateral” shall not include any Badcock Collateral (as defined in the Initial First Lien Credit Agreement).
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“First Lien Collateral Agent” means (i) in the case of any Initial First Lien Obligations or the Initial First Lien Claimholders, the Initial First Lien Collateral Agent and (ii) in the case of any Additional First Lien Obligations and the Additional First Lien Claimholders in respect thereof, the Person serving as collateral agent (or the equivalent) for such Additional First Lien Obligations and that is named as the First Lien Collateral Agent in respect of such Additional First Lien Obligations in the applicable Joinder Agreement (or in the case of the BDK First Lien Obligations or the BDK First Lien Claimholders, the BDK First Lien Collateral Agent (which for all purposes hereof shall be an “Additional First Lien Collateral Agent”), pursuant to its direct signature hereto on the date hereof) (each, in the case of this clause (ii) together with its successors and assigns in such capacity, an “Additional First Lien Collateral Agent”).
“First Lien Collateral Documents” means the “Security Documents” or “Collateral Documents” or similar term (as defined in the applicable First Lien Loan Documents) and any other agreement, document or instrument pursuant to which a Lien is granted securing any First Lien Obligations or pursuant to which any such Lien is perfected; provided that, until such time as the Discharge of BDK Obligations has occurred, “First Lien Collateral Documents” shall not include any “Badcock Security Documents” (as defined in the Initial First Lien Credit Agreement).
“First Lien Debt” means the Initial First Lien Debt and any Additional First Lien Debt.
“First Lien Declined Liens” has the meaning set forth in Section 2.3.
“First Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“First Lien Loan Documents” means the Initial First Lien Loan Documents and any Additional First Lien Loan Documents.
“First Lien Obligations” means the Initial First Lien Obligations and any Additional First Lien Obligations; provided, that if the sum of all Indebtedness constituting principal outstanding under the Initial First Lien Credit Agreement and the Additional First Lien Loan Documents exceeds the sum of the First Lien Cap Amount and, for so long as the BDK First Lien Obligations remain outstanding, the BDK First Lien Cap Amount, then only that portion of such Indebtedness (on a pro rata basis based on the aggregate outstanding principal amount of such Indebtedness) equal to the sum of the First Lien Cap Amount and, for so long as the BDK First Lien Obligations remain outstanding, the BDK First Lien Cap Amount shall be included in First Lien Obligations and interest with respect to such Indebtedness shall only constitute First Lien Obligations to the extent related to Indebtedness up to the sum of the First Lien Cap Amount and, for so long as the BDK First Lien Obligations remain outstanding, the BDK First Lien Cap Amount included in the First Lien Obligations. For avoidance of doubt, Hedging Obligations and Bank Product Obligations shall not be subject to the First Lien Cap Amount or the BDK First Lien Cap Amount.
“First Lien Pari Passu Intercreditor Agreement” means an agreement among each First Lien Representative and each First Lien Collateral Agent allocating rights among the various Series of First Lien Obligations.
“First Lien Representative” means (i) in the case of any Initial First Lien Obligations or the Initial First Lien Claimholders, the Initial First Lien Representative and (ii) in the case of any Additional First Lien Obligations and the Additional First Lien Claimholders in respect thereof, each trustee, administrative agent, collateral agent, security agent and similar agent that is named as the First Lien Representative in respect of such Additional First Lien Obligations in the applicable Joinder Agreement (or in the case of the BDK First Lien Obligations or the BDK First Lien Claimholders, the BDK First Lien Representative (which for all purposes hereof shall be an “Additional First Lien Representative”), pursuant to its direct signature hereto on the date hereof) (each, in the case of this clause (ii), together with its successors and assigns in such capacity, an “Additional First Lien Representative”).
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“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.
“Grantors” means (a) prior to the Discharge of BDK Obligations, the Company, FG Newco PSP, Valor, FG Newco Intermediate AF, each other Subsidiary of the Company that is party to the First Lien Guaranty, the BDK First Lien Guaranty, the Second Lien Guaranty and the BDK Second Lien Guaranty and each other Person that has executed and delivered or may from time to time hereafter execute and deliver any First Lien Collateral Document and/or Second Lien Collateral Document as a “grantor” or “pledgor” (or the equivalent thereof) to secure any First Lien Obligations and/or Second Lien Obligations, as the context may require and (b) from and after the Discharge of BDK Obligations, the Company, FG Newco PSP, Valor, FG Newco Intermediate AF, Badcock, each other Subsidiary of the Company that is party to the First Lien Guaranty and the Second Lien Guaranty and each other Person that has executed and delivered or may from time to time hereafter execute and deliver any First Lien Collateral Document and/or Second Lien Collateral Document as a “grantor” or “pledgor” (or the equivalent thereof) to secure any First Lien Obligations and/or Second Lien Obligations, as the context may require. For the avoidance of doubt, Badcock shall not constitute a “Grantor” until such time as the Discharge of BDK Obligations has occurred.
“Hedge Agreement” means a Swap Contract entered into by a Loan Party with a counterparty as permitted under the First Lien Loan Documents.
“Hedging Obligation” of any Person means any obligation of such Person pursuant to any Hedge Agreement.
“Indebtedness” means and includes all indebtedness for borrowed money. For the avoidance of doubt, “Indebtedness” shall not include reimbursement or other obligations in respect of letters of credit, Hedging Obligations or Bank Product Obligations.
“Initial First Lien Claimholders” means the “Secured Parties” as defined in the Initial First Lien Credit Agreement.
“Initial First Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“Initial First Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“Initial First Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Initial First Lien Loan Documents.
“Initial First Lien Loan Documents” means the Initial First Lien Credit Agreement and the other “Loan Documents” as defined in the Initial First Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Initial First Lien Obligations.
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“Initial First Lien Obligations” means the “Secured Obligations” as defined in the Initial First Lien Credit Agreement.
“Initial First Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“Initial Second Lien Claimholders” means the “Secured Parties” as defined in the Initial Second Lien Loan Documents.
“Initial Second Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“Initial Second Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“Initial Second Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Initial Second Lien Loan Documents.
“Initial Second Lien Loan Documents” means that certain Initial Second Lien Credit Agreement and the other “Loan Documents” as defined in the Initial Second Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Initial Second Lien Obligations.
“Initial Second Lien Obligations” means the “Secured Obligations” as defined in the Initial Second Lien Loan Documents.
“Initial Second Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“Insolvency or Liquidation Proceeding” means:
(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Loan Party;
(b) any other voluntary or involuntary insolvency, reorganization or Bankruptcy Case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Loan Party or with respect to a material portion of their respective assets;
(c) any liquidation, dissolution, reorganization or winding up of any Loan Party whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(d) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Loan Party.
“Joinder Agreement” means a supplement to this Agreement in the form of: (i) Exhibit A or Exhibit B hereto, as applicable, required to be delivered by a Representative and a Collateral Agent to each other then-existing Representative and Collateral Agent pursuant to Section 8.7 in order to include Additional First Lien Debt or Additional Second Lien Debt hereunder and to become the Representative or Collateral Agent, as the case may be, hereunder in respect thereof for the applicable Additional First Lien Claimholders or applicable Additional Second Lien Claimholders, as the case may be, under such Additional First Lien Debt or Additional Second Lien Debt or (ii) Exhibit D hereto required to be delivered by any Grantor pursuant to Section 8.20.
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“Lien” means any lien (including judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust (whether contractual, statutory, deemed, equitable, constructive, resulting or otherwise), UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing, including any right of set-off or recoupment.
“Loan Documents” means the First Lien Loan Documents and the Second Lien Loan Documents.
“Loan Parties” means (a) prior to the Discharge of BDK Obligations, the Grantors and Badcock and (b) from and after the Discharge of BDK Obligations, the Grantors.
“Obligations” means all obligations of every nature of each Grantor from time to time owed to any agent or trustee, the First Lien Claimholders, the Second Lien Claimholders or any of them or their respective Affiliates, in each case, under the First Lien Loan Documents, the Second Lien Loan Documents, Hedge Agreements or Bank Product Obligations, whether for principal, interest, premium or payments for early termination of Swap Contracts, fees, expenses, indemnification or otherwise and all guarantees of any of the foregoing and including any interest and fees that accrue after the commencement by or against any Person of any proceeding under any Bankruptcy Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
“Pay-Over Amount” has the meaning set forth in Section 6.3(b).
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.
“Pledged Collateral” has the meaning set forth in Section 5.5.
“Post-Petition Interest” means interest, fees, premiums, expenses and other charges that, pursuant to the First Lien Loan Documents or the Second Lien Loan Documents, as applicable, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.
“Purchase Price” has the meaning set forth in Section 5.7.
“Recovery” has the meaning set forth in Section 6.5.
“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other Indebtedness in exchange or replacement for, such Indebtedness in whole or in part and subject, in the case of First Lien Debt, to the First Lien Cap Amount regardless of whether the principal amount of such Refinancing Indebtedness is the same, greater than, or less than the principal amount of the Refinanced Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees and substantially the same collateral provisions) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
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“Replacement BDK Collateral” has the meaning set forth in Section 6.6.
“Replacement Collateral” has the meaning set forth in Section 6.6.
“Representative” means any First Lien Representative and/or any Second Lien Representative, as the context may require.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or equivalent officers of the applicable Grantor.
“Second Lien Adequate Protection Payments” has the meaning set forth in Section 6.3(b).
“Second Lien Claimholder DIP Financing” has the meaning set forth in Section 6.1(b).
“Second Lien Claimholders” means the Initial Second Lien Claimholders and any Additional Second Lien Claimholders.
“Second Lien Collateral” means any “Collateral,” “Pledged Collateral” or similar term as defined in any Second Lien Loan Document or any other assets of any Grantor with respect to which a Lien is granted, purported to be granted or required to be granted pursuant to a Second Lien Loan Document as security for any Second Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Second Lien Claimholder. For the avoidance of doubt, until such time as the Discharge of BDK Obligations has occurred, “Second Lien Collateral” shall not include any Badcock Collateral (as defined in the Initial Second Lien Credit Agreement).
“Second Lien Collateral Agent” means (i) in the case of any Initial Second Lien Obligations or the Initial Second Lien Claimholders, the Initial Second Lien Collateral Agent and (ii) in the case of any Additional Second Lien Obligations and the Additional Second Lien Claimholders in respect thereof, the Person serving as collateral agent (or the equivalent) for such Additional Second Lien Obligations and that is named as the Second Lien Collateral Agent in respect of such Additional Second Lien Obligations in the applicable Joinder Agreement (or in the case of the BDK Second Lien Obligations or the BDK Second Lien Claimholders, the BDK Second Lien Collateral Agent (which for all purposes hereof shall be an “Additional Second Lien Collateral Agent”), pursuant to its direct signature hereto on the date hereof) (each, in the case of this clause (ii), together with its successors and assigns in such capacity, an “Additional Second Lien Collateral Agent”).
“Second Lien Collateral Documents” means the “Security Documents” or “Collateral Documents” (as defined in the applicable Second Lien Loan Documents) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Second Lien Obligations or pursuant to which any such Lien is perfected; provided that, until such time as the Discharge of BDK Obligations has occurred, “Second Lien Collateral Documents” shall not include any “Badcock Security Documents” (as defined in the Initial Second Lien Credit Agreement).
“Second Lien Debt” means the Initial Second Lien Debt and any Additional Second Lien Debt.
“Second Lien Declined Lien” has the meaning set forth in Section 2.3.
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“Second Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“Second Lien Loan Documents” means the Initial Second Lien Loan Documents and any Additional Second Lien Loan Documents.
“Second Lien Mortgages” means a collective reference to each mortgage, deed of trust and any other document or instrument under which any Lien on real property owned or leased by any Grantor is granted to secure any Second Lien Obligations or under which rights or remedies with respect to any such Liens are governed. For the avoidance of doubt, until such time as the Discharge of BDK Obligations has occurred, “Second Lien Mortgages” shall not include any assets of Badcock.
“Second Lien Obligations” means the Initial Second Lien Obligations and any Additional Second Lien Obligations.
“Second Lien Pari Passu Intercreditor Agreement” means an agreement among each Second Lien Representative and each Second Lien Collateral Agent allocating rights among the various Series of Second Lien Obligations.
“Second Lien Representative” means (i) in the case of the Initial Second Lien Obligations or the Initial Second Lien Claimholders, the Initial Second Lien Representative and (ii) in the case of any Additional Second Lien Obligations and the Additional Second Lien Claimholders in respect thereof, each trustee, administrative agent, collateral agent, security agent and similar agent that is named as the Second Lien Representative in respect of such Additional Second Lien Obligations in the applicable Joinder Agreement (or in the case of the BDK Second Lien Obligations or the BDK Second Lien Claimholders, the BDK Second Lien Representative (which for all purposes hereof shall be an “Additional Second Lien Representative”), pursuant to its direct signature hereto on the date hereof) (each, in the case of this clause (ii), together with its successors and assigns in such capacity, an “Additional Second Lien Representative”).
“Series” means, (x) with respect to First Lien Debt or Second Lien Debt, all First Lien Debt or Second Lien Debt, as applicable, represented by the same Representative acting in the same capacity and (y) with respect to First Lien Obligations or Second Lien Obligations, all such obligations secured by the same First Lien Collateral Documents or the same Second Lien Collateral Documents, as the case may be.
“Short Fall” has the meaning set forth in Section 6.3(b).
“Standstill Period” has the meaning set forth in Section 3.1.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
“Swap Contract” means (a) any and all interest 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 price or bond index swaps or options for 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 such obligations or liabilities under any Master Agreement.
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“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.
“Valor” shall have the meaning set forth in the Recitals to this Agreement.
1.2 Terms Generally. The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise:
(a) any definition of or reference herein to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as amended, restated, amended and restated, supplemented or otherwise modified from time to time and any reference herein to any statute or regulations shall include any amendment, renewal, extension or replacement thereof;
(b) any reference herein to any Person shall be construed to include such Person’s successors and assigns from time to time;
(c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;
(d) all references herein to Sections shall be construed to refer to Sections of this Agreement; and
(e) 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.
1.3 Currency Equivalents Generally. For purposes of determining compliance with any Dollar-denominated restriction on the maximum amount of Indebtedness permitted to be outstanding for any purposes hereunder, the principal amount of Indebtedness denominated in a currency other than U.S. Dollars shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is Refinancing Indebtedness denominated in a currency other than U.S. Dollars, and such refinancing would cause the applicable U.S. Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such U.S. Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced (in each case, assuming a full utilization of commitments thereunder). The principal amount of any Refinancing Indebtedness, if incurred in a different currency from the Indebtedness being Refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such Refinancing (in each case, assuming a full utilization of commitments thereunder).
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Section 2. Lien Priorities.
2.1 Relative Priorities. Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing the Second Lien Obligations granted on the Collateral or of any Liens securing the First Lien Obligations granted on the Collateral and notwithstanding any provision of the UCC or any other applicable law or the Second Lien Loan Documents or any defect or deficiencies in, or failure to perfect or lapse in perfection of, or avoidance as a fraudulent conveyance or otherwise of, the Liens securing the First Lien Obligations, the subordination of such Liens to any other Liens, or any other circumstance whatsoever, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, hereby agrees that:
(a) any Lien on the Collateral securing any First Lien Obligations now or hereafter held by or on behalf of any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholders or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Lien on the Collateral securing any Second Lien Obligations;
(b) any Lien on the Collateral securing any Second Lien Obligations now or hereafter held by or on behalf of any Second Lien Representative, any Second Lien Collateral Agent, any Second Lien Claimholders or any agent or trustee therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any First Lien Obligations. All Liens on the Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Obligations for all purposes, whether or not such Liens securing any First Lien Obligations are subordinated to any Lien securing any other obligation of any Grantor or any other Person; and
(c) any Lien on the Collateral securing any Excess First Lien Obligations now or hereafter held by or on behalf of any First Lien Representative, any First Lien Collateral Agent, any First Lien Claimholders or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to any Lien on the Collateral securing any Second Lien Obligations.
2.2 Prohibition on Contesting Liens. Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, and each First Lien Representative and each First Lien Collateral Agent, for itself and on behalf of each other First Lien Claimholder represented by it, agrees that it will not (and hereby waives any right to) directly or indirectly contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the priority, validity, perfection, extent or enforceability of a Lien held, or purported to be held, by or on behalf of any of the First Lien Claimholders in the First Lien Collateral or by or on behalf of any of the Second Lien Claimholders in the Second Lien Collateral, as the case may be, or the amount, nature or extent of the First Lien Obligations or Second Lien Obligations or the provisions of this Agreement; provided, that nothing in this Agreement shall be construed to prevent or impair the rights of any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the First Lien Obligations as provided in Sections 2.1 and 3.1.
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2.3 No New Liens. So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, no Grantor shall (and the Company shall not permit any other Grantor to):
(a) grant or permit any additional Liens on any asset or property to secure any Second Lien Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure the First Lien Obligations, the parties hereto agreeing that any such Lien shall be subject to Section 2.1; provided that this provision will not be violated with respect to any particular Series of First Lien Obligations if the applicable First Lien Collateral Agent is given a reasonable opportunity to accept a Lien on any asset or property and either the Company or such First Lien Collateral Agent states in writing that the First Lien Loan Documents in respect thereof prohibit such First Lien Collateral Agent from accepting a Lien on such asset or property or the applicable First Lien Collateral Agent otherwise expressly declines to accept a Lien on such asset or property (any such prohibited or declined Lien with respect to a particular Series of First Lien Obligations, a “First Lien Declined Lien”); or
(b) grant or permit any additional Liens on any asset or property to secure any First Lien Obligations unless it has granted or concurrently grants a Lien on such asset or property to secure the Second Lien Obligations; provided that this provision will not be violated with respect to any particular Series of Second Lien Obligations if the applicable Second Lien Collateral Agent is given a reasonable opportunity to accept a Lien on any asset or property and either the Company or such Second Lien Collateral Agent states in writing that the Second Lien Loan Documents in respect thereof prohibit such Second Lien Collateral Agent from accepting a Lien on such asset or property or the applicable Second Lien Collateral Agent otherwise expressly declines to accept a Lien on such asset or property (any such prohibited or declined Lien with respect to a particular Series of Second Lien Obligations, a “Second Lien Declined Lien” and, together with the First Lien Declined Liens, the “Declined Liens”).
If any Second Lien Representative, any Second Lien Collateral Agent or any Second Lien Claimholder shall hold any Lien on any assets or property of any Grantor securing any Second Lien Obligations that are not also subject to the first-priority Liens, other than any Declined Liens, securing all First Lien Obligations under the First Lien Collateral Documents, such Second Lien Representative, Second Lien Collateral Agent or Second Lien Claimholder shall notify the Designated First Lien Representative promptly upon becoming aware thereof and, unless such Grantor shall promptly grant a similar Lien, other than any such Lien that would constitute a Declined Lien, on such assets or property to each First Lien Collateral Agent as security for the First Lien Obligations represented by it, such Second Lien Representative, Second Lien Collateral Agent and Second Lien Claimholders shall be deemed to hold and have held such Lien for the benefit of each First Lien Representative, First Lien Collateral Agent and the other First Lien Claimholders, other than any First Lien Claimholders whose First Lien Loan Documents prohibit them from taking such Liens, as security for the First Lien Obligations. To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to any First Lien Representative, First Lien Collateral Agent and/or the First Lien Claimholders, each Second Lien Representative and each Second Lien Collateral Agent, on behalf of each Second Lien Claimholder represented by it, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.
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If any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder shall hold any Lien on any assets or property of any Grantor securing any First Lien Obligations that are not also subject to the junior-priority Liens, other than any Declined Liens, securing all Second Lien Obligations under the Second Lien Collateral Documents, such First Lien Representative, First Lien Collateral Agent or First Lien Claimholder shall notify the Designated Second Lien Representative promptly upon becoming aware thereof and, unless such Grantor shall promptly grant a similar Lien, other than any such Lien that would constitute a Declined Lien, on such assets or property to each Second Lien Collateral Agent as security for the Second Lien Obligations represented by it, such First Lien Representative, First Lien Collateral Agent and First Lien Claimholders shall be deemed to hold and have held such Lien for the benefit of each Second Lien Representative, Second Lien Collateral Agent and the other Second Lien Claimholders, other than any Second Lien Claimholders whose Second Lien Loan Documents prohibit them from taking such Liens, as security for the Second Lien Obligations.
2.4 Similar Liens and Agreements. The parties hereto agree that, subject to Sections 2.3 and 5.3(c), it is their intention that the First Lien Collateral and the Second Lien Collateral be identical. In furtherance of the foregoing and of Section 8.12, the parties hereto agree, subject to the other provisions of this Agreement:
(a) upon request by any First Lien Collateral Agent or any Second Lien Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the First Lien Collateral and the Second Lien Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the First Lien Loan Documents and the Second Lien Loan Documents; and
(b) that the documents and agreements creating or evidencing the First Lien Collateral and the Second Lien Collateral and guarantees for the First Lien Obligations and the Second Lien Obligations, subject to Sections 2.3 and 5.3(c), shall be in all material respects the same forms of documents other than with respect to the first lien and the second lien nature of the Obligations thereunder.
2.5 Perfection of Liens. Except for the arrangements contemplated by Section 5.5, none of the First Lien Representatives, the First Lien Collateral Agents or the First Lien Claimholders shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Collateral for the benefit of the Second Lien Representatives, the Second Lien Collateral Agents or the Second Lien Claimholders. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the First Lien Claimholders on the one hand and the Second Lien Claimholders on the other hand, and such provisions shall not impose on the First Lien Representatives, the First Lien Collateral Agents, the First Lien Claimholders, the Second Lien Representatives, the Second Lien Collateral Agents, the Second Lien Claimholders or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior-perfected claims therein in favor of any other Person or any order or decree of any court or Governmental Authority or any applicable law.
2.6 Nature of First Lien Obligations. Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, acknowledges that a portion of the First Lien Obligations represents, or may in the future represent, debt that is revolving in nature and that the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that, subject to Section 5.3(a), the terms of the First Lien Obligations may be modified, extended or amended from time to time, and that, subject to the provisions of this Agreement, the aggregate amount of the First Lien Obligations may be increased, replaced or refinanced, in each event, without notice to or consent by the Second Lien Claimholders and without affecting the provisions hereof. The lien priorities provided in Section 2.1 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the First Lien Obligations or the Second Lien Obligations, or any portion thereof.
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Section 3. Enforcement.
3.1 Exercise of Remedies.
(a) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, the Second Lien Representatives, the Second Lien Collateral Agents and the Second Lien Claimholders:
(1) will not commence or maintain, or seek to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral; provided that the Designated Second Lien Representative and/or the Designated Second Lien Collateral Agent may commence an Enforcement Action or otherwise exercise any or all such rights or remedies after the passage of a period of at least 150 days has elapsed since the later of (i) the date on which a Second Lien Representative declared the existence of any Event of Default under (and as defined in) any Second Lien Loan Document; and (ii) the date on which the First Lien Representatives received notice from such Second Lien Representative of such declaration of such Event of Default (the “Standstill Period”); provided, further, that notwithstanding anything herein to the contrary, in no event shall any Second Lien Representative, any Second Lien Collateral Agent or any Second Lien Claimholder take any Enforcement Action with respect to the Collateral if, notwithstanding the expiration of the Standstill Period, (i) any First Lien Representative, any First Lien Collateral Agent or the applicable First Lien Claimholders shall have commenced and be diligently pursuing in good faith an Enforcement Action or other exercise of their rights or remedies in each case with respect to all or any material portion of the Collateral (prompt notice of such exercise to be given to the Designated Second Lien Representative), (ii) any Loan Party shall be subject to any Insolvency or Liquidation Proceeding (provided that in any such Insolvency or Liquidation Proceeding any Second Lien Representative, Second Lien Collateral Agent or Second Lien Claimholder may take any action expressly permitted by Section 3.1(c), Section 3.1(e) or Section 6 hereof) or (iii) solely and exclusively with respect to the ABL Priority Collateral any First Lien Representative, any First Lien Collateral Agent or the applicable First Lien Claimholders are stayed by the ABL Intercreditor Agreement from pursuing exercise of rights and remedies with respect to the ABL Priority Collateral (it being understood and agreed that Second Lien Claimholders shall be permitted to exercise rights and remedies with respect to the Term Loan Priority Collateral upon expiration of the Standstill Period (subject to the foregoing clauses (i) and (ii));
(2) will not contest, protest or object to any foreclosure proceeding or action brought by any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder or any other exercise by any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder of any rights and remedies relating to the Collateral under the First Lien Loan Documents or otherwise (including any Enforcement Action initiated by or supported by any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder); and
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(3) subject to their rights under Section 3.1(a)(1), will not object to the forbearance by any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral,
in each case so long as any proceeds received by any First Lien Representative or First Lien Collateral Agent in excess of those necessary to achieve a Discharge of First Lien Obligations are distributed in accordance with Section 4.1 and applicable law.
(b) Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, subject to Section 3.1(a)(1), the First Lien Representatives, the First Lien Collateral Agents and the First Lien Claimholders shall have the exclusive right to commence and maintain an Enforcement Action or otherwise enforce rights and exercise remedies with respect to the Collateral (including set-off, recoupment and the right to credit bid their debt, except that Second Lien Representatives shall have the credit bid rights set forth in Section 3.1(c)(6)), and subject to Section 5.1, make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder; provided that any proceeds received by any First Lien Representative or First Lien Collateral Agent in excess of those necessary to achieve a Discharge of First Lien Obligations are distributed in accordance with Section 4.1 and applicable law. In commencing or maintaining any Enforcement Action or otherwise exercising rights and remedies with respect to the Collateral, the First Lien Representatives, the First Lien Collateral Agents and the First Lien Claimholders may enforce the provisions of the First Lien Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion in compliance with any applicable law and without consultation with any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder and regardless of whether any such exercise is adverse to the interest of any Second Lien Claimholder. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.
(c) Notwithstanding the foregoing, any Second Lien Representative, any Second Lien Collateral Agent and any other Second Lien Claimholder may:
(1) file a claim or statement of interest with respect to the Second Lien Obligations; provided that an Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party;
(2) take any action (not adverse to the priority status of the Liens on the Collateral securing the First Lien Obligations, or the rights of any First Lien Representative, any First Lien Collateral Agent or the First Lien Claimholders to exercise remedies in respect thereof) in order to create, perfect, preserve or protect its Lien on the Collateral;
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(3) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Second Lien Claimholders, including any claims secured by the Collateral, if any, in each case in accordance with the terms of this Agreement;
(4) vote on any plan of reorganization, arrangement, compromise or liquidation, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Second Lien Obligations and the Collateral; provided that no filing of any claim or vote, or pleading related to such claim or vote, to accept or reject a disclosure statement, plan of reorganization, arrangement, compromise or liquidation, or any other document, agreement or proposal similar to the foregoing by any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder may be inconsistent with the provisions of this Agreement;
(5) exercise any of its rights or remedies with respect to the Collateral after the termination of the Standstill Period to the extent permitted by Section 3.1(a)(1);
(6) bid for or purchase Collateral at any public, private or judicial foreclosure upon such Collateral initiated by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder, or any sale of Collateral during an Insolvency or Liquidation Proceeding; provided that such bid may not include a “credit bid” in respect of any Second Lien Obligations unless the cash proceeds of such bid are otherwise sufficient to cause the Discharge of First Lien Obligations;
(7) join (but not exercise any control over) a judicial foreclosure or Lien enforcement proceeding with respect to the Collateral initiated by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder, to the extent that such action could not reasonably be expected to interfere materially with the Enforcement Action; or
(8) object to any proposed acceptance of Collateral by any First Lien Representative, First Lien Collateral Agent or other First Lien Claimholder pursuant to Section 9-620 of the UCC, in a manner not inconsistent with the provisions of this Agreement.
Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy with respect to any Collateral (including set-off and recoupment) in its capacity as a creditor, unless and until the Discharge of First Lien Obligations has occurred, except as expressly permitted by Section 3.1(a)(1) to the extent such Second Lien Representative or such Second Lien Collateral Agent and Second Lien Claimholders represented by it are permitted to retain the proceeds thereof in accordance with Section 4.2 of this Agreement. Without limiting the generality of the foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as expressly provided in Sections 3.1(a) and 6.3(b) and this Section 3.1(c), the sole right of the Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Second Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of First Lien Obligations has occurred.
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(d) Subject to Sections 3.1(a) and 3.1(c) and Section 6.3(b):
(1) each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that such Second Lien Representative or such Second Lien Collateral Agent and such Second Lien Claimholders represented by it will not take any action that would hinder any exercise of remedies under the First Lien Loan Documents or is otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other disposition of the Collateral that is prohibited hereunder, whether by foreclosure or otherwise;
(2) each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, hereby waives any and all rights such Second Lien Representative or such Second Lien Collateral Agent and such Second Lien Claimholders represented by it may have as a junior lien creditor or otherwise to object to the manner in which any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder seeks to enforce or collect the First Lien Obligations or Liens securing the First Lien Obligations granted in any of the First Lien Collateral undertaken in accordance with this Agreement, regardless of whether any action or failure to act by or on behalf of any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder is adverse to the interest of any Second Lien Claimholder; and
(3) each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Second Lien Loan Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder with respect to the Collateral as set forth in this Agreement and the First Lien Loan Documents.
(e) Except as specifically set forth in this Agreement, the Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders may exercise rights and remedies as unsecured creditors against any Grantor that has guaranteed or granted Liens to secure the Second Lien Obligations in accordance with the terms of the Second Lien Loan Documents and applicable law (other than initiating in an involuntary case or proceeding under any Insolvency or Liquidation Proceeding with respect to any Grantor); provided that in the event that any Second Lien Claimholder becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Second Lien Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the First Lien Obligations) in the same manner as the other Liens securing the Second Lien Obligations are subject to this Agreement.
(f) Nothing in this Agreement shall prohibit the receipt by any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder of the required payments of interest, principal and other amounts owed in respect of the Second Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder of rights or remedies as a secured creditor (including set-off and recoupment against the Collateral) or enforcement in contravention of this Agreement of any Lien held by any of them or as a result of any other violation by any Second Lien Claimholder of the express terms of this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder may have with respect to the First Lien Collateral.
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3.2 Actions Upon Breach; Specific Performance. If any Second Lien Claimholder, in contravention of the terms of this Agreement, in any way takes, attempts to or threatens to take any action with respect to the Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), or fails to take any action required by this Agreement, this Agreement shall create an irrebutable presumption and admission by such Second Lien Claimholder that relief against such Second Lien Claimholder by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the First Lien Claimholders, it being understood and agreed by each Second Lien Representative and each Second Lien Collateral Agent, on behalf of each Second Lien Claimholder represented by it, that (i) the First Lien Claimholders’ damages from actions of any Second Lien Claimholder may at that time be difficult to ascertain and may be irreparable and (ii) each Second Lien Claimholder waives any defense that the Grantors and/or the First Lien Claimholders cannot demonstrate damage and/or be made whole by the awarding of damages. Each of the First Lien Representatives and/or First Lien Collateral Agents may demand specific performance of this Agreement. Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder. No provision of this Agreement shall constitute or be deemed to constitute a waiver by any First Lien Representative or any First Lien Collateral Agent on behalf of itself and each other First Lien Claimholder represented by it of any right to seek damages from any Person in connection with any breach or alleged breach of this Agreement.
Section 4. Payments.
4.1 Application of Proceeds. Subject to the terms of the ABL Intercreditor Agreement, so long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, any Collateral or any proceeds thereof and any insurance proceeds to be distributed pursuant to Section 5.2 received in connection with any Enforcement Action or other exercise of remedies by any First Lien Representative, any First Lien Collateral Agent or any First Lien Claimholder with respect to the Collateral shall be applied as follows:
FIRST, by the Designated First Lien Collateral Agent to the First Lien Collateral Agents, the First Lien Representatives, the Second Lien Collateral Agents and/or the Second Lien Representatives for the payment of reasonable out-of-pocket costs and expenses incurred by such First Lien Representatives, First Lien Collateral Agents, Second Lien Representatives and/or Second Lien Collateral Agents, in each case constituting First Lien Obligations or Second Lien Obligations in connection with any Enforcement Action or such other exercise of remedies in respect of the Collateral (in the case of the Second Lien Representatives and/or Second Lien Collateral Agents, to the extent such Enforcement Action or other exercise of remedies in respect of the Collateral are not in violation of this Agreement);
SECOND, by the Designated First Lien Collateral Agent and the other First Lien Collateral Agents or the First Lien Representatives, as applicable, to the applicable First Lien Obligations in such order as specified in the relevant First Lien Loan Documents and, if then in effect, the First Lien Pari Passu Intercreditor Agreement, until a Discharge of First Lien Obligations; provided, that any non-cash Collateral or non-cash proceeds may be held by the applicable First Lien Collateral Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable;
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THIRD, by the Designated Second Lien Collateral Agent and the other Second Lien Collateral Agents or the Second Lien Representatives, as applicable, to the applicable Second Lien Obligations in such order as specified in the applicable Second Lien Collateral Documents and, if then in effect, the Second Lien Pari Passu Intercreditor Agreement, until a Discharge of Second Lien Obligations;
FOURTH, by the Designated First Lien Collateral Agent and the other First Lien Collateral Agents or the First Lien Representatives, as applicable, to any Excess First Lien Obligations in such order as specified in the relevant First Lien Loan Documents and, if then in effect, the First Lien Pari Passu Intercreditor Agreement, until a Discharge of Excess First Lien Obligations; and
FIFTH, to the Grantors, their successors or assigns from time to time, or to whomever may be lawfully entitled to receive the same.
4.2 Payments Over.
(a) So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, any Collateral or any proceeds thereof (including assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and any assets or proceeds subject to Liens that have been avoided or otherwise invalidated, but excluding any debt obligations of the reorganized debtor distributed as contemplated by Section 6.6) received by any Second Lien Representative, Second Lien Collateral Agent or any other Second Lien Claimholder in connection with any Enforcement Action or other exercise of any right or remedy relating to the Collateral, less any reasonable out-of-pocket expenses incurred in connection with such Enforcement Action, in all cases shall be segregated and forthwith paid over to the Designated First Lien Collateral Agent for the benefit of the First Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties) or as a court of competent jurisdiction may otherwise direct. The Designated First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Second Lien Representatives, Second Lien Collateral Agents or any such other Second Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.
(b) So long as the Discharge of First Lien Obligations has not occurred, if in any Insolvency or Liquidation Proceeding any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder shall receive any distribution of money or other property in respect of the Collateral or proceeds thereof (including any assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and assets or proceeds subject to Liens that have been avoided or otherwise invalidated) such money or other property (other than debt obligations of the reorganized debtor distributed as contemplated by Section 6.6) shall be segregated and forthwith paid over to the Designated First Lien Collateral Agent for the benefit of the First Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties). The Designated First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Second Lien Representatives, the Second Lien Collateral Agents or any such other Second Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations. Any Lien received by any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder in respect of any of the Second Lien Obligations in any Insolvency or Liquidation Proceeding shall be subject to the terms of this Agreement.
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(c) After the Discharge of First Lien Obligations has occurred and so long as the Discharge of Second Lien Obligations has not occurred, if in any Insolvency or Liquidation Proceeding any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder shall receive any distribution of money or other property in respect of the Collateral or proceeds thereof (including any assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and assets or proceeds subject to Liens that have been avoided or otherwise invalidated) such money or other property (other than debt obligations of the reorganized debtor distributed as contemplated by Section 6.6) shall be segregated and forthwith paid over to the Designated Second Lien Collateral Agent for the benefit of the Second Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties). The Designated Second Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the First Lien Representatives, the First Lien Collateral Agents or any such other First Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of Second Lien Obligations or Discharge of Excess First Lien Obligations. Any Lien received by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder in respect of any of the Excess First Lien Obligations in any Insolvency or Liquidation Proceeding shall be subject to the terms of this Agreement.
Section 5. Other Agreements.
5.1 Releases.
(a) If in connection with any Enforcement Action by any First Lien Representative or any First Lien Collateral Agent or any other exercise of any First Lien Representative’s or any First Lien Collateral Agent’s remedies in respect of the Collateral, in each case prior to the Discharge of First Lien Obligations, such First Lien Collateral Agent, for itself or on behalf of any of the First Lien Claimholders represented by it, releases any of its Liens on any part of the Collateral or such First Lien Representative, for itself or on behalf of any of the First Lien Claimholders represented by it, releases any Grantor (other than the Company) from its obligations under its guaranty of the First Lien Obligations, then the Liens, if any, of each Second Lien Collateral Agent, for itself or for the benefit of the Second Lien Claimholders, on such Collateral, and the obligations of such Grantor under its guaranty of the Second Lien Obligations, shall be automatically, unconditionally and simultaneously released. If in connection with any Enforcement Action or other exercise of rights and remedies by any First Lien Representative or any First Lien Collateral Agent, in each case prior to the Discharge of First Lien Obligations, the equity interests of any Person are foreclosed upon or otherwise disposed of and such First Lien Collateral Agent releases its Lien on the property or assets of such Person then the Liens of each Second Lien Collateral Agent with respect to the property or assets of such Person will be automatically released to the same extent as the Liens of such First Lien Collateral Agent. Each Second Lien Representative and each Second Lien Collateral Agent, for itself or on behalf of any Second Lien Claimholder represented by it, shall promptly execute and deliver to the First Lien Representatives, First Lien Collateral Agents or such Grantor such termination statements, releases and other documents as any First Lien Representative, First Lien Collateral Agent or such Grantor may request to effectively confirm the foregoing releases.
(b) If in connection with any sale, lease, exchange, transfer or other disposition of any Collateral by any Grantor (collectively, a “Disposition”) permitted under the terms of the First Lien Loan Documents and the terms of the Second Lien Loan Documents (other than in connection with an Enforcement Action or other exercise of any First Lien Representative’s and/or First Lien Collateral Agent’s remedies in respect of the Collateral, which shall be governed by Section 5.1(a)), any First Lien Collateral Agent, for itself or on behalf of any First Lien Claimholder represented by it, releases any of its Liens on any part of the Collateral, or any First Lien Representative, for itself or on behalf of any First Lien Claimholder represented by it, releases any Grantor from its obligations under its guaranty of the First Lien Obligations, in each case other than (A) in connection with, or following, the Discharge of First Lien Obligations or (B) after the occurrence and during the continuance of any Event of Default under (and as defined in) any Second Lien Loan Document, then the Liens, if any, of each Second Lien Collateral Agent, for itself or for the benefit of the Second Lien Claimholders represented by it, on such Collateral, and the obligations of such Grantor under its guaranty of the Second Lien Obligations, shall be automatically, unconditionally and simultaneously released. Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, shall promptly execute and deliver to the First Lien Representatives, the First Lien Collateral Agents or such Grantor such termination statements, releases and other documents as any First Lien Representative, First Lien Collateral Agent or such Grantor may request to effectively confirm such release.
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(c) Until the Discharge of First Lien Obligations occurs, each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, hereby irrevocably constitutes and appoints the Designated First Lien Collateral Agent and any officer or agent of the Designated First Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Second Lien Representative, such Second Lien Collateral Agent and such Second Lien Claimholders or in the Designated First Lien Collateral Agent’s own name, from time to time in the Designated First Lien Collateral Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Section 5.1, including any endorsements or other instruments of transfer or release. This power is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.
(d) Until the Discharge of First Lien Obligations occurs, to the extent that any First Lien Collateral Agent, any First Lien Representative or any First Lien Claimholder (i) has released any Lien on Collateral or any Grantor from its obligation under its guarantee and any such Liens or guarantee are later reinstated or (ii) obtains any new Liens or additional guarantees from any Grantor, then each Second Lien Collateral Agent, for itself and for the Second Lien Claimholders represented by it, shall be granted a Lien on any such Collateral (except to the extent such Lien represents a Second Lien Declined Lien with respect to the Second Lien Debt represented by such Second Lien Collateral Agent), subject to this Agreement, and each Second Lien Representative, for itself and for the Second Lien Claimholders represented by it, shall be granted an additional guarantee, as the case may be.
5.2 Insurance. Unless and until the Discharge of First Lien Obligations has occurred, the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders shall have the sole and exclusive right, subject to the rights of the Grantors under the First Lien Loan Documents, to adjust settlement for any insurance policy covering the Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral. Subject to the rights of the Grantors under the First Lien Loan Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) if in respect of the Collateral shall be distributed in accordance with the terms of Section 4.1. Until the Discharge of First Lien Obligations has occurred, if any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Agreement, then it shall segregate and forthwith pay such proceeds over to the Designated First Lien Collateral Agent in accordance with the terms of Section 4.2.
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5.3 Amendments to First Lien Loan Documents and Second Lien Loan Documents.
(a) The First Lien Loan Documents of any Series may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms and the First Lien Debt of any Series (other than BDK First Lien Debt) may be Refinanced subject to Section 8.7 without notice to, or the consent of, any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, restatement, supplement, modification or Refinancing is not inconsistent with the terms of this Agreement and, in the case of a Refinancing, the holders of such Refinancing debt (directly or through their agent) bind themselves in a writing addressed to each Second Lien Collateral Agent to the terms of this Agreement; and provided further that any such amendment, supplement, modification or Refinancing shall not, without the consent of each Second Lien Representative:
(1) (i) increase the sum of the then-outstanding aggregate principal amount of the Indebtedness outstanding under all First Lien Loan Documents (including, if any, any undrawn portion of any commitment under the First Lien Loan Documents but excluding any BDK First Lien Loan Documents) to an amount in excess of the First Lien Cap Amount or (ii) increase the sum of the then-outstanding aggregate principal amount of the Indebtedness outstanding under all BDK First Lien Loan Documents (including, if any, any undrawn portion of any commitment under the BDK First Lien Loan Documents) to an amount in excess of the BDK First Lien Cap Amount;
(2) increase the “Applicable Margin” or similar component of the interest rate or yield provisions applicable to the Indebtedness outstanding under the First Lien Loan Documents of that Series in a manner that would result in the total yield thereon exceeding by more than 3% per annum the total yield on Indebtedness thereunder as in effect on the date such Indebtedness became First Lien Debt (excluding increases (A) resulting from application of any pricing grid set forth in the applicable First Lien Loan Document as in effect on the date such Indebtedness became First Lien Debt, (B) resulting from the accrual of interest at the default rate or (C) resulting from any fluctuations in any “floor” rate component or other underlying reference rate of such interest rate not caused by an amendment, supplement, or refinancing of the First Lien Loan Documents of that Series);
(3) (i) extend the scheduled final maturity date of the First Lien Debt of that Series or a Refinancing beyond the scheduled final maturity date of the Series of Second Lien Debt with the earliest final maturity date or Refinancing thereof, (ii) extend the date for payment of more than two (2) scheduled principal payments during any calendar year or (iii) solely in the case of the BDK First Lien Debt, extend the scheduled final maturity of such BDK First Lien Debt;
(4) modify (or undertake an action with the effect of a modification of) the mandatory prepayment provisions of the First Lien Loan Documents (including accelerating or increasing the amortization of principal) in a manner that makes them more restrictive to any Grantor;
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(5) amend or otherwise modify any covenant, “Default” or “Event of Default” (as each such term is defined (or similar term) in the First Lien Loan Document for that Series) under any First Lien Loan Document to restrict any Grantor from making payments of the Second Lien Debt of any Series that would otherwise be permitted under such First Lien Loan Documents as in effect on the date the Indebtedness of such Series became First Lien Debt; or
(6) modify (or undertake an action with the effect of a modification of), add or waive any of the provisions of the First Lien Loan Documents governing assignments or other sales of First Lien Obligations by any First Lien Claimholders to an Affiliate of any Grantor.
(b) The Second Lien Loan Documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms and the Second Lien Debt of any Series may be Refinanced (other than BDK Second Lien Debt) subject to Section 8.7 without notice to, or the consent of, any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement, to the extent the terms and conditions of such amendment, restatement, supplement, modification or Refinancing meet any applicable requirements set forth in the First Lien Loan Documents; provided that any such amendment, restatement, supplement, modification or Refinancing is not inconsistent with the terms of this Agreement and, in the case of any Refinancing, the holders of such Refinancing debt (directly or through their agent) bind themselves in a writing addressed to each First Lien Collateral Agent to the terms of this Agreement; and provided further that any such amendment, supplement, modification or Refinancing shall not, without the consent of each First Lien Representative:
(1) increase the sum of the then-outstanding aggregate principal amount of the Indebtedness outstanding under all BDK Second Lien Loan Documents (including, if any, any undrawn portion of any commitment under the BDK Second Lien Loan Documents) to an amount in excess of the BDK Second Lien Cap Amount;
(2) increase the “Applicable Margin” or similar component of the interest rate or yield provisions applicable to the Indebtedness outstanding under the Second Lien Loan Documents of that Series in a manner that would result in the total yield thereon exceeding by more than 3% per annum the total yield on Indebtedness thereunder as in effect on the date such Indebtedness became Second Lien Debt (excluding increases (A) resulting from application of any pricing grid set forth in the applicable Second Lien Loan Document as in effect on the date such Indebtedness became Second Lien Debt, (B) resulting from the accrual of interest at the default rate or (C) resulting from any fluctuations in any “floor” rate component or other underlying reference rate of such interest rate not caused by an amendment, supplement, or refinancing of the Second Lien Loan Documents of that Series);
(3) solely in the case of the BDK Second Lien Debt, extend the scheduled final maturity of such BDK Second Lien Debt;
(4) accelerate any date or dates upon which scheduled payments of principal are due, or change the redemption, mandatory prepayment or defeasance provisions thereof in a manner that is adverse to any Grantor; or
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(5) amend or otherwise modify any covenant, “Default” or “Event of Default” (as each such term is defined (or similar term) in the Second Lien Loan Document for that Series) under any Second Lien Loan Document to restrict any Grantor from making payments of the First Lien Debt of any Series that would otherwise be permitted under such Second Lien Loan Documents as in effect on the date the Indebtedness of such Series became Second Lien Debt.
(c) In the event any First Lien Collateral Agent or the applicable First Lien Claimholders and the relevant Grantor enter into any amendment, waiver or consent in respect of any of the First Lien Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First Lien Collateral Document or changing in any manner the rights of the applicable First Lien Collateral Agent, such First Lien Claimholders or any Grantor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of a Second Lien Collateral Document without the consent of any Second Lien Representative, Second Lien Collateral Agent, any other Second Lien Claimholder or any Grantor and without any action by any Second Lien Representative, any Second Lien Collateral Agent, any other Second Lien Claimholder or any Grantor, provided that:
(1) no such amendment, waiver or consent shall have the effect of:
(A) removing assets subject to the Lien of the Second Lien Collateral Documents, except to the extent that a release of such Lien is permitted or required by Section 5.1 and provided that there is a corresponding release of the Liens securing the First Lien Obligations on such removed assets;
(B) modifying the covenants requiring that the Grantors take actions to perfect or protect the Liens of the Second Lien Collateral Agent in the Collateral to the extent adverse in any material respect to any Second Lien Claimholders;
(C) imposing duties on any Second Lien Collateral Agent or any Second Lien Representative without its consent;
(D) permitting other Liens on the Collateral not permitted under the terms of the Second Lien Loan Documents or Section 6; or
(E) being prejudicial to the interests of the Second Lien Claimholders to a greater extent than the First Lien Claimholders (other than by virtue of their relative priority and the rights and obligations hereunder); and
(2) notice of such amendment, waiver or consent shall have been given by the Company to each Second Lien Collateral Agent within ten Business Days after the effective date of such amendment, waiver or consent.
5.4 Confirmation of Subordination in Second Lien Collateral Documents. The Grantors agree that each Second Lien Collateral Document shall include the following language (or language to similar effect approved by the Designated First Lien Collateral Agent):
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“Notwithstanding anything herein to the contrary, the lien and security interest granted to the [Collateral Agent] pursuant to this Agreement and the exercise of any right or remedy by the [Collateral Agent] hereunder are subject to the provisions of the Amended and Restated First Lien/Second Lien Intercreditor Agreement, dated as of November 22, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “First Lien/Second Lien Intercreditor Agreement”), among JPMorgan Chase Bank, N.A., as Initial First Lien Representative and as Initial First Lien Collateral Agent, Alter Domus (US) LLC, as Initial Second Lien Representative and as Initial Second Lien Collateral Agent, JPMorgan Chase Bank, N.A., as BDK First Lien Representative and as BDK First Lien Collateral Agent, Alter Domus (US) LLC, as BDK Second Lien Representative and as BDK Second Lien Collateral Agent and certain other persons party or that may become party thereto from time to time. In the event of any conflict between the terms of the First Lien/Second Lien Intercreditor Agreement and this Agreement, the terms of the First Lien/Second Lien Intercreditor Agreement shall govern and control.”
In addition, the Grantors agree that each Second Lien Mortgage, if any, covering any Collateral shall contain such other language as the Designated First Lien Collateral Agent may reasonably request to reflect the subordination of such Second Lien Mortgage to the First Lien Collateral Documents covering such Collateral.
5.5 Gratuitous Bailee/Agent for Perfection.
(a) Each First Lien Collateral Agent agrees to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees), to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”), as collateral agent for the First Lien Claimholders and as gratuitous bailee for the Second Lien Collateral Agents (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee thereof solely for the purpose of perfecting the security interest granted under the First Lien Loan Documents and the Second Lien Loan Documents, respectively, subject to the terms and conditions of this Section 5.5. Solely with respect to any deposit accounts under the control (within the meaning of Section 9-104 of the UCC) of any First Lien Collateral Agent, such First Lien Collateral Agent agrees to also hold control over such deposit accounts as gratuitous agent for the Second Lien Collateral Agents, subject to the terms and conditions of this Section 5.5. Prior to a Discharge of First Lien Obligations, at the request of the Designated First Lien Collateral Agent, each Second Lien Collateral Agent shall turn over possession of any Pledged Collateral in possession of such Second Lien Collateral Agent to the Designated First Lien Collateral Agent.
(b) No First Lien Collateral Agent shall have any obligation whatsoever to the other First Lien Claimholders, the Second Lien Representatives, the Second Lien Collateral Agents or the Second Lien Claimholders to ensure that the Pledged Collateral is genuine or owned by any of the Grantors, to perfect the security interests of the Second Lien Collateral Agents or other Second Lien Claimholders or to preserve rights or benefits of any Person except as expressly set forth in this Section 5.5. The duties or responsibilities of any First Lien Collateral Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as gratuitous bailee (and with respect to deposit accounts, gratuitous agent) in accordance with this Section 5.5 and delivering the Pledged Collateral upon a Discharge of First Lien Obligations as provided in Section 5.5(d).
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(c) No First Lien Collateral Agent or any other First Lien Claimholder shall have by reason of the First Lien Collateral Documents, the Second Lien Collateral Documents, this Agreement or any other document a fiduciary relationship in respect of any Second Lien Representative or any other Second Lien Claimholder and the Second Lien Representatives, the Second Lien Collateral Agents and the Second Lien Claimholders hereby waive and release the First Lien Collateral Agents and the other First Lien Claimholders from all claims and liabilities arising pursuant to any First Lien Collateral Agent’s role under this Section 5.5 as gratuitous bailee and gratuitous agent with respect to the Pledged Collateral. It is understood and agreed that the interests of the First Lien Collateral Agents and the other First Lien Claimholders, on the one hand, and the Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders on the other hand, may differ and the First Lien Collateral Agents and the other First Lien Claimholders shall be fully entitled to act in their own interest without taking into account the interests of the Second Lien Representatives, the Second Lien Collateral Agents or other Second Lien Claimholders.
(d) So long as this Agreement is in effect, Pledged Collateral in the possession of any Collateral Agent or any Representative shall be delivered to the Designated First Lien Collateral Agent or the Designated Second Lien Collateral Agent, as applicable, together with any necessary endorsements (which endorsements shall be without recourse and without any representation or warranty), in the following manner:
(1) to the Designated First Lien Collateral Agent until a Discharge of First Lien Obligations has occurred, and thereafter,
(2) to the Designated Second Lien Collateral Agent until a Discharge of Second Lien Obligations has occurred, and thereafter,
(3) to the extent Excess First Lien Obligations remain outstanding, to the Designated First Lien Collateral Agent until a Discharge of Excess First Lien Obligations has occurred, and thereafter,
(4) to the Company or to whomever may be lawfully entitled to receive the same.
Following the Discharge of First Lien Obligations, each First Lien Collateral Agent further agrees to take all other action reasonably requested by any Second Lien Collateral Agent at the expense of the Grantors in connection with the Second Lien Collateral Agents obtaining a first-priority security interest in the Collateral. Following the Discharge of First Lien Obligations and Discharge of Second Lien Obligations, each Second Lien Collateral Agent further agrees to take all other action reasonably requested by any First Lien Collateral Agent at the expense of the Grantors in connection with the First Lien Collateral Agents obtaining a first-priority security interest in the Collateral if any Excess First Lien Obligations remain outstanding.
5.6 When Discharge of Obligations Deemed to Not Have Occurred. (a) If, at any time after the Discharge of First Lien Obligations has occurred any Grantor enters into any Additional First Lien Loan Document evidencing any Additional First Lien Obligations which Additional First Lien Loan Obligations are permitted by the Second Lien Loan Documents, then such Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken as a result of the occurrence of such first Discharge of First Lien Obligations), and, from and after the date on which the Additional First Lien Representative and Additional First Lien Collateral Agent in respect of such Additional First Lien Obligations each becomes a party to this Agreement in accordance with Section 8.7(b), the obligations under such Additional First Lien Loan Document shall automatically be treated as First Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the Additional First Lien Representative and the Additional First Lien Collateral Agent under such new First Lien Loan Documents shall be a First Lien Representative and First Lien Collateral Agent, respectively, for all purposes of this Agreement and this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Upon receipt of a Designation from the Company in accordance with Section 8.7(b)(2), each Second Lien Representative and Second Lien Collateral Agent shall promptly (x) enter into such documents and agreements (including amendments or supplements to this Agreement) as the Company or such Additional First Lien Representative and/or such Additional First Lien Collateral Agent shall reasonably request in order to provide to such Additional First Lien Representative and such Additional First Lien Collateral Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement and (y) deliver to such Additional First Lien Collateral Agent any Pledged Collateral held by it together with any necessary endorsements (or otherwise allow such Additional First Lien Collateral Agent to obtain control of such Pledged Collateral). If the Additional First Lien Obligations under such Additional First Lien Loan Documents are secured by assets of the Grantors constituting Collateral that do not also secure the Second Lien Obligations, then the Second Lien Obligations shall be secured at such time by a junior-priority Lien on such assets to the same extent provided in the Second Lien Collateral Documents and this Agreement except to the extent, with respect to any Series of Second Lien Obligations, such Lien on such assets constitutes a Second Lien Declined Lien. This Section 5.6(a) shall survive termination of this Agreement.
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(b) If, at any time after the Discharge of Second Lien Obligations has occurred, any Grantor enters into any Additional Second Lien Loan Document evidencing any Additional Second Lien Obligations which Additional Second Lien Obligations are permitted by the First Lien Loan Documents, then such Discharge of Second Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken as a result of the occurrence of such first Discharge of Second Lien Obligations), and, from and after the date on which the Additional Second Lien Representative and Additional Second Lien Collateral Agent in respect of such Additional Second Lien Obligations each becomes a party to this Agreement in accordance with Section 8.7(b), the obligations under such Additional Second Lien Loan Document shall automatically be treated as Second Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the Additional Second Lien Representative and the Additional Second Lien Collateral Agent under such new Second Lien Loan Documents shall be a Second Lien Representative and Second Lien Collateral Agent, respectively, for all purposes of this Agreement and this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. Upon receipt of a designation from the Company in accordance with Section 8.7(b)(2), each First Lien Representative and First Lien Collateral Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the Company or such Additional Second Lien Representative and/or such Additional Second Lien Collateral Agent shall reasonably request in order to provide to such Additional Second Lien Representative and such Additional Second Lien Collateral Agent the rights contemplated hereby, in each case consistent in all material respects with the terms of this Agreement. If the Additional Second Lien Obligations under such Additional Second Lien Loan Documents are secured by assets of the Grantors constituting Collateral that do not also secure the First Lien Obligations, then the First Lien Obligations shall be secured at such time by a first-priority Lien on such assets to the same extent provided in the First Lien Collateral Documents and this Agreement except to the extent, with respect to any Series of First Lien Obligations, such Lien on such assets constitutes a First Lien Declined Lien. This Section 5.6(b) shall survive termination of this Agreement.
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5.7 Purchase Right.
(a) Without prejudice to the enforcement of any of the First Lien Claimholders’ remedies under the First Lien Loan Documents, this Agreement, at law or in equity or otherwise, the First Lien Claimholders agree at any time following the earliest to occur of (i) an acceleration of any of the First Lien Obligations, (ii) a payment default under any First Lien Loan Document or any Second Lien Loan Document, (iii) the commencement of any Insolvency or Liquidation Proceeding with respect to any Loan Party, or (iv) the exercise of remedies by any First Lien Collateral Agent or First Lien Representative against the Grantors with regard to all or a material portion of the Collateral, First Lien Claimholders will offer the Second Lien Claimholders the option to purchase, and/or the Second Lien Claimholders shall have the right to elect to purchase, the entire aggregate amount (but not less than the entirety) of outstanding First Lien Obligations (including unfunded commitments under any Initial First Lien Loan Document that have not been terminated at such time) at the Purchase Price without warranty or representation or recourse except as provided in Section 5.7(d), on a pro rata basis among the First Lien Claimholders.
(b) The “Purchase Price” will equal the sum of (1) the full amount of all First Lien Obligations then-outstanding and unpaid at par (including principal, accrued but unpaid interest and fees and any other unpaid amounts, including breakage costs and, in the case of any secured hedging obligations, the amount that would be payable by the relevant Grantor thereunder if such Grantor were to terminate the hedge agreement in respect thereof on the date of the purchase or, if not terminated, an amount determined by the relevant First Lien Claimholder to be necessary to collateralize its credit risk arising out of such agreement, but excluding any prepayment penalties or premiums) and (2) all accrued and unpaid fees, expenses and other amounts (including attorneys’ fees and expenses) owed to the First Lien Claimholders under or pursuant to the First Lien Loan Documents on the date of purchase to the extent not allocable to Excess First Lien Obligations.
(c) If the purchase is being effected through an offer by the First Lien Claimholders, the Second Lien Claimholders shall irrevocably accept or reject such offer within ten (10) Business Days of the receipt thereof by the Second Lien Representatives and the parties shall endeavor to close promptly thereafter. If the Second Lien Claimholders reject such offer (or do not so irrevocably accept such offer within the required timeframe), the First Lien Claimholders shall have no further obligations pursuant to this Section 5.7 and may take any further actions in their sole discretion in accordance with the First Lien Loan Documents and this Agreement. The purchase pursuant to this Section shall be exercised pursuant to documentation mutually acceptable to each of the First Lien Representatives and the Second Lien Representatives. Each First Lien Claimholder will retain all rights to indemnification provided in the relevant First Lien Loan Documents for all claims and other amounts relating to periods prior to the purchase of the First Lien Obligations pursuant to this Section 5.7.
(d) The purchase and sale of the First Lien Obligations under this Section 5.7 will be without recourse and without representation or warranty of any kind by the First Lien Claimholders, except that the First Lien Claimholders shall severally and not jointly represent and warrant to the Second Lien Claimholders that on the date of such purchase, immediately before giving effect to the purchase;
(1) the principal of and accrued and unpaid interest on the First Lien Obligations, and the fees and expenses thereof owed to the respective First Lien Claimholders, are as stated in any assignment agreement prepared in connection with the purchase and sale of the First Lien Obligations; and
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(2) each First Lien Claimholder owns the First Lien Obligations purported to be owned by it free and clear of any Liens (other than participation interests not prohibited by the First Lien Loan Documents, in which case the Purchase Price will be appropriately adjusted so that the Second Lien Claimholders do not pay amounts represented by participation interests to the extent that the Second Lien Claimholders expressly assume the obligations under such participation interests).
Section 6. Insolvency or Liquidation Proceedings.
6.1 Finance and Sale Issues.
(a) (i) Until the Discharge of First Lien Obligations has occurred, if any Loan Party shall be subject to any Insolvency or Liquidation Proceeding and any First Lien Representative shall desire to permit the use of “Cash Collateral” (as such term is defined in Section 363(a) of the Bankruptcy Code) in respect of the Collateral on which such First Lien Representative, any First Lien Collateral Agent or any other creditor has a Lien, or to permit any Loan Party to obtain financing, whether from the First Lien Claimholders or any other Person under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“DIP Financing”) that is secured by a Lien on the Collateral, then each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it (1) will consent to and not object to such Cash Collateral use or DIP Financing (including any proposed orders for such Cash Collateral use and/or DIP Financing which are acceptable to any First Lien Representative); and (2) to the extent the Liens in the Collateral securing the First Lien Obligations are discharged, subordinated to or pari passu with such DIP Financing, each Second Lien Collateral Agent will subordinate its Liens in the Collateral to the Liens securing such DIP Financing (and all Obligations relating thereto) and each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, will not request adequate protection or any other relief in connection therewith (except as expressly agreed by the Designated First Lien Representative or to the extent permitted by Section 6.3) and (ii) until the Discharge of BDK Obligations has occurred, if any Loan Party shall be subject to any Insolvency or Liquidation Proceeding and the Applicable BDK Representative shall desire to permit the use of “Cash Collateral” (as such term is defined in Section 363(a) of the Bankruptcy Code) in respect of the BDK Collateral on which such Applicable BDK Representative, the Applicable BDK Collateral Agent or any other creditor has a Lien, or to permit any Loan Party to obtain financing, whether from the Applicable BDK Claimholders or any other Person under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“BDK DIP Financing”) that is secured by a Lien on the BDK Collateral, then each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it (1) will consent to and not object to such Cash Collateral use or BDK DIP Financing (including any proposed orders for such Cash Collateral use and/or BDK DIP Financing which are acceptable to the Applicable BDK Representative); and (2) to the extent the Liens in the BDK Collateral securing the BDK Obligations of the Applicable BDK Claimholders are discharged, subordinated to or pari passu with such BDK DIP Financing, each BDK Junior Lien Collateral Agent will subordinate its Liens in the BDK Collateral to the Liens securing such BDK DIP Financing (and all Obligations relating thereto) and each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, will not request adequate protection or any other relief in connection therewith (except as expressly agreed by the Applicable BDK Representative or to the extent permitted by Section 6.3); provided that (i) the aggregate principal amount of the DIP Financing provided by any Person (other than any BDK First Lien Claimholder) plus the aggregate outstanding principal amount of First Lien Obligations under the First Lien Loan Documents (other than the BDK First Lien Loan Documents) does not exceed the First Lien Cap Amount, (ii) the aggregate principal amount of the DIP Financing provided by any BDK First Lien Claimholder plus the aggregate outstanding principal amount of BDK First Lien Obligations under the BDK First Lien Loan Documents does not exceed the BDK First Lien Cap Amount, (iii) the aggregate principal amount of the BDK DIP Financing plus the aggregate outstanding principal amount of the Applicable BDK Obligations does not exceed the Applicable BDK Cap Amount, (iv) the DIP Financing and BDK DIP Financing, as the case may be, is otherwise subject to the terms of this Agreement and (v) the DIP Financing and BDK DIP Financing, as the case may be, does not compel any Loan Party to seek confirmation of a specific plan of reorganization or similar dispositive restructuring plan for which all or substantially all of the material terms are set forth in the DIP Financing or BDK DIP Financing, as the case may be, and does not expressly require the liquidation of the Collateral or the BDK Collateral, as the case may be.
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(b) (i) No Second Lien Claimholder may provide DIP Financing to any Loan Party secured by Liens on the Collateral equal or senior in priority to the Liens on the Collateral securing any First Lien Obligations; provided, that if no First Lien Claimholder offers to provide DIP Financing to the extent permitted under this Section 6.1 on or before the date that is 60 days after the date of commencement of the Insolvency or Liquidation Proceeding, then a Second Lien Claimholder may seek to provide such DIP Financing secured by Liens on the Collateral that are equal or senior in priority to the Liens on the Collateral securing any First Lien Obligations (any such equal or senior DIP Financing provided by a Second Lien Claimholder, a “Second Lien Claimholder DIP Financing”) so long as (x) the aggregate principal amount of the Second Lien Claimholder DIP Financing does not exceed 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the Applicable Second Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding, (y) the Second Lien Claimholder DIP Financing does not compel any Loan Party to seek confirmation of a specific plan of reorganization or similar dispositive restructuring plan for which all or substantially all of the material terms are set forth in the Second Lien Claimholder DIP Financing and does not expressly require the liquidation of the Collateral and (z) such Second Lien Claimholder DIP Financing does not “roll-up” or otherwise include or refinance any pre-petition Indebtedness under the Second Lien Loan Documents and (ii) until the Discharge of BDK Obligations has occurred, no BDK Junior Lien Claimholder may provide BDK DIP Financing to any Loan Party secured by Liens on the BDK Collateral equal or senior in priority to the Liens on the BDK Collateral securing the BDK Senior Lien Obligations; provided, that if no BDK Senior Lien Claimholder offers to provide BDK DIP Financing to the extent permitted under this Section 6.1 on or before the date that is 60 days after the date of commencement of the Insolvency or Liquidation Proceeding, then any BDK Junior Lien Claimholder may seek to provide such BDK DIP Financing secured by Liens on the BDK Collateral that are equal or senior in priority to the Liens on the BDK Collateral securing the BDK Senior Lien Obligations (any such equal or senior DIP Financing provided by a BDK Junior Lien Claimholder, a “BDK Junior Lien Claimholder DIP Financing”) so long as (x) the aggregate principal amount of the BDK Junior Lien Claimholder DIP Financing does not exceed 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the Applicable BDK Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding, (y) the BDK Junior Lien Claimholder DIP Financing does not compel any Loan Party to seek confirmation of a specific plan of reorganization or similar dispositive restructuring plan for which all or substantially all of the material terms are set forth in the BDK Junior Lien Claimholder DIP Financing and does not expressly require the liquidation of the BDK Collateral and (z) such BDK Junior Lien Claimholder DIP Financing does not “roll-up” or otherwise include or refinance any pre-petition Indebtedness under the BDK Junior Lien Loan Documents. Notwithstanding the foregoing, (i) the First Lien Claimholders may object to any DIP Financing proposed by any Second Lien Claimholder and (ii) the BDK Senior Lien Claimholders may object to any BDK DIP Financing proposed by any BDK Junior Lien Claimholder.
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(c) Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that it will not seek consultation rights in connection with, and it will not object to or oppose, a motion to sell, liquidate or otherwise dispose of Collateral under Section 363 of the Bankruptcy Code if the requisite First Lien Claimholders have consented to such sale, liquidation or other disposition and the proceeds of such sale, liquidation or other disposition are applied in accordance with Section 4.1. Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, further agrees that it will not directly or indirectly oppose or impede entry of any order in connection with such sale, liquidation or other disposition of Collateral, including orders to retain professionals or set bid procedures in connection with such sale, liquidation or disposition of Collateral, if the requisite First Lien Claimholders have consented to (i) such retention of professionals and bid procedures in connection with such sale, liquidation or disposition of such assets and (ii) the sale, liquidation or disposition of such assets, in which event the Second Lien Claimholders will be deemed to have consented to the sale or disposition of Collateral pursuant to Section 363(f) of the Bankruptcy Code, so long as such order does not impair the rights of the Second Lien Claimholders under Section 363(k) of the Bankruptcy Code and the proceeds of such sale, liquidation or other disposition are applied in accordance with Section 4.1.
(d) Notwithstanding any other provision hereof to the contrary, each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that without the consent of the First Lien Claimholders, none of such Second Lien Representative or such Second Lien Collateral Agent, the Second Lien Claimholders represented by it or any agent or the trustee on behalf of any of them shall, for any purpose during any Insolvency or Liquidation Proceeding or otherwise, support, endorse, propose or submit, whether directly or indirectly, any plan of reorganization that is inconsistent with this Agreement.
(e) Each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, agrees that, until the Discharge of BDK Obligations has occurred, it will not seek consultation rights in connection with, and it will not object to or oppose, a motion to sell, liquidate or otherwise dispose of BDK Collateral under Section 363 of the Bankruptcy Code if the requisite BDK Senior Lien Claimholders have consented to such sale, liquidation or other disposition and the proceeds of such sale, liquidation or other disposition are applied in accordance with Section 4.1 of the BDK Intercreditor Agreement. Each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, further agrees that, until the Discharge of BDK Obligations has occurred, it will not directly or indirectly oppose or impede entry of any order in connection with such sale, liquidation or other disposition of BDK Collateral, including orders to retain professionals or set bid procedures in connection with such sale, liquidation or disposition of BDK Collateral, if the requisite BDK Senior Lien Claimholders have consented to (i) such retention of professionals and bid procedures in connection with such sale, liquidation or disposition of such assets and (ii) the sale, liquidation or disposition of such assets, in which event the BDK Junior Lien Claimholders will be deemed to have consented to the sale or disposition of BDK Collateral pursuant to Section 363(f) of the Bankruptcy Code, so long as such order does not impair the rights of the BDK Junior Lien Claimholders under Section 363(k) of the Bankruptcy Code and the proceeds of such sale, liquidation or other disposition are applied in accordance with Section 4.1 of the BDK Intercreditor Agreement.
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(f) Notwithstanding any other provision hereof to the contrary, each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, agrees that, until the Discharge of BDK Obligations has occurred, without the consent of the BDK Senior Lien Claimholders, none of such BDK Junior Lien Representative or such BDK Junior Lien Collateral Agent, the BDK Junior Lien Claimholders represented by it or any agent or the trustee on behalf of any of them shall, for any purpose during any Insolvency or Liquidation Proceeding or otherwise, support, endorse, propose or submit, whether directly or indirectly, any plan of reorganization that is inconsistent with this Agreement.
6.2 Relief from the Automatic Stay. Until the Discharge of First Lien Obligations has occurred, each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that none of them shall: (i) seek (or support any other Person seeking) relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral, without the prior written consent of the First Lien Representatives, unless a motion for adequate protection permitted under Section 6.3 has been denied by a bankruptcy court or (ii) oppose (or support any other Person in opposing) any request by any First Lien Representative or First Lien Collateral Agent for relief from such stay. Until the Discharge of BDK Obligations has occurred, each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, agrees that none of them shall: (i) seek (or support any other Person seeking) relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the BDK Collateral, without the prior written consent of the BDK Senior Lien Representatives, unless a motion for adequate protection permitted under Section 6.3 has been denied by a bankruptcy court or (ii) oppose (or support any other Person in opposing) any request by any BDK Senior Lien Representative or any BDK Senior Collateral Agent for relief from such stay.
6.3 Adequate Protection (Collateral).
(a) Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that none of them shall contest (or support any other Person contesting):
(1) any request by any First Lien Representative, any First Lien Collateral Agent or other First Lien Claimholder for adequate protection in respect of the Collateral under any Bankruptcy Law; or
(2) any objection by any First Lien Representative, any First Lien Collateral Agent or other First Lien Claimholder to any motion, relief, action or proceeding based on such First Lien Representative, First Lien Collateral Agent or First Lien Claimholder claiming a lack of adequate protection in respect of the Collateral.
(b) Notwithstanding the foregoing provisions in this Section 6.3, in any Insolvency or Liquidation Proceeding:
(1) if the First Lien Claimholders (or any subset thereof) are granted adequate protection in the form of additional collateral in connection with any Cash Collateral use or DIP Financing (other than BDK Collateral prior to the Discharge of BDK Obligations), then each Second Lien Collateral Agent, for itself and on behalf of any other Second Lien Claimholder represented by it, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens securing the First Lien Obligations and such Cash Collateral use or DIP Financing (and all Obligations relating thereto) on the same basis as the other Liens on the Collateral securing the Second Lien Obligations are so subordinated to the First Lien Obligations under this Agreement; and
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(2) the Second Lien Representatives, the Second Lien Collateral Agents and Second Lien Claimholders shall only be permitted to seek adequate protection with respect to their rights in the Collateral in any Insolvency or Liquidation Proceeding in the form of:
(A) additional collateral (other than BDK Collateral prior to the Discharge of BDK Obligations); provided that as adequate protection for the First Lien Obligations, each First Lien Collateral Agent, on behalf of the First Lien Claimholders represented by it, is also granted a Lien on such additional collateral, which Lien shall be senior to any Lien of the Second Lien Representatives, the Second Lien Collateral Agents and the Second Lien Claimholders on such additional collateral;
(B) replacement Liens on the Collateral; provided that as adequate protection for the First Lien Obligations, each First Lien Collateral Agent, on behalf of the First Lien Claimholders represented by it, is also granted replacement Liens on the Collateral, which Liens shall be senior to the Liens of the Second Lien Representatives, the Second Lien Collateral Agents and the Second Lien Claimholders on the Collateral;
(C) an administrative expense claim in respect of the Collateral; provided that as adequate protection for the First Lien Obligations, each First Lien Representative, on behalf of the First Lien Claimholders represented by it, is also granted an administrative expense claim in respect of the Collateral which is senior and prior to the administrative expense claim of the Second Lien Representatives and the other Second Lien Claimholders; and
(D) cash payments with respect to interest on the Second Lien Obligations; provided that (1) as adequate protection for the First Lien Obligations, each First Lien Representative, on behalf of the First Lien Claimholders represented by it, is also granted cash payments with respect to interest on the First Lien Obligations represented by it and (2) such cash payments do not exceed an amount equal to the interest accruing on the principal amount of Second Lien Obligations outstanding on the date such relief is granted at the interest rate under the applicable Second Lien Loan Documents and accruing from the date the applicable Second Lien Representative is granted such relief.
(3) If any Second Lien Claimholder receives Post-Petition Interest and/or cash adequate protection payments in respect of the Collateral in an Insolvency or Liquidation Proceeding (“Second Lien Adequate Protection Payments”) and the Discharge of First Lien Obligations does not occur upon the effectiveness of the plan of reorganization for, or conclusion of, that Insolvency or Liquidation Proceeding, then each Second Lien Claimholder shall pay over to the First Lien Claimholders an amount (the “Pay-Over Amount”) equal to the lesser of (i) the Second Lien Adequate Protection Payments received by such Second Lien Claimholder and (ii) the amount of the short-fall (the “Short Fall”) in the Discharge of First Lien Obligations; provided that to the extent any portion of the Short Fall represents payments received by the First Lien Claimholders in the form of promissory notes, equity or other property equal in value to the cash paid in respect of the Pay-Over Amount, the First Lien Claimholders shall, upon receipt of the Pay-Over Amount, transfer those promissory notes, equity or other property, equal in value to the cash paid in respect of the Pay-Over Amount, to the applicable Second Lien Claimholders pro rata in exchange for the Pay-Over Amount.
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(c) Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, agrees that notice of a hearing to approve DIP Financing or use of Cash Collateral in respect of the Collateral on an interim basis shall be adequate if delivered to such Second Lien Representative and Second Lien Collateral Agent at least two (2) Business Days in advance of such hearing and that notice of a hearing to approve DIP Financing or use of Cash Collateral in respect of the Collateral on a final basis shall be adequate if delivered to such Second Lien Representative and Second Lien Collateral Agent at least fifteen (15) days in advance of such hearing.
6.4 Adequate Protection (Badcock Collateral). Until the Discharge of BDK Obligations has occurred:
(a) Each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, agrees that none of them shall contest (or support any other Person contesting):
(1) any request by any BDK Senior Lien Representative, any BDK Senior Lien Collateral Agent or any other BDK Senior Lien Claimholder for adequate protection in respect of the Badcock Collateral under any Bankruptcy Law; or
(2) any objection by any BDK Senior Lien Representative, any BDK Senior Collateral Agent or any other BDK Senior Lien Claimholder to any motion, relief, action or proceeding based on such BDK Senior Lien Representative, BDK Senior Lien Collateral Agent or BDK Senior Lien Claimholder claiming a lack of adequate protection in respect of the Badcock Collateral.
(b) Notwithstanding the foregoing provisions in this Section 6.4, in any Insolvency or Liquidation Proceeding:
(1) if any BDK Senior Lien Claimholders (or any subset thereof) are granted adequate protection in the form of additional collateral in connection with any Cash Collateral use or BDK DIP Financing (other than Collateral), then each BDK Junior Lien Collateral Agent, for itself and on behalf of any other BDK Junior Lien Claimholder represented by it, may seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the Liens securing the BDK Senior Lien Obligations and such Cash Collateral use or BDK DIP Financing (and all Obligations relating thereto) on the same basis as the other Liens on the BDK Collateral securing the BDK Junior Lien Obligations are so subordinated to the BDK Senior Lien Obligations under the BDK Intercreditor Agreement; and
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(2) the BDK Junior Lien Representatives, the BDK Junior Lien Collateral Agents and the other BDK Junior Lien Claimholders shall only be permitted to seek adequate protection with respect to their rights in the BDK Collateral in any Insolvency or Liquidation Proceeding in the form of:
(A) additional collateral (other than Collateral); provided that as adequate protection for the BDK Senior Lien Obligations, each BDK Senior Lien Collateral Agent, on behalf of the BDK Senior Lien Claimholders represented by it, is also granted a Lien on such additional collateral, which Lien shall be senior to any Lien of the BDK Junior Lien Representatives, the BDK Junior Lien Collateral Agents and the BDK Junior Lien Claimholders on such additional collateral in the same manner as the Lien priorities under the BDK Intercreditor Agreement;
(B) replacement Liens on the BDK Collateral; provided that as adequate protection for the BDK Senior Lien Obligations, each BDK Senior Lien Collateral Agent, on behalf of the BDK Senior Lien Claimholders represented by it, is also granted replacement Liens on the BDK Collateral, which Liens shall be senior to the Liens of the BDK Junior Lien Representatives, the BDK Junior Lien Collateral Agents and the BDK Junior Lien Claimholders on the BDK Collateral in the same manner as the Lien priorities under the BDK Intercreditor Agreement;
(C) an administrative expense claim in respect of the BDK Collateral; provided that as adequate protection for the BDK Senior Lien Obligations, each BDK Senior Lien Representative, on behalf of the BDK Senior Lien Claimholders represented by it, is also granted an administrative expense claim in respect of the BDK Collateral which is senior and prior to the administrative expense claim of the BDK Junior Lien Representatives and the other BDK Junior Lien Claimholders in the same manner as the Lien priorities under the BDK Intercreditor Agreement; and
(D) cash payments with respect to interest on the BDK Junior Lien Obligations; provided that (1) as adequate protection for the BDK Senior Lien Obligations, each BDK Senior Lien Representative, on behalf of the BDK Senior Lien Claimholders represented by it, is also granted cash payments with respect to interest on the BDK Senior Lien Obligations represented by it and (2) such cash payments do not exceed an amount equal to the interest accruing on the principal amount of BDK Junior Lien Obligations outstanding on the date such relief is granted at the interest rate under the applicable BDK Junior Lien Loan Documents and accruing from the date such BDK Junior Lien Representative is granted such relief.
(3) If any BDK Junior Lien Claimholder receives Post-Petition Interest and/or cash adequate protection payments in respect of the BDK Collateral in an Insolvency or Liquidation Proceeding (“BDK Junior Lien Adequate Protection Payments”) and the Discharge of BDK Senior Lien Obligations does not occur upon the effectiveness of the plan of reorganization for, or conclusion of, that Insolvency or Liquidation Proceeding, then each BDK Junior Lien Claimholder shall pay over to the BDK Senior Lien Claimholders an amount (the “BDK Pay-Over Amount”) equal to the lesser of (i) the BDK Junior Lien Adequate Protection Payments received by such BDK Junior Lien Claimholder and (ii) the amount of the short-fall (the “BDK Short Fall”) in the Discharge of BDK Senior Lien Obligations; provided that to the extent any portion of the BDK Short Fall represents payments received by the BDK Senior Lien Claimholders in the form of promissory notes, equity or other property equal in value to the cash paid in respect of the BDK Pay-Over Amount, the BDK Senior Lien Claimholders shall, upon receipt of the BDK Pay-Over Amount, transfer those promissory notes, equity or other property, equal in value to the cash paid in respect of the BDK Pay-Over Amount, to the Applicable BDK Junior Lien Claimholders pro rata in exchange for the BDK Pay-Over Amount.
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(c) Each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, agrees that notice of a hearing to approve BDK DIP Financing or use of Cash Collateral in respect of the BDK Collateral on an interim basis shall be adequate if delivered to such BDK Junior Lien Representative and BDK Junior Lien Collateral Agent at least two (2) Business Days in advance of such hearing and that notice of a hearing to approve BDK DIP Financing or use of Cash Collateral in respect of the BDK Collateral on a final basis shall be adequate if delivered to such BDK Junior Lien Representative and BDK Junior Lien Collateral Agent at least fifteen (15) days in advance of such hearing.
6.5 Avoidance Issues. If any First Lien Claimholder is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of any Loan Party any amount paid in respect of First Lien Obligations (other than any such amount in respect of the BDK Collateral prior to the Discharge of BDK Obligations) (a “Recovery”), then such First Lien Claimholder shall be entitled to a reinstatement of its First Lien Obligations with respect to all such recovered amounts on the date of such Recovery, and from and after the date of such reinstatement the Discharge of First Lien Obligations (or, as applicable, payment in full in cash of all Excess First Lien Obligations (including interest accruing thereon on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding)) shall be deemed not to have occurred for all purposes hereunder. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. If, prior to the Discharge of BDK Obligations, any BDK Senior Lien Claimholder is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of any Loan Party any amount paid in respect of BDK Senior Lien Obligations (other than any such amount in respect of the Collateral) (a “BDK Recovery”), then such BDK Senior Lien Claimholder shall be entitled to a reinstatement of its BDK Senior Lien Obligations with respect to all such recovered amounts on the date of such BDK Recovery, and from and after the date of such reinstatement the Discharge of BDK Senior Lien Obligations in respect of such BDK Senior Lien Claimholders shall be deemed not to have occurred for all purposes hereunder. If this Agreement shall have been terminated prior to such BDK Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement. This Section 6.5 shall survive termination of this Agreement.
6.6 Reorganization Securities. If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor that would, but for such Insolvency or Liquidation Proceeding, constitute Collateral (“Replacement Collateral”) are distributed pursuant to a plan of reorganization, arrangement, compromise or liquidation or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the Replacement Collateral, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens on the Replacement Collateral securing such debt obligations as if the Replacement Collateral were the Collateral. If, prior to the Discharge of BDK Obligations, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor that would, but for such Insolvency or Liquidation Proceeding, constitute BDK Collateral (“Replacement BDK Collateral”) are distributed pursuant to a plan of reorganization, arrangement, compromise or liquidation or similar dispositive restructuring plan, both on account of BDK Senior Lien Obligations and on account of the BDK Junior Lien Obligations, then, to the extent the debt obligations distributed on account of the BDK Senior Lien Obligations and on account of the BDK Junior Lien Obligations are secured by Liens upon the Replacement BDK Collateral, the provisions of this Agreement and the BDK Intercreditor Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens on the Replacement BDK Collateral securing such debt obligations as if the Replacement BDK Collateral were the BDK Collateral.
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6.7 Post-Petition Interest.
(a) None of any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder shall oppose or seek to challenge any claim by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of First Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the First Lien Collateral Agents on behalf of the First Lien Claimholders on the Collateral or any other First Lien Claimholder’s Lien on the Collateral, without regard to the existence of the Liens of the Second Lien Collateral Agents or the other Second Lien Claimholders on the Collateral.
(b) None of any First Lien Representative, First Lien Collateral Agent or any other First Lien Claimholder shall oppose or seek to challenge any claim by any Second Lien Representative, Second Lien Collateral Agent or any other Second Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of Second Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the Second Lien Collateral Agents, on behalf of the Second Lien Claimholders, on the Collateral (after taking into account the amount of the First Lien Obligations).
(c) None of any BDK Junior Lien Representative, any BDK Junior Lien Collateral Agent or any other BDK Junior Lien Claimholder shall, prior to the Discharge of BDK Obligations, oppose or seek to challenge any claim by any BDK Senior Lien Representative, any BDK Senior Lien Collateral Agent or any other BDK Senior Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of BDK Senior Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the BDK Senior Lien Collateral Agents on behalf of the BDK Senior Lien Claimholders on the BDK Collateral or any other BDK Senior Lien Claimholder’s Lien on the BDK Collateral, without regard to the existence of the Liens of the BDK Junior Lien Collateral Agents or the other BDK Junior Lien Claimholders on the BDK Collateral.
(d) None of any BDK Senior Lien Representative, BDK Senior Lien Collateral Agent or any other BDK Senior Lien Claimholder shall, prior to the Discharge of BDK Obligations, oppose or seek to challenge any claim by any BDK Junior Lien Representative, BDK Junior Lien Collateral Agent or any other BDK Junior Lien Claimholder for allowance in any Insolvency or Liquidation Proceeding of BDK Junior Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the BDK Junior Lien Collateral Agents, on behalf of the BDK Junior Lien Claimholders, on the BDK Collateral (after taking into account the amount of the BDK Senior Lien Obligations).
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6.8 Waiver. Each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, waives any claim it may hereafter have against any First Lien Claimholder arising out of the election of any First Lien Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any cash collateral or financing arrangement or out of any grant of a security interest in connection with the Collateral in any Insolvency or Liquidation Proceeding so long as such actions are not in express contravention of the terms of this Agreement. Each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, waives, solely prior to the Discharge of BDK Obligations, any claim it may hereafter have against any BDK Senior Lien Claimholder arising out of the election of any BDK Senior Lien Claimholder of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any cash collateral or financing arrangement or out of any grant of a security interest in connection with the BDK Collateral in any Insolvency or Liquidation Proceeding so long as such actions are not in express contravention of the terms of this Agreement.
6.9 Separate Grants of Security and Separate Classification. Each Representative and each Collateral Agent, for itself and on behalf of each other Claimholder represented by it, acknowledges and agrees that:
(a) the grants of Liens pursuant to the Initial First Lien Loan Documents, the Initial Second Lien Loan Documents, the BDK First Lien Loan Documents and the BDK Second Lien Loan Documents constitute four separate and distinct grants of Liens; and
(b) because of, among other things, their differing rights in the Collateral and the BDK Collateral, the Initial First Lien Obligations, the Initial Second Lien Obligations, the BDK First Lien Obligations and the BDK Second Lien Obligations are fundamentally different from one another and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency or Liquidation Proceeding.
To further effectuate the intent of the parties as provided in the immediately preceding sentence:
(1) if it is held that the claims of the First Lien Claimholders and the Second Lien Claimholders in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of the parties hereto hereby acknowledges and agrees that all distributions shall be made as if there were separate classes of senior and junior secured claims against the Grantors in respect of the Collateral (with the effect being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Second Lien Claimholders), the First Lien Claimholders shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing (or that would be owing if there were such separate classes of senior and junior secured claims) in respect of Post-Petition Interest (including any additional interest payable pursuant to the First Lien Loan Documents, arising from or related to a default, which is disallowed as a claim in any Insolvency or Liquidation Proceeding) before any distribution is made in respect of the claims held by the Second Lien Claimholders with respect to the Collateral, with each Second Lien Representative and each Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Claimholder represented by it, hereby acknowledging and agreeing to turn over to the Designated First Lien Collateral Agent, for itself and on behalf of each other First Lien Claimholder, Collateral or proceeds of Collateral otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Second Lien Claimholders); and
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(2) if it is held that the claims of any of the Claimholders in respect of the BDK Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of the parties hereto hereby acknowledges and agrees that all distributions shall be made as if there were separate classes of senior and junior secured claims against Badcock in respect of the BDK Collateral (with the effect being that, to the extent that the aggregate value of the BDK Collateral is sufficient (for this purpose ignoring all claims held by the BDK Junior Lien Claimholders), the BDK Senior Lien Claimholders shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing (or that would be owing if there were such separate classes of senior and junior secured claims) in respect of Post-Petition Interest (including any additional interest payable pursuant to the Loan Documents in respect of such BDK Senior Lien Claimholders, arising from or related to a default, which is disallowed as a claim in any Insolvency or Liquidation Proceeding) before any distribution is made in respect of the claims held by the BDK Junior Lien Claimholders with respect to the BDK Collateral, with each BDK Junior Lien Representative and each BDK Junior Lien Collateral Agent, for itself and on behalf of each other BDK Junior Lien Claimholder represented by it, hereby acknowledging and agreeing to turn over to the BDK Senior Lien Collateral Agent, for itself and on behalf of each other BDK Senior Lien Claimholder, BDK Collateral or proceeds of BDK Collateral otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the BDK Junior Lien Claimholders).
6.10 Effectiveness in Insolvency or Liquidation Proceedings. The Parties acknowledge that this Agreement is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, which will be effective before, during and after the commencement of an Insolvency or Liquidation Proceeding. All references in this Agreement to any Loan Party will include such Person as a debtor-in-possession and any receiver or trustee for such Person in an Insolvency or Liquidation Proceeding.
6.11 Discharge of BDK Obligations. The Parties hereto acknowledge and agree that, from and after the Discharge of BDK Obligations, (i) the provisions of this Section 6 (other than this Section 6.11) that refer to the “Collateral” shall be deemed in all respects to refer to a collective reference to the Collateral and the Badcock Collateral, (ii) Section 6.1(a)(ii), clauses (ii) and (iii) in the proviso to Section 6.1(a), Section 6.1(b)(ii), clause (ii) of the last sentence of Section 6.1(b), Section 6.1(e), Section 6.1(f), the last sentence of Section 6.2, Section 6.4, the third sentence of Section 6.5 (other than to the extent the last sentence of Section 6.5 shall apply), the last sentence of Section 6.6, Section 6.7(c), Section 6.7(d), the last sentence of Section 6.8 and clause (2) of the last sentence of Section 6.9 shall cease to bind any of the Parties and (iii) the Badcock Collateral shall no longer be subject to the terms and provisions of the Badcock Intercreditor Agreement and shall instead be subject in all respects to the terms and provisions of this Agreement (as if the Badcock Collateral were part of the Collateral).
Section 7. Reliance; Waivers; Etc.
7.1 Reliance. Other than any reliance on the terms of this Agreement, each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and each other First Lien Claimholder represented by it, acknowledges that it and such First Lien Claimholders have, independently and without reliance on any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the First Lien Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the First Lien Loan Documents or this Agreement. Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, acknowledges that it and such Second Lien Claimholders have, independently and without reliance on any First Lien Representative, any First Lien Collateral Agent or any other First Lien Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Second Lien Loan Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Second Lien Loan Documents or this Agreement.
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7.2 No Warranties or Liability. Each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and each other First Lien Claimholder represented by it, acknowledges and agrees that no Second Lien Representative or other Second Lien Claimholder has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Second Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. Except as otherwise provided herein, the Second Lien Claimholders will be entitled to manage and supervise their respective extensions of credit under the Second Lien Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate. Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, acknowledges and agrees that no First Lien Representative or other First Lien Claimholder has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the First Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. Except as otherwise provided herein, the First Lien Claimholders will be entitled to manage and supervise their respective loans and extensions of credit under the First Lien Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate. The Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders shall have no duty to the First Lien Representatives, the First Lien Collateral Agents or any of the other First Lien Claimholders, and the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders shall have no duty to the Second Lien Representatives, the Second Lien Collateral Agents or any of the other Second Lien Claimholders, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the First Lien Loan Documents and the Second Lien Loan Documents), regardless of any knowledge thereof which they may have or be charged with.
7.3 No Waiver of Lien Priorities; No Marshaling.
(a) No right of the First Lien Claimholders, the First Lien Representatives, the First Lien Collateral Agents or any of them to enforce any provision of this Agreement or any First Lien Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by any First Lien Claimholder, First Lien Representative or First Lien Collateral Agent, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the First Lien Loan Documents or any of the Second Lien Loan Documents, regardless of any knowledge thereof which any First Lien Representative, First Lien Collateral Agent or any First Lien Claimholder, or any of them, may have or be otherwise charged with.
(b) Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Grantors under the First Lien Loan Documents and subject to the provisions of Section 5.3(a)), the First Lien Claimholders, the First Lien Representatives, the First Lien Collateral Agents and any of them may, at any time and from time to time in accordance with the First Lien Loan Documents and/or applicable law, without the consent of, or notice to, any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder, without incurring any liabilities to any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder is affected, impaired or extinguished thereby) do any one or more of the following:
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(1) change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the First Lien Obligations or any Lien on any First Lien Collateral or guaranty of any of the First Lien Obligations or any liability of any Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the First Lien Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by any First Lien Representative, any First Lien Collateral Agent or any of the other First Lien Claimholders, the First Lien Obligations or any of the First Lien Loan Documents; provided, that (x) any such increase in the First Lien Obligations shall not increase the sum of the Indebtedness constituting principal under the First Lien Loan Documents (excluding the BDK First Lien Loan Documents) to an amount in excess of the First Lien Cap Amount and (y) any such increase in the BDK First Lien Obligations shall not increase the sum of the Indebtedness constituting principal under the BDK First Lien Loan Documents to an amount in excess of the BDK First Lien Cap Amount;
(2) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the First Lien Collateral or any liability of any Grantor to any of the First Lien Claimholders, the First Lien Representatives or the First Lien Collateral Agents, or any liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any First Lien Obligation or any other liability of any Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the First Lien Obligations) in any manner or order; and
(4) exercise or delay in or refrain from exercising any right or remedy against any Grantor or any other Person or any security, and elect any remedy and otherwise deal freely with any Grantor or any First Lien Collateral and any security and any guarantor or any liability of any Grantor to the First Lien Claimholders or any liability incurred directly or indirectly in respect thereof.
(c) Except as otherwise expressly provided herein, each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, also agrees that the First Lien Claimholders, the First Lien Representatives and the First Lien Collateral Agents shall not have any liability to such Second Lien Representative, such Second Lien Collateral Agent or any such Second Lien Claimholders, and such Second Lien Representative and such Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, hereby waives any claim against any First Lien Claimholder, any First Lien Representative or any First Lien Collateral Agent arising out of any and all actions which the First Lien Claimholders, any First Lien Representative or any First Lien Collateral Agent may take or permit or omit to take with respect to:
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(1) the First Lien Loan Documents (other than this Agreement);
(2) the collection of the First Lien Obligations; or
(3) the foreclosure upon, or sale, liquidation or other disposition of, any First Lien Collateral.
Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, agrees that the First Lien Claimholders, the First Lien Representatives and the First Lien Collateral Agents do not have any duty to them in respect of the maintenance or preservation of the First Lien Collateral, the First Lien Obligations or otherwise.
(d) Until the Discharge of First Lien Obligations, each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of any marshaling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to any First Lien Collateral or any other similar rights a junior secured creditor may have under applicable law.
For the avoidance of doubt, nothing in this Section 7.3 shall limit any Second Lien Claimholder’s right to enforce this Agreement.
7.4 Obligations Unconditional. All rights, interests, agreements and obligations of the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders and the Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders, respectively, hereunder shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any First Lien Loan Documents or any Second Lien Loan Documents;
(b) except as otherwise expressly set forth in this Agreement, any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Lien Obligations or Second Lien Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any First Lien Loan Document or any Second Lien Loan Document;
(c) except as otherwise expressly set forth in this Agreement, any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Lien Obligations or Second Lien Obligations or any guarantee thereof;
(d) the commencement of any Insolvency or Liquidation Proceeding in respect of any Loan Party; or
(e) any other circumstances which otherwise might constitute a defense available to, or a discharge of, any Grantor in respect of any First Lien Representative, any First Lien Collateral Agent, the First Lien Obligations, any First Lien Claimholder, any Second Lien Representative, any Second Lien Collateral Agent, the Second Lien Obligations or any Second Lien Claimholder in respect of this Agreement.
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Section 8. Miscellaneous.
8.1 Integration/Conflicts.
(a) This Agreement, the ABL Intercreditor Agreement, the First Lien Loan Documents and the Second Lien Loan Documents represent the entire agreement of the Grantors, the First Lien Claimholders, the Second Lien Claimholders and the ABL Claimholders with respect to the subject matter hereof and thereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. There are no promises, undertakings, representations or warranties by the First Lien Claimholders or the Second Lien Claimholders relative to the subject matter hereof and thereof not expressly set forth or referred to herein or therein.
(b) In the event of any conflict between the provisions of this Agreement and the provisions of the First Lien Loan Documents or the Second Lien Loan Documents (other than the ABL Intercreditor Agreement), the provisions of this Agreement shall govern and control; provided that the foregoing shall not be construed to limit the relative rights and obligations as among the First Lien Claimholders or as among the Second Lien Claimholders; as among the First Lien Claimholders, such rights and obligations are governed by, and any provisions herein regarding them are therefore subject to, the provisions of the First Lien Pari Passu Intercreditor Agreement, and as among the Second Lien Claimholders, such rights and obligations are governed by, and any provisions herein regarding them are therefore subject to, the provisions of the Second Lien Pari Passu Intercreditor Agreement.
(c) Notwithstanding anything herein to the contrary, the exercise of any right or remedy by any Collateral Agent or Representative hereunder is subject to the provisions of the ABL Intercreditor Agreement. As between the ABL Claimholders (as defined in the ABL Intercreditor Agreement) on the one hand and the First Lien Claimholders and the Second Lien Claimholders on the other hand, in the event of any conflict between the terms of the ABL Intercreditor Agreement and the terms of this Agreement, the terms of the ABL Intercreditor Agreement shall govern and control. Solely as among the First Lien Claimholders and the Second Lien Claimholders, in the event of any conflict between this Agreement and the ABL Intercreditor Agreement, the terms of this Agreement shall govern and control.
(d) Prior to the Discharge of BDK Obligations, notwithstanding anything herein to the contrary, the exercise of any right or remedy by any Collateral Agent or Representative hereunder with respect to the BDK Collateral is subject to the provisions of the BDK Intercreditor Agreement. Solely with respect to the BDK Collateral prior to the Discharge of BDK Obligations, in the event of any conflict between the terms of the BDK Intercreditor Agreement and the terms of this Agreement, the terms of the BDK Intercreditor Agreement shall govern and control.
8.2 Effectiveness; Continuing Nature of this Agreement; Severability. This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement of lien subordination and the First Lien Claimholders may continue, at any time and without notice to any Second Lien Representative or any other Second Lien Claimholder, to extend credit and other financial accommodations and lend monies to or for the benefit of one or more of the Loan Parties constituting First Lien Obligations in reliance hereon. Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions. All references to any Loan Party shall include such Loan Party as debtor and debtor-in-possession and any receiver, trustee or similar person for any Loan Party (as the case may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect:
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(a) with respect to any First Lien Representative and any First Lien Collateral Agent, the First Lien Claimholders represented by it and their First Lien Obligations, on the date on which the First Lien Obligations of such First Lien Claimholders are Discharged, subject to Sections 5.6 and 6.5; and
(b) with respect to any Second Lien Representative and any Second Lien Collateral Agent, the Second Lien Claimholders represented by it and their Second Lien Obligations, on the date on which the Second Lien Obligations of such Second Lien Claimholders are Discharged, subject to Sections 5.6 and 6.5;
provided, however, that in each case, such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination.
8.3 Amendments; Waivers(a).
(a) No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, the Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement, except with respect to Section 8.7, Section 8.18 or this Section 8.3 (including, in each case, each defined term referred to therein to the extent used therein) to the extent such amendment, modification or waiver directly and adversely affects the rights of the Grantors.
(b) Notwithstanding the foregoing, without the consent of any First Lien Claimholder or Second Lien Claimholder, any Representative and Collateral Agent may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 8.7 and upon such execution and delivery, such Representative and Collateral Agent and the Additional First Lien Claimholders and Additional First Lien Obligations or Additional Second Lien Claimholders and Additional Second Lien Obligations, as the case may be, of the Series for which such Representative and Collateral Agent is acting shall be subject to the terms hereof.
(c) Notwithstanding the foregoing, without the consent of any other Representative, Collateral Agent or Claimholder, the Designated First Lien Representative may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any Additional First Lien Obligations or Additional Second Lien Obligations in compliance with this Agreement.
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8.4 Information Concerning Financial Condition of the Loan Parties and their Subsidiaries. The First Lien Representatives, the First Lien Collateral Agents and the First Lien Claimholders, on the one hand, and the Second Lien Representatives, the Second Lien Collateral Agents and the Second Lien Claimholders, on the other hand, shall each be responsible for keeping themselves informed of (a) the financial condition of the Loan Parties and their Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations or the Second Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations or the Second Lien Obligations. The First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders shall have no duty to advise the Second Lien Representatives, the Second Lien Collateral Agents or any other Second Lien Claimholder of information known to them regarding such condition or any such circumstances or otherwise. In the event any of the First Lien Representatives, the First Lien Collateral Agents or any of the other First Lien Claimholders, in its sole discretion, undertakes at any time or from time to time to provide any such information to any Second Lien Representative, any Second Lien Collateral Agent or any other Second Lien Claimholder, it shall be under no obligation:
(a) to make, and the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;
(b) to provide any additional information or to provide any such information on any subsequent occasion;
(c) to undertake any investigation; or
(d) to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
8.5 Subrogation. With respect to the value of any payments or distributions in cash, property or other assets that any of the Second Lien Representatives, the Second Lien Collateral Agents or the other Second Lien Claimholders pays over to any of the First Lien Representatives, the First Lien Collateral Agents or the other First Lien Claimholders under the terms of this Agreement, such Second Lien Claimholders, Second Lien Representatives and Second Lien Collateral Agents shall be subrogated to the rights of such First Lien Representatives, First Lien Collateral Agents and First Lien Claimholders; provided that each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, hereby agrees not to assert or enforce any such rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of First Lien Obligations has occurred. Each Grantor acknowledges and agrees that the value of any payments or distributions in cash, property or other assets received by any Second Lien Representative, Second Lien Collateral Agent or other Second Lien Claimholder that are paid over to any First Lien Representative, First Lien Collateral Agent or other First Lien Claimholder pursuant to this Agreement shall not reduce any of the Second Lien Obligations.
8.6 Application of Payments. All payments received by any First Lien Representative, First Lien Collateral Agent or other First Lien Claimholder may be applied, reversed and reapplied, in whole or in part, to such part of the First Lien Obligations provided for in the First Lien Loan Documents (subject to the First Lien Pari Passu Intercreditor Agreement, if then in effect). Each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, agrees to any extension or postponement of the time of payment of the First Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any Lien which may at any time secure any part of the First Lien Obligations and to the addition or release of any other Person primarily or secondarily liable therefor.
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8.7 Additional Debt Facilities.
(a) To the extent, but only to the extent, permitted by the provisions of the First Lien Loan Documents and the Second Lien Loan Documents and Section 5.3, the Grantors may incur (or issue and sell), secure and guarantee after the date hereof one or more series or classes of Indebtedness that the Company designates as Additional First Lien Debt and/or one or more series or classes of Indebtedness that the Company designates as Additional Second Lien Debt (each, “Additional Debt”).
Any such series or class of Additional First Lien Debt may be secured by a first-priority, senior Lien on the Collateral, in each case under and pursuant to the First Lien Collateral Documents for such Series of Additional First Lien Debt, if and subject to the condition that, unless such Indebtedness is part of an existing Series of Additional First Lien Debt represented by a First Lien Representative and First Lien Collateral Agent already party to this Agreement and the First Lien Pari Passu Intercreditor Agreement, the Additional First Lien Representative and the Additional First Lien Collateral Agent of any such Additional First Lien Debt each becomes a party to this Agreement and the First Lien Pari Passu Intercreditor Agreement by satisfying the conditions set forth in clauses (1) and (2) of Section 8.7(b). Upon any Additional First Lien Representative and Additional First Lien Collateral Agent so becoming a party hereto and becoming a party to the First Lien Pari Passu Intercreditor Agreement in accordance with the terms thereof, all Additional First Lien Obligations of such Series shall also be entitled to be so secured by a senior Lien on the Collateral in accordance with the terms hereof and thereof.
Any such series or class of Additional Second Lien Debt may be secured by a junior-priority, subordinated Lien on the Collateral, in each case under and pursuant to the relevant Second Lien Collateral Documents for such Series of Additional Second Lien Debt, if and subject to the condition that, unless such Indebtedness is part of an existing Series of Additional Second Lien Debt represented by a Second Lien Representative and Second Lien Collateral Agent already party to this Agreement and the Second Lien Pari Passu Intercreditor Agreement, the Additional Second Lien Representative and Additional Second Lien Collateral Agent of any such Additional Second Lien Debt each becomes a party to this Agreement and the Second Lien Pari Passu Intercreditor Agreement by satisfying the conditions set forth in clauses (1) and (2) of Section 8.7(b). Upon any Additional Second Lien Representative and Additional Second Lien Collateral Agent so becoming a party hereto and becoming a party to the Second Lien Pari Passu Intercreditor Agreement in accordance with the terms thereof, all Additional Second Lien Obligations of such Series shall also be entitled to be so secured by a subordinated Lien on the Collateral in accordance with the terms hereof and thereof.
(b) In order for an Additional Representative and an Additional Collateral Agent in respect of any Additional Debt incurred (or issued or sold) after the date hereof to become a party to this Agreement:
(1) such Additional Representative and such Additional Collateral Agent shall have executed and delivered to each other then-existing Representative a Joinder Agreement substantially in the form of Exhibit A hereto (if such Representative is an Additional Second Lien Representative and such Collateral Agent is an Additional Second Lien Collateral Agent) (with such changes as may be reasonably approved by the Designated First Lien Representative and such Representative and such Collateral Agent) or Exhibit B hereto (if such Representative is an Additional First Lien Representative and such Collateral Agent is an Additional First Lien Collateral Agent) (with such changes as may be reasonably approved by the Designated First Lien Representative and such Representative and such Collateral Agent) pursuant to which such Additional Representative becomes a Representative hereunder, such Additional Collateral Agent becomes a Collateral Agent hereunder and the related First Lien Claimholders or Second Lien Claimholders, as applicable, become subject hereto and bound hereby; and
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(2) the Company shall have delivered a Designation to each other then-existing Collateral Agent substantially in the form of Exhibit C hereto, pursuant to which a Responsible Officer of the Company shall (A) identify the Indebtedness to be designated as Additional First Lien Obligations or Additional Second Lien Obligations, as applicable, and the initial aggregate principal amount of such Indebtedness, (B) specify the name and address of the applicable Additional Representative and Additional Collateral Agent, (C) certify that such Additional Debt is permitted to be incurred, secured and guaranteed by each First Lien Loan Document and Second Lien Loan Document and that the conditions set forth in this Section 8.7 are satisfied with respect to such Additional Debt and (D) attach to such Designation true and complete copies of each of the First Lien Loan Documents or Second Lien Loan Documents, as applicable, relating to such Additional First Lien Debt or Additional Second Lien Debt, as applicable, certified as being true and correct by a Responsible Officer of the Company.
(c) The Additional Second Lien Loan Documents or Additional First Lien Loan Documents, as applicable, relating to such Additional Obligations shall provide that each of the applicable Claimholders with respect to such Additional Obligations will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Additional Obligations.
(d) Upon the execution and delivery of a Joinder Agreement by an Additional First Lien Representative and an Additional First Lien Collateral Agent or an Additional Second Lien Representative and an Additional Second Lien Collateral Agent, as the case may be, in each case in accordance with this Section 8.7, each other Representative and Collateral Agent shall acknowledge receipt thereof by countersigning a copy thereof and returning the same to such Additional First Lien Representative and such Additional First Lien Collateral Agent or such Additional Second Lien Representative and such Additional Second Lien Collateral Agent, as the case may be; provided that the failure of any Representative or Collateral Agent to so acknowledge or return the same shall not affect the status of such Additional Obligations as Additional First Lien Obligations or Additional Second Lien Obligations, as the case may be, if the other requirements of this Section 8.7 are complied with.
(e) With respect to any incurrence, issuance or sale of Indebtedness after the date hereof under the Additional First Lien Loan Documents or Additional Second Lien Loan Documents of a Series of Additional First Lien Debt or Series of Additional Second Lien Debt whose Representative and Collateral Agent is already each a party to this Agreement and the First Lien Pari Passu Intercreditor Agreement or Second Lien Pari Passu Intercreditor Agreement, as applicable, the requirements of Section 8.7(b) shall not be applicable and such Indebtedness shall automatically constitute Additional First Lien Debt or Additional Second Lien Debt so long as (i) such Indebtedness is permitted to be incurred, secured and guaranteed by each First Lien Loan Document and Second Lien Loan Document and (ii) the provisions of Section 8.7(b)(2) have been complied with; provided, further, however, that with respect to any such Indebtedness incurred, issued or sold pursuant to the terms of any Additional First Lien Loan Documents or Additional Second Lien Loan Documents of such existing Series of Additional First Lien Debt or Additional Second Lien Debt as such terms existed on the date the Representative and Collateral Agent for such Series of Additional First Lien Debt or Additional Second Lien Debt executed the Joinder Agreement, the requirements of clause (i) of this Section 8.7(e) shall be tested only as of (x) the date of execution of such Joinder Agreement, if pursuant to a commitment entered into at the time of such Joinder Agreement and (y) with respect to any later commitment or amendment to those terms to permit such Indebtedness, as of the date of such commitment and/or amendment.
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8.8 Agency Capacities. Except as expressly provided herein, (i) JPMorgan Chase Bank, N.A. is acting in the capacity of Initial First Lien Representative and Initial First Lien Collateral Agent solely for the Initial First Lien Claimholders, (ii) Alter Domus (US) LLC is acting in the capacity of Initial Second Lien Representative and Initial Second Lien Collateral Agent solely for the Initial Second Lien Claimholders, (iii) JPMorgan Chase Bank, N.A. is acting in the capacity of BDK First Lien Representative and BDK First Lien Collateral Agent solely for the BDK First Lien Claimholders, (iv) Alter Domus (US) LLC is acting in the capacity of BDK Second Lien Representative and BDK Second Lien Collateral Agent solely for the BDK Second Lien Claimholders, (v) JPMorgan Chase Bank, N.A. is acting in the capacity of Designated First Lien Representative and Designated First Lien Collateral Agent solely for the First Lien Claimholders and (vi) Alter Domus (US) LLC is acting in the capacity of Designated Second Lien Representative and Designated Second Lien Collateral Agent solely for the Second Lien Claimholders. Except as expressly provided herein, each other Representative and Collateral Agent is acting in the capacity of Representative and Collateral Agent, respectively, solely for the Claimholders under the First Lien Loan Documents or Second Lien Loan Documents for which it is the named Representative or Collateral Agent, as the case may be, in the applicable Joinder Agreement.
8.9 Submission to Jurisdiction; Certain Waivers. Each Grantor, and each Representative and each Collateral Agent, on behalf of itself and each other applicable Claimholder represented by it, hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the Collateral Documents (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;
(b) agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;
(c) 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 and that nothing in this Agreement or any other First Lien Loan Document or Second Lien Loan Document shall affect any right that any Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other First Lien Loan Document or Second Lien Loan Document against such Grantor or any of its assets in the courts of any jurisdiction;
(d) 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 Collateral Document in any court referred to in Section 8.9(a) (and 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);
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(e) consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 8.11 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);
(f) agrees that service as provided in Section 8.9(e) is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and
(g) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.
8.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO AND EACH GRANTOR 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 THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO AND EACH GRANTOR (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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO AND EACH GRANTOR FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
8.11 Notices. All notices to the Second Lien Claimholders and the First Lien Claimholders permitted or required under this Agreement shall be sent to the applicable Second Lien Representative and the applicable First Lien Representative, respectively. Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by telefacsimile, electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or in the Joinder Agreement pursuant to which it becomes a party hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
8.12 Further Assurances. Each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and each other First Lien Claimholder represented by it, each Second Lien Representative and each Second Lien Collateral Agent, on behalf of itself and each other Second Lien Claimholder represented by it, and the Grantors, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any First Lien Representative and First Lien Collateral Agent or any Second Lien Representative and Second Lien Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.
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8.13 APPLICABLE LAW. THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS IN THE COLLATERAL).
8.14 Binding on Successors and Assigns. This Agreement shall be binding upon the First Lien Representatives, the First Lien Collateral Agents, the other First Lien Claimholders, the Second Lien Representatives, the Second Lien Collateral Agents, the other Second Lien Claimholders, the Grantors and their respective successors and assigns from time to time. If any of the First Lien Representatives, the First Lien Collateral Agents, the Second Lien Representatives or the Second Lien Collateral Agents resigns or is replaced pursuant to the First Lien Loan Documents or the Second Lien Loan Documents, as applicable, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement. No provision of this Agreement will inure to the benefit of a bankruptcy trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of any Grantor, including where any such trustee, debtor-in-possession, creditor trust or other representative of an estate is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency or Liquidation Proceeding.
8.15 Section Headings. The section headings and the table of contents used in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose, be given any substantive effect, affect the construction hereof or be taken into consideration in the interpretation hereof.
8.16 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or other electronic transmission (i.e., a “pdf”) shall be effective as delivery of a manually executed counterpart hereof. Any signature to this Agreement may be delivered by facsimile, electronic mail (including pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the New York Electronic Signature and Records Act or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes to the fullest extent permitted by applicable law.
8.17 Authorization. By its signature, each Person executing this Agreement, on behalf of such Person but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.
8.18 No Third Party Beneficiaries; Provisions Solely to Define Relative Rights. This Agreement and the rights and benefits hereof shall inure to the benefit of each of the First Lien Claimholders and the Second Lien Claimholders and their respective successors and assigns from time to time. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Claimholders on the one hand and the Second Lien Representatives, the Second Lien Collateral Agents and the other Second Lien Claimholders on the other hand. Nothing herein shall be construed to limit the relative rights and obligations as among the First Lien Claimholders or as among the Second Lien Claimholders; as among the First Lien Claimholders, such rights and obligations are governed by, and any provisions herein regarding them are therefore subject to, the provisions of the First Lien Pari Passu Intercreditor Agreement and as among the Second Lien Claimholders, such rights and obligations are governed by, and any provisions herein regarding them are therefore subject to, the provisions of the Second Lien Pari Passu Intercreditor Agreement. Other than as set forth in Section 8.3 and in Section 8.7, neither the Grantors nor any other creditor shall have any rights hereunder and neither the Grantors nor any other creditor may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the First Lien Obligations and the Second Lien Obligations as and when the same shall become due and payable in accordance with their terms.
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8.19 No Indirect Actions. Unless otherwise expressly stated, if a party may not take an action under this Agreement, then it may not take that action indirectly, or support any other Person in taking that action directly or indirectly. “Taking an action indirectly” means taking an action that is not expressly prohibited for the party but is intended to have substantially the same effects as the prohibited action.
8.20 Additional Grantors. Each Grantor agrees that it shall ensure that each of its Subsidiaries that is or is to become a party to any First Lien Loan Document or Second Lien Loan Document shall either execute this Agreement on the date hereof or shall confirm that it is a Grantor hereunder pursuant to a Joinder Agreement substantially in the form attached hereto as Exhibit D that is executed and delivered by such Subsidiary prior to or concurrently with its execution and delivery of such First Lien Loan Document or such Second Lien Loan Document.
8.21 Amendment and Restatement. This Original Intercreditor Agreement is hereby amended and restated, and superseded, in its entirety by this Agreement, which has been executed in renewal, amendment, restatement and modification of, but not in extinguishment of, the obligations under the Original Intercreditor Agreement.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this First Lien/Second Lien Intercreditor Agreement as of the date first written above.
| JPMORGAN CHASE BANK, N.A. | |
| as Initial First Lien Representative and as Initial First Lien Collateral Agent | |
| By: /s/ James A. Knight | |
| Name: James A. Knight | |
| Title: Executive Director | |
| JPMorgan Chase Bank, N.A. | |
| 383 Madison Ave, Floor 23 | |
| New York, NY 10179 | |
| Attn: James Knight | |
| Facsimile: (917) 464-7000 | |
| Email: james.a.knight@jpmorgan.com |
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG] |
| ALTER DOMUS (US) LLC, as Initial Second Lien Representative and as Initial Second Lien Collateral Agent | |
| By: /s/ Matthew Trybula | |
| Name: Matthew Trybula | |
| Title: Associate Counsel | |
| Alter Domus (US) LLC | |
| 225 W. Washington Street, 9th Floor | |
| Chicago, Illinois 60606 | |
| Attention: Legal Department and Rick Ledenbach | |
| Facsimile No. (312) 376-0751 | |
| Email: legal@alterdomus.com | |
| ALTER DOMUS (US) LLC, as BDK Second Lien Representative and as BDK Second Lien Collateral Agent | |
| By: /s/ Matthew Trybula | |
| Name: Matthew Trybula | |
| Title: Associate Counsel | |
| Alter Domus (US) LLC | |
| 225 W. Washington Street, 9th Floor | |
| Chicago, Illinois 60606 | |
| Attention: Legal Department and Rick Ledenbach | |
| Facsimile No. (312) 376-0751 | |
| Email: legal@alterdomus.com | |
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG] |
| JPMORGAN CHASE BANK, N.A. | |
| as BDK First Lien Representative and as BDK First Lien Collateral Agent | |
| By: /s/ James A. Knight | |
| Name: James A. Knight | |
| Title: Executive Director | |
| JPMorgan Chase Bank, N.A. | |
| 383 Madison Ave, Floor 23 | |
| New York, NY 10179 | |
| Attn: James Knight | |
| Facsimile: (917) 464-7000 | |
| Email: james.a.knight@jpmorgan.com |
Acknowledged and Agreed to by:
GRANTORS:
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.
VALOR ACQUISITION, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOPPE FLORIDA, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
BETANCOURT SPORTS NUTRITION, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG] |
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powel
Name: Will Powell
Title: President
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG] |
W.S. BADCOCK CORPORATION
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Senior Vice President
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG] |
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
109 Innovation Court, Suite J,
Delaware, OH 43015
Attention: Tiffany McMillan-McWaters
Email: tmcwaters@franchisegrp.com
[SIGNATURE PAGE TO AMENDED AND RESTATED FIRST LIEN/SECOND LIEN INTERCREDITOR AGREEMENT – FRG]
Exhibit 10.8
Execution Version
FOUR LIEN INTERCREDITOR AGREEMENT
Dated as of November 22, 2021
among
JPMORGAN CHASE BANK, N.A.,
as the First Lien Representative and the First Lien Collateral Agent for the First Lien Claimholders,
ALTER DOMUS (US) LLC,
as the Second Lien Representative and the Second Lien Collateral Agent for the Second Lien Claimholders,
JPMORGAN CHASE BANK, N.A.,
as the Third Lien Representative and the Third Lien Collateral Agent for the Third Lien Claimholders,
ALTER DOMUS (US) LLC,
as the Fourth Lien Representative and the Fourth Lien Collateral Agent for the Fourth Lien Claimholders,
and
each additional Representative and Collateral Agent from time to time party hereto
and acknowledged by
W.S. BADCOCK CORPORATION,
as the Company
TABLE OF CONTENTS
| Page | ||||
| Section 1. | Definitions | 2 | ||
| 1.1 | Defined Terms | 2 | ||
| 1.2 | Terms Generally | 18 | ||
| 1.3 | Currency Equivalents Generally | 18 | ||
| Section 2. | Lien Priorities | 19 | ||
| 2.1 | Relative Priorities | 19 | ||
| 2.2 | Prohibition on Contesting Liens | 19 | ||
| 2.3 | No New Liens | 20 | ||
| 2.4 | Similar Liens and Agreements | 21 | ||
| 2.5 | Perfection of Liens | 21 | ||
| 2.6 | Nature of First Lien Obligations | 21 | ||
| Section 3. | Enforcement | 22 | ||
| 3.1 | Exercise of Remedies | 22 | ||
| 3.2 | Actions Upon Breach; Specific Performance | 25 | ||
| Section 4. | Payments | 26 | ||
| 4.1 | Application of Proceeds | 26 | ||
| 4.2 | Payments Over | 27 | ||
| Section 5. | Other Agreements | 28 | ||
| 5.1 | Releases | 28 | ||
| 5.2 | Insurance | 29 | ||
| 5.3 | Amendments to Senior Loan Documents | 29 | ||
| 5.4 | Confirmation of Subordination in Junior Lien Collateral Documents | 31 | ||
| 5.5 | Gratuitous Bailee/Agent for Perfection; Badcock Mortgaged Property | 31 | ||
| 5.6 | When Discharge of Obligations Deemed to Not Have Occurred | 36 | ||
| Section 6. | Insolvency or Liquidation Proceedings | 37 | ||
| 6.1 | Other Intercreditor Agreement | 37 | ||
| 6.2 | Effectiveness in Insolvency or Liquidation Proceedings | 37 | ||
| Section 7. | Reliance; Waivers; Etc. | 37 | ||
| 7.1 | Reliance | 37 | ||
| 7.2 | No Warranties or Liability | 37 | ||
| 7.3 | No Waiver of Lien Priorities; No Marshaling | 37 | ||
| 7.4 | Obligations Unconditional | 39 |
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| Section 8. | Miscellaneous | 40 | ||
| 8.1 | Integration/Conflicts | 40 | ||
| 8.2 | Effectiveness; Continuing Nature of this Agreement; Severability | 40 | ||
| 8.3 | Amendments; Waivers | 41 | ||
| 8.4 | Information Concerning Financial Condition of the Loan Parties and their Subsidiaries | 41 | ||
| 8.5 | Subrogation | 42 | ||
| 8.6 | Application of Payments | 42 | ||
| 8.7 | Reserved | 43 | ||
| 8.8 | Agency Capacities | 43 | ||
| 8.9 | Submission to Jurisdiction; Certain Waivers | 43 | ||
| 8.10 | WAIVER OF JURY TRIAL | 44 | ||
| 8.11 | Notices | 44 | ||
| 8.12 | Further Assurances | 44 | ||
| 8.13 | APPLICABLE LAW | 44 | ||
| 8.14 | Binding on Successors and Assigns | 45 | ||
| 8.15 | Section Headings | 45 | ||
| 8.16 | Counterparts | 45 | ||
| 8.17 | Authorization | 45 | ||
| 8.18 | No Third Party Beneficiaries; Provisions Solely to Define Relative Rights | 45 | ||
| 8.19 | No Indirect Actions | 45 |
EXHIBITS
Exhibit A - Joinder Agreement (Replacement Third Lien Debt)
Exhibit B - Joinder Agreement (Replacement Fourth Lien Debt)
Exhibit C - Replacement Designation
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FOUR LIEN INTERCREDITOR AGREEMENT
This FOUR LIEN INTERCREDITOR AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), is dated as of November 22, 2021 and entered into by and among JPMORGAN CHASE BANK, N.A., as First Lien Representative for the First Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity, the “First Lien Representative”) and as collateral agent for the First Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity, the “First Lien Collateral Agent”), ALTER DOMUS (US) LLC, as Second Lien Representative for the Second Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity, the “Second Lien Representative”) and as collateral agent for the Second Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity, the “Second Lien Collateral Agent”), JPMORGAN CHASE BANK, N.A., as Third Lien Representative for the Third Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity or any Representative that becomes a party hereto with respect to the Third Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Third Lien Representative”), and as collateral agent for the Third Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity or any Collateral Agent that becomes a party hereto with respect to the Third Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Third Lien Collateral Agent”), ALTER DOMUS (US) LLC, as Fourth Lien Representative for the Fourth Lien Claimholders (as defined below) (in such capacity and together with its successors and assigns from time to time in such capacity or any Representative that becomes a party hereto with respect to the Fourth Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Fourth Lien Representative”), and as collateral agent for the Fourth Lien Claimholders (in such capacity and together with its successors and assigns from time to time in such capacity or any Collateral Agent that becomes a party hereto with respect to the Fourth Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Fourth Lien Collateral Agent”), and each additional Third Lien Representative, Third Lien Collateral Agent, Fourth Lien Representative and Fourth Lien Collateral Agent that from time to time becomes a party hereto pursuant to Section 8.7, and acknowledged by W.S. BADCOCK CORPORATION, a Florida corporation (the “Company”). Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 below.
RECITALS
Franchise Group, Inc., a Delaware corporation (“FRG”), Franchise Group Newco PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”), Franchise Group Newco Intermediate AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF” and together with FRG, FG Newco PSP and Valor individually each a “Borrower” and collectively, the “Borrowers”), the lenders party thereto, the First Lien Representative and the First Lien Collateral Agent have entered into that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “First Lien Credit Agreement”);
The Borrowers, the lenders party thereto, the Second Lien Representative and the Second Lien Collateral Agent have entered into that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Second Lien Credit Agreement”);
The Borrowers, the lenders party thereto, the Third Lien Representative and the Third Lien Collateral Agent have entered into that certain First Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time or Refinanced (subject to compliance with Section 5.6), the “Third Lien Credit Agreement”);
The Borrowers, the lenders party thereto, the Fourth Lien Representative and the Fourth Lien Collateral Agent have entered into that certain Second Lien Credit Agreement, dated as of March 10, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time or Refinanced (subject to compliance with Section 5.6), the “Fourth Lien Credit Agreement”);
Pursuant to (i) that certain First Lien Guaranty Agreement, dated as of the date hereof, between the Company and the First Lien Representative, the Company has agreed to guaranty the First Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “First Lien Guaranty”); (ii) that certain Second Lien Guaranty Agreement, dated as of the date hereof, between the Company and the Second Lien Representative, the Company has agreed to guarantee the Second Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Second Lien Guaranty”); (iii) that certain First Lien Guaranty Agreement, dated as of the date hereof, between the Company and the Third Lien Representative, the Company has agreed to guaranty the Third Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time or any guaranty by the Company with respect to the Third Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Third Lien Guaranty”); and (iv) that certain Second Lien Guaranty Agreement, dated as of the date hereof, between the Company and the Fourth Lien Representative, the Company has agreed to guarantee the Fourth Lien Obligations (as amended, restated, amended and restated, supplemented or otherwise modified from time to time or any guaranty by the Company with respect to the Fourth Lien Obligations pursuant to a Refinancing made in compliance with Section 5.6, the “Fourth Lien Guaranty”);
In furtherance of the foregoing, the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents and the Fourth Lien Loan Documents provide, among other things, that the First Lien Representative and the First Lien Collateral Agent, on the one hand (each on behalf of the First Lien Claimholders), the Second Lien Representative and the Second Lien Collateral Agent, on the one hand (each on behalf of the Second Lien Claimholders), each Third Lien Representative and each Third Lien Collateral Agent, on the one hand (each on behalf of its related Third Lien Claimholders) and each Fourth Lien Representative and each Fourth Lien Collateral Agent, on the other hand (each on behalf of its related Fourth Lien Claimholders) shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and
In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the First Lien Representative (for itself and on behalf of each other First Lien Claimholder), the First Lien Collateral Agent (for itself and on behalf of each other First Lien Claimholder), the Second Lien Representative (for itself and on behalf of each other Second Lien Claimholder), the Second Lien Collateral Agent (for itself and on behalf of each other Second Lien Claimholder), the Third Lien Representative (for itself and on behalf of each other Third Lien Claimholder), the Third Lien Collateral Agent (for itself and on behalf of each other Third Lien Claimholder), the Fourth Lien Representative (for itself and on behalf of each other Fourth Lien Claimholder), the Fourth Lien Collateral Agent (for itself and on behalf of each other Fourth Lien Claimholder), each other Representative (for itself and on behalf of each other Claimholder represented by it) and each other Collateral Agent (for itself and on behalf of each other Claimholder represented by it), intending to be legally bound, hereby agrees as follows:
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Section 1. Definitions.
1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:
“Affiliate” means, with respect to a specified Person, (a) any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with the Person specified or is a director or officer of the Person specified or (b) any other Person that directly or indirectly owns 10% or more of any class of equity interests of the Person specified.
“Agreement” has the meaning set forth in the Preamble to this Agreement.
“Applicable Junior Lien Collateral Agent” means (i) initially and prior to the Discharge of Second Lien Obligations and if the Second Lien Collateral Agent and/or the Second Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Second Lien Collateral Agent, (ii) prior to the Discharge of Third Lien Obligations and if none of the First Lien Collateral Agent, the First Lien Representative, the Second Lien Collateral Agent or the Second Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Third Lien Collateral Agent, and (iii) prior to the Discharge of Fourth Lien Obligations and if none of the First Lien Collateral Agent, the First Lien Representative, the Second Lien Collateral Agent, the Second Lien Representative, the Third Lien Collateral Agent or the Third Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Fourth Lien Collateral Agent.
“Applicable Junior Lien Collateral Documents” means (i) initially and prior to the Discharge of First Lien Obligations, the Second Lien Collateral Documents (if any), the Third Lien Collateral Documents (if any) and the Fourth Lien Collateral Documents (if any), (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Third Lien Collateral Documents (if any) and the Fourth Lien Collateral Documents (if any) and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Fourth Lien Collateral Documents (if any).
“Applicable Junior Lien Representative” means (i) initially and prior to the Discharge of Second Lien Obligations and if the Second Lien Collateral Agent and/or the Second Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Second Lien Representative, (ii) prior to the Discharge of Third Lien Obligations and if neither the Second Lien Collateral Agent nor the Second Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Third Lien Representative, and (iii) prior to the Discharge of Fourth Lien Obligations and if none of the Second Lien Collateral Agent, the Second Lien Representative, the Third Lien Collateral Agent or the Third Lien Representative has commenced or is maintaining, or seeking to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral following the Standstill Period in accordance with Section 3.1, the Fourth Lien Representative.
3
“Applicable Senior Lien Claimholders” means (i) initially and prior to the Discharge of First Lien Obligations, the First Lien Representative, the First Lien Collateral Agent and the other First Lien Claimholders, (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Claimholders and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Third Lien Representative, the Third Lien Collateral Agent and the other Third Lien Claimholders.
“Applicable Senior Lien Collateral Agent” means (i) initially and prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent, (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Second Lien Collateral Agent and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Third Lien Collateral Agent.
“Applicable Senior Lien Collateral Documents” means (i) initially and prior to the Discharge of First Lien Obligations, the First Lien Collateral Documents, (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Second Lien Collateral Documents and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Third Lien Collateral Documents.
“Applicable Senior Lien Obligations” means (i) initially and prior to the Discharge of First Lien Obligations, the First Lien Obligations, (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Second Lien Obligations and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Third Lien Obligations.
“Applicable Senior Lien Representative” means (i) initially and prior to the Discharge of First Lien Obligations, the First Lien Representative, (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Second Lien Representative and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Third Lien Representative.
“Badcock Mortgaged Properties” has the meaning assigned to such term in the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement.
“Bank Product Obligations” means all obligations and liabilities (whether direct or indirect, absolute or contingent, due or to become due or now existing or hereafter incurred) of any Loan Party, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise, which may arise under, out of, or in connection with any credit and debit cards (including commercial credit cards), stored value cards, purchasing cards, treasury, investment, depository, clearing house, wire transfer, overdraft, controlled disbursement, cash management or automated clearing house transfers of funds services, return items, interstate depository network services or any related services, to any Person permitted to be a secured party in respect of such obligations under the applicable Secured Loan Documents.
“Bankruptcy Case” means a case under the Bankruptcy Code or any other Bankruptcy Law.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
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“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.
“Borrower” has the meaning set forth in the Recitals to this Agreement.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.
“Cap Amount” means the First Lien Cap Amount, the Second Lien Cap Amount or the Third Lien Cap Amount, as the context may require.
“Claimholders” means the First Lien Claimholders, the Second Lien Claimholders, the Third Lien Claimholders and/or the Fourth Lien Claimholders, as the context may require.
“Collateral” means, at any time, all of the assets and property of the Company, whether real, personal or mixed, in which the holders of the Secured Obligations (or their respective Collateral Agents or Representatives) hold, purport to hold or are required to hold, a security interest at such time (or, in the case of the Senior Lien Obligations, are deemed pursuant to Section 2 to hold a security interest) to secure the Secured Obligations.
“Collateral Agent” means the First Lien Collateral Agent, the Second Lien Collateral Agent, any Third Lien Collateral Agent and/or any Fourth Lien Collateral Agent, as the context may require.
“Collateral Documents” means the First Lien Collateral Documents, the Second Lien Collateral Documents, the Third Lien Loan Documents and the Fourth Lien Collateral Documents.
“Company” has the meaning set forth in the Preamble to this Agreement.
“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.
“Declined Liens” has the meaning set forth in Section 2.3.
“Designation” means a Third Lien Replacement Designation or Fourth Lien Replacement Designation in substantially the form of Exhibit A or Exhibit B attached hereto.
“Discharge” means, except to the extent otherwise provided in Section 5.6, with respect to any Series of Secured Obligations, each of the following has occurred:
(a) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding) on all Indebtedness outstanding under the applicable Secured Loan Documents and constituting Secured Obligations of such Series;
(b) payment in full in cash of all Hedging Obligations and all Bank Product Obligations constituting Secured Obligations of such Series secured by the Collateral, or the cash collateralization of all such applicable Hedging Obligations and Bank Product Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty);
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(c) payment in full in cash of all other Secured Obligations of such Series under the applicable Secured Loan Documents of such Series that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than any indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time); and
(d) termination or expiration of all commitments, if any, to extend credit that would constitute Secured Obligations under such Series.
The term “Discharged” shall have a corresponding meaning.
“Discharge of First Lien Obligations” means the Discharge of all First Lien Obligations has occurred.
“Discharge of Second Lien Obligations” means the Discharge of all Second Lien Obligations has occurred.
“Discharge of Third Lien Obligations” means the Discharge of all Third Lien Obligations has occurred; provided, that the Discharge of Third Lien Obligations shall be deemed not to have occurred if the Third Lien Credit Agreement is Refinanced in accordance with Section 5.6 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.6.
“Discharge of Fourth Lien Obligations” means the Discharge of all Fourth Lien Obligations has occurred; provided, that the Discharge of Fourth Lien Obligations shall be deemed not to have occurred if the Fourth Lien Credit Agreement is Refinanced in accordance with Section 5.6 and such Refinanced Indebtedness is then in effect and has not itself been Discharged or Refinanced in accordance with Section 5.6.
“Discharge of Junior Lien Obligations” means, as used herein as of any date of determination, (i) in the case of the First Lien Representative, the First Lien Collateral Agent, the other First Lien Claimholders and the First Lien Obligations and after the Discharge of First Lien Obligations has occurred, the Discharge of Second Lien Obligations, the Discharge of Third Lien Obligations and the Discharge of Fourth Lien Obligations, (ii) in the case of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations and after the Discharge of Second Lien Obligations has occurred, the Discharge of Third Lien Obligations and the Discharge of Fourth Lien Obligations and (iii) in the case of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations and after the Discharge of Third Lien Obligations has occurred, the Discharge of Fourth Lien Obligations.
“Discharge of Senior Lien Obligations” means, as used herein as of any date of determination, (i) if a Discharge of First Lien Obligations has not occurred as of such date, a Discharge of First Lien Obligations, (ii) if a Discharge of First Lien Obligations has occurred as of such date and a Discharge of Second Lien Obligations has not occurred as of such date, a Discharge of Second Lien Obligations and (iii) if a Discharge of First Lien Obligations and a Discharge of Second Lien Obligations has occurred as of such date and a Discharge of Third Lien Obligations has not occurred as of such date, a Discharge of Third Lien Obligations.
“Disposition” has the meaning set forth in Section 5.1(b).
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“Enforcement Action” means any action to:
(a) foreclose, execute, levy, or collect on, take possession or control of (other than for purposes of perfection), sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under the Secured Loan Documents (including by way of setoff, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable);
(b) solicit bids from third Persons, approve bid procedures for any proposed disposition of Collateral, conduct the liquidation or disposition of Collateral or engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of valuing, marketing, promoting, and selling Collateral;
(c) receive a transfer of Collateral in satisfaction of Indebtedness or any other Obligation secured thereby; or
(d) otherwise enforce a security interest or exercise another right or remedy, as a secured creditor or otherwise, pertaining to the Collateral at law, in equity, or pursuant to the Secured Loan Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses, and exercising voting rights in respect of equity interests comprising Collateral).
“FG Newco Intermediate AF” shall have the meaning set forth in the Recitals to this Agreement.
“FG Newco PSP” shall have the meaning set forth in the Recitals to this Agreement.
“First Lien Cap Amount” means, (x) unless the Company shall be subject to any Insolvency or Liquidation Proceeding, $467,500,000 minus the aggregate amount of principal payments made under the First Lien Credit Agreement from and after the date hereof; and (y) if the Company shall be subject to any Insolvency or Liquidation Proceeding the sum of (i) $467,500,000 minus (ii) the aggregate amount of principal payments made under the First Lien Credit Agreement from and after the date hereof plus (iii) 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the First Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding.
“First Lien Claimholders” means the “Secured Parties” as defined in the First Lien Credit Agreement.
“First Lien Collateral” means any “Badcock Collateral,” “Pledged Collateral” or similar term as defined in any First Lien Loan Document or any other assets of the Company with respect to which a Lien is granted, purported to be granted or required to be granted pursuant to a First Lien Loan Document as security for any First Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any First Lien Claimholder; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “First Lien Collateral” shall not include any Collateral (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
“First Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
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“First Lien Collateral Documents” means the “Badcock Security Documents” (as defined in the First Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is granted securing any First Lien Obligations or pursuant to which any such Lien is perfected; provided that (i) for the avoidance of doubt and solely for purposes of this Agreement, “First Lien Collateral Documents” shall not include any Security Documents (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement) and (ii) in the case of any First Lien/Third Lien Mortgage, such First Lien/Third Lien Mortgage shall only constitute a “First Lien Collateral Document” solely as it relates to such First Lien/Third Lien Mortgage providing security for any First Lien Obligations.
“First Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“First Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“First Lien Loan Documents” means the First Lien Credit Agreement and the other “Loan Documents” as defined in the First Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the First Lien Obligations.
“First Lien Mortgage” means a First Lien/Third Lien Mortgage solely to the extent it constitutes a First Lien Collateral Document.
“First Lien/Third Lien Mortgages” means a collective reference to each mortgage, deed of trust and any other document or instrument under which any Lien on real property owned or leased by the Company is granted to secure any First Lien Obligations and/or Third Lien Obligations or under which rights or remedies with respect to any such Liens are governed; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “First Lien/Third Lien Mortgages” shall not include any Mortgages (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
“First Lien Obligations” means the “Secured Obligations” as defined in the First Lien Loan Documents. For avoidance of doubt, Hedging Obligations and Bank Product Obligations shall not be subject to the First Lien Cap Amount.
“First Lien Real Property Collateral Agent” has the meaning set forth in Section 5.5(e).
“First Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“Fourth Lien Cap Amount” means, (x) unless the Company shall be subject to any Insolvency or Liquidation Proceeding, $330,000,000; and (y) if the Company shall be subject to any Insolvency or Liquidation Proceeding the sum of (i) $330,000,000 plus (ii) 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the Fourth Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding.
“Fourth Lien Claimholders” means the “Secured Parties” as defined in the Fourth Lien Loan Documents.
“Fourth Lien Collateral” means any “Badcock Collateral,” “Pledged Collateral” or similar term as defined in any Fourth Lien Loan Document or any other assets of the Company with respect to which a Lien is granted, purported to be granted or required to be granted pursuant to a Fourth Lien Loan Document as security for any Fourth Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Fourth Lien Claimholder; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “Fourth Lien Collateral” shall not include any Collateral (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
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“Fourth Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“Fourth Lien Collateral Documents” means the “Badcock Security Documents” (as defined in the Fourth Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Fourth Lien Obligations or pursuant to which any such Lien is perfected; provided that (i) for the avoidance of doubt and solely for purposes of this Agreement, “Fourth Lien Collateral Documents” shall not include any Security Documents (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement) and (ii) in the case of any Second Lien/Fourth Lien Mortgage, such Second Lien/Fourth Lien Mortgage shall only constitute a “Fourth Lien Collateral Document” solely as it relates to such Second Lien/Fourth Lien Mortgage providing security for any Fourth Lien Obligations.
“Fourth Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“Fourth Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“Fourth Lien Loan Documents” means the Fourth Lien Credit Agreement and the other “Loan Documents” as defined in the Fourth Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Fourth Lien Obligations.
“Fourth Lien Mortgage” means a Second Lien/Fourth Lien Mortgage solely to the extent it constitutes a Fourth Lien Collateral Document.
“Fourth Lien Obligations” means the “Secured Obligations” as defined in the Fourth Lien Loan Documents. For avoidance of doubt, Hedging Obligations and Bank Product Obligations shall not be subject to the Fourth Lien Cap Amount.
“Fourth Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.
“Hedge Agreement” means a Swap Contract entered into by a Loan Party with a counterparty as permitted under the Secured Loan Documents.
“Hedging Obligation” of any Person means any obligation of such Person pursuant to any Hedge Agreement.
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“Indebtedness” means and includes all indebtedness for borrowed money. For the avoidance of doubt, “Indebtedness” shall not include reimbursement or other obligations in respect of letters of credit, Hedging Obligations or Bank Product Obligations.
“Insolvency or Liquidation Proceeding” means:
(a) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Loan Party;
(b) any other voluntary or involuntary insolvency, reorganization or Bankruptcy Case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Loan Party or with respect to a material portion of their respective assets;
(c) any liquidation, dissolution, reorganization or winding up of any Loan Party whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(d) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Loan Party.
“Joinder Agreement” means a supplement to this Agreement in the form of Exhibit A or Exhibit B hereto, as applicable, required to be delivered by a Representative and a Collateral Agent to each other then-existing Representative and Collateral Agent pursuant to Section 5.6 in order to include Refinancing Indebtedness that constitutes Third Lien Obligations or Fourth Lien Obligations hereunder and to become the Representative or Collateral Agent, as the case may be, hereunder in respect thereof for the applicable Third Lien Claimholders or the applicable Fourth Lien Claimholders, as the case may be, under such Third Lien Obligations or Fourth Lien Obligations.
“Junior Lien Claimholders” means, when used herein, (i) in respect of the First Lien Representative, the First Lien Collateral Agent, the other First Lien Claimholders and the First Lien Obligations, the Second Lien Claimholders, the Third Lien Claimholders and the Fourth Lien Claimholders, (ii) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the Third Lien Claimholders and the Fourth Lien Claimholders and (iii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the Fourth Lien Claimholders.
“Junior Lien Collateral Agent” means, when used herein, (i) in respect of the First Lien Representative, the First Lien Collateral Agent, the other First Lien Claimholders and the First Lien Obligations, the Second Lien Collateral Agent, the Third Lien Collateral Agent and the Fourth Lien Collateral Agent, (ii) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the Third Lien Collateral Agent and the Fourth Lien Collateral Agent and (iii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the Fourth Lien Collateral Agent.
“Junior Lien Collateral Documents” means, when used herein, (i) in respect of any First Lien Collateral Document, the Second Lien Collateral Documents, the Third Lien Collateral Documents and the Fourth Lien Collateral Documents, (ii) in respect of any Second Lien Collateral Document, the Third Lien Collateral Documents and the Fourth Lien Collateral Documents and (iii) in respect of any Third Lien Collateral Document, the Fourth Lien Collateral Documents.
“Junior Lien Declined Lien” has the meaning set forth in Section 2.3.
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“Junior Lien Loan Documents” means, when used herein, (i) in respect of any First Lien Loan Document, the Second Lien Loan Documents, the Third Lien Loan Documents and the Fourth Lien Loan Documents, (ii) in respect of any Second Lien Loan Document, the Third Lien Loan Documents and the Fourth Lien Loan Documents and (iii) in respect of any Third Lien Loan Document, the Fourth Lien Loan Documents.
“Junior Lien Mortgage” means, when used herein, (i) in respect of any First Lien Mortgage, the Second Lien Mortgages, the Third Lien Mortgages and the Fourth Lien Mortgages, (ii) in respect of any Second Lien Mortgage, the Third Lien Mortgages and the Fourth Lien Mortgages and (iii) in respect of any Third Lien Mortgage, the Fourth Lien Mortgages.
“Junior Lien Obligations” means, when used herein, (i) in respect of the First Lien Representative, the First Lien Collateral Agent, the other First Lien Claimholders and the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations and the Fourth Lien Obligations, (ii) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the Third Lien Obligations and the Fourth Lien Obligations and (iii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the Fourth Lien Obligations.
“Junior Lien Representative” means, when used herein, (i) in respect of the First Lien Representative, the First Lien Collateral Agent, the other First Lien Claimholders and the First Lien Obligations, the Second Lien Representative, the Third Lien Representative and the Fourth Lien Representative, (ii) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the Third Lien Representative and the Fourth Lien Representative and (iii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the Fourth Lien Representative.
“Lien” means any lien (including judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust (whether contractual, statutory, deemed, equitable, constructive, resulting or otherwise), UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing, including any right of set-off or recoupment.
“Loan Parties” has the meaning assigned to such term in the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement.
“New Claimholders” means the Claimholders in respect of any Series of New Obligations.
“New Obligations” means any Third Lien Obligations or Fourth Lien Obligations, as the case may be, that become subject to the terms of this Agreement pursuant to a Joinder Agreement in accordance with Section 5.6.
“Obligations” means all obligations of every nature of the Company from time to time owed to any First Lien Claimholders, any Second Lien Claimholders, any Third Lien Claimholders, any Fourth Lien Claimholders or any of them or their respective Affiliates, in each case, under the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents, the Fourth Lien Loan Documents, Hedge Agreements or Bank Product Obligations, whether for principal, interest, premium or payments for early termination of Swap Contracts, fees, expenses, indemnification or otherwise and all guarantees of any of the foregoing and including any interest and fees that accrue after the commencement by or against any Person of any proceeding under any Bankruptcy Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
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“Other Intercreditor Agreement” means that certain Amended and Restated First Lien/Second Lien Intercreditor Agreement, dated as of the date hereof, among JPMorgan Chase Bank, N.A., as the Initial First Lien Representative and the Initial First Lien Collateral Agent, Alter Domus (US) LLC, as the Initial Second Lien Representative and the Initial Second Lien Collateral Agent, JPMorgan Chase Bank, N.A., as the Initial Additional First Lien Representative and the Initial Additional First Lien Collateral Agent and Alter Domus (US) LLC, as the Initial Additional Second Lien Representative and the Initial Additional Second Lien Collateral Agent, and acknowledged by the Loan Parties, as amended, restated, amended and restated, supplemented or otherwise modified in accordance with its terms.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.
“Pledged Collateral” has the meaning set forth in Section 5.5.
“Post-Petition Interest” means interest, fees, premiums, expenses and other charges that, pursuant to the Secured Loan Documents, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.
“Real Property Collateral Agents” has the meaning set forth in Section 5.5(f).
“Refinance” means, in respect of any Indebtedness that constitutes Third Lien Obligations or Fourth Lien Obligations, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other Indebtedness in exchange or replacement for, such Indebtedness in whole or in part and subject, in the case of the Third Lien Obligations, to the Third Lien Cap Amount, and in the case of the Fourth Lien Obligations, to the Fourth Lien Cap Amount, in each case, regardless of whether the principal amount of such Refinancing Indebtedness is the same, greater than, or less than the principal amount of the Refinanced Indebtedness; provided that the definitive documentation for any such Refinancing Indebtedness shall provide that the holders of such Refinancing Indebtedness are subject to and bound by the provisions of this Agreement in their capacity as a holder of Third Lien Obligations or Fourth Lien Obligations, as the case may be. “Refinanced” and “Refinancing” shall have correlative meanings.
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees and substantially the same collateral provisions) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Remaining Junior Lien Claimholders” means, as used herein as of any date of determination, (i) initially and prior to the Discharge of First Lien Obligations, the Second Lien Claimholders (if any), the Third Lien Claimholders (if any) and the Fourth Lien Claimholders (if any), (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Third Lien Claimholders (if any) and the Fourth Lien Claimholders (if any) and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Fourth Lien Claimholders (if any).
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“Remaining Junior Lien Collateral Agents” means, as used herein as of any date of determination, (i) initially and prior to the Discharge of First Lien Obligations, the Second Lien Collateral Agent (if any), the Third Lien Collateral Agent (if any) and the Fourth Lien Collateral Agent (if any), (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Third Lien Collateral Agent (if any) and the Fourth Lien Collateral Agent (if any) and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Fourth Lien Collateral Agent (if any).
“Remaining Junior Lien Representatives” means, as used herein as of any date of determination, (i) initially and prior to the Discharge of First Lien Obligations, the Second Lien Representative (if any), the Third Lien Representative (if any) and the Fourth Lien Representative (if any), (ii) from and after the Discharge of First Lien Obligations and prior to the Discharge of Second Lien Obligations, the Third Lien Representative (if any) and the Fourth Lien Representative (if any) and (iii) from and after the Discharge of Second Lien Obligations and prior to the Discharge of Third Lien Obligations, the Fourth Lien Representative (if any).
“Remaining Priority Lien Collateral Agent” means, as used herein as of any date of determination, (i) if a Discharge of First Lien Obligations has occurred as of such date and a Discharge of Second Lien Obligations has not occurred as of such date, the Second Lien Collateral Agent, (ii) if a Discharge of First Lien Obligations and a Discharge of Second Lien Obligations has occurred as of such date and a Discharge of Third Lien Obligations has not occurred as of such date, the Third Lien Collateral Agent and (iii) if a Discharge of First Lien Obligations, a Discharge of Second Lien Obligations and a Discharge of Third Lien Obligations has occurred as of such date, the Fourth Lien Collateral Agent.
“Representative” means the First Lien Representative, the Second Lien Representative, the Third Lien Representative and/or the Fourth Lien Representative, as the context may require.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or equivalent officers of the Company.
“Second Lien Cap Amount” means, (x) unless the Company shall be subject to any Insolvency or Liquidation Proceeding, $165,000,000 minus the aggregate amount of principal payments made under the Second Lien Credit Agreement from and after the date hereof; and (y) if the Company shall be subject to any Insolvency or Liquidation Proceeding the sum of (i) $165,000,000 minus (ii) the aggregate amount of principal payments made under the Second Lien Credit Agreement from and after the date hereof plus (iii) 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the Second Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding.
“Second Lien Claimholders” means the “Secured Parties” as defined in the Second Lien Credit Agreement.
“Second Lien Collateral” means any “Badcock Collateral,” “Pledged Collateral” or similar term as defined in any Second Lien Loan Document or any other assets of the Company with respect to which a Lien is granted, purported to be granted or required to be granted pursuant to a Second Lien Loan Document as security for any Second Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Second Lien Claimholder; provided that for the avoidance of doubt and solely for purposes of this Agreement, “Second Lien Collateral” shall not include any Collateral (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
“Second Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
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“Second Lien Collateral Documents” means the “Badcock Security Documents” (as defined in the Second Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Second Lien Obligations or pursuant to which any such Lien is perfected; provided that (i) for the avoidance of doubt and solely for purposes of this Agreement, “Second Lien Collateral Documents” shall not include any Security Documents (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement) and (ii) in the case of any Second Lien/Fourth Lien Mortgage, such Second Lien/Fourth Lien Mortgage shall only constitute a “Second Lien Collateral Document” solely as it relates to such Second Lien/Fourth Lien Mortgage providing security for any Second Lien Obligations.
“Second Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
“Second Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“Second Lien Loan Documents” means the Second Lien Credit Agreement and the other “Loan Documents” as defined in the Second Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Second Lien Obligations.
“Second Lien Obligations” means the “Secured Obligations” as defined in the Second Lien Loan Documents. For avoidance of doubt, Hedging Obligations and Bank Product Obligations shall not be subject to the Second Lien Cap Amount.
“Second Lien Real Property Collateral Agent” has the meaning set forth in Section 5.5(f).
“Second Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“Second Lien Mortgage” means a Second Lien/Fourth Lien Mortgage solely to the extent it constitutes a Second Lien Collateral Document.
“Second Lien/Fourth Lien Mortgages” means a collective reference to each mortgage, deed of trust and any other document or instrument under which any Lien on real property owned or leased by the Company is granted to secure any Second Lien Obligations and/or Fourth Lien Obligations or under which rights or remedies with respect to any such Liens are governed; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “Second Lien Mortgages” shall not include any Mortgages (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
“Secured Loan Documents” means the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents or the Fourth Lien Loan Documents, as the case may be.
“Secured Obligations” means the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations or the Fourth Lien Obligations, as the case may be.
“Senior Lien Claimholder” means, when used herein, (i) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the First Lien Claimholders, (ii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the First Lien Claimholders and the Second Lien Claimholders and (iii) in respect of the Fourth Lien Representative, the Fourth Lien Collateral Agent, the other Fourth Lien Claimholders and the Fourth Lien Obligations, the First Lien Claimholders, the Second Lien Claimholders and the Third Lien Claimholders.
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“Senior Lien Collateral Agent” means, when used herein, (i) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the First Lien Collateral Agent, (ii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the First Lien Collateral Agent and the Second Lien Collateral Agent and (iii) in respect of the Fourth Lien Representative, the Fourth Lien Collateral Agent, the other Fourth Lien Claimholders and the Fourth Lien Obligations, the First Lien Collateral Agent, the Second Lien Collateral Agent and the Third Lien Collateral Agent.
“Senior Lien Collateral Documents” means, when used herein, (i) in respect of any Second Lien Collateral Document, the First Lien Collateral Documents, (ii) in respect of any Third Lien Collateral Document, the First Lien Collateral Documents and the Second Lien Collateral Documents and (iii) in respect of any Fourth Lien Collateral Document, the First Lien Collateral Documents, the Second Lien Collateral Documents and the Third Lien Collateral Documents.
“Senior Lien Declined Lien” has the meaning set forth in Section 2.3.
“Senior Lien Loan Documents” means, when used herein, (i) in respect of any Second Lien Loan Document, the First Lien Loan Documents, (ii) in respect of any Third Lien Loan Document, the First Lien Loan Documents and the Second Lien Loan Documents and (iii) in respect of any Fourth Lien Loan Document, the First Lien Loan Documents, the Second Lien Loan Documents and the Third Lien Loan Documents.
“Senior Lien Obligations” means, when used herein, (i) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the First Lien Obligations, (ii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the First Lien Obligations and the Second Lien Obligations and (iii) in respect of the Fourth Lien Representative, the Fourth Lien Collateral Agent, the other Fourth Lien Claimholders and the Fourth Lien Obligations, the First Lien Obligations, the Second Lien Obligations and the Third Lien Obligations.
“Senior Lien Representative” means, when used herein, (i) in respect of the Second Lien Representative, the Second Lien Collateral Agent, the other Second Lien Claimholders and the Second Lien Obligations, the First Lien Representative, (ii) in respect of the Third Lien Representative, the Third Lien Collateral Agent, the other Third Lien Claimholders and the Third Lien Obligations, the First Lien Representative and the Second Lien Representative and (iii) in respect of the Fourth Lien Representative, the Fourth Lien Collateral Agent, the other Fourth Lien Claimholders and the Fourth Lien Obligations, the First Lien Representative, the Second Lien Representative and the Third Lien Representative.
“Series” means the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations or the Fourth Lien Obligations, as the case may be.
“Standstill Period” has the meaning set forth in Section 3.1.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
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“Swap Contract” means (a) any and all interest 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 price or bond index swaps or options for 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 such obligations or liabilities under any Master Agreement.
“Third Lien Cap Amount” means, (x) unless the Company shall be subject to any Insolvency or Liquidation Proceeding, $1,100,000,000; and (y) if the Company shall be subject to any Insolvency or Liquidation Proceeding the sum of (i) $1,100,000,000 plus (ii) 10% of the sum of the aggregate outstanding principal amount of Indebtedness under the Third Lien Loan Documents immediately prior to the commencement of such Insolvency or Liquidation Proceeding.
“Third Lien Claimholders” means the “Secured Parties” as defined in the Third Lien Credit Agreement.
“Third Lien Collateral” means any “Badcock Collateral,” “Pledged Collateral” or similar term as defined in any Third Lien Loan Document or any other assets of the Company with respect to which a Lien is granted, purported to be granted or required to be granted pursuant to a Third Lien Loan Document as security for any Third Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Third Lien Claimholder; provided that, for the avoidance of doubt and solely for purposes of this Agreement, “Third Lien Collateral” shall not include any Collateral (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement).
“Third Lien Collateral Agent” has the meaning set forth in the Preamble to this Agreement.
“Third Lien Collateral Documents” means the “Badcock Security Documents” (as defined in the Third Lien Credit Agreement) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Third Lien Obligations or pursuant to which any such Lien is perfected; provided that (i) for the avoidance of doubt and solely for purposes of this Agreement, “Third Lien Collateral Documents” shall not include any Security Documents (as defined in each of the First Lien Credit Agreement, the Second Lien Credit Agreement, the Third Lien Credit Agreement and the Fourth Lien Credit Agreement) and (ii) in the case of any First Lien/Third Lien Mortgage, such First Lien/Third Lien Mortgage shall only constitute a “Third Lien Collateral Document” solely as it relates to such First Lien/Third Lien Mortgage providing security for any Third Lien Obligations.
“Third Lien Credit Agreement” has the meaning set forth in the Recitals to this Agreement.
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“Third Lien Guaranty” has the meaning set forth in the Recitals to this Agreement.
“Third Lien Loan Documents” means the Third Lien Credit Agreement and the other “Loan Documents” as defined in the Third Lien Credit Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Third Lien Obligations.
“Third Lien Mortgage” means a First Lien/Third Lien Mortgage solely to the extent it constitutes a Third Lien Collateral Document.
“Third Lien Obligations” means the “Secured Obligations” as defined in the Third Lien Loan Documents. For avoidance of doubt, Hedging Obligations and Bank Product Obligations shall not be subject to the Third Lien Cap Amount.
“Third Lien Representative” has the meaning set forth in the Preamble to this Agreement.
“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in the State of New York; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.
1.2 Terms Generally. The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise:
(a) any definition of or reference herein to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as amended, restated, amended and restated, supplemented or otherwise modified from time to time and any reference herein to any statute or regulations shall include any amendment, renewal, extension or replacement thereof;
(b) any reference herein to any Person shall be construed to include such Person’s successors and assigns from time to time;
(c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;
(d) all references herein to Sections shall be construed to refer to Sections of this Agreement; and
(e) 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.
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1.3 Currency Equivalents Generally. For purposes of determining compliance with any Dollar-denominated restriction on the maximum amount of Indebtedness permitted to be outstanding for any purposes hereunder, the principal amount of Indebtedness denominated in a currency other than U.S. Dollars shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is Refinancing Indebtedness denominated in a currency other than U.S. Dollars, and such refinancing would cause the applicable U.S. Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such U.S. Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced (in each case, assuming a full utilization of commitments thereunder). The principal amount of any Refinancing Indebtedness, if incurred in a different currency from the Indebtedness being Refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such Refinancing (in each case, assuming a full utilization of commitments thereunder).
Section 2. Lien Priorities.
2.1 Relative Priorities. Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing any Series of Secured Obligations granted on the Collateral and notwithstanding any provision of the UCC or any other applicable law or the Secured Loan Documents or any defect or deficiencies in, or failure to perfect or lapse in perfection of, or avoidance as a fraudulent conveyance or otherwise of, the Liens securing any Series of Secured Obligations, the subordination of such Liens to any other Liens, or any other circumstance whatsoever, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, hereby agrees that:
(a) any Lien on the Collateral securing any Senior Lien Obligations now or hereafter held by or on behalf of any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholders or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Lien on the Collateral securing any Junior Lien Obligations; and
(b) any Lien on the Collateral securing any Junior Lien Obligations now or hereafter held by or on behalf of any Junior Lien Representative, any Junior Lien Collateral Agent, any Junior Lien Claimholders or any agent or trustee therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any Senior Lien Obligations. All Liens on the Collateral securing any Senior Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Junior Lien Obligations for all purposes, whether or not such Liens securing any Senior Lien Obligations are subordinated to any Lien securing any other obligation of the Company or any other Person.
2.2 Prohibition on Contesting Liens. Each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, and each Senior Lien Representative and each Senior Lien Collateral Agent, for itself and on behalf of each other Senior Lien Claimholder represented by it, agrees that it will not (and hereby waives any right to) directly or indirectly contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the priority, validity, perfection, extent or enforceability of a Lien held, or purported to be held, by or on behalf of any of the Senior Lien Claimholders in the Collateral or by or on behalf of any of the Junior Lien Claimholders in the Collateral, as the case may be, or the amount, nature or extent of the Senior Lien Obligations or Junior Lien Obligations or the provisions of this Agreement; provided, that nothing in this Agreement shall be construed to prevent or impair the rights of any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the Senior Lien Obligations as provided in Sections 2.1 and 3.1.
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2.3 No New Liens. So long as the Discharge of Senior Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, the Company shall not:
(a) grant or permit any additional Liens on any asset or property to secure any Junior Lien Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure the Senior Lien Obligations, the parties hereto agreeing that any such Lien shall be subject to Section 2.1; provided that this provision will not be violated with respect to any particular Series of Senior Lien Obligations if the applicable Senior Lien Collateral Agent is given a reasonable opportunity to accept a Lien on any asset or property and either the Company or such Senior Lien Collateral Agent states in writing that the Secured Loan Documents under which such Senior Lien Collateral Agent is acting prohibit such Senior Lien Collateral Agent from accepting a Lien on such asset or property or the applicable Senior Lien Collateral Agent otherwise expressly declines to accept a Lien on such asset or property (any such prohibited or declined Lien with respect to a particular Series of Senior Lien Obligations, a “Senior Lien Declined Lien”); or
(b) grant or permit any additional Liens on any asset or property to secure any Senior Lien Obligations unless it has granted or concurrently grants a Lien on such asset or property to secure the Junior Lien Obligations; provided that this provision will not be violated with respect to any particular Series of Junior Lien Obligations if the applicable Junior Lien Collateral Agent is given a reasonable opportunity to accept a Lien on any asset or property and either the Company or such Junior Lien Collateral Agent states in writing that the Secured Loan Documents under which such Junior Lien Collateral Agent is acting prohibit such Junior Lien Collateral Agent from accepting a Lien on such asset or property or the applicable Junior Lien Collateral Agent otherwise expressly declines to accept a Lien on such asset or property (any such prohibited or declined Lien with respect to a particular Series of Junior Lien Obligations, a “Junior Lien Declined Lien” and, together with the Senior Lien Declined Liens, the “Declined Liens”).
If any Junior Lien Representative, any Junior Lien Collateral Agent or any Junior Lien Claimholder in respect of any Series of Junior Lien Obligations shall hold any Lien on any assets or property of the Company securing any Junior Lien Obligations that are not also subject to the Liens, other than any Declined Liens, securing the Senior Lien Obligations under the Collateral Documents in respect of all other Series of Senior Lien Obligations, such Junior Lien Representative, Junior Lien Collateral Agent or Junior Lien Claimholder shall notify the Senior Lien Representatives promptly upon becoming aware thereof and, unless the Company shall promptly grant a similar Lien, other than any such Lien that would constitute a Declined Lien, on such assets or property to each Senior Lien Collateral Agent as security for the Senior Lien Obligations represented by it, such Junior Lien Representative, Junior Lien Collateral Agent and Junior Lien Claimholders shall be deemed to hold and have held such Lien for the benefit of each Senior Lien Representative, Senior Lien Collateral Agent and the other Senior Lien Claimholders, other than any Senior Lien Claimholders whose Senior Loan Documents prohibit them from taking such Liens, as security for the Senior Lien Obligations of such Senior Lien Claimholders. To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to any Senior Lien Representative, Senior Lien Collateral Agent and/or the Senior Lien Claimholders, each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of each Junior Lien Claimholder represented by it, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.
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If any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder shall hold any Lien on any assets or property of the Company securing any Senior Lien Obligations that are not also subject to the junior-priority Liens, other than any Declined Liens, securing all Junior Lien Obligations under the Junior Lien Collateral Documents, such Senior Lien Representative, Senior Lien Collateral Agent or Senior Lien Claimholder shall notify the Junior Lien Representatives promptly upon becoming aware thereof and, unless the Company shall promptly grant a similar Lien, other than any such Lien that would constitute a Declined Lien, on such assets or property to each Junior Lien Collateral Agent as security for the Junior Lien Obligations represented by it, such Senior Lien Representative, Senior Lien Collateral Agent and Senior Lien Claimholders shall be deemed to hold and have held such Lien for the benefit of each Junior Lien Representative, Junior Lien Collateral Agent and the other Junior Lien Claimholders, other than any Junior Lien Claimholders whose Junior Lien Loan Documents prohibit them from taking such Liens, as security for the Junior Lien Obligations of such Junior Lien Claimholders.
2.4 Similar Liens and Agreements. The parties hereto agree that, subject to Sections 2.3 and 5.3(c), it is their intention that the Collateral securing the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations and the Fourth Lien Obligations be identical. In furtherance of the foregoing and of Section 8.12, the parties hereto agree, subject to the other provisions of this Agreement:
(a) upon request by any Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents and the Fourth Lien Loan Documents; and
(b) that the First Lien Collateral Documents, the Second Lien Collateral Documents, the Third Lien Collateral Documents and the Fourth Lien Collateral Documents and guarantees for the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations and the Fourth Lien Obligations, subject to Sections 2.3 and 5.3(c), shall be in all material respects the same forms of documents other than with respect to the first lien, second lien, third lien and fourth lien nature of the Obligations thereunder.
2.5 Perfection of Liens. Except for the arrangements contemplated by Section 5.5, none of the Senior Lien Representatives, the Senior Lien Collateral Agents or the Senior Lien Claimholders shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Collateral for the benefit of the Junior Lien Representatives, the Junior Lien Collateral Agents or the Junior Lien Claimholders. The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the Senior Lien Claimholders on the one hand and the Junior Lien Claimholders on the other hand, and such provisions shall not impose on the Senior Lien Representatives, the Senior Lien Collateral Agents, the Senior Lien Claimholders, the Junior Lien Representatives, the Junior Lien Collateral Agents, the Junior Lien Claimholders or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior-perfected claims therein in favor of any other Person or any order or decree of any court or Governmental Authority or any applicable law.
2.6 Nature of Senior Lien Obligations. Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, acknowledges that a portion of the Senior Lien Obligations represents, or may in the future represent, debt that is revolving in nature and that the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that, subject to Section 5.3(a), the terms of the Senior Lien Obligations may be modified, extended or amended from time to time, and that, subject to the provisions of this Agreement, the aggregate amount of the Senior Lien Obligations may be increased, replaced or refinanced, in each event, without notice to or consent by the Junior Lien Claimholders and without affecting the provisions hereof. The lien priorities provided in Section 2.1 shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the Senior Lien Obligations or the Junior Lien Obligations, or any portion thereof.
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Section 3. Enforcement.
3.1 Exercise of Remedies.
(a) Until the Discharge of Senior Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, the Junior Lien Representatives, the Junior Lien Collateral Agents and the Junior Lien Claimholders:
(1) will not commence or maintain, or seek to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral; provided that the Applicable Junior Lien Representative and/or the Applicable Junior Lien Collateral Agent may commence an Enforcement Action or otherwise exercise any or all such rights or remedies after the passage of a period of at least 150 days has elapsed since the later of (i) the date on which a Junior Lien Representative declared the existence of any Event of Default under (and as defined in) any Secured Loan Document to which such Junior Lien Representative is a party; and (ii) the date on which the Applicable Senior Lien Representative received notice from such Junior Lien Representative of such declaration of such Event of Default (the “Standstill Period”); provided, further, that notwithstanding anything herein to the contrary, in no event shall any Junior Lien Representative, any Junior Lien Collateral Agent or any Junior Lien Claimholder take any Enforcement Action with respect to the Collateral if, notwithstanding the expiration of the Standstill Period, (i) the Applicable Senior Lien Representative, the Applicable Senior Lien Collateral Agent or the Applicable Senior Lien Claimholders shall have commenced and be diligently pursuing in good faith an Enforcement Action or other exercise of their rights or remedies in each case with respect to all or any material portion of the Collateral (prompt notice of such exercise to be given to the Junior Lien Representatives), (ii) any Loan Party shall be subject to any Insolvency or Liquidation Proceeding (provided that in any such Insolvency or Liquidation Proceeding any Junior Lien Representative, Junior Lien Collateral Agent or Junior Lien Claimholder may take any action expressly permitted by Section 3.1(c), Section 3.1(e) or Section 6 hereof); provided further that any Applicable Junior Lien Claimholder that takes any Enforcement Action pursuant to this Section 3.1 shall provide notice to each Senior Lien Representative of its election to take such Enforcement Actions hereunder (provided that the provision of any such notice shall not be a condition to the exercise of any such Enforcement Action that is otherwise made in accordance herewith, nor shall a failure to provide any such notice result in a breach of this Agreement by such Applicable Junior Lien Claimholder);
(2) will not contest, protest or object to any foreclosure proceeding or action brought by any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder or any other exercise by any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder of any rights and remedies relating to the Collateral under the Senior Lien Loan Documents or otherwise (including any Enforcement Action initiated by or supported by any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder); and
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(3) subject to their rights under Section 3.1(a)(1), will not object to the forbearance by any Senior Lien Representative, any Senior Lien Collateral Agent or any Senior Lien Claimholder from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral,
in each case so long as any proceeds received by any Senior Lien Representative or Senior Lien Collateral Agent in excess of those necessary to achieve a Discharge of Senior Lien Obligations are distributed in accordance with Section 4.1 and applicable law.
(b) Until the Discharge of Senior Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party, subject to Section 3.1(a)(1), the Senior Lien Representatives, the Senior Lien Collateral Agents and the Senior Lien Claimholders shall have the exclusive right to commence and maintain an Enforcement Action or otherwise enforce rights and exercise remedies with respect to the Collateral (including set-off, recoupment and the right to credit bid their debt, except that Junior Lien Representatives shall have the credit bid rights set forth in Section 3.1(c)(6)), and subject to Section 5.1, make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder; provided that any proceeds received by any Senior Lien Representative or Senior Lien Collateral Agent in excess of those necessary to achieve a Discharge of Senior Lien Obligations are distributed in accordance with Section 4.1 and applicable law. In commencing or maintaining any Enforcement Action or otherwise exercising rights and remedies with respect to the Collateral, the Senior Lien Representatives, the Senior Lien Collateral Agents and the Senior Lien Claimholders may enforce the provisions of the Secured Loan Documents to which they are party and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion in compliance with any applicable law and without consultation with any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder and regardless of whether any such exercise is adverse to the interest of any Junior Lien Claimholder. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.
(c) Notwithstanding the foregoing, any Junior Lien Representative, any Junior Lien Collateral Agent and any other Junior Lien Claimholder may:
(1) file a claim or statement of interest with respect to its Junior Lien Obligations; provided that an Insolvency or Liquidation Proceeding has been commenced by or against any Loan Party;
(2) take any action (not adverse to the priority status of the Liens on the Collateral securing the Senior Lien Obligations, or the rights of any Senior Lien Representative, any Senior Lien Collateral Agent or the Senior Lien Claimholders to exercise remedies in respect thereof) in order to create, perfect, preserve or protect its Lien on the Collateral;
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(3) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Junior Lien Claimholders, including any claims secured by the Collateral, if any, in each case in accordance with the terms of this Agreement;
(4) vote on any plan of reorganization, arrangement, compromise or liquidation, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Junior Lien Obligations and the Collateral; provided that no filing of any claim or vote, or pleading related to such claim or vote, to accept or reject a disclosure statement, plan of reorganization, arrangement, compromise or liquidation, or any other document, agreement or proposal similar to the foregoing by any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder may be inconsistent with the provisions of this Agreement;
(5) exercise any of its rights or remedies with respect to the Collateral after the termination of the Standstill Period to the extent permitted by Section 3.1(a)(1);
(6) bid for or purchase Collateral at any public, private or judicial foreclosure upon such Collateral initiated by any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder, or any sale of Collateral during an Insolvency or Liquidation Proceeding; provided that such bid may not include a “credit bid” in respect of any Junior Lien Obligations unless the cash proceeds of such bid are otherwise sufficient to cause the Discharge of Senior Lien Obligations;
(7) join (but not exercise any control over) a judicial foreclosure or Lien enforcement proceeding with respect to the Collateral initiated by any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder, to the extent that such action could not reasonably be expected to interfere materially with the Enforcement Action; or
(8) object to any proposed acceptance of Collateral by any Senior Lien Representative, Senior Lien Collateral Agent or other Senior Lien Claimholder pursuant to Section 9-620 of the UCC, in a manner not inconsistent with the provisions of this Agreement.
Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy with respect to any Collateral (including set-off and recoupment) in its capacity as a creditor, unless and until the Discharge of Senior Lien Obligations has occurred, except as expressly permitted by Section 3.1(a)(1) to the extent such Junior Lien Representative or such Junior Lien Collateral Agent and Junior Lien Claimholders represented by it are permitted to retain the proceeds thereof in accordance with Section 4.2 of this Agreement. Without limiting the generality of the foregoing, unless and until the Discharge of Senior Lien Obligations has occurred, except as expressly provided in Sections 3.1(a) and 6.3(b) and this Section 3.1(c), the sole right of the Junior Lien Representatives, the Junior Lien Collateral Agents and the other Junior Lien Claimholders with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Junior Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of Senior Lien Obligations has occurred.
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(d) Subject to Sections 3.1(a) and 3.1(c) and Section 6.3(a):
(1) each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, agrees that such Junior Lien Representative or such Junior Lien Collateral Agent and such Junior Lien Claimholders represented by it will not take any action that would hinder any exercise of remedies under the Senior Lien Loan Documents or is otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other disposition of the Collateral that is prohibited hereunder, whether by foreclosure or otherwise;
(2) each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, hereby waives any and all rights such Junior Lien Representative or such Junior Lien Collateral Agent and such Junior Lien Claimholders represented by it may have as a junior lien creditor or otherwise to object to the manner in which any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder seeks to enforce or collect the Senior Lien Obligations or Liens securing the Senior Lien Obligations granted in any of the Collateral undertaken in accordance with this Agreement, regardless of whether any action or failure to act by or on behalf of any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder is adverse to the interest of any Junior Lien Claimholder; and
(3) each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Junior Lien Loan Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder with respect to the Collateral as set forth in this Agreement and the Senior Lien Loan Documents.
(e) Except as specifically set forth in this Agreement, the Junior Lien Representatives, the Junior Lien Collateral Agents and the other Junior Lien Claimholders may exercise rights and remedies as unsecured creditors against the Company that has guaranteed or granted Liens to secure the Junior Lien Obligations in accordance with the terms of the Junior Lien Loan Documents and applicable law (other than initiating in an involuntary case or proceeding under any Insolvency or Liquidation Proceeding with respect to the Company); provided that in the event that any Junior Lien Claimholder becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Junior Lien Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Senior Lien Obligations) in the same manner as the other Liens securing the Junior Lien Obligations are subject to this Agreement.
(f) Nothing in this Agreement shall prohibit the receipt by any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder of the required payments of interest, principal and other amounts owed in respect of the Junior Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder of rights or remedies as a secured creditor (including set-off and recoupment against the Collateral) or enforcement in contravention of this Agreement of any Lien held by any of them or as a result of any other violation by any Junior Lien Claimholder of the express terms of this Agreement. Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder may have with respect to the Collateral.
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3.2 Actions Upon Breach; Specific Performance. If any Junior Lien Claimholder, in contravention of the terms of this Agreement, in any way takes, attempts to or threatens to take any action with respect to the Collateral (including any attempt to realize upon or enforce any remedy with respect to this Agreement), or fails to take any action required by this Agreement, this Agreement shall create an irrebutable presumption and admission by such Junior Lien Claimholder that relief against such Junior Lien Claimholder by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the Senior Lien Claimholders, it being understood and agreed by each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of each Junior Lien Claimholder represented by it, that (i) the Senior Lien Claimholders’ damages from actions of any Junior Lien Claimholder may at that time be difficult to ascertain and may be irreparable and (ii) each Junior Lien Claimholder waives any defense that the Company and/or the Senior Lien Claimholders cannot demonstrate damage and/or be made whole by the awarding of damages. Each of the Senior Lien Representatives and/or Senior Lien Collateral Agents may demand specific performance of this Agreement. Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder. No provision of this Agreement shall constitute or be deemed to constitute a waiver by any Senior Lien Representative or any Senior Lien Collateral Agent on behalf of itself and each other Senior Lien Claimholder represented by it of any right to seek damages from any Person in connection with any breach or alleged breach of this Agreement.
Section 4. Payments.
4.1 Application of Proceeds. So long as the Discharge of Senior Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company, any Collateral or any proceeds thereof and any insurance proceeds to be distributed pursuant to Section 5.2 received in connection with any Enforcement Action or other exercise of remedies by any Representative, any Collateral Agent or any Claimholder with respect to the Collateral shall be applied as follows:
FIRST, to the Collateral Agents and/or the Representatives for the payment of reasonable out-of-pocket costs and expenses incurred by such Representatives and/or Collateral Agents, in each case constituting Secured Obligations in connection with any Enforcement Action or such other exercise of remedies in respect of the Collateral (in the case of the Junior Lien Representatives and/or Junior Lien Collateral Agents, to the extent such Enforcement Action or other exercise of remedies in respect of the Collateral are not in violation of this Agreement);
SECOND, to the First Lien Obligations in such order as specified in the relevant First Lien Loan Documents until a Discharge of First Lien Obligations; provided, that any non-cash Collateral or non-cash proceeds may be held by the First Lien Collateral Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable;
THIRD, to the Second Lien Obligations in such order as specified in the relevant Second Lien Loan Documents until a Discharge of Second Lien Obligations; provided, that any non-cash Collateral or non-cash proceeds may be held by the Second Lien Collateral Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable;
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FOURTH, to the Third Lien Obligations in such order as specified in the relevant Third Lien Loan Documents until a Discharge of Third Lien Obligations; provided, that any non-cash Collateral or non-cash proceeds may be held by the Third Lien Collateral Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable;
FIFTH, to the Fourth Lien Obligations in such order as specified in the relevant Fourth Lien Loan Documents until a Discharge of Fourth Lien Obligations; provided, that any non-cash Collateral or non-cash proceeds may be held by the Fourth Lien Collateral Agent as Collateral unless the failure to apply such amounts would be commercially unreasonable; and
SIXTH, to the Company, its successors or assigns from time to time, or to whomever may be lawfully entitled to receive the same.
4.2 Payments Over.
(a) So long as the Discharge of Senior Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company, any Collateral or any proceeds thereof (including assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and any assets or proceeds subject to Liens that have been avoided or otherwise invalidated, but excluding any debt obligations of the reorganized debtor distributed as contemplated by Section 6) received by any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder in connection with any Enforcement Action or other exercise of any right or remedy relating to the Collateral, less any reasonable out-of-pocket expenses incurred in connection with such Enforcement Action, in all cases shall be segregated and forthwith paid over to the Applicable Senior Lien Collateral Agent for the benefit of the Applicable Senior Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties) or as a court of competent jurisdiction may otherwise direct. The Applicable Senior Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Junior Lien Representatives, Junior Lien Collateral Agents or any such other Junior Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of Senior Lien Obligations.
(b) So long as the Discharge of Senior Lien Obligations has not occurred, if in any Insolvency or Liquidation Proceeding any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder shall receive any distribution of money or other property in respect of the Collateral or proceeds thereof (including any assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and assets or proceeds subject to Liens that have been avoided or otherwise invalidated) such money or other property (other than debt obligations of the reorganized debtor distributed as contemplated by Section 6) shall be segregated and forthwith paid over to the Applicable Senior Lien Collateral Agent for the benefit of the Applicable Senior Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties). The Applicable Senior Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Junior Lien Representatives, the Junior Lien Collateral Agents or any such other Junior Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of Senior Lien Obligations. Any Lien received by any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder in respect of any of the Junior Lien Obligations in any Insolvency or Liquidation Proceeding shall be subject to the terms of this Agreement.
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(c) After the Discharge of any Series of Senior Obligations has occurred and so long as the Discharge of Junior Lien Obligations has not occurred, if in any Insolvency or Liquidation Proceeding any Senior Lien Representative, any Senior Lien Collateral Agent or any other Senior Lien Claimholder shall receive any distribution of money or other property in respect of the Collateral or proceeds thereof (including any assets or proceeds subject to Liens referred to in the second to last paragraph of Section 2.3 and assets or proceeds subject to Liens that have been avoided or otherwise invalidated), such money or other property (other than debt obligations of the reorganized debtor distributed as contemplated by Section 6) shall be segregated and forthwith paid over to the Remaining Priority Lien Collateral Agent for the benefit of the Remaining Senior Lien Claimholders in the same form as received, with any necessary endorsements (which endorsements shall be without recourse and without any representations or warranties). The Remaining Priority Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Senior Lien Representatives, the Senior Lien Collateral Agents or any such other Senior Lien Claimholder. This authorization is coupled with an interest and is irrevocable until the Discharge of Junior Lien Obligations.
Section 5. Other Agreements.
5.1 Releases.
(a) If in connection with any Enforcement Action by any Senior Lien Representative or any Senior Lien Collateral Agent or any other exercise of any Senior Lien Representative’s or any Senior Lien Collateral Agent’s remedies in respect of the Collateral, in each case prior to the Discharge of Senior Lien Obligations, such Senior Lien Collateral Agent, for itself or on behalf of any of the Senior Lien Claimholders represented by it, releases any of its Liens on any part of the Collateral or such Senior Lien Representative, for itself or on behalf of any of the Senior Lien Claimholders represented by it, releases the Company from its obligations under its guaranty of the Senior Lien Obligations, then the Liens, if any, of each Junior Lien Collateral Agent, for itself or for the benefit of the Junior Lien Claimholders, on such Collateral, and the obligations of the Company under its guaranty of the Junior Lien Obligations, shall be automatically, unconditionally and simultaneously released. If in connection with any Enforcement Action or other exercise of rights and remedies by any Senior Lien Representative or any Senior Lien Collateral Agent, in each case prior to the Discharge of Senior Lien Obligations, the equity interests of any Person are foreclosed upon or otherwise disposed of and such Senior Lien Collateral Agent releases its Lien on the property or assets of such Person then the Liens of each Junior Lien Collateral Agent with respect to the property or assets of such Person will be automatically released to the same extent as the Liens of such Senior Lien Collateral Agent. Each Junior Lien Representative and each Junior Lien Collateral Agent, for itself or on behalf of any Junior Lien Claimholder represented by it, shall promptly execute and deliver to the Senior Lien Representatives, Senior Lien Collateral Agents or the Company such termination statements, releases and other documents as any Senior Lien Representative, Senior Lien Collateral Agent or the Company may request to effectively confirm the foregoing releases.
(b) If in connection with any sale, lease, exchange, transfer or other disposition of any Collateral by the Company (collectively, a “Disposition”) permitted under the terms of the Senior Lien Loan Documents and the terms of the Junior Lien Loan Documents (other than in connection with an Enforcement Action or other exercise of any Senior Lien Representative’s and/or Senior Lien Collateral Agent’s remedies in respect of the Collateral, which shall be governed by Section 5.1(a)), any Senior Lien Collateral Agent, for itself or on behalf of any Senior Lien Claimholder represented by it, releases any of its Liens on any part of the Collateral, or any Senior Lien Representative, for itself or on behalf of any Senior Lien Claimholder represented by it, releases the Company from its obligations under its guaranty of the Senior Lien Obligations, in each case other than (A) in connection with, or following, the Discharge of Senior Lien Obligations or (B) after the occurrence and during the continuance of any Event of Default under (and as defined in) any Junior Lien Loan Document, then the Liens, if any, of each Junior Lien Collateral Agent, for itself or for the benefit of the Junior Lien Claimholders represented by it, on such Collateral, and the obligations of the Company under its guaranty of the Junior Lien Obligations, shall be automatically, unconditionally and simultaneously released. Each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, shall promptly execute and deliver to the Senior Lien Representatives, the Senior Lien Collateral Agents or the Company such termination statements, releases and other documents as any Senior Lien Representative, Senior Lien Collateral Agent or the Company may request to effectively confirm such release.
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(c) Until the Discharge of Senior Lien Obligations occurs, each Junior Lien Representative and each Junior Lien Collateral Agent, for itself and on behalf of each other Junior Lien Claimholder represented by it, hereby irrevocably constitutes and appoints the Applicable Senior Lien Collateral Agent and any officer or agent of the Applicable Senior Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Junior Lien Representative, such Junior Lien Collateral Agent and such Junior Lien Claimholders or in the Applicable Senior Lien Collateral Agent’s own name, from time to time in the Applicable Senior Lien Collateral Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Section 5.1, including any endorsements or other instruments of transfer or release. This power is coupled with an interest and is irrevocable until the Discharge of Senior Lien Obligations.
(d) Until the Discharge of Senior Lien Obligations occurs, to the extent that any Senior Lien Collateral Agent, any Senior Lien Representative or any Senior Lien Claimholder (i) has released any Lien on Collateral or the Company from its obligation under its guarantee and any such Liens or guarantee are later reinstated or (ii) obtains any new Liens or additional guarantees from the Company, then each Junior Lien Collateral Agent, for itself and for the Junior Lien Claimholders represented by it, shall be granted a Lien on any such Collateral (except to the extent such Lien represents a Junior Lien Declined Lien with respect to the Junior Lien Obligations represented by such Junior Lien Collateral Agent), subject to this Agreement, and each Junior Lien Representative, for itself and for the Junior Lien Claimholders represented by it, shall be granted an additional guarantee, as the case may be.
5.2 Insurance. Unless and until the Discharge of Senior Lien Obligations has occurred, the Senior Lien Representatives, the Senior Lien Collateral Agents and the other Senior Lien Claimholders shall have the sole and exclusive right, subject to the rights of the Company under the Senior Lien Loan Documents, to adjust settlement for any insurance policy covering the Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral. Subject to the rights of the Company under the Senior Lien Loan Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) if in respect of the Collateral shall be distributed in accordance with the terms of Section 4.1. Until the Discharge of Senior Lien Obligations has occurred, if any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Agreement, then it shall segregate and forthwith pay such proceeds over to the Applicable Senior Lien Collateral Agent in accordance with the terms of Section 4.2.
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5.3 Amendments to Secured Loan Documents.
(a) The First Lien Loan Documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms without notice to, or the consent of, any Second Lien Claimholder, Third Lien Claimholder or Fourth Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, restatement, supplement or modification is not inconsistent with the terms of this Agreement and the Other Intercreditor Agreement.
(b) The Second Lien Loan Documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms without notice to, or the consent of, any First Lien Claimholder, Third Lien Claimholder or Fourth Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, restatement, supplement or modification is not inconsistent with the terms of this Agreement and the Other Intercreditor Agreement.
(c) The Third Lien Loan Documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms and the Third Lien Obligations may be Refinanced subject to Section 5.6 without notice to, or the consent of, any First Lien Claimholder, Second Lien Claimholder or Fourth Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, restatement, supplement, modification or Refinancing is not inconsistent with the terms of this Agreement and the Other Intercreditor Agreement and, in the case of a Refinancing, the holders of such Refinancing debt (directly or through their agent) bind themselves in a writing addressed to each other Collateral Agent to the terms of this Agreement.
(d) The Fourth Lien Loan Documents may be amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with their terms and the Fourth Lien Obligations may be Refinanced subject to Section 5.6 without notice to, or the consent of, any First Lien Claimholder, Second Lien Claimholder or Third Lien Claimholder, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, restatement, supplement, modification or Refinancing is not inconsistent with the terms of this Agreement and the Other Intercreditor Agreement and, in the case of a Refinancing, the holders of such Refinancing debt (directly or through their agent) bind themselves in a writing addressed to each other Collateral Agent to the terms of this Agreement.
(e) In the event the Applicable Senior Lien Collateral Agent or the Applicable Senior Lien Claimholders and the Company enter into any amendment, waiver or consent in respect of any of the Applicable Senior Lien Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any Applicable Senior Lien Collateral Document or changing in any manner the rights of the Applicable Senior Lien Collateral Agent, such Applicable Senior Lien Claimholders or the Company thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of each Applicable Junior Lien Collateral Document without the consent of any other Representative, any other Collateral Agent, any other Claimholder or the Company and without any action by any other Representative, any other Collateral Agent, any other Claimholder or the Company, provided that:
(1) no such amendment, waiver or consent shall have the effect of:
(A) removing assets subject to the Lien of the Applicable Junior Lien Collateral Documents, except to the extent that a release of such Lien is permitted or required by Section 5.1 and provided that there is a corresponding release of the Liens securing the Applicable Senior Lien Obligations on such removed assets;
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(B) modifying the covenants requiring that the Company take actions to perfect or protect the Liens of any Collateral Agent in the Collateral to the extent adverse in any material respect to any Claimholders;
(C) imposing duties on any Collateral Agent or any Representative without its consent;
(D) permitting other Liens on the Collateral not permitted under the terms of the other Secured Loan Documents or Section 6; or
(E) being prejudicial to the interests of the other Claimholders to a greater extent than the Applicable Senior Lien Claimholders (other than by virtue of their relative priority and the rights and obligations hereunder); and
(2) notice of such amendment, waiver or consent shall have been given by the Company to each other Collateral Agent within ten Business Days after the effective date of such amendment, waiver or consent.
5.4 Confirmation of Subordination in Junior Lien Collateral Documents. The Company agrees that each Junior Lien Collateral Document shall include the following language (or language to similar effect approved by the Applicable Senior Lien Collateral Agent):
“Notwithstanding anything herein to the contrary, the lien and security interest granted to the [Collateral Agent] pursuant to this Agreement and the exercise of any right or remedy by the [Collateral Agent] hereunder are subject to the provisions of the Four Lien Intercreditor Agreement, dated as of November 22, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Four Lien Intercreditor Agreement”), among JPMorgan Chase Bank, N.A., as First Lien Representative and as First Lien Collateral Agent, Alter Domus (US) LLC, as Second Lien Representative and as Second Lien Collateral Agent, JPMorgan Chase Bank, N.A., as Third Lien Representative and as Third Lien Collateral Agent, Alter Domus (US) LLC, as Fourth Lien Representative and as Fourth Lien Collateral Agent, and certain other persons party or that may become party thereto from time to time. In the event of any conflict between the terms of the Four Lien Intercreditor Agreement and this Agreement, the terms of the Four Lien Intercreditor Agreement shall govern and control.”
In addition, the Company agrees that each Junior Lien Mortgage, if any, covering any Collateral shall contain such other language as the Applicable Senior Lien Collateral Agent may reasonably request to reflect the subordination of such Junior Lien Mortgage to the Senior Lien Collateral Documents covering such Collateral.
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5.5 Gratuitous Bailee/Agent for Perfection; Badcock Mortgaged Property.
(a) The Applicable Senior Lien Collateral Agent agrees to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees), to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”), as collateral agent for the Applicable Senior Lien Claimholders and as gratuitous bailee for the Junior Lien Collateral Agents (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee thereof solely for the purpose of perfecting the security interest granted under the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents and the Fourth Lien Loan Documents, respectively, subject to the terms and conditions of this Section 5.5. Solely with respect to any deposit accounts under the control (within the meaning of Section 9-104 of the UCC) of any Applicable Senior Lien Collateral Agent, such Applicable Senior Lien Collateral Agent agrees to also hold control over such deposit accounts as gratuitous agent for the Junior Lien Collateral Agents, subject to the terms and conditions of this Section 5.5. Prior to a Discharge of First Lien Obligations, at the request of the First Lien Collateral Agent, each Junior Lien Collateral Agent shall turn over possession of any Pledged Collateral in possession of such Junior Lien Collateral Agent to the First Lien Collateral Agent. From and after a Discharge of First Lien Obligations and prior to a Discharge of Second Lien Obligations, at the request of the Second Lien Collateral Agent, each Junior Lien Collateral Agent shall turn over possession of any Pledged Collateral in possession of such Junior Lien Collateral Agent to the Second Lien Collateral Agent. From and after a Discharge of First Lien Obligations and a Discharge of Second Lien Obligations and prior to a Discharge of Third Lien Obligations, at the request of the Third Lien Collateral Agent, each Junior Lien Collateral Agent shall turn over possession of any Pledged Collateral in possession of such Junior Lien Collateral Agent to the Third Lien Collateral Agent.
(b) No Applicable Senior Lien Collateral Agent shall have any obligation whatsoever to the other Claimholders to ensure that the Pledged Collateral is genuine or owned by the Company, to perfect the security interests of any Claimholders or to preserve rights or benefits of any Person except as expressly set forth in this Section 5.5. The duties or responsibilities of any Applicable Senior Lien Collateral Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as gratuitous bailee (and with respect to deposit accounts, gratuitous agent) in accordance with this Section 5.5 and delivering the Pledged Collateral upon a Discharge of First Lien Obligations, a Discharge of Second Lien Obligations or a Discharge of Third Lien Obligations, as the case may be, as provided in Section 5.5(d).
(c) No Applicable Senior Lien Collateral Agent or any other Applicable Senior Lien Claimholder shall have by reason of the First Lien Collateral Documents, the Second Lien Collateral Documents, the Third Lien Collateral Documents, the Fourth Lien Collateral Documents, this Agreement or any other document a fiduciary relationship in respect of any Junior Lien Claimholder and the Junior Lien Claimholders hereby waive and release the Applicable Senior Lien Collateral Agent and the other Applicable Senior Lien Claimholders from all claims and liabilities arising pursuant to any Applicable Senior Lien Collateral Agent’s role under this Section 5.5 as gratuitous bailee and gratuitous agent with respect to the Pledged Collateral. It is understood and agreed that the interests of the Applicable Senior Lien Collateral Agent and the other Applicable Senior Lien Claimholders, on the one hand, and the Junior Lien Claimholders on the other hand, may differ and the Applicable Senior Lien Collateral Agent and the other Applicable Senior Lien Claimholders shall be fully entitled to act in their own interest without taking into account the interests of the Junior Lien Claimholders.
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(d) So long as this Agreement is in effect, Pledged Collateral in the possession of any Collateral Agent or any Representative shall be delivered to the Applicable Senior Lien Collateral Agent together with any necessary endorsements (which endorsements shall be without recourse and without any representation or warranty), in the following manner:
(1) to the First Lien Collateral Agent until a Discharge of First Lien Obligations has occurred, and thereafter,
(2) if a Discharge of First Lien Obligations has occurred but a Discharge of Second Lien Obligations has not occurred, to the Second Lien Collateral Agent until a Discharge of Second Lien Obligations has occurred, and thereafter,
(3) if a Discharge of First Lien Obligations and a Discharge of Second Lien Obligations has occurred but a Discharge of Third Lien Obligations has not occurred, to the Third Lien Collateral Agent until a Discharge of Third Lien Obligations has occurred, and thereafter,
(4) if a Discharge of First Lien Obligations, a Discharge of Second Lien Obligations and a Discharge of Third Lien Obligations has occurred but a Discharge of Fourth Lien Obligations has not occurred, to the Fourth Lien Collateral Agent until a Discharge of Fourth Lien Obligations has occurred, and thereafter,
(5) if a Discharge of First Lien Obligations, a Discharge of Second Lien Obligations, a Discharge of Third Lien Obligations and a Discharge of Fourth Lien Obligations has occurred, to the Company or to whomever may be lawfully entitled to receive the same.
(e) Notwithstanding the foregoing, each of the parties hereto acknowledges and agrees, with respect to each First Lien/Third Lien Mortgage, as follows:
(1) each First Lien/Third Lien Mortgage has been granted in favor of the Third Lien Collateral Agent for the benefit of the First Lien Claimholders and the Third Lien Claimholders to secure the First Lien Obligations and the Third Lien Obligations (the Third Lien Collateral Agent in such capacity, the “First Lien Real Property Collateral Agent”);
(2) if a Discharge of First Lien Obligations has not occurred and the Third Lien Collateral Agent is not the Applicable Junior Lien Collateral Agent:
(A) the First Lien Real Property Collateral Agent shall only act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of the First Lien Collateral Agent with respect to each First Lien/Third Lien Mortgage thereunder and under this Agreement for purposes of such actions; and
(B) the First Lien Real Property Collateral Agent shall be deemed to be the First Lien Collateral Agent for all purposes of this Agreement as it relates to the First Lien/Third Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement);
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(3) if a Discharge of First Lien Obligations has not occurred and the Third Lien Collateral Agent is the Applicable Junior Lien Collateral Agent:
(A) the First Lien Real Property Collateral Agent shall act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of each of the First Lien Collateral Agent and the Third Lien Collateral Agent with respect to each First Lien/Third Lien Mortgage thereunder and under this Agreement, in each case, to the extent such instructions do not conflict with the provisions of this Agreement; provided that, to the extent the instructions of the First Lien Collateral Agent and the Third Lien Collateral Agent conflict with one another, the First Lien Real Property Collateral Agent shall act on the instructions of the First Lien Collateral Agent and not those of the Third Lien Collateral Agent;
(B) if the First Lien Real Property Collateral Agent is acting on the instructions of the First Lien Collateral Agent in accordance with the preceding clause (e)(3)(A), the First Lien Real Property Collateral Agent shall be deemed to be the First Lien Collateral Agent for all purposes of this Agreement as it relates to the First Lien/Third Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement) for purposes of such actions; and
(C) if the First Lien Real Property Collateral Agent is acting on the instructions of the Third Lien Collateral Agent in accordance with the preceding clause (e)(3)(A), the First Lien Real Property Collateral Agent shall be deemed to be the Third Lien Collateral Agent for all purposes of this Agreement as it relates to the First Lien/Third Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement) for purposes of such actions; and
(4) if a Discharge of First Lien Obligations has occurred, the First Lien Real Property Collateral Agent shall only act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of the Third Lien Collateral Agent with respect to each First Lien/Third Lien Mortgage thereunder and under this Agreement.
(f) Notwithstanding the foregoing, each of the parties hereto acknowledges and agrees, with respect to each Second Lien/Fourth Lien Mortgage, as follows:
(1) each Second Lien/Fourth Lien Mortgage has been granted in favor of the Fourth Lien Collateral Agent for the benefit of the Second Lien Claimholders and the Fourth Lien Claimholders to secure the Second Lien Obligations and the Fourth Lien Obligations (the Fourth Lien Collateral Agent in such capacity, the “Second Lien Real Property Collateral Agent” and, together with the First Lien Real Property Collateral Agent, the “Real Property Collateral Agents”);
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(2) if a Discharge of Second Lien Obligations has not occurred and the Fourth Lien Collateral Agent is not the Applicable Junior Lien Collateral Agent:
(A) the Second Lien Real Property Collateral Agent shall only act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of the Second Lien Collateral Agent with respect to each Second Lien/Fourth Lien Mortgage thereunder and under this Agreement for purposes of such actions; and
(B) the Second Lien Real Property Collateral Agent shall be deemed to be the Second Lien Collateral Agent for all purposes of this Agreement as it relates to the Second Lien/Fourth Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement);
(3) if a Discharge of Second Lien Obligations has not occurred and the Fourth Lien Collateral Agent is the Applicable Junior Lien Collateral Agent:
(A) the Second Lien Real Property Collateral Agent shall act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of each of the Second Lien Collateral Agent and the Fourth Lien Collateral Agent with respect to each Second Lien/Fourth Lien Mortgage thereunder and under this Agreement, in each case, to the extent such instructions do not conflict with the provisions of this Agreement; provided that, to the extent the instructions of the Second Lien Collateral Agent and the Fourth Lien Collateral Agent conflict with one another, the Second Lien Real Property Collateral Agent shall act on the instructions of the Second Lien Collateral Agent and not those of the Fourth Lien Collateral Agent;
(B) if the Second Lien Real Property Collateral Agent is acting on the instructions of the Second Lien Collateral Agent in accordance with the preceding clause (f)(3)(A), the Second Lien Real Property Collateral Agent shall be deemed to be the Second Lien Collateral Agent for all purposes of this Agreement as it relates to the Second Lien/Fourth Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement) for purposes of such actions; and
(C) if the Second Lien Real Property Collateral Agent is acting on the instructions of the Fourth Lien Collateral Agent in accordance with the preceding clause (f)(3)(A), the Second Lien Real Property Collateral Agent shall be deemed to be the Fourth Lien Collateral Agent for all purposes of this Agreement as it relates to the Second Lien/Fourth Lien Mortgages (including, for the avoidance of doubt, Sections 3 and 4 of this Agreement) for purposes of such actions; and
(4) if a Discharge of Second Lien Obligations has occurred, the Second Lien Real Property Collateral Agent shall only act, and shall be entitled to rely without the consent or direction of any other Person, on the instructions of the Fourth Lien Collateral Agent with respect to each Second Lien/Fourth Lien Mortgage thereunder and under this Agreement.
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(g) No Real Property Collateral Agent shall have any obligation whatsoever to the other Claimholders to ensure that any Badcock Mortgaged Property is owned by the Company, to perfect the security interests of any Claimholders or to preserve rights or benefits of any Person in respect of any Badcock Mortgaged Property except as expressly set forth in this Section 5.5. The duties or responsibilities of any Real Property Collateral Agent under this Section 5.5 shall be limited solely to acting as collateral agent in respect of the Badcock Mortgaged Properties in accordance with this Section 5.5.
(h) No Real Property Collateral Agent shall have by reason of the First Lien Collateral Documents, the Second Lien Collateral Documents, the Third Lien Collateral Documents, the Fourth Lien Collateral Documents, this Agreement or any other document a fiduciary relationship in respect of any other party hereto and each other party hereto hereby waives and releases each Real Property Collateral Agent from all claims and liabilities arising pursuant to any Real Property Collateral Agent’s role under this Section 5.5 as collateral agent in respect of the Badcock Mortgaged Properties. Each of the First Lien Claimholders, the Third Lien Claimholders and the Company hereby agrees to pay, and to save the First Lien Real Property Collateral Agent harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of the provisions of the First Lien/Third Lien Mortgages and this Agreement as it relates thereto. Each of the Second Lien Claimholders, the Fourth Lien Claimholders and the Company hereby agrees to pay, and to save the Second Lien Real Property Collateral Agent harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of the provisions of the Second Lien/Fourth Lien Mortgages and this Agreement as it relates thereto.
If a Discharge of Senior Lien Obligations occurs, the Collateral Agent in respect of which Indebtedness such Discharge occurred further agrees to take all other action reasonably requested by the Remaining Priority Lien Collateral Agent at the expense of the Company in connection with such Remaining Priority Lien Collateral Agent obtaining a first-priority security interest in the Collateral.
5.6 When Discharge of Obligations Deemed to Not Have Occurred. (a) The Third Lien Obligations and the Fourth Lien Obligations may, subject to this Section 5.6, be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction under any Secured Loan Document) of any Senior Lien Claimholder or Junior Lien Claimholder, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Representative and Collateral Agent of the holders of any such Refinancing Indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing Indebtedness.
(b) If such Refinancing Indebtedness is intended to constitute Third Lien Obligations or Fourth Lien Obligations, the Company shall (i) so state in its Designation pursuant to which the Company shall (w) identify the Refinancing Indebtedness to be designated as Third Lien Obligations or Fourth Lien Obligations, as the case may be, and the initial aggregate principal amount or committed amount thereof, (x) specify the name and address of the Collateral Agent and the Representative for such Refinancing Indebtedness, (y) certify that such Refinancing Indebtedness is permitted by the Secured Loan Documents and that the conditions set forth in this Section 5.6 are satisfied with respect to such Refinancing Indebtedness, and (z) expressly state that such agreement giving rise to such Refinancing Indebtedness satisfies the requirements of a Refinancing and (ii) shall have delivered to each Collateral Agent (other than the Collateral Agent with respect to the Obligations being Refinanced) true and complete copies of the credit agreement and the collateral documents for such Refinancing Indebtedness, certified as being true and correct by a Responsible Officer of the Company.
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(c) Upon the execution and delivery of a Joinder Agreement by the Representative and Collateral Agent in respect of any such Refinancing Indebtedness, in each case, in accordance with this Section 5.6, each other Representative and each other Collateral Agent hereunder shall acknowledge such receipt thereof by countersigning a copy thereof, subject to the terms of this Section 5.6 and returning the same to such Representative and Collateral Agent in respect of such Refinancing Indebtedness provided that the failure of any Representative or any Collateral Agent to so acknowledge or return shall not affect the status of such debt as Third Lien Obligations or Fourth Lien Obligations, as the case may be, if the other requirements of this Section 5.6 are complied with.
Section 6. Insolvency or Liquidation Proceedings.
6.1 Other Intercreditor Agreement. Each of the parties hereto agrees that the provisions of Section 6.1 through Section 6.9 of the Other Intercreditor Agreement apply with respect to this Agreement and the parties hereto as if fully set forth herein (irrespective of whether or not the Other Intercreditor Agreement is then in effect).
6.2 Effectiveness in Insolvency or Liquidation Proceedings. The parties hereto acknowledge that this Agreement is a “subordination agreement” under Section 510(a) of the Bankruptcy Code, which will be effective before, during and after the commencement of an Insolvency or Liquidation Proceeding. All references in this Agreement to the Company will include such Person as a debtor-in-possession and any receiver or trustee for such Person in an Insolvency or Liquidation Proceeding.
Section 7. Reliance; Waivers; Etc.
7.1 Reliance. Other than any reliance on the terms of this Agreement, each Representative and each Collateral Agent, on behalf of itself and each other Claimholder represented by it, acknowledges that it and such Claimholders have, independently and without reliance on any other Representative, any other Collateral Agent or any other Claimholder, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Secured Loan Documents to which it is a party and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Secured Loan Documents to which they are a party or this Agreement.
7.2 No Warranties or Liability. Each Representative and each Collateral Agent, on behalf of itself and each other Claimholder represented by it, acknowledges and agrees that no other Representative or other Claimholder has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Secured Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. Except as otherwise provided herein, each Claimholder will be entitled to manage and supervise its respective extensions of credit under the Secured Loan Documents in accordance with law and as it may otherwise, in its sole discretion, deem appropriate. No Representative, Collateral Agent or other Claimholder shall have any duty to any other Representatives, Collateral Agents or any of the other Claimholders to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Company (including the Secured Loan Documents), regardless of any knowledge thereof which it may have or be charged with.
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7.3 No Waiver of Lien Priorities; No Marshaling.
(a) No right of any Claimholder, any Representative, any Collateral Agent or any of them to enforce any provision of this Agreement or any Secured Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any Claimholder, any Representative or any Collateral Agent, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement or any of the Secured Loan Documents, regardless of any knowledge thereof which any Representative, any Collateral Agent or any Claimholder, or any of them, may have or be otherwise charged with.
(b) Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Company under the Senior Loan Documents and subject to the provisions of Section 5.3(a)), the Senior Lien Claimholders, the Senior Lien Representatives, the Senior Lien Collateral Agents and any of them in respect of any Series of Senior Lien Obligations may, at any time and from time to time in accordance with the Senior Lien Loan Documents and/or applicable law, without the consent of, or notice to, any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder, without incurring any liabilities to any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of any Junior Lien Representative, any Junior Lien Collateral Agent or any other Junior Lien Claimholder is affected, impaired or extinguished thereby) do any one or more of the following:
(1) change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any Series of Senior Lien Obligations or any Lien on any Collateral securing such Series of Senior Lien Obligations or guaranty of any of such Series of Senior Lien Obligations or any liability of the Company, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of such Series of Senior Lien Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by such Senior Lien Representative, such Senior Lien Collateral Agent or any of such other Senior Lien Claimholders, such Series of Senior Lien Obligations or any of the Senior Lien Loan Documents in respect of such Series of Senior Lien Obligations; provided, that any such increase in such Series of Senior Lien Obligations shall not increase the sum of the Indebtedness constituting principal under the Senior Lien Loan Documents in respect of such Series of Senior Lien Obligations to an amount in excess of the applicable Cap Amount;
(2) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the Collateral securing such Series of Senior Lien Obligations or any liability of the Company to any of the Senior Lien Claimholders, the Senior Lien Representative or the Senior Lien Collateral Agent, in each case, in respect of such Series of Senior Lien Obligations or any liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Series of Senior Lien Obligations or any other liability of the Company in respect of such Series of Senior Lien Obligations or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability in any manner or order; and
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(4) exercise or delay in or refrain from exercising any right or remedy against the Company or any other Person or any security, and elect any remedy and otherwise deal freely with the Company or any Collateral and any security and any guarantor or any liability of the Company to the Senior Lien Claimholders in respect of such Series of Senior Lien Obligations or any liability incurred directly or indirectly in respect thereof.
(c) Except as otherwise expressly provided herein, each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, also agrees that the Senior Lien Claimholders, the Senior Lien Representatives and the Senior Lien Collateral Agents shall not have any liability to such Junior Lien Representative, such Junior Lien Collateral Agent or any such Junior Lien Claimholders, and such Junior Lien Representative and such Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, hereby waives any claim against any Senior Lien Claimholder, any Senior Lien Representative or any Senior Lien Collateral Agent arising out of any and all actions which the Senior Lien Claimholders, any Senior Lien Representative or any Senior Lien Collateral Agent may take or permit or omit to take with respect to:
(1) any Senior Lien Loan Document in respect of the Series of Senior Lien Obligations of such Senior Lien Representative, such Senior Lien Collateral Agent or such other Senior Lien Claimholder (other than this Agreement);
(2) the collection of the Series of Senior Lien Obligations of such Senior Lien Representative, such Senior Lien Collateral Agent or such other Senior Lien Claimholder; or
(3) the foreclosure upon, or sale, liquidation or other disposition of, any Collateral.
Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, agrees that the Senior Lien Claimholders, the Senior Lien Representatives and the Senior Lien Collateral Agents do not have any duty to them in respect of the maintenance or preservation of the Collateral, the Senior Lien Obligations of any Series or otherwise.
(d) Until the Discharge of Senior Lien Obligations, each Remaining Junior Lien Representative and each Remaining Junior Lien Collateral Agent, on behalf of itself and each other Remaining Junior Lien Claimholder represented by it, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of any marshaling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to any Collateral or any other similar rights a junior secured creditor may have under applicable law.
For the avoidance of doubt, nothing in this Section 7.3 shall limit any Junior Lien Claimholder’s right to enforce this Agreement.
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7.4 Obligations Unconditional. All rights, interests, agreements and obligations of the Representatives, Collateral Agents and the other Claimholders, respectively, hereunder shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of any Secured Loan Documents;
(b) except as otherwise expressly set forth in this Agreement, any change in the time, manner or place of payment of, or in any other terms of, all or any of the Secured Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any Secured Loan Document;
(c) except as otherwise expressly set forth in this Agreement, any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Secured Obligations or any guarantee thereof;
(d) the commencement of any Insolvency or Liquidation Proceeding in respect of the Company or any other Loan Party; or
(e) any other circumstances which otherwise might constitute a defense available to, or a discharge of, the Company in respect of any Representative, any Collateral Agent, any Claimholder or the Secured Obligations in respect of this Agreement.
Section 8. Miscellaneous.
8.1 Integration/Conflicts.
(a) This Agreement, the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents and the Fourth Lien Loan Documents represent the entire agreement of the Company and the Claimholders with respect to the subject matter hereof and thereof, and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. There are no promises, undertakings, representations or warranties by the Claimholders relative to the subject matter hereof and thereof not expressly set forth or referred to herein or therein.
(b) In the event of any conflict between the provisions of this Agreement and the provisions of the First Lien Loan Documents, the Second Lien Loan Documents, the Third Lien Loan Documents or the Fourth Lien Loan Documents, the provisions of this Agreement shall govern and control; provided that the foregoing shall not be construed to limit the relative rights and obligations as among the First Lien Claimholders, as among the Second Lien Claimholders, as among the Third Lien Claimholders or as among the Fourth Lien Claimholders.
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8.2 Effectiveness; Continuing Nature of this Agreement; Severability. This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement of lien subordination and the Senior Lien Claimholders may continue, at any time and without notice to any Junior Lien Representative or any other Junior Lien Claimholder, to extend credit and other financial accommodations and lend monies to or for the benefit of one or more of the Loan Parties constituting First Lien Obligations, Second Lien Obligations or Third Lien Obligations, as the case may be, in reliance hereon. Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions. All references to any Loan Party shall include such Loan Party as debtor and debtor-in-possession and any receiver, trustee or similar person for any Loan Party (as the case may be) in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect:
(a) with respect to the First Lien Representative, the First Lien Collateral Agent, the First Lien Claimholders and the First Lien Obligations, on the date on which the First Lien Obligations are Discharged;
(b) with respect to the Second Lien Representative, the Second Lien Collateral Agent, the Second Lien Claimholders and the Second Lien Obligations, on the date on which the Second Lien Obligations are Discharged;
(c) with respect to the Third Lien Representative, the Third Lien Collateral Agent, the Third Lien Claimholders and the Third Lien Obligations, on the date on which the Third Lien Obligations are Discharged, subject to Section 5.6; and
(d) with respect to the Fourth Lien Representative, the Fourth Lien Collateral Agent, the Fourth Lien Claimholders and the Fourth Lien Obligations, on the date on which the Fourth Lien Obligations are Discharged, subject to Section 5.6;
provided, however, that in each case, such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination.
8.3 Amendments; Waivers(a).
(a) No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, the Company shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement, except with respect to Section 5.6, Section 8.18 or this Section 8.3 (including, in each case, each defined term referred to therein to the extent used therein) to the extent such amendment, modification or waiver directly and adversely affects the rights of the Company.
(b) Notwithstanding the foregoing, without the consent of any other Claimholder, any Representative and Collateral Agent may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 5.6 and upon such execution and delivery, such Representative and Collateral Agent and the applicable New Claimholders and the applicable New Obligations, as the case may be, of the Series for which such Representative and Collateral Agent is acting shall be subject to the terms hereof.
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8.4 Information Concerning Financial Condition of the Loan Parties and their Subsidiaries. Each Representative, each Collateral Agent and each other Claimholder, respectively, shall be responsible for keeping themselves informed of (a) the financial condition of the Loan Parties and their Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations or the Fourth Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations or the Fourth Lien Obligations. No Representative, Collateral Agent or other Claimholder shall have any duty to advise any other Representative, Collateral Agent or Claimholder of information known to them regarding such condition or any such circumstances or otherwise. In the event any Representative, Collateral Agent or other Claimholder, in its sole discretion, undertakes at any time or from time to time to provide any such information to any other Representative, Collateral Agent or other Claimholder, it shall be under no obligation:
(a) to make, and such Representative, Collateral Agent or other Claimholder shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;
(b) to provide any additional information or to provide any such information on any subsequent occasion;
(c) to undertake any investigation; or
(d) to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
8.5 Subrogation. With respect to the value of any payments or distributions in cash, property or other assets that any of the Junior Lien Representatives, the Junior Lien Collateral Agents or the other Junior Lien Claimholders pays over to the Applicable Senior Lien Representative, the Applicable Senior Lien Collateral Agent or the other Applicable Senior Lien Claimholders under the terms of this Agreement, such Junior Lien Claimholders, Junior Lien Representatives and Junior Lien Collateral Agents shall be subrogated to the rights of such Applicable Senior Lien Representative, Applicable Senior Lien Collateral Agent and other Applicable Senior Lien Claimholders; provided that each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, hereby agrees not to assert or enforce any such rights of subrogation it may acquire as a result of any payment hereunder until (i) in the case of the Second Lien Claimholders, the Discharge of First Lien Obligations has occurred, (ii) in the case of the Third Lien Claimholders, the Discharge of First Lien Obligations and the Discharge of Second Lien Obligations has occurred and (iii) in the case of the Fourth Lien Claimholders, the Discharge of First Lien Obligations, the Discharge of Second Lien Obligations and the Discharge of Third Lien Obligations has occurred. The Company acknowledges and agrees that the value of any payments or distributions in cash, property or other assets received by any Junior Lien Representative, Junior Lien Collateral Agent or other Junior Lien Claimholder that are paid over to the Applicable Senior Lien Representative, the Applicable Senior Lien Collateral Agent or other Applicable Senior Lien Claimholder pursuant to this Agreement shall not reduce any of the Junior Lien Obligations.
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8.6 Application of Payments. All payments received by the Applicable Senior Lien Representative, the Applicable Senior Lien Collateral Agent or any other Applicable Senior Lien Claimholder may be applied, reversed and reapplied, in whole or in part, to such part of the Applicable Senior Lien Obligations provided for in the Senior Lien Loan Documents in respect of such Applicable Senior Lien Obligations. Each Junior Lien Representative and each Junior Lien Collateral Agent, on behalf of itself and each other Junior Lien Claimholder represented by it, agrees to any extension or postponement of the time of payment of the Applicable Senior Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any Lien which may at any time secure any part of the Applicable Senior Lien Obligations and to the addition or release of any other Person primarily or secondarily liable therefor.
8.7 Reserved.
8.8 Agency Capacities. Except as expressly provided herein (including Section 5.5), (i) JPMorgan Chase Bank, N.A. is acting in the capacity of First Lien Representative and First Lien Collateral Agent solely for the First Lien Claimholders, (ii) Alter Domus (US) LLC is acting in the capacity of Second Lien Representative and Second Lien Collateral Agent solely for the Second Lien Claimholders, (iii) JPMorgan Chase Bank, N.A. is acting in the capacity of Third Lien Representative and Third Lien Collateral Agent solely for the Third Lien Claimholders and (iv) Alter Domus (US) LLC is acting in the capacity of Fourth Lien Representative and Fourth Lien Collateral Agent solely for the Fourth Lien Claimholders. Except as expressly provided herein, each other Representative and Collateral Agent is acting in the capacity of Representative and Collateral Agent, respectively, solely for the Claimholders under the Secured Loan Documents for which it is the named Representative or Collateral Agent, as the case may be, in the applicable Joinder Agreement.
8.9 Submission to Jurisdiction; Certain Waivers. The Company, each Representative and each Collateral Agent, on behalf of itself and each other applicable Claimholder represented by it, hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the Collateral Documents (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;
(b) agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;
(c) 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 and that nothing in this Agreement or any other Secured Loan Document shall affect any right that any Claimholder may otherwise have to bring any action or proceeding relating to this Agreement or any other Secured Loan Document against the Company or any of its assets in the courts of any jurisdiction;
(d) 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 Collateral Document in any court referred to in Section 8.9(a) (and 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);
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(e) consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 8.11 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);
(f) agrees that service as provided in Section 8.9(e) is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and
(g) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.
8.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO AND THE COMPANY 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 THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO AND THE COMPANY (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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO AND THE COMPANY FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
8.11 Notices. All notices to the Claimholders permitted or required under this Agreement shall be sent to the applicable Representative. Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by telefacsimile, electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or in the Joinder Agreement pursuant to which it becomes a party hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
8.12 Further Assurances. Each Representative and each Collateral Agent, on behalf of itself and each other Claimholder represented by it, and the Company, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any Representative and Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.
43
8.13 APPLICABLE LAW. THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS IN THE COLLATERAL).
8.14 Binding on Successors and Assigns. This Agreement shall be binding upon each Representative, each Collateral Agent, each other Claimholder, the Company and their respective successors and assigns from time to time. If any Representative or Collateral Agent resigns or is replaced pursuant to the applicable Secured Loan Documents, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement. No provision of this Agreement will inure to the benefit of a bankruptcy trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of the Company, including where any such trustee, debtor-in-possession, creditor trust or other representative of an estate is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency or Liquidation Proceeding.
8.15 Section Headings. The section headings and the table of contents used in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose, be given any substantive effect, affect the construction hereof or be taken into consideration in the interpretation hereof.
8.16 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or other electronic transmission (i.e., a “pdf”) shall be effective as delivery of a manually executed counterpart hereof. Any signature to this Agreement may be delivered by facsimile, electronic mail (including pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the New York Electronic Signature and Records Act or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes to the fullest extent permitted by applicable law.
8.17 Authorization. By its signature, each Person executing this Agreement, on behalf of such Person but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.
8.18 No Third Party Beneficiaries; Provisions Solely to Define Relative Rights. This Agreement and the rights and benefits hereof shall inure to the benefit of each Claimholder and its respective successors and assigns from time to time. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Representatives, Collateral Agents and Claimholders. Other than as set forth in Section 5.6 and in Section 8.3, neither the Company nor any other creditor shall have any rights hereunder and neither the Company nor any other creditor may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of the Company, which are absolute and unconditional, to pay the First Lien Obligations, the Second Lien Obligations, the Third Lien Obligations and the Fourth Lien Obligations as and when the same shall become due and payable in accordance with their terms.
8.19 No Indirect Actions. Unless otherwise expressly stated, if a party may not take an action under this Agreement, then it may not take that action indirectly, or support any other Person in taking that action directly or indirectly. “Taking an action indirectly” means taking an action that is not expressly prohibited for the party but is intended to have substantially the same effects as the prohibited action.
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IN WITNESS WHEREOF, the parties hereto have executed this Four Lien Intercreditor Agreement as of the date first written above.
JPMORGAN CHASE BANK, N.A.
as First Lien Representative and as First Lien Collateral Agent
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
JPMorgan Chase Bank, N.A.
383 Madison Ave, Floor 23
New York, NY 10179
Attn: James Knight
Facsimile: (917) 464-7000
Email: james.a.knight@jpmorgan.com
[Signature Page to Four Lien Intercreditor Agreement]
ALTER DOMUS (US) LLC,
as Second Lien Representative and as Second Lien Collateral Agent
By: /s/ Matthew Trybula
Name: Matthew Trybula
Title: Associate Counsel
Alter Domus (US) LLC
225 W. Washington Street, 9th Floor
Chicago, Illinois 60606
Attention: Legal Department and Rick Ledenbach
Facsimile No. (312) 376-0751
Email: legal@alterdomus.com
ALTER DOMUS (US) LLC,
as Fourth Lien Representative, as Fourth Lien Collateral Agent and as Second Lien Real Property Collateral
Agent
By: /s/ Matthew Trybula
Name: Matthew Trybula
Title: Associate Counsel
Alter Domus (US) LLC
225 W. Washington Street, 9th Floor
Chicago, Illinois 60606
Attention: Legal Department and Rick Ledenbach
Facsimile No. (312) 376-0751
Email: legal@alterdomus.com
[Signature Page to Four Lien Intercreditor Agreement]
JPMORGAN CHASE BANK, N.A.
as Third Lien Representative, as Third Lien Collateral Agent and as First Lien Real Property Collateral Agent
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
JPMorgan Chase Bank, N.A.
383 Madison Ave, Floor 23
New York, NY 10179
Attn: James Knight
Facsimile: (917) 464-7000
Email: james.a.knight@jpmorgan.com
[Signature Page to Four Lien Intercreditor Agreement]
Acknowledged by:
THE COMPANY:
W.S. BADCOCK CORPORATION
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Senior Vice President
109 Innovation Court, Suite J,
Delaware, OH 43015
Attention: Tiffany McMillan-McWaters
Email: tmcwaters@franchisegrp.com
[Signature Page to Four Lien Intercreditor Agreement]
Exhibit 10.9
Execution Version
FIRST LIEN CREDIT AGREEMENT
dated as of
November 22, 2021
among
FRANCHISE GROUP, INC.,
as a Borrower and Lead Borrower,
FRANCHISE GROUP NEWCO PSP, LLC,
as a Borrower,
VALOR ACQUISITION, LLC,
as a Borrower,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
as a Borrower,
the Lenders from time to time party hereto,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and as Collateral Agent,
and
JPMORGAN CHASE BANK, N.A.,
as Sole Lead Arranger and Sole Bookrunner
Table of Contents
| Page | |||
| ARTICLE I Definitions | 1 | ||
| SECTION 1.01 | Defined Terms. | 1 | |
| SECTION 1.02 | Classification of Loans and Borrowings. | 74 | |
| SECTION 1.03 | Terms Generally. | 74 | |
| SECTION 1.04 | Accounting Terms; GAAP. | 75 | |
| SECTION 1.05 | Effectuation of Transactions. | 75 | |
| SECTION 1.06 | Limited Conditionality Acquisition. | 75 | |
| SECTION 1.07 | Certain Determinations. | 76 | |
| SECTION 1.08 | Divisions. | 77 | |
| SECTION 1.09 | Interest Rates; Benchmark Notification. | 77 | |
| ARTICLE II The Credits | 78 | ||
| SECTION 2.01 | Commitments. | 78 | |
| SECTION 2.02 | Loans and Borrowings. | 78 | |
| SECTION 2.03 | Requests for Borrowings. | 79 | |
| SECTION 2.04 | [Reserved]. | 80 | |
| SECTION 2.05 | [Reserved]. | 80 | |
| SECTION 2.06 | Funding of Borrowings. | 80 | |
| SECTION 2.07 | Interest Elections. | 80 | |
| SECTION 2.08 | Termination and Reduction of Commitments. | 81 | |
| SECTION 2.09 | Repayment of Loans; Evidence of Debt. | 82 | |
| SECTION 2.10 | Repayment of Term Loans. | 82 | |
| SECTION 2.11 | Prepayment of Loans. | 83 | |
| SECTION 2.12 | Fees. | 94 | |
| SECTION 2.13 | Interest. | 94 | |
| SECTION 2.14 | Benchmark Unavailability; Benchmark Replacement Setting. | 95 | |
| SECTION 2.15 | Increased Costs. | 97 | |
| SECTION 2.16 | Break Funding Payments. | 98 | |
| SECTION 2.17 | Taxes. | 98 | |
| SECTION 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Setoffs. | 101 | |
| SECTION 2.19 | Mitigation Obligations; Replacement of Lenders. | 103 | |
| SECTION 2.20 | [Reserved] | 103 | |
| SECTION 2.21 | Refinancing Amendments. | 105 | |
| SECTION 2.22 | Defaulting Lenders. | 106 | |
| SECTION 2.23 | Illegality. | 107 | |
| SECTION 2.24 | Loan Modification Offers. | 107 | |
| ARTICLE III Representations and Warranties | 108 | ||
| SECTION 3.01 | Organization; Powers. | 109 | |
| SECTION 3.02 | Authorization; Enforceability. | 109 | |
| SECTION 3.03 | Governmental Approvals; No Conflicts. | 109 | |
| SECTION 3.04 | Financial Condition; No Material Adverse Effect. | 109 | |
| SECTION 3.05 | Properties. | 110 | |
| SECTION 3.06 | Litigation and Environmental Matters. | 110 | |
| SECTION 3.07 | Compliance with Laws. | 110 | |
| SECTION 3.08 | Investment Company Status. | 111 | |
| SECTION 3.09 | Taxes. | 111 | |
| SECTION 3.10 | ERISA; Labor Matters. | 111 | |
| SECTION 3.11 | Disclosure. | 111 | |
| SECTION 3.12 | Subsidiaries. | 112 | |
| SECTION 3.13 | Intellectual Property; Licenses, Etc. | 112 | |
| SECTION 3.14 | Solvency. | 112 | |
| SECTION 3.15 | Federal Reserve Regulations. | 112 | |
| SECTION 3.16 | Use of Proceeds. | 113 | |
| SECTION 3.17 | Anti-Corruption Laws and Sanctions. | 113 | |
| SECTION 3.18 | Security Documents. | 113 | |
| SECTION 3.19 | Insurance. | 114 | |
| SECTION 3.20 | Franchise Agreements. | 114 | |
| ARTICLE IV Conditions | 114 | ||
| SECTION 4.01 | Effective Date. | 114 | |
| SECTION 4.02 | Each Credit Event after the Effective Date. | 116 | |
| ARTICLE V Affirmative Covenants | 117 | ||
| SECTION 5.01 | Financial Statements and Other Information. | 117 | |
| SECTION 5.02 | Notices of Material Events. | 120 | |
| SECTION 5.03 | Information Regarding Collateral. | 120 | |
| SECTION 5.04 | Existence; Conduct of Business. | 120 | |
| SECTION 5.05 | Payment of Taxes, etc. | 121 | |
| SECTION 5.06 | Maintenance of Properties. | 121 | |
| SECTION 5.07 | Insurance. | 121 | |
| SECTION 5.08 | Books and Records; Inspection and Audit Rights. | 122 | |
| SECTION 5.09 | Compliance with Laws. | 122 | |
| SECTION 5.10 | Use of Proceeds. | 123 | |
| SECTION 5.11 | Additional Subsidiaries. | 123 | |
| SECTION 5.12 | Further Assurances. | 123 | |
| SECTION 5.13 | Franchise Agreements. | 124 | |
| SECTION 5.14 | Certain Post-Closing Obligations. | 124 | |
| SECTION 5.15 | Maintenance of Ratings. | 125 | |
| ARTICLE VI Negative Covenants | 125 | ||
| SECTION 6.01 | Indebtedness; Certain Equity Securities. | 125 | |
| SECTION 6.02 | Liens. | 131 | |
| SECTION 6.03 | Fundamental Changes; Lead Borrower Covenant. | 134 | |
| SECTION 6.04 | Investments, Loans, Advances, Guarantees and Acquisitions. | 136 | |
| SECTION 6.05 | Asset Sales. | 139 | |
| SECTION 6.06 | Sale and Leaseback Transactions. | 142 | |
| SECTION 6.07 | Restricted Payments; Certain Payments of Indebtedness. | 142 | |
| SECTION 6.08 | Transactions with Affiliates. | 145 | |
| SECTION 6.09 | Restrictive Agreements. | 146 | |
| SECTION 6.10 | Financial Maintenance Covenants. | 148 | |
| SECTION 6.11 | Changes in Fiscal Periods. | 148 | |
| SECTION 6.12 | Amendment of Financing Documents. | 148 | |
| SECTION 6.13 | Franchise Agreements. | 148 | |
| SECTION 6.14 | Badcock. | 148 | |
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| ARTICLE VII Events of Default | 149 | ||
| SECTION 7.01 | Events of Default. | 149 | |
| SECTION 7.02 | Right to Cure. | 152 | |
| SECTION 7.03 | Application of Proceeds. | 153 | |
| ARTICLE VIII Administrative Agent | 154 | ||
| SECTION 8.01 | Appointment and Authority. | 154 | |
| SECTION 8.02 | Rights as a Lender. | 155 | |
| SECTION 8.03 | Exculpatory Provisions. | 155 | |
| SECTION 8.04 | Reliance by Agents. | 156 | |
| SECTION 8.05 | Delegation of Duties. | 157 | |
| SECTION 8.06 | Resignation of Administrative Agent; Mergers. | 157 | |
| SECTION 8.07 | Non-Reliance on Agents and Lenders. | 158 | |
| SECTION 8.08 | No Other Duties, Etc. | 159 | |
| SECTION 8.09 | Administrative Agent May File Proofs of Claim. | 159 | |
| SECTION 8.10 | No Waiver; Cumulative Remedies; Enforcement. | 160 | |
| SECTION 8.11 | Withholding Taxes. | 160 | |
| SECTION 8.12 | Credit Bidding. | 161 | |
| SECTION 8.13 | Erroneous Payments. | 163 | |
| ARTICLE IX Miscellaneous | 164 | ||
| SECTION 9.01 | Notices. | 164 | |
| SECTION 9.02 | Waivers; Amendments. | 165 | |
| SECTION 9.03 | Expenses; Indemnity; Damage Waiver. | 168 | |
| SECTION 9.04 | Successors and Assigns. | 170 | |
| SECTION 9.05 | Survival. | 175 | |
| SECTION 9.06 | Counterparts; Integration; Effectiveness. | 175 | |
| SECTION 9.07 | Severability. | 176 | |
| SECTION 9.08 | Right of Setoff. | 176 | |
| SECTION 9.09 | Governing Law; Jurisdiction; Consent to Service of Process. | 177 | |
| SECTION 9.10 | WAIVER OF JURY TRIAL. | 178 | |
| SECTION 9.11 | Headings. | 178 | |
| SECTION 9.12 | Confidentiality. | 178 | |
| SECTION 9.13 | USA PATRIOT Act. | 180 | |
| SECTION 9.14 | Release of Liens and Guarantees. | 180 | |
| SECTION 9.15 | No Advisory or Fiduciary Responsibility. | 181 | |
| SECTION 9.16 | Interest Rate Limitation. | 181 | |
| SECTION 9.17 | Intercreditor Agreements | 182 | |
| SECTION 9.18 | Judgment Currency | 182 | |
| SECTION 9.19 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 182 | |
| SECTION 9.20 | Acknowledgement Regarding Any Supported QFCs | 183 | |
| SECTION 9.21 | Keepwell | 183 | |
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| SCHEDULES: | ||
| Schedule 2.01 | — | Commitments and Loans |
| Schedule 2.02 | — | Effective Date Badcock Material Real Property |
| Schedule 3.03 | — | Government Approvals; No Conflicts |
| Schedule 3.06 | — | Litigation and Environmental Matters |
| Schedule 3.12 | — | Subsidiaries |
| Schedule 3.20 | — | Franchise Agreements |
| Schedule 5.14(a) | — | Certain Post-Closing Obligations |
| Schedule 6.01 | — | Existing Indebtedness |
| Schedule 6.02 | — | Existing Liens |
| Schedule 6.04(e) | — | Existing Investments |
| Schedule 6.05(k) | — | Specified Disposition |
| Schedule 6.08 | — | Existing Affiliate Transactions |
| Schedule 6.09 | — | Existing Restrictions |
| Schedule 9.01 | — | Notices |
| EXHIBITS: | ||
| Exhibit A | — | Form of Assignment and Assumption |
| Exhibit B | — | Form of Badcock Guarantee Agreement |
| Exhibit C | — | Form of Perfection Certificate |
| Exhibit D | — | Form of Badcock Collateral Agreement |
| Exhibit E | — | Form of Compliance Certificate |
| Exhibit F | — | [Reserved] |
| Exhibit G | — | Form of Solvency Certificate |
| Exhibit H | — | Form of Closing Certificate |
| Exhibit I | — | Form of Master Intercompany Note |
| Exhibit J | — | Form of Specified Discount Prepayment Notice |
| Exhibit K | — | Form of Specified Discount Prepayment Response |
| Exhibit L | — | Form of Discount Range Prepayment Notice |
| Exhibit M | — | Form of Discount Range Prepayment Offer |
| Exhibit N | — | Form of Solicited Discounted Prepayment Notice |
| Exhibit O | — | Form of Solicited Discounted Prepayment Offer |
| Exhibit P | — | Form of Acceptance and Prepayment Notice |
| Exhibit Q-1 | — | Form of United States Tax Compliance Certificate 1 |
| Exhibit Q-2 | — | Form of United States Tax Compliance Certificate 2 |
| Exhibit Q-3 | — | Form of United States Tax Compliance Certificate 3 |
| Exhibit Q-4 | — | Form of United States Tax Compliance Certificate 4 |
| Exhibit R | — | Form of Note |
| Exhibit S | — | Form of Notice of Borrowing |
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FIRST LIEN CREDIT AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), the Lenders from time to time party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent and as Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified below:
“A Team” means A Team Sales, LLC, a Delaware limited liability company.
“ABL Agent” means JPM, as agent under the ABL Credit Agreement or any successor thereto acting in such capacities.
“ABL Credit Agreement” means (i) that certain Third Amended and Restated Loan and Security Agreement, as in effect on the Effective Date (after giving effect to the ABL Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement), among each Loan Party party thereto, certain lenders party thereto and the ABL Agent, and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent asset-based revolving credit facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not an ABL Credit Agreement hereunder. Any reference to the ABL Credit Agreement hereunder shall be deemed a reference to any ABL Credit Agreement then in existence.
“ABL Credit Agreement First Amendment” means that certain First Amendment to ABL Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto and the ABL Agent.
“ABL Intercreditor Agreement” means (a) that certain Amended and Restated Intercreditor Agreement, dated as of the Effective Date, by and among the Collateral Agent, the Second Lien Agent, the FRG First Lien Agent , the FRG Second Lien Agent and the ABL Agent (and any other Persons party thereto), and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement among the ABL Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the ABL Credit Agreement and the other ABL Loan Documents), the Agents (or any of them) and the Second Lien Agent (and any other Persons party thereto), that is reasonably acceptable to the Administrative Agent and the Lead Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
“ABL Loan Documents” shall have the meaning ascribed to the term “Financing Agreements” in the ABL Credit Agreement.
“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Acceptable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“Acceptable Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Acceptance and Prepayment Notice” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D)(2) substantially in the form of Exhibit P.
“Acceptance Date” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“Accepting Lenders” has the meaning specified in Section 2.24(a).
“Acquired EBITDA” means, with respect to any Pro Forma Entity, for any period, the amount of Consolidated EBITDA of such Pro Forma Entity (determined as if references to the Borrower and its Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“Acquired Entity or Business” has the meaning given such term in the definition of “Consolidated EBITDA.”
“Acquisition” means the acquisition of Badcock pursuant to the Acquisition Agreement .
“Acquisition Agreement” means that certain Stock Purchase Agreement, dated as of November 22, 2021 (including the schedules, exhibits and disclosure letters thereto) by and among Badcock, William K. Pou, Jr., as seller representative, the shareholders of Badcock and Franchise Group Newco BHF, LLC.
“Additional Lender” means any Additional Term Lender.
“Additional Term Lender” means, at any time, any bank, financial institution or other institutional lender or investor that agrees to provide any portion of any Credit Agreement Refinancing Indebtedness with respect to any existing Term Loans or Term Commitments, as applicable, pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval not to be unreasonably withheld, conditioned or delayed) and the Lead Borrower.
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“Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) Daily Simple SOFR, plus (b) (i) for one month Daily Simple SOFR borrowings, 0.11448%, (ii) for three month Daily Simple SOFR borrowings, 0.26161% and (iii) for six month Daily Simple SOFR borrowings, 0.42826%; provided that if the Adjusted Daily Simple SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) (i) for one month Term SOFR Rate borrowings, 0.10%, (ii) for three month Term SOFR Rate borrowings, 0.15% and (iii) for six month Term SOFR Rate borrowings, 0.25%; provided that if the Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Administrative Agent” means JPM, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affected Class” has the meaning specified in Section 2.24(a).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“Agent” means the Administrative Agent and the Collateral Agent, and any successors and assigns in such capacity, and “Agents” means two or more of them.
“Agent Parties” has the meaning given to such term in Section 9.01(c).
“Agreement” has the meaning given to such term in the preliminary statements hereto.
“Agreement Currency” has the meaning given to such term in Section 9.18.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. (Chicago time) on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
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“Ancillary Document” has the meaning assigned to such term in Section 9.06.
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, and all other applicable laws, rules, and regulations concerning or relating to bribery or corruption.
“Applicable Account” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“Applicable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Applicable Rate” means, (a) with respect to any Initial Term Loans maintained as ABR Loans, 3.75% per annum, and with respect to any Initial Term Loans maintained as Term Benchmark Loans, 4.75% per annum, and (b) with respect to any Other Term Loans, as set forth in the applicable Refinancing Amendment or Loan Modification Agreement.
“Approved Bank” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“Auction Agent” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
“Audited Financial Statements” means (a) the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of the Lead Borrower ended on or about December 31, 2020 and (b) the audited consolidated balance sheet of Badcock, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of Badcock, ended on or about December 31, 2020.
“Available Amount” means, as of any date of determination, a cumulative amount equal to (without duplication and without duplication of any amount included in the Available Equity Amount):
(a) [Reserved], plus
(b) the sum of an amount (which amount shall not be less than zero) equal to the sum of (x) Excess Cash Flow (but not less than zero in any period) for the fiscal year of the Lead Borrower ending on or about December 31, 2021 and (y) Excess Cash Flow for each succeeding completed fiscal year as of such date, in each case, that was not required to prepay Term Loan Borrowings (as defined in the FRG First Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG First Lien Credit Agreement or Term Loan Borrowings (as defined in the FRG Second Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG Second Lien Credit Agreement, plus
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(c) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower and its Subsidiaries on Investments made using the Available Amount (not to exceed the original amount of such Investments), plus
(d) [Reserved], plus
(e) the Net Proceeds of a sale or other Disposition received by the Borrower or any Subsidiary of Investments made using the Available Amount, plus
(f) [Reserved], plus
(g) [Reserved], plus
(h) the aggregate amount of any Retained Declined Proceeds and Retained Asset Sale Proceeds.
“Available Equity Amount” means a cumulative amount equal to (without duplication, and without duplication of any amount included in the Available Amount):
(a) without duplication of any amount included in the Available Amount, the Net Proceeds of new public or private issuances after the Effective Date of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) of the Lead Borrower, plus
(b) capital contributions received by the Lead Borrower after the Effective Date in cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash capital contributions) in respect of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), plus
(c) the net cash proceeds received by the Borrower or any Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower or any Subsidiary on Investments made using the Available Equity Amount (not to exceed the original amount of such Investments).
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“Available General RP Capacity Amount” means (i) the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.07(a)(xv) plus (ii) the amount of prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing that may be made at the time of determination pursuant to Section 6.07(b)(vi)(A) minus (iii) the sum of the amount of the Available General RP Capacity Amount utilized by the Borrower or any Subsidiary prior to such time to make (a) Restricted Payments pursuant to Section 6.07(a)(xv), (b) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(A), (c) Investments pursuant to Section 6.04(m)(A)(ii) utilizing the Available General RP Capacity Amount or (d) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(B) utilizing the Available General RP Capacity Amount.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.14(e).
“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Badcock Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Badcock Security Documents as security for the Secured Obligations. For the avoidance of doubt, Collateral does not constitute “Badcock Collateral”.
“Badcock Collateral Agreement” means the First Lien Collateral Agreement, dated as of the Effective Date, between Badcock and the Collateral Agent, substantially in the form of Exhibit D.
“Badcock Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from Badcock
(i) a counterpart of the Badcock Guarantee Agreement duly executed and delivered on behalf of Badcock, and
(ii) a counterpart of the Badcock Collateral Agreement duly executed and delivered on behalf of Badcock,
in each case under this clause (a) together with opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b) all outstanding Equity Interests of each direct Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of Badcock, shall have been pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;
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(c) (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Badcock as payee and all such obligors as payors in the form of the Badcock Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Badcock Collateral owned by Badcock, all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Badcock Intellectual Property Security Agreements required by this Agreement, the Badcock Security Documents, Requirements of Law and reasonably requested by the Collateral Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Badcock Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Badcock Security Documents, the Intercreditor Agreements and the other provisions of the term “Badcock Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording no later than the tenth (10th) Business Day following the Effective Date (other than with respect to Uniform Commercial Code financing statements); and
(e) the Collateral Agent shall have received (i) counterparts of a Badcock Mortgage with respect to each Badcock Material Real Property duly executed and delivered by Badcock; provided, that, to the extent any Badcock Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Agents will cooperate with the Lead Borrower in order to minimize the amount of tax payable in connection with such Badcock Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Badcock Mortgage to the book value of such Badcock Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Badcock Mortgage as a first priority Lien on the Mortgaged Property described therein (subject to the terms of the Intercreditor Agreements), free of any other Liens except as expressly permitted by Section 6.02 and Section 6.14, together with such customary lender’s endorsements as the Collateral Agent may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Badcock Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Badcock Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Badcock Mortgaged Property, and if any Badcock Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Collateral Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Badcock Mortgaged Property is located regarding the enforceability of the Badcock Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent, (v) a survey or existing survey together with a no change affidavit of such Badcock Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Badcock Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s); provided further that, with respect to any Effective Date Badcock Material Real Property, the requirements set forth in this clause (e) shall not be required to be satisfied until the date set forth on Schedule 2.02 for such Effective Date Badcock Material Real Property or such longer time period as agreed by the Collateral Agent in its reasonable discretion.
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of the Loan Parties (other than Badcock) or (ii) particular assets of Badcock, if solely for purposes of this clause (a)(ii), and for so long as the Administrative Agent and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Badcock Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Badcock Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents; (d) in no event shall Badcock be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall any Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall Badcock be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Badcock Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall Badcock be required to complete any filings or other action with respect to security interests in Badcock Intellectual Property beyond the filing of Badcock Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Badcock Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Badcock Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Badcock Security Documents.
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“Badcock Guarantee Agreement” means the First Lien Guarantee Agreement, dated as of the Effective Date, between Badcock and the Administrative Agent, substantially in the form of Exhibit B.
“Badcock Intellectual Property” has the meaning assigned to such term in the Badcock Collateral Agreement.
“Badcock Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Badcock Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Badcock Collateral that can be perfected by the filing of such security agreements, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Intercreditor Agreement” means that certain that certain Four Lien Intercreditor Agreement, dated as of the Effective Date, by and among the Agents, the FRG First Lien Agent, the FRG Second Lien Agent and the Second Lien Agent and acknowledged by Badcock, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Badcock Master Intercompany Note” means the Master Intercompany Note, dated the Effective Date, pursuant to which Badcock is the “payee” and the Lead Borrower and its Subsidiaries (other than Badcock) are the “payors” substantially in the form of Exhibit I.
“Badcock Material Real Property” means (a) the real property described on Schedule 2.02 (the “Effective Date Badcock Material Real Property”) and (b) any other real property (including fixtures) (i) located in the United States, (ii) first acquired by Badcock after the Effective Date and (iii) owned (but not leased or ground-leased) by Badcock with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Material Real Property does not constitute “Badcock Material Real Property”.
“Badcock Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Badcock Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Badcock Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent and the Borrower.
“Badcock Mortgaged Property” means each parcel of Badcock Material Real Property with respect to which a Badcock Mortgage is granted pursuant to the “Badcock Collateral and Guarantee Requirement,” Section 5.12(a), or Section 5.12(c).
“Badcock Pledged Equity Interests” has the meaning set forth in the Badcock Collateral Agreement.
“Badcock Security Documents” means the Badcock Collateral Agreement, the Badcock Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Badcock Collateral and Guarantee Requirement” and/or Section 5.12(a) (solely as it may relate to Badcock) or Section 5.12(c) to secure any of the Secured Obligations.
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“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Basel III” means: (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated; (ii) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
“Benchmark” means, initially, with respect to any Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and its related Benchmark Replacement Date have occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.14(b).
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“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(a) the Adjusted Daily Simple SOFR Rate;
(b) the sum of: (1) the alternate benchmark rate that has been selected by the Administrative Agent and the Lead Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (2) the related Benchmark Replacement Adjustment;
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Lead Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
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For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors, the NYFRB, the CME Term SOFR Administrator an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.
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“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board of Directors” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States of America.
“Bookrunner” means JPM, in its capacity as sole bookrunner.
“Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Borrower Materials” has the meaning assigned to such term in Section 5.01.
“Borrower Offer of Specified Discount Prepayment” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
“Borrower Solicitation of Discount Range Prepayment Offers” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“Borrower Solicitation of Discounted Prepayment Offers” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $500,000.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Chicago are authorized or required by Requirements of Law to remain closed.
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“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any Capitalized Leases; provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”). For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
“Capitalized Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person (a) as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income Tax purposes); provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”).
“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and its Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrower and its Subsidiaries.
“Cash Management Obligations” means (a) obligations of the Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“Cash Management Services” has the meaning assigned to such term in the definition of “Secured Cash Management Obligations”.
“Casualty Event” means any event that gives rise to the receipt by the Borrower or any Subsidiary of any insurance proceeds or condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
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“Change in Law” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including for purposes of Section 2.15.
“Change of Control” means (x) the acquisition of beneficial ownership, directly or indirectly, by any Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), of Equity Interests representing 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the Lead Borrower and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the Lead Borrower held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one or more holding companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of the Lead Borrower or (y) any “change of control” or similar event under the ABL Credit Agreement, the Second Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement.
For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase “Person or group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of the Lead Borrower directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
“Class” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Initial Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is an Initial Term Loan Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments and Other Term Loans that have different terms and conditions shall be construed to be in different Classes.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
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“Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations. For the avoidance of doubt, Badcock Collateral does not constitute “Collateral”.
“Collateral Account” means an account of the Administrative Agent as the Administrative Agent may designate to the Lead Borrower from time to time as the “Collateral Account” for purposes of this Agreement and the other Loan Documents.
“Collateral Agent” means JPM, in its capacity as collateral agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Collateral Agreement” means the First Lien Collateral Agreement, dated as of the Effective Date, among the Borrower, each other Loan Party (other than Badcock) and the Collateral Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent shall have received from
(i) each Borrower and Subsidiary (other than any Excluded Subsidiary or Badcock) either (x) in the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary but excluding Badcock), a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person, and
(ii) each Borrower and Subsidiary (other than any Excluded Subsidiary or Badcock) either (x) in the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Collateral Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary but excluding Badcock), a supplement to the Collateral Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent, opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b) subject to Section 5.14, all outstanding Equity Interests of the Borrower and each Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Borrower or Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of any Loan Party (other than Badcock), shall have been pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank; provided that, with respect to any Equity Interests of Badcock (which the Lead Borrower hereby agrees shall be evidenced by a certificate following the First Amendment Effective Date), the requirements set forth in this clause (b) (including the issuance of such certificate) shall not be required to be satisfied until the date that is sixty (60) days following the First Amendment Effective Date, or such longer time period as agreed by the Collateral Agent in its reasonable discretion;
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(c) subject to Section 5.14, (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties (other than Badcock) as payees and all such obligors as payors in the form of the Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Collateral owned by any Loan Party (other than Badcock), all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements required by this Agreement, the Security Documents, Requirements of Law and reasonably requested by the Collateral Agent to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Security Documents, the Intercreditor Agreements and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; and
(e) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly executed and delivered by the record owner of such Mortgaged Property; provided, that, to the extent any Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Agents will cooperate with the Borrower or the applicable Loan Party in order to minimize the amount of tax payable in connection with such Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Mortgage to the book value of such Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 6.02, together with such customary lender’s endorsements as the Collateral Agent may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Collateral Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Mortgaged Property is located regarding the enforceability of the Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent, (v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of Badcock or (ii) particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if solely for purposes of this clause (a)(ii), and for so long as the Administrative Agent and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to the Borrower and its Affiliates (including the imposition of withholding or other material taxes)), outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents; (d) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall any Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall any Loan Party be required to complete any filings or other action with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required, except to the extent required under the Loan Documents with respect to distribution centers of the Loan Parties; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.
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“Commitment” means with respect to any Lender, the Term Commitment or Other Term Commitment of any Class or any combination thereof (as the context requires).
“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.
“Compliance Certificate” has the meaning assigned to such term in Section 5.01(e).
“Consolidated Cash Interest Charges” means, for any period, the total interest expense of the Borrower and its Subsidiaries for such period determined on a consolidated basis net of any interest income, which shall be determined on a cash basis only and solely in respect of Indebtedness of the type described in the definition of Consolidated Total Indebtedness and excluding, for the avoidance of doubt, (i) any non-cash interest expense and any capitalized interest, whether paid or accrued, (ii) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (iii) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses (including agency costs, amendment, consent or other front end, one-off or similar non-recurring fees), (iv) any expenses resulting from discounting of indebtedness in connection with the application of recapitalization accounting or purchase accounting, (v) penalties or interest related to taxes and any other amounts of non-cash interest resulting from the effects of acquisition method accounting or pushdown accounting, (vi) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (vii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (viii) any one-time cash costs associated with breakage in respect of Swap Agreements for interest rates, (ix) any payments with respect to make whole premiums, commissions or other breakage costs of any Indebtedness, (x) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (xi) expensing of bridge, arrangement, structuring, commitment, fronting or other financing fees, (xii) fees and expenses (including any penalties and interest relating to Taxes but excluding any bona fide interest expense) associated with the consummation of the Transactions (as defined in the FRG First Lien Credit Agreement), (xiii) agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (xiv) fees (including any ticking fees) and expenses (including any penalties and interest relating to Taxes) associated with any Investment not prohibited by Section 6.04 or the issuance of Equity Interests or Indebtedness (in each case excluding any bona fide interest expense).
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“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, plus:
(a) without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financing activities, plus (F) amortization or write-off of deferred financing fees, debt issuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing fees and expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received in connection with the purchasing or procurement of goods or services under any purchasing card or similar program;
(ii) provision for taxes based on income, profits, revenue or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges;
(iv) [reserved];
(v) net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness;
(vi) severance, relocation, integration and facilities’ opening costs and expenses and other business optimization costs and expenses and operating improvements (including related to new product introductions and any operating expenses, losses or charges related to the implementation of cost savings initiatives, operating expense reductions and other similar initiatives), recruiting fees, signing costs, reserve, retention, recruiting, relocation and signing bonuses and expenses, transition costs, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), contract terminations, professional and consulting fees incurred in connection with any of the foregoing and other one-time and nonoperational costs and expenses;
(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income, excluding cash distributions in respect thereof;
(ix) [reserved];
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(x) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(xi) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xii) any gain relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clause (c)(iv) below;
(xiii) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xiv) charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered by indemnification provisions or by any insurance provider in connection with the Pre-Effective Date Transactions, the Transactions, a Permitted Acquisition or any other acquisition or Investment, disposition or any Casualty Event, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (xiv) (and if not so reimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the next measurement period);
(xv) cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (c) below for any previous period and not added back;
(xvi) Earn-Out payments, contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments incurred in connection with the Acquisition (as defined in the FRG First Lien Credit Agreement) and/or any acquisition or other investment (including any acquisition or other investment consummated prior to the Effective Date) which are paid or accrued during the applicable period; and
(xvii) other adjustments (i) identified to the Lead Arranger prior to the Effective Date, (ii) set forth in (A) the Model (as defined in the FRG First Lien Credit Agreement) or (B) the quality of earnings report prepared by independent registered public accountants of recognized national standing or any other accounting firm reasonably acceptable to the Administrative Agent (as defined in the FRG First Lien Credit Agreement) and delivered to the Administrative Agent (as defined in the FRG First Lien Credit Agreement) in connection with the Transactions (as defined in the FRG First Lien Credit Agreement) or (iii) contemplated by the Acquisition Agreement (as defined in the FRG First Lien Credit Agreement); plus
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(b) without duplication, (i) the amount of “run rate” cost savings, operating expense reductions and synergies related to any of the Pre-Effective Date Transactions, any of the Transactions, any Specified Transaction, any restructuring, any business optimization activities, cost saving initiatives and operating improvements or other initiatives, actions or events (each of the foregoing, an “Event”) that are reasonably identifiable and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Event (or, if the underlying Event is any of the Transactions, within 18 months after the Effective Date) (including actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower) (which cost savings, operating expense reductions and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that no cost savings, operating expense reductions or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions, other operating improvements or synergies that are included above or in the definition of “Pro Forma Basis” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided, further that the aggregate amount of addbacks to Consolidated EBITDA pursuant this clause (b) for any period, excluding any addbacks for such period pursuant to this clause (b) where the underlying Event is any of the Transactions (as defined in the FRG First Lien Credit Agreement), shall not exceed 20.0% of Consolidated EBITDA for such period (calculated after giving effect to such addbacks); less
(c) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business);
(ii) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(iii) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period;
(iv) any loss relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xi) and (a)(xii) above;
(v) the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary added (and not deducted in such period) to Consolidated Net Income;
(vi) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or cash reserve for a potential cash item that reduced Consolidated EBITDA in any prior period, any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase Consolidated EBITDA in such prior period, and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business; and
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(vii) any amount included in Consolidated Net Income of such Person for such period attributable to non-controlling interests pursuant to the application of FASB Accounting Standards Codification Topic 810-10-45;
in each case, as determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP; provided that:
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
(II) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
(III) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to the Pre-Effective Date Investments and the Transactions, an “Acquired Entity or Business”), based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) in the case of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting, the Consolidated EBITDA of such Person multiplied by the ownership percentage of the Borrower or applicable Subsidiary therein;
(IV) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by the Borrower or any Subsidiary during such period (each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “Sold Entity or Business”), based on the Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Administrative Agent (for further delivery to the Lenders); and
(V) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any non-cash expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder).
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Notwithstanding the foregoing, Consolidated EBITDA shall be deemed to equal (a) $102,145,028 for the fiscal quarter of the Lead Borrower ended on or about December 31, 2020, (b) $135,453,700 for the fiscal quarter of the Lead Borrower ended on or about March 31, 2021, (c) $129,457,547 for the fiscal quarter of the Lead Borrower ended on or about June 30, 2021 and (d) $115,698,793 for the fiscal quarter of the Lead Borrower ended on or about September 30, 2021 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any calculation on a Pro Forma Basis (including, for the avoidance of doubt, in respect of any disposition of Badcock Collateral during the relevant periods)); provided that such amounts of Consolidated EBITDA for any such fiscal quarter shall be adjusted to include, without duplication, any cost savings that would otherwise be included pursuant to clause (b) of this definition.
“Consolidated First Lien Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral on an equal priority basis (but without regard to the control of remedies) with Liens securing the Secured Obligations (it being understood and agreed that any Indebtedness under the ABL Loan Documents, the FRG First Lien Credit Agreement and the Second Lien Credit Agreement shall constitute Consolidated First Lien Indebtedness).
“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) unusual, or non-recurring gains or losses for such period,
(b) the cumulative effect of a change in accounting principles during such period;
(c) any Transaction Costs incurred during such period,
(d) any fees, costs and expenses (including (x) any transaction or retention bonus or similar payment and (y) any indemnities) incurred during such period, or any amortization thereof for such period, in connection with or in relation to any acquisition (including any acquisition of a franchisee), non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, incurrence, issuance or repayment of debt or similar transaction, issuance of equity securities, option buyouts, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument or similar transaction (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
(e) any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
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(f) accruals and reserves that are established or adjusted as a result of the Pre-Effective Date Investments, the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on Earn-Outs) or changes as a result of the adoption or modification of accounting policies during such period,
(g) stock-based award compensation expenses (including any one-time compensation related to unvested options outstanding as of the Effective Date),
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) any income (loss) from Investments recorded using the equity method,
(j) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration,
(k) any unrealized gain or loss due solely to fluctuations in currency values and the related tax effects, determined in accordance with GAAP,
(l) [Reserved],
(m) (A) the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of the Lead Borrower or any of its direct or indirect parent companies in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case, to the extent permitted in the Loan Documents,
(n) any costs or expenses incurred by the Borrower or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrower or Net Proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),
(o) the Consolidated Net Income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, and
(p) any non-cash goodwill impairment charges or other intangible asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of ASC 350 or other non-cash asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of SFAS 144.
There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefits related to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for any period the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its Subsidiaries), as a result of the Pre-Effective Date Investments, the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
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In addition, to the extent included in the Consolidated Net Income of such Person and its Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall (i) exclude any expenses and charges that are reimbursed by indemnification or other reimbursement provisions in connection with any acquisition or other investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder and (ii) include the amount of business interruption insurance proceeds received and, to the extent covered by insurance and actually reimbursed, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption.
“Consolidated Secured Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral.
“Consolidated Total Indebtedness” means, as of any date of determination, (i) the aggregate amount of Indebtedness of the Lead Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of the acquisition method accounting in connection with the Pre-Effective Date Investments, the Transactions or any Permitted Acquisition (or other Investment not prohibited hereunder)) consisting only of third-party Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit, letters of guaranty and bankers’ acceptances and third-party debt obligations evidenced by bonds, debentures, loan agreements, promissory notes or similar instruments, and, in each case, without duplication, Guarantees by the Lead Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, in respect of any of the foregoing Indebtedness of any other Person minus (ii) the sum of (x) unrestricted cash and cash equivalents of the Lead Borrower and its Subsidiaries in an aggregate amount not to exceed $150,000,000 and (y) cash and cash equivalents restricted in favor of the Administrative Agent, the Collateral Agent or any Lender (which may also include cash and cash equivalents securing other indebtedness (including Indebtedness under the ABL Loan Documents, the Second Lien Loan Documents, the FRG First Lien Loan Documents or the FRG Second Lien Loan Documents) secured by a Lien on the Collateral and the Badcock Collateral).
“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, excluding the current portion of current and deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of Loans to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by the Lead Borrower and its Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (z) the effects of acquisition method accounting.
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“Contract Consideration” has the meaning assigned to such term in the definition of “Excess Cash Flow”.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b) or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning specified in Section 9.20.
“COVID-19 Pandemic” means the global spread of the coronavirus illness, which was declared to be a pandemic by the World Health Organization on March 11, 2020.
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“Credit Agreement Refinancing Indebtedness” means Indebtedness issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) by the Borrower or any other Loan Party in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans (“Refinanced Debt”); provided that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (plus any premium, accrued interest, original issue discount and fees and expenses incurred in connection with such exchange, extension, renewal, replacement or refinancing), (b) does not mature earlier than or have a Weighted Average Life to Maturity shorter than the Refinanced Debt (other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (c) if such Indebtedness is unsecured or secured by the Collateral and the Badcock Collateral on a junior lien basis to the Secured Obligations, does not (1) mature prior to the date that is 91 days after the maturity date of the Refinanced Debt (or if later, 91 days after the Latest Maturity Date), (2) have a Weighted Average Life to Maturity shorter than the Refinanced Debt (or any later maturing Term Facility then in effect) plus 91 days, or (3) have mandatory prepayment, redemption or offer to purchase events more onerous than those with respect to Refinanced Debt (and shall otherwise be subject to the same terms as the Refinanced Debt) (in each case other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (c) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (d) [reserved], (e) shall not be guaranteed by any entity that is not a Loan Party, (f) in the case of any secured Indebtedness (i) is not secured by any assets not securing the Secured Obligations, (ii) if not comprising Indebtedness hereunder, is subject to the relevant Intercreditor Agreement(s) and (iii) in the case of Refinanced Debt that was secured on a junior basis to the Secured Obligations, shall be secured on a junior basis to the Secured Obligations; provided that any unsecured Refinanced Debt shall not be refinanced with secured Credit Agreement Refinancing Indebtedness, (g) in the case of Refinanced Debt that is subordinated in right of payment to the Secured Obligations, shall be subordinated on the same basis, (h) has covenants, events of default and guarantees (excluding, for avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions) of any such Indebtedness, that are not materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the Refinanced Debt (or, with respect to any Permitted Junior Priority Refinancing Debt, than the Indebtedness under the Second Lien Credit Agreement) (as determined by the Lead Borrower in good faith) unless (1) the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (2) any such provisions apply after the Latest Maturity Date at the time of such refinancing, (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower or (4) such terms reflect market terms and conditions (taken as a whole) at the time of such refinancing (as determined by the Lead Borrower in good faith) and are also added for the benefit of the Lenders of the Initial Term Loans (to the extent remaining outstanding after the incurrence or issuance of such refinancing Indebtedness) (it being understood to the extent that any such terms are added for the benefit of the Lenders of the Initial Term Loans, no consent shall be required from the Administrative Agent or any such Lenders of the Initial Term Loans), and (i) if such Indebtedness is secured on a pari passu basis with the Liens securing the Secured Obligations, such Indebtedness may participate on a pro rata basis or a less than a pro rata basis (but not greater than a pro rata basis) in any mandatory repayments or prepayments in respect of the Term Loans; provided that a certificate of a Responsible Officer delivered to the Administrative Agent at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Administrative Agent notifies the Lead Borrower within such five (5) Business Day period that it disagrees with such determination (including a reasonably detailed description of the basis upon which it disagrees). For the avoidance of doubt, such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
“Cure Amount” has the meaning assigned to such term in Section 7.02(a).
“Cure Expiration Date” has the meaning assigned to such term in Section 7.02(a).
“Cure Right” has the meaning assigned to such term in Section 7.02(a)
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“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day, a “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Debtor Relief Laws” means the Bankruptcy Code, 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 upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Lead Borrower or the Administrative Agent, or any other Lender, as applicable, in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any other Lender, as applicable, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or any other Lender’s, as applicable, receipt of such certification in form and substance satisfactory to it and the Administrative Agent or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Lead Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition or, if converted to cash after 180 days, the lesser of (a) the consideration in cash or cash equivalents received from such conversion and (b) the fair market value of such non-cash consideration at the time of such conversion).
“Discount Prepayment Accepting Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“Discount Range” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
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“Discount Range Prepayment Notice” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C)(1) substantially in the form of Exhibit L.
“Discount Range Prepayment Offer” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit M, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“Discount Range Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Discounted Prepayment Determination Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Discounted Prepayment Effective Date” means in the case of a Borrower Offer of Specified Discount Prepayment or Borrower Solicitation of Discount Range Prepayment Offer, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable, unless a shorter period is agreed to between the Borrower and the Auction Agent.
“Discounted Term Loan Prepayment” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Dispose” and “Disposition” each has the meaning assigned to such term in Section 6.05.
“Disposed EBITDA” means, with respect to any Sold Entity or Business for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Borrower and its Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.
“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
(a) matures or is mandatorily redeemable or contains any mandatory put, redemption or repayment provision (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests);
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof; or
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(d) in the case of any preferred Equity Interest, provides for scheduled payments of dividends and/or distributions in cash;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided, however, that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after, or payment thereunder is subject to the prior, repayment in full of all the Loans and all other Loan Document Obligations that are accrued and payable and the termination of the Commitments, (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of the Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Borrower or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person and (iii) any Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for a requirement of payment of dividends or distributions in violation of clauses (a) or (b) above shall not constitute a Disqualified Equity Interest if the terms of such Equity Interest (x) give the applicable issuer the option to elect to pay such dividends or distributions on a non-cash basis and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under Section 6.07 of this Agreement or would result in an Event of Default hereunder.
“Disqualified Lenders” means (i) those Persons identified by the Lead Borrower to the Administrative Agent in writing prior to the Effective Date as being “Disqualified Lenders”, (ii) those Persons who are competitors of the Lead Borrower, Badcock and/or any of their Subsidiaries or Persons Controlling or Controlled by any of the foregoing, in each case, identified by the Lead Borrower to the Administrative Agent from time to time in writing (including by email) which designation shall become effective three (3) Business Days after the delivery of each such written designation to the Administrative Agent, but which shall not apply retroactively to disqualify any persons that have previously acquired, or entered into a trade to acquire, an assignment or participation interest in the Loan and (iii) in the case of each Person identified pursuant to clauses (i) and (ii) above, any of their Affiliates (other than any such Affiliate that is primarily engaged in, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the primary Disqualified Lender does not possess the power to direct or cause the direction of the investment policies of such entity referenced in clause (ii) above, unless separately identified by the Lead Borrower pursuant to clause (i) above) that are either (x) identified in writing by the Lead Borrower to the Administrative Agent from time to time or (y) clearly identifiable as Affiliates on the basis of such Affiliate’s name. Such list of Disqualified Lenders shall be available for inspection upon request by any Lender.
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.
“Earn-Outs” means, with respect to any Person, obligations of such Person arising from Permitted Acquisitions or other Investments permitted hereunder which are payable to the sellers thereunder in their capacity as such based on the achievement of specified financial results or other criteria or milestones over time.
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“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means November 22, 2021.
“Effective Date Badcock Material Real Property” has the meaning assigned to such term in the definition of the term “Badcock Material Real Property.”
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Effective Yield” means, as of any date of determination, the sum of (i) the higher of (A) the Adjusted Term SOFR Rate on such date for a deposit in dollars with a maturity of one month and (B) the Adjusted Term SOFR Rate floor, if any, with respect thereto as of such date, (ii) the interest rate margins as of such date (with such interest rate margin and interest spreads to be determined by reference to the Adjusted Term SOFR Rate) and (iii) the amount of original issuance discount and/or upfront fees thereon (converted to yield assuming a four-year average life and without any present value discount) (it being understood that customary arrangement, underwriting, structuring or commitment fees payable to the Lead Arranger in connection with the Initial Term Loan Commitment shall be excluded).
“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than the Borrower or any of its Affiliates), other than, in each case, (i) a natural person (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person), (ii) a Defaulting Lender or (iii) a Disqualified Lender; provided that a Disqualified Lender will constitute an Eligible Assignee solely to the extent that such assignment is consented to in writing by the Lead Borrower. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that the Administrative Agent shall have no liability with respect to any assignment made to a Disqualified Lender unless (i) the Administrative Agent has acted with gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable judgment) and (ii) the Lead Borrower has not consented to such assignment or is not deemed to have consented to such assignment to the extent required by Section 9.04(b).
“Enterprise Transformative Event” means any merger, acquisition, Investment, dissolution, liquidation, consolidation or Disposition, in any such case by the Borrower or any Subsidiary, that is either (a) not permitted by the terms of any Loan Document immediately prior to the consummation of such transaction or (b) if permitted by the terms of the Loan Documents immediately prior to the consummation of such transaction, would not provide the Borrower and the Subsidiaries with adequate flexibility under the Loan Documents for the continuation or expansion of their combined operations following such consummation, as reasonably determined by the Lead Borrower acting in good faith.
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“Environmental Laws” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“Environmental Liability” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Title IV and Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 4001(b) of ERISA or Section 414 of the Code.
“ERISA Event” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability, or the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity 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.
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“Erroneous Payment” has the meaning assigned to such term in Section 8.13(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to such term in Section 8.13(d)(i).
“Erroneous Payment Impacted Class” has the meaning assigned to such term in Section 8.13(d)(i).
“Erroneous Payment Return Deficiency” has the meaning assigned to such term in Section 8.13(d)(i).
“Erroneous Payment Subrogation Rights” has the meaning assigned to such term in Section 8.13(e).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital and long-term account receivables for such period,
(iv) an amount equal to the aggregate net non-cash loss on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income, and
(v) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) gains, less:
(b) the sum, without duplication, of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income pursuant to the last sentence of the definition of “Consolidated Net Income” to the extent such amounts are due but not received during such period) and cash charges included in clauses (a) through (j) of the definition of “Consolidated Net Income” (other than cash charges to the extent financed with the proceeds of long-term Indebtedness (other than revolving Indebtedness)),
(ii) the amount of capital expenditures made in cash or accrued during such period, except to the extent that such capital expenditures were financed with the proceeds of (x) long term Indebtedness of the Borrower or its Subsidiaries (other than revolving Indebtedness) or (y) the issuance of Equity Interests,
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(iii) (x) the aggregate amount of all principal payments of Indebtedness (including the principal component of payments in respect of Capitalized Leases, but excluding (A) all principal payments of Indebtedness to the extent reducing the required prepayment of Term Loans (as defined in the FRG First Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG First Lien Credit Agreement as a result of the application of clauses (i) through (v) of the first proviso thereof, (B) all prepayments of revolving loans except to the extent there is an equivalent permanent reduction in commitments thereunder and (C) all principal payments of Indebtedness to the extent financed with long-term Indebtedness (other than revolving Indebtedness)) and (y) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, to the extent not financed with long-term Indebtedness (other than revolving Indebtedness),
(iv) an amount equal to the aggregate net non-cash gain on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
(v) increases in Consolidated Working Capital and long-term account receivables for such period,
(vi) cash payments by the Borrower and its Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness,
(vii) the aggregate amount of payments and expenditures actually made by the Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such payments and expenditures are not expensed during such period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries other than revolving Indebtedness or (y) the issuance of Equity Interests,
(viii) cash payments by the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries or (y) the issuance of Equity Interests,
(ix) without duplication of amounts deducted from Excess Cash Flow in respect of a prior period, at the option of the Lead Borrower, the aggregate consideration (including Earn-Outs) required to be paid in cash by the Borrower and its Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “Contract Consideration”) entered into prior to or during such period relating to capital expenditures, Permitted Acquisitions or other Investments permitted hereunder (other than intercompany Investments or Investments in cash equivalents) to be consummated or made during the period of four consecutive fiscal quarters of Lead Borrower following the end of such period (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)); provided that to the extent the aggregate amount actually utilized to finance such capital expenditures, Permitted Acquisitions or other applicable Investments during such subsequent period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such subsequent period of four consecutive fiscal quarters,
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(x) the amount of cash rent payments made in such period to the extent they exceed the amount of rent payments deducted in determining Consolidated Net Income for such period,
(xi) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, and
(xii) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) losses or charges.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.
“Excluded Accounts” means (a) Zero Balance Accounts (provided that, upon any such account ceasing to be a Zero Balance Account, such account shall cease to be an Excluded Account), (b) Store Accounts, (c) accounts into which government receivables and government reimbursement payments are deposited, (d) payroll accounts (including accounts used for the disbursement of payroll, payroll taxes and other employee wage and benefit payments, including 401(k) and other retirement plans, rabbi trusts for deferred compensation and health care benefits), (e) withholding and trust accounts, escrow and other fiduciary accounts, (f) Manual Sweeping Accounts, (g) Deposit Accounts, Securities Accounts and commodity accounts that (x) individually have a daily balance of not more than $100,000 and (y) together with all other Deposit Accounts, Securities Accounts and commodity accounts constituting Excluded Accounts under this clause (g), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or commodity accounts and (h) consisting solely of cash or Cash Equivalents securing Indebtedness permitted by Section 6.01(a)(xxvi) to the extent such security constitutes Liens permitted by Section 6.02(xxiii).
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“Excluded Assets” means, (a) any fee-owned real property that is not Material Real Property, all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters) and any real property that contains improvements and is located in an area determined (as of the Effective Date with respect to real property owned on the Effective Date and as of the date of acquisition of any real property acquired after the Effective Date) by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (b) motor vehicles, railcars, trailers, aircraft, aircraft engines, construction and earth moving equipment and other assets subject to certificates of title or ownership (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (d) commercial tort claims with an individual value, as determined by the Lead Borrower in good faith, of less than $5,000,000 and commercial tort claims for which no complaint or counterclaim has been filed in a court of competent jurisdiction, (e) Equity Interests in any Person (other than any Wholly Owned Subsidiaries) to the extent the pledge thereof to the Collateral Agent is not permitted by the terms of such Person’s organizational, incorporation or joint venture documents, (f) [Reserved], (g) Equity Interests of any Immaterial Subsidiary (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries (including real estate special purpose entities), (h) [reserved], (i) any lease, license or other agreement, government approval or franchise with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, such lease, license or other agreement, government approval or franchise (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code, (j) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in each case if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), (k) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act, (l) any asset if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any applicable Requirements of Law, rule or regulation, or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the Uniform Commercial Code or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority, unless such consent, approval, license or authorization has been received in consultation with the Administrative Agent, (m) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Borrower or any Material Subsidiary of the Borrower), under the terms of any applicable organizational or incorporation documents, joint venture agreement or shareholders’ agreement, equity interests in any person other than Material Subsidiaries that are Wholly Owned Subsidiaries after giving effect to the anti-assignment provisions of the UCC or any other applicable Requirements of Law, (n) Excluded Accounts, (o) assets to the extent a security interest in such assets would result in material adverse tax consequences to the Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (p) assets sold to any Person who is not a Loan Party in compliance with the Loan Documents, (q) assets owned by a Subsidiary Loan Party after the release of the Guarantee of such Subsidiary Loan Party pursuant to the Loan Documents, and (r) any assets with respect to which, in the reasonable judgment of the Administrative Agent and the Lead Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences as determined by the Lead Borrower and the Administrative Agent in good faith) of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.
“Excluded Information” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Excluded Party” has the meaning assigned to such term in Section 9.03(b).
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“Excluded Subsidiary” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of the Lead Borrower, (b) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation (so long as any such contractual prohibition is not incurred in contemplation of the acquisition of such Subsidiary, and only for so long as such contractual prohibition shall be continuing) existing on the Effective Date or, if later, the date such Subsidiary first becomes a Subsidiary, from guaranteeing the Secured Obligations or which would require any governmental or regulatory consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained (c) any Subsidiary acquired pursuant to a Permitted Acquisition or similar Investment financed with secured Indebtedness permitted to be incurred pursuant to Section 6.01(xx) (and not incurred in contemplation of such Permitted Acquisition or similar Investment) and any subsidiary thereof that guarantees such Indebtedness, in each case to the extent, and so long as, such secured Indebtedness prohibits such Subsidiary from becoming a Loan Party, providing a Guarantee of the Secured Obligations or granting Liens on its assets as security for the Secured Obligations, (d) any direct or indirect U.S. subsidiary of a Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code, and any direct or indirect U.S. Subsidiary that has no material assets other than the equity of (or equity of and obligations owed to or treated as owed by) one or more direct or indirect non-U.S. subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of the Code, (e) any Immaterial Subsidiary, (f) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent and the Lead Borrower (as agreed in writing), the cost or other consequences (including any adverse tax consequences as determined in good faith by the Borrower and the Administrative Agent) of providing the guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary if the provision of a guaranty by such Subsidiary would result in material adverse tax consequences to the Lead Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (h) any other Subsidiary excused from becoming a Loan Party pursuant to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”, (i) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (j) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries and (k) any Foreign Subsidiary; provided that any Immaterial Subsidiary that is a signatory to the Collateral Agreement and the Guarantee Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Lead Borrower has otherwise notified the Administrative Agent; provided further that the Lead Borrower may at any time and in its sole discretion, with the consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), cause any Subsidiary to not be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents; provided, further, that notwithstanding the foregoing, no Subsidiary that Guarantees the obligations under the ABL Credit Agreement, the Second Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement shall be an Excluded Subsidiary hereunder.
“Excluded Swap Obligation” means, with respect to any Loan Party at any time, any Secured Swap Obligation under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, 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 Secured 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 Exchange Act (determined after giving effect to any “Keepwell”, support or other agreement for the benefit of such Loan Party), at the time such guarantee or grant of a security interest becomes effective with respect to such related Secured Swap Obligation. If a Secured Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Secured Swap Obligation that is attributable to swaps that are or would be rendered illegal due to such guarantee or security interest.
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“Excluded Taxes” means, with respect to any Recipient, (a) Taxes imposed on (or measured by) net income (however denominated) and franchise Taxes by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office located in such jurisdiction (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Lead Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office.
“Existing Badcock Loan Agreements” means (a) that certain Loan Agreement, dated as of March 6, 2013, by and among Badcock, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof and (b) that certain Credit Agreement, dated as of June 26, 2018, by and among Badcock, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing Badcock Construction Loan Agreement” means that certain Construction Loan Agreement, dated as of March 27, 2015, by and among Badcock, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Fee Letter” means that certain Arranger Fee Letter, dated as of November [ ˜ ], 2021, by and among the Lead Borrower and JPM.
“FG Newco Intermediate AF” has the meaning assigned to such term in the preliminary statements hereto.
“FG Newco PSP” has the meaning assigned to such term in the preliminary statements hereto.
“Financial Maintenance Covenants” means the covenants set forth in Section 6.10.
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“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or corporate controller of the Lead Borrower, another officer of the Lead Borrower with similar responsibilities, or the chief executive officer or chief operating officer of the Lead Borrower.
“Financing Transactions” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party and (b) the borrowing of Loans hereunder and the use of the proceeds thereof.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Lien Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated First Lien Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“First Lien Pari Passu Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a pari passu basis (but without regard to the control of remedies) (and any other Persons party thereto) with the Loan Document Obligations in customary form reasonably acceptable to the Administrative Agent and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“First Lien/Second Lien Intercreditor Agreement” means (a) that certain Amended and Restated First Lien/Second Lien Intercreditor Agreement, dated as of the Effective Date, by and among the Agents, the Second Lien Agent, the FRG First Lien Agent and the FRG Second Lien Agent, and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement between the Second Lien Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the Second Lien Credit Agreement and the other Second Lien Loan Documents) and the Agents (or any of them) (and any other Persons party thereto), that is reasonably acceptable to the Administrative Agent and the Lead Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
“Fixed Amounts” has the meaning assigned to such term in Section 1.07(b).
“Fixed Charge Coverage Ratio” means, for any period of four fiscal quarters of the Lead Borrower, the ratio of (a) Consolidated EBITDA for such period minus (i) all Unfinanced Capital Expenditures for such period and (ii) cash taxes paid (including in the form of tax distributions) for such period (net of cash refunds received during such period) to (b) the sum of (i) Consolidated Cash Interest Charges paid or payable currently for such period plus (ii) scheduled amortization of Funded Debt (including Capitalized Leases) paid or payable currently in cash for such period.
“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate, as applicable.
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“Foreign Lender” has the meaning assigned to such term in Section 2.17(e)(ii).
“Foreign Prepayment Event” has the meaning assigned to such term in Section 2.11(g).
“Foreign Subsidiary” means each Subsidiary that is organized under or incorporated in the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.
“Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Lead Borrower and its Subsidiaries.
“Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any Loan Party or Subsidiary of a Loan Party to comply with any applicable law, rule, regulation or order of any Governmental Authority.
“Franchise Laws” means all applicable laws, rules, regulations, orders, binding guidance or other requirements of the United States Federal Trade Commission or any other Governmental Authority relating to the relationship between franchisor and franchisees or to the offer, sale, termination, non-renewal or transfer of a franchise.
“Franchise Rights” mean the rights of a franchisee of any Loan Party or Subsidiary within any specified geographic area.
“FRG First Lien Agent” means JPM, as administrative agent and collateral agent under the FRG First Lien Credit Agreement, or any successor thereto acting in such capacities.
“FRG First Lien Credit Agreement” means that certain First Lien Credit Agreement, dated as of March 10, 2021, among the Borrower, the FRG First Lien Agent and the lenders from time to time party thereto, as in effect on the Effective Date (after giving effect to the FRG First Lien Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the Badcock Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).
“FRG First Lien Credit Agreement First Amendment” means that certain First Amendment to First Lien Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto, the lenders party thereto and the FRG First Lien Agent.
“FRG First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the FRG First Lien Credit Agreement.
“FRG Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the FRG Second Lien Credit Agreement, or any successor thereto acting in such capacities.
“FRG Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of March 10, 2021, among the Borrower, the FRG Second Lien Agent and the lenders from time to time party thereto, as in effect on the Effective Date (after giving effect to the FRG Second Lien Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the Badcock Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).
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“FRG Second Lien Credit Agreement First Amendment” means that certain First Amendment to Second Lien Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto, the lenders party thereto and the FRG Second Lien Agent.
“FRG Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the FRG Second Lien Credit Agreement.
“Funded Debt” means all Indebtedness of the Borrower and its Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans and in respect of the Loans under and as defined in each of the ABL Credit Agreement, the Second Lien Credit Agreement, the FRG First Lien Credit Agreement and the FRG Second Lien Credit Agreement.
“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations or Capitalized Leases shall be determined in accordance with the definitions of such terms.
“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“Governmental Authority” means any (i) federal, state, local, municipal, or other government, (ii) governmental or quasi-Governmental Authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (iii) body exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). 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 in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
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“Guarantee Agreement” means the First Lien Guarantee Agreement, dated as of the Effective Date, among the Loan Parties (other than Badcock) and the Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Hazardous Materials” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
“IBA” has the meaning specified in Section 1.09.
“Identified Participating Lenders” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Identified Qualifying Lenders” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“Immaterial Subsidiary” means any Subsidiary other than a Material Subsidiary.
“Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness or in the form of Qualified Equity Interests of the Borrower or any of its direct or indirect parent entities, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.
“Incurrence Based Amounts” has the meaning assigned to such term in Section 1.07(b).
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“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (w) trade accounts payable in the ordinary course of business, (x) any Earn-Out obligation, purchase price adjustment or similar obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid within thirty (30) days after being due and payable, (y) liabilities associated with customer prepayments and deposits and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business (iv) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (v) Indebtedness of any Person that is a direct or indirect parent of the Borrower appearing on the balance sheet of the Borrower, or solely by reason of push down accounting under GAAP, (vi) any non-compete or consulting obligations incurred in connection with a Permitted Acquisition, (vii) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (viii) for the avoidance of doubt, any Qualified Equity Interests issued by the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and its Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).
“Indemnified Taxes” means Taxes imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document, other than Excluded Taxes and Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Information” has the meaning assigned to such term in Section 9.12(a).
“Initial Term Loan Commitment” means the commitment of a Lender to make Initial Term Loans, and “Initial Term Loan Commitments” means such commitments of all Lenders. The aggregate amount of the Initial Term Loan Commitments as of the Effective Date is $425,000,000.
“Initial Term Loan Lender” means a Lender with an Initial Term Loan Commitment or an outstanding Initial Term Loan.
“Initial Term Loans” means the Term Loans made on the Effective Date pursuant to Section 2.01.
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“Intellectual Property” has the meaning assigned to such term in the Collateral Agreement.
“Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Collateral that can be perfected by the filing of such security agreements.
“Intercreditor Agreement” means the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement, the Badcock Intercreditor Agreement, the First Lien Pari Passu Intercreditor Agreement and/or the Junior Lien Intercreditor Agreement, as the context may require.
“Interest Election Request” means a request by the Borrower to convert or continue a Term Loan Borrowing in accordance with Section 2.07.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and on the Term Maturity Date and (b) with respect to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the Term Maturity Date.
“Interest Period” means, with respect to any Term Benchmark Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Term Benchmark Borrowing and ending on the date that is one, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if agreed to by each Lender participating therein, twelve months or such other period less than one month thereafter as the Borrower may elect; in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Commitment); provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period, (c) no Interest Period shall extend beyond the Term Maturity Date and (d) no tenor that has been removed from this definition pursuant to Section 2.14(e) shall be available for specification in such Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
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“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 or Indebtedness or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of the Borrower and the Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms)) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be 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 in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
“Investors” means the one or more co-investors and other investors (which may include existing shareholders, board members, management or other rollover investors of PSP Midco, LLC) who were holders of Equity Interests in the Borrower (or any direct or indirect parent thereof) on March 10, 2021 after giving effect to the Transactions (as defined in the FRG First Lien Credit Agreement), together with their Affiliates.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
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“JPM” means JPMorgan Chase Bank, N.A.
“Judgment Currency” has the meaning assigned to such term in Section 9.18.
“Junior Financing” means (a) any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any Subsidiary) for borrowed money in a principal amount in excess of $10,000,000 that is secured on a junior basis to the Secured Obligations, unsecured or contractually subordinated in right of payment or right of lien to the Loan Document Obligations and (b) any Permitted Refinancing in respect of the foregoing. For avoidance of doubt, Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents and Indebtedness under the FRG First Lien Credit Agreement and the other FRG First Lien Loan Documents shall not constitute Junior Financing but Indebtedness under the Second Lien Credit Agreement and the other Second Lien Loan Documents and Indebtedness under the FRG Second Lien Credit Agreement and the other FRG Second Lien Loan Documents shall constitute Junior Financing.
“Junior Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral and the Badcock Collateral on a junior basis (but without regard to the control of remedies) to the Loan Document Obligations and the Indebtedness incurred under the Second Lien Credit Agreement and the other Second Lien Loan Documents (and any other Persons party thereto), in customary form reasonably acceptable to the Administrative Agent and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Latest Maturity Date” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan or any Other Term Commitment, in each case as extended in accordance with this Agreement from time to time.
“LCA Election” has the meaning assigned to such term in Section 1.06.
“LCA Test Date” has the meaning assigned to such term in Section 1.06.
“Lead Arranger” means JPM, in its capacity as sole lead arranger.
“Lead Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Legal Reservations” has the meaning assigned to such term in Section 3.02.
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, ground lease, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Limited Condition Transaction” means any Permitted Acquisition or other investment, incurrence of Indebtedness, Restricted Payment or repayment, repurchase or redemption of Indebtedness permitted hereunder by the Borrower or one or more of its Subsidiaries.
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“Loan Document Obligations” means (a) the due and punctual payment in cash by the Borrower of (i) the principal of the Loans and all accrued and unpaid interest thereon at the Applicable Rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents to which it is a party, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment in cash and performance of all other monetary obligations of the Borrower under or pursuant to each of the Loan Documents to which it is a party and (c) the due and punctual payment and performance of all the monetary obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents to which it is a party (including interest and monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Loan Documents” means this Agreement, any Refinancing Amendment, any Loan Modification Agreement, the Guarantee Agreement, the Badcock Guarantee Agreement, the Collateral Agreement, the Badcock Collateral Agreement, the other Security Documents, the other Badcock Security Documents, each Intercreditor Agreement then in effect, the Fee Letter and, except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e).
“Loan Modification Agreement” means a Loan Modification Agreement, in form reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Accepting Lenders, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
“Loan Modification Offer” has the meaning specified in Section 2.24(a).
“Loan Parties” means the Borrower and any Subsidiary Loan Parties.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Majority in Interest”, when used in reference to Lenders of any Class, means, at any time, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
“Manual Sweeping Accounts” shall have the meaning ascribed to the term “Manual Sweeping Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Master Agreement” has the meaning assigned to such term in the definition of “Swap Agreement”.
“Master Intercompany Note” means the Amended and Restated Master Intercompany Note, dated the Effective Date, pursuant to which the Lead Borrower and its Subsidiaries (other than Badcock) are the “payees” and the Lead Borrower and its Subsidiaries are the “payors”.
“Material Adverse Effect” means a circumstance or condition that would materially and adversely affect (a) the business, results of operations or financial condition of the Lead Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Loan Parties, taken as a whole, to perform their payment obligations under the applicable Loan Documents or (c) the rights and remedies, taken as a whole, of the Agents and the Lenders under the Loan Documents.
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“Material Indebtedness” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $50,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Material Intellectual Property” means any intellectual property owned by the Borrower or any of its Subsidiaries, the loss of which would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
“Material Non-Public Information” means material non-public information with respect to the Lead Borrower or its Affiliates, or the respective securities of any of the foregoing for purposes of United States Federal and state securities laws.
“Material Real Property” means real property (including fixtures) (i) located in the United States, (ii) first acquired by any Loan Party (other than Badcock) after the Effective Date and (iii) owned (but not leased or ground-leased) by any Loan Party (other than Badcock) with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Badcock Material Real Property does not constitute “Material Real Property”.
“Material Subsidiary” means each Wholly Owned Subsidiary that, as of the last day of the fiscal quarter of the Lead Borrower most recently ended, had net revenues or total assets for such quarter in excess of 2.5% of the consolidated net revenues or total assets, as applicable, of the Lead Borrower and its Subsidiaries for such fiscal quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Lead Borrower most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or total assets, as applicable, of the Borrower and its Subsidiaries for such fiscal quarter, the Lead Borrower shall designate at its sole discretion one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as Borrower is in compliance with the foregoing.
“Maximum Rate” has the meaning assigned to such term in Section 9.16.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent and the Borrower.
“Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted pursuant to the “Collateral and Guarantee Requirement”, Section 5.11, Section 5.12 or Section 5.14 (if any).
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
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“Net Proceeds” means, with respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any cash or Permitted Investments received in respect of any Designated Non-Cash Consideration or other non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or Earn-Out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by the Borrower and its Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount of all payments that are permitted hereunder and are made by the Borrower and its Subsidiaries as a result of such event to repay Indebtedness (other than (A) the Loans, (B) in respect of the Collateral, Indebtedness secured by a lien on such Collateral that is pari passu or junior to the lien on such Collateral securing the Secured Obligations and (C) in respect of the Badcock Collateral, Indebtedness secured by a lien on such Badcock Collateral that is pari passu or junior to the lien on such Badcock Collateral securing the Secured Obligations) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to or for the account of the Borrower or its Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated with such asset and retained by the Borrower or any Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established by the Borrower and its Subsidiaries to fund contingent liabilities reasonably estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.
“Non-Accepting Lender” has the meaning assigned to such term in Section 2.24(c).
“Non-Cash Charges” means (a) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization of intangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from the application of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisition method accounting, (e) depreciation and amortization (including amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (including non-cash charges related to deferred rent) (provided, in each case, that if any non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).
“Non-Cash Compensation Expense” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(c).
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“Non-Wholly Owned Subsidiary” means any Subsidiary other than a Wholly Owned Subsidiary.
“Not Otherwise Applied” means, with reference to the Available Amount or the Available Equity Amount, that such amount was not previously applied pursuant to 6.04(m), 6.07(a)(vii) and 6.07(b)(vii).
“Note” means a promissory note of the Borrower, in substantially the form of Exhibit R, payable to a Lender in a principal amount equal to the principal amount of the Term Loans of such Lender.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Offered Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Offered Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Organizational Documents” means, with respect to any Person, the charter, articles of association or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of any present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient (x) having executed, delivered, become a party to, performed its obligations or received payments under, received or perfected a security interest under or enforced any Loan Documents or engaged in any other transaction pursuant to this Agreement or (y) having sold or assigned an interest in any Loan Documents).
“Other Taxes” means any and all present or future recording, stamp, documentary or similar Taxes arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“Other Term Commitments” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
“Other Term Loans” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar borrowings denominated in dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
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“Participant” has the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” has the meaning assigned to such term in Section 9.04(c)(ii).
“Participating Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Payment Recipient” has the meaning assigned to such term in Section 8.13(a).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Perfection Certificate” means a certificate substantially in the form of Exhibit C.
“Perfection Requirements” means the need for appropriate filings, registrations, endorsements, notarizations, stampings and/or notifications of the Security Documents, the Badcock Security Documents, the Collateral or the Badcock Collateral and any other steps or actions necessary in any jurisdiction or under any laws or regulations in order to (i) create or perfect the Liens on the Collateral granted by the Loan Parties (other than Badcock) in favor of the Secured Parties, (ii) create or perfect the Liens on the Badcock Collateral granted by Badcock in favor of the Secured Parties and/or (iii) achieve the relevant priority expressed therein or in the Intercreditor Agreements (including the delivery of any stock certificate or promissory note required to be delivered pursuant to the applicable Loan Documents).
“Permitted Acquisition” means the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger or consolidation between any Subsidiary and such Person), or (ii) such Person is merged into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a Similar Business (or assets with respect thereto), (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement” to the extent applicable shall have been taken to the extent required by Sections 5.11 or 5.12 (or shall be taken within the time periods set forth in this Agreement or such later date as agreed to by the Administrative Agent in its sole discretion) (other than with respect to any Subsidiary of such newly created or acquired Subsidiary that is an Excluded Subsidiary), (d) subject to Section 1.06, after giving effect to any such purchase or other acquisition no Event of Default shall have occurred and be continuing, (e) the total consideration paid in connection with all such purchases and acquisitions of the Equity Interests in any Person which will not become a Loan Party (within the time periods set forth in this Agreement), or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person if substantially all of such assets will not become owned by a Loan Party (or a Person that will become a Loan Party within the time periods set forth in this Agreement), shall not exceed $20,000,000 in the aggregate, unless financed with the proceeds of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) and (f) after giving effect to such purchase or acquisition, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.31 to 1.00.
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“Permitted Amendment” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders and/or (c) additional covenants or other provisions (i) with respect to which the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (ii) to the extent any such provisions apply after the Latest Maturity Date at the time of such Loan Modification Offer, or (iii) to the extent such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower.
“Permitted Encumbrances” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(b) Liens with respect to outstanding motor vehicle fines and Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ Liens and other similar Liens arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, in each case so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
(c) Liens incurred, pledges or deposits made in the ordinary course of business (i) in connection with payroll taxes, workers’ compensation, unemployment insurance and other social security legislation, public liability laws or similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary or otherwise supporting the payment of items of the type set forth in the foregoing clause (i);
(d) Liens incurred or deposits made to secure the performance of tenders, bids, trade contracts, customer claims, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) easements, licenses, servitudes, restrictive covenants, rights-of-way, restrictions, encroachments, protrusions, zoning restrictions and other similar encumbrances and title defects affecting real property that, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
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(f) leases or subleases of real or personal property granted to other Persons (as lessee thereof) that do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(g) rights of future tenants pursuant to written leases entered into in accordance with the terms hereof;
(h) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j) and any pledge and/or deposit securing any settlement of threatened litigation;
(i) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for the account of the Borrower or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01 and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(j) Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made in respect of operating leases entered into by the Borrower or any of its Subsidiaries;
(k) rights of recapture of unused real property (other than any Mortgaged Property or any Badcock Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(l) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(m) liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any of the Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(n) Liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property or Badcock Intellectual Property, or covenants not to sue with respect to Intellectual Property or Badcock Intellectual Property, made in the ordinary course of business;
(o) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(p) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long as such Liens are not exercised or except where the exercise of such Liens would not reasonably be expected to have a Material Adverse Effect;
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(q) Liens or security given to public utilities or to any municipality or Governmental Authority when required by the utility, municipality or Governmental Authority in connection with the supply of services or utilities to the Borrower or any of its Subsidiaries;
(r) servicing agreements, development agreements, site plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of the assets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of the business activities of the Borrower and its Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect; and
(s) Liens securing Priority Obligations;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money other than Liens referred to in clauses (d) and (k) above securing obligations under letters of credit or bank guarantees or similar instruments related thereto and in clause (g) above, in each case to the extent any such Lien would constitute a Lien securing Indebtedness for borrowed money.
“Permitted First Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Holders” means (a) Vintage Capital Management, LLC, (b) Brian Kahn, (c) Lauren Kahn, (d) Tributum, L.P., (e) Stefac LP, (f) Vintage Tributum, L.P., (g) Kahn Capital Management, LLC, (h) Vintage Vista GP, LLC, (i) Andrew Laurence, (j) B. Riley FBR, Inc., (k) Bryant R. Riley, (l) any direct or indirect current or former equity holders of Buddy’s Newco, LLC or Franchise Group New Holdco, LLC, (m) Samjor Family LP, (n) Vintage RTO, L.P. and (o) any Affiliates, general partners, limited partners, investment managers, investment advisors, investment funds or direct or indirect equity holders, successors or assigns of any of the foregoing.
“Permitted Investments” means any of the following, to the extent owned by the Borrower or any Subsidiary:
(a) dollars, euros, Swiss francs, Sterling, Canadian dollars, or such other currencies held by it from time to time in the ordinary course of business;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) any member nation of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged in support thereof;
(c) time deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S. banks and $100,000,000 (or the dollar equivalent as of the date of determination) in the case of foreign banks (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
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(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above;
(f) marketable short-term money market and similar highly liquid funds substantially all of the assets of which are comprised of securities of the types described in clauses (b) through (e) above;
(g) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, the United Kingdom, Canada, Switzerland, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s;
(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) demand deposit accounts holding cash;
(l) interest bearing instruments with a maximum maturity of 180 days in respect of which the obligor is a G7 government or other G7 governmental agency or a G7 financial institution with credit ratings from S&P of at least “A-2” or the equivalent thereof or from Moody’s of at least “P-2” or the equivalent thereof;
(m) other short-term investments of a type analogous to the foregoing utilized by Foreign Subsidiaries;
(n) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (m) above; and
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(o) any guarantee or indemnity for the obligations of a Subsidiary in connection with a Subsidiary claiming exemption from audit, the preparation and filing of its accounts or other similar exemptions (including under section 394C, 448C or 479C of the Companies Act 2006 or other similar or equivalent provisions).
“Permitted Junior Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a junior basis to the Secured Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted Junior Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, exchanged or extended except (i) by an amount equal to unpaid accrued interest and premium thereon plus underwriting discounts, other amounts paid, and fees and expenses (including upfront fees, original issue discount or initial yield payments) incurred, in connection with such modification, refinancing, refunding, renewal or extension, (ii) by an amount equal to any existing revolving commitments unutilized thereunder to the extent that the portion of any existing and unutilized revolving commitment being refinanced was permitted to be drawn under Section 6.01 immediately prior to such refinancing (other than by reference to a Permitted Refinancing) and such drawing shall be deemed to have been made and (iii) to the extent such excess amounts is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(xii) and (a)(xxvi), Indebtedness resulting from such modification, refinancing, refunding, renewal, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended; provided that the foregoing requirements of this clause (b) shall not apply to the extent such Indebtedness constitutes a customary bridge facility, so long as the long-term Indebtedness into which any such bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to conditions customary for similar conversions or exchanges (c) if the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms not materially less favorable, taken as a whole, to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended, (d) such Permitted Refinancing is not secured by a Lien on any assets other than the collateral securing, and, to the extent secured by the Collateral and the Badcock Collateral, with no higher priority than the Liens securing, the Indebtedness being refinanced, except for accessions and additions to such property and replacements and proceeds thereof (unless permitted to be secured by another provision of Section 6.02), (e) if unsecured, such Indebtedness shall remain unsecured (unless permitted to be secured by another provision of Section 6.02) and (f) no Loan Party that was not an obligor with respect to the Indebtedness being refinanced shall be an obligor under the Permitted Refinancing and if the Indebtedness being refinanced was (or was required to be) subject to an Intercreditor Agreement, the holders of such Permitted Refinancing (if such Indebtedness is secured) or their authorized representative on their behalf, shall become party to such Intercreditor Agreement, in each case providing for the same (or lesser) lien priority renewed, exchanged or extended. For the avoidance of doubt, it is understood that a Permitted Refinancing may constitute a portion of an issuance of Indebtedness in excess of the amount of such Permitted Refinancing; provided that such excess amount is otherwise permitted to be incurred under Section 6.01. For the avoidance of doubt, it is understood and agreed that a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness to the extent such successive Permitted Refinancings satisfy the foregoing requirements.
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“Permitted Unsecured Refinancing Debt” means any unsecured Indebtedness incurred by the Loan Parties in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that such Indebtedness constitutes Credit Agreement Refinancing Indebtedness. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity, whether existing as of the Effective Date or subsequently created or coming to exist.
“Plan” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to such term in Section 5.01.
“Pledged Equity Interests” has the meaning set forth in the Collateral Agreement.
“Post-Transaction Period” means, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter of the Lead Borrower immediately following the date on which such Specified Transaction is consummated.
“Pre-Effective Date Investments” means, collectively, (i) the Transactions (as defined in the FRG First Lien Credit Agreement) and (ii) any Permitted Acquisitions or any other Investment, in the case of this clause (ii), that was consummated after March 10, 2021 and prior to the Effective Date and that, if such Permitted Acquisition or other Investment were to have been consummated on or after the Effective Date, would be permitted by Section 6.04.
“Pre-Effective Date Transactions” means, collectively, (i) the Transactions (as defined in the FRG First Lien Credit Agreement) and (ii) any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event, in the case of this clause (ii), that was consummated after March 10, 2021 and prior to the Effective Date and that, if such event were to have been consummated on or after the Effective Date, would be permitted to be included in the determination of “Pro Forma Basis” hereunder.
“Prepayment Event” means:
(a) (I) the Disposition described on Schedule 6.05(k), (II) Dispositions by Badcock pursuant to Section 6.05(f) and Section 6.05(u) and/or (III) any other non-ordinary course sale, transfer or other disposition of any property or asset of the Borrower or any of its Subsidiaries pursuant to Section 6.05(k) or the occurrence of any other Casualty Event, in each case of this clause (III) resulting in aggregate Net Proceeds exceeding (A) with respect to any single transaction or series of related transactions, the greater of $8,000,000 and 2.5% of Consolidated EBITDA individually or (B) with respect to all dispositions pursuant to Section 6.05(k) or Casualty Events in each case not excluded pursuant to previous clause (A), the greater of $16,000,000 and 5.0% of Consolidated EBITDA in the aggregate in any fiscal year of the Lead Borrower, other than dispositions constituting a sale and leaseback transaction to the extent consummated substantially contemporaneously with the acquisition by the Borrower or such Subsidiary of the property subject to such sale and leaseback transaction; provided that, for the avoidance of doubt, in each case of this clause (III), (x) only Net Proceeds in excess of such amount shall be subject to the mandatory prepayment provisions set forth in Section 2.11(c) and (y) no Prepayment Event shall occur in any fiscal year of the Lead Borrower until the Net Proceeds received during such fiscal year that are subject to clause (B) above exceed the amount set forth in clause (B) above; or
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(b) the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 (other than Credit Agreement Refinancing Indebtedness) or permitted by the Required Lenders pursuant to Section 9.02.
“Prime Rate” means the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases quoting a prime rate of the type described, either (a) the per annum rate quoted as the base rate on such corporate loans in a different national publication as reasonably selected by Administrative Agent or (b) the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent).
“Priority Obligation” means any obligation that is secured by a Lien on any Collateral and/or any Badcock Collateral in favor of a Governmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by the applicable Security Documents and/or Badcock Security Documents, as the case may be, including any such Lien securing amounts owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pension fund obligations.
“Pro Forma Basis,” “Pro Forma Compliance” and “Pro Forma Effect” mean, as to any Person, for any events as described below that occur subsequent to the commencement of a period for which the effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four (4) consecutive fiscal quarter of the Lead Borrower period ended on or before the occurrence of such event (the “Reference Period”):
(a) in making any determination of Consolidated EBITDA or any component thereof or the determination of financial ratios and tests hereunder, effect shall be given to the Pre-Effective Date Transactions, the Transactions, any Specified Transaction made during the applicable Test Period and any synergies, operating improvements, operating expense reductions or cost savings pertaining to the business of the Borrower or any of its Subsidiaries, in each case, that occurred during the Reference Period or with respect to any such event or transaction included in the definition of Pre-Effective Date Transactions or the definition of Specified Transactions and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Transaction (as defined in the FRG First Lien Credit Agreement) or such Specified Transaction, synergies, operating improvements, operating expense reductions or cost savings (or, with respect to the Transactions, within 18 months of the Effective Date) (including, in each case, actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower), net of the amount of actual benefits realized, and without duplication of any such amount included in Consolidated EBITDA pursuant to the definition thereof;
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(b) in making any determination on a Pro Forma Basis, of Pro Forma Compliance or of Pro Forma Effect, (i) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under the Loan Documents or otherwise) issued, incurred, assumed or repaid during the Reference Period (or with respect to Indebtedness repaid, during the Reference Period or subsequent to the end of the Reference Period and prior to, or simultaneously with, the event for which the calculation of any such ratio is made) shall be deemed to have been issued, incurred, assumed or repaid at the beginning of such period, (ii) such calculation shall be made without regard to the netting of any cash proceeds of Indebtedness incurred in connection with the relevant transactions, (iii) in the case of any Indebtedness in the nature of a revolving credit facility, the entire principal amount of such credit facility shall be deemed to have been fully drawn and (iv) interest expense of such Person attributable to interest on any Indebtedness for which pro forma effect is being given as provided in preceding clause (i) bearing floating interest rates shall be computed on a pro forma basis at the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination,
(c) [Reserved], and
(d) income statement items (whether positive or negative) attributable to all property acquired or disposed of in such relevant transaction shall be included as if such transaction had occurred as of the first day of the relevant Test Period. Whenever a financial ratio or test or covenant is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which financial statements of the Borrower were delivered pursuant to Section 5.01(a) or (b).
“Pro Forma Disposal Adjustment” means, for any Test Period that includes all or a portion of a fiscal quarter of the Lead Borrower included in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Lead Borrower in good faith as a result of contractual arrangements between the Borrower or any Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Period and which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal.
“Pro Forma Entity” means any Acquired Entity or Business.
“Pro Forma Financial Statements” has the meaning assigned to such term in Section 3.04(c).
“Proposed Change” has the meaning assigned to such term in Section 9.02(c).
“Public Company Costs” means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and charges relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursement, charges relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.
“Public Lender” has the meaning assigned to such term in Section 5.01.
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“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning specified in Section 9.20.
“Qualified ECP Guarantor” shall mean, in respect of any Secured Swap Obligation, each Borrower that has total assets exceeding $10,000,000 at the time the Guarantee by Badcock or grant of a security interest by Badcock becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act, as amended, 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, as amended. “Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
“Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
“Qualifying Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two Business Days prior to the date of such setting, (2) if such Benchmark is Daily Simple SOFR, four Business Days prior to such setting or (3) if such Benchmark is not the Term SOFR Rate or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.
“Refinanced Debt” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower executed by each of (a) the Lead Borrower, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“Register” has the meaning assigned to such term in Section 9.04(b)(iv).
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the partners, directors, officers, employees, trustees, agents, controlling persons, advisors and other representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
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“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, emptying, escaping, pumping, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
“Relevant Governmental Body” means the Board of Governors and/or the NYFRB, the CME Term SOFR Administrator, or a committee officially endorsed or convened by the Board of Governors and/or the NYFRB, or, in each case, any successor thereto.
“Relevant Rate” means with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate.
“Removal Effective Date” has the meaning assigned to such term in Section 8.06.
“Representative” means, with respect to any series of Indebtedness permitted by this Agreement to be secured by the Collateral and/or the Badcock Collateral on a pari passu or junior or “silent” subordinated basis, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Repricing Transaction” means (a) the incurrence by the Borrower of any syndicated dollar-denominated term loans that are secured on a pari passu basis with the Initial Term Loans (i) having an Effective Yield that is less than the Effective Yield for the Initial Term Loans (and not by virtue of any fluctuation in any “base” rate), but excluding Indebtedness incurred in connection any transaction that would, if consummated, constitute a Change of Control, Permitted Acquisition or similar Investment or Enterprise Transformative Event and (ii) the proceeds of which are used to prepay (or, in the case of a conversion, deemed to prepay) or replace, in whole or in part, outstanding principal of Initial Term Loans or (b) any effective reduction in the Effective Yield for the Initial Term Loans (e.g., by way of amendment, waiver or otherwise), except for a reduction in connection with any transaction that would, if consummated, constitute a Change of Control, Permitted Acquisition or similar Investment or Enterprise Transformative Event, and, in the case of any transaction under either clause (a) or clause (b) above, the primary purpose of which is to lower the Effective Yield on the Initial Term Loans. Any determination by the Administrative Agent with respect to whether a Repricing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Initial Term Loans.
“Required Lenders” means, at any time, Lenders having Term Loans and unused Commitments representing more than 50% of the aggregate Term Loans and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and the unused Commitments of each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Requirements of Law” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resignation Effective Date” has the meaning assigned to such term in Section 8.06.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
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“Responsible Officer” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies or partnerships that do not have officers, any manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary, assistant secretary, company secretary or director of a Loan Party, and as to the Lead Borrower, any Financial Officer. 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 Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.
“Retained Asset Sale Proceeds” means any proceeds of any Prepayment Event described in clause (a) of the definition of the term “Prepayment Event” that are not required to be used to prepay Term Loan Borrowings pursuant to Section 2.11(c) or Term Loan Borrowings (as defined in the Second Lien Credit Agreement) pursuant to Section 2.11(c) of the Second Lien Credit Agreement.
“Retained Declined Proceeds” has the meaning assigned to such term in Section 2.11(e).
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned 50% or more by any such Person in the foregoing clauses (a) and (b), or (d) any Person otherwise the subject of Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the Second Lien Credit Agreement, or any successor thereto acting in such capacities.
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“Second Lien Credit Agreement” means (i) that certain Second Lien Credit Agreement, dated as of the Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement), among each Loan Party party thereto, the lender(s) party thereto and the Second Lien Agent and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent second lien term loan facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not a Second Lien Credit Agreement hereunder. Any reference to the Second Lien Credit Agreement hereunder shall be deemed a reference to any Second Lien Credit Agreement then in existence. For the avoidance of doubt, the FRG Second Lien Credit Agreement shall not constitute a “Second Lien Credit Agreement” hereunder.
“Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the Second Lien Credit Agreement.
“Secured Cash Management Obligations” means the due and punctual payment and performance of all obligations of the Borrower and its Subsidiaries in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs or any automated clearing house transfers of funds (collectively, “Cash Management Services”) provided to the Borrower or any Subsidiary (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) that are (a) owed to the Administrative Agent or any of its Affiliates, (b) owed on the Effective Date to a Person that is a Lender or an Affiliate of a Lender as of the Effective Date and (c) owed to a Person that is an Agent, a Lender or an Affiliate of an Agent or Lender at the time such obligations are incurred, and that in each case has been designated as a “Secured Cash Management Obligation” in a writing executed by the Lead Borrower and such counterparty and delivered to the Administrative Agent. It is hereby understood that obligations in respect of any specific Cash Management Services may not be Secured Cash Management Obligations under this Agreement to the extent it is similarly treated as such under the ABL Credit Agreement.
“Secured Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Secured Obligations” means (a) the Loan Document Obligations, (b) the Secured Cash Management Obligations and (c) the Secured Swap Obligations (excluding with respect to any Loan Party, Excluded Swap Obligations of such Loan Party).
“Secured Parties” means (a) each Lender, (b) the Administrative Agent, (c) the Collateral Agent, (d) each Person to whom any Secured Cash Management Obligations or Secured Swap Obligations are owed, (e) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document, Secured Swap Obligation or Secured Cash Management Obligation and (f) the permitted successors and assigns of each of the foregoing.
“Secured Swap Obligations” means the due and punctual payment and performance of all obligations of the Borrower and its Subsidiaries under each Swap Agreement that (a) is with a counterparty that is the Administrative Agent or any of its Affiliates, (b) is in effect on the Effective Date with a counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent as of the Effective Date or (c) is entered into after the Effective Date with any counterparty that is a Lender, an Agent or an Affiliate of a Lender or an Agent at the time such Swap Agreement is entered into, and that in each case has been designated as a “Secured Swap Obligation” in a writing executed by the Lead Borrower and such counterparty and delivered to the Administrative Agent. It is hereby understood that obligations in respect of any Swap Agreement may not be Secured Swap Obligations under this Agreement to the extent it is similarly treated as such under the ABL Credit Agreement.
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“Security Documents” means the Collateral Agreement, the Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Collateral and Guarantee Requirement” and/or Section 5.11, Section 5.12(a) (other than as it may relate to Badcock), Section 5.12(b) or Section 5.14 to secure any of the Secured Obligations.
“Securities Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Similar Business” means (1) any business conducted by the Borrower or any Subsidiary on the Effective Date or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to (including non-core incidental businesses acquired in connection with any permitted Investment), or a reasonable extension, development or expansion of, the businesses that the Borrower and its Subsidiaries conduct or propose to conduct on the Effective Date.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the NYFRB on the NYFRB’s Website on the immediately succeeding Business Day. If SOFR as so determined is less than zero, it shall be deemed to be zero for purposes of calculating the rate.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the NYFRB, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”.
“Sold Entity or Business” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“Solicited Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Solicited Discounted Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solicited Discounted Prepayment Notice” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit N.
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“Solicited Discounted Prepayment Offer” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit O, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
“Solicited Discounted Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solvent” means, with respect to the Lead Borrower and its Subsidiaries, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Lead Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities, (ii) the Lead Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital and (iii) the Lead Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For the purposes of this definition, capitalized terms used and not defined in this Agreement shall have the meanings provided for in Exhibit G.
“Specified Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Notice” means an irrevocable written notice of the Borrower Offer of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit J.
“Specified Discount Prepayment Response” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit K, to a Specified Discount Prepayment Notice.
“Specified Discount Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“Specified Transaction” means, with respect to any period, any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
“Store Accounts” shall have the meaning ascribed to the term “Store Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Submitted Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Submitted Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held (unless parent does not Control such entity), or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent; in each case, whether existing as of the Effective Date or subsequently created or coming to exist.
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“Subsidiary” means any subsidiary of the Lead Borrower (unless otherwise specified or the context otherwise requires).
“Subsidiary Loan Party” means (i) each Subsidiary of the Lead Borrower (other than FG Newco PSP, Valor and FG Newco Intermediate AF) that is party to the Guarantee Agreement and (ii) Badcock.
“Successor Borrower” has the meaning assigned to such term in Section 6.03(a)(iv).
“Supported QFC” has the meaning assigned to such term in Section 9.20.
“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Tax Restructuring” means any reorganizations and other activities related to tax planning and tax reorganization (as determined by Lead Borrower in good faith) entered into after the Effective Date so long as such Tax Restructuring does not materially impair the Guarantee, the Badcock Guarantee, the security interests of the Agents and the Lenders under the Security Documents in the Collateral or the security interests of the Agents and the Lenders under the Badcock Security Documents in the Badcock Collateral, taken as a whole, and Borrower and its Subsidiaries otherwise comply with Sections 5.11 and 5.12.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.
“Term Commitment” means, with respect to each Lender, the Initial Term Loan Commitment, if any, of such Lender to make Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a Refinancing Amendment or (iii) a Loan Modification Agreement. The amount of each Lender’s Term Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Term Commitment, Loan Modification Agreement or Refinancing Amendment, as the case may be. As of the Effective Date, the total Term Commitment is $425,000,000.
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“Term Facility” means the Term Loans provided to or for the benefit of the Borrower pursuant to the terms of this Agreement.
“Term Lender” means a Lender with a Term Commitment or an outstanding Term Loan.
“Term Loans” means, individually or collectively as the context requires, Initial Term Loans and Other Term Loans.
“Term Maturity Date” means (a) in the case of the Initial Term Loans, November 22, 2023 and (b) in the case of any Other Term Loan, the date set forth in the applicable documentation in respect thereof, provided, however, if such day is not a Business Day, then the next succeeding Business Day.
“Term SOFR Determination Day” has the meaning assigned to such term in the definition of Term SOFR Reference Rate.
“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m. (Chicago time), two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.
“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 p.m. (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such Term SOFR Determination Day.
“Test Period” means, at any date of determination, the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time for which financial statements are delivered pursuant to Section 5.01(a) or (b); provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time.
“Total Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Transaction Costs” means all fees, premiums, costs and expenses incurred or payable by the Borrower or any other Subsidiary in connection with the Transactions.
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“Transactions” means (a) the Acquisition, (b) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents and the incurrence of the Term Facility and the funding of the Initial Term Loans on the Effective Date, (c) the consummation of the other transactions contemplated by this Agreement on the Effective Date, (d) the consummation of any other transactions in connection with the foregoing, (e) the repayment of the existing Indebtedness under the Existing Badcock Loan Agreements and the termination of such Existing Badcock Loan Agreements and the documents related thereto, (f) the repayment of the existing Indebtedness under the Existing Badcock Construction Loan Agreement and the termination of the Existing Badcock Construction Loan Agreement and the documents related thereto, (g) the execution and delivery of the ABL Credit Agreement First Amendment and related documents, (h) the execution and delivery of the FRG First Lien Credit Agreement First Amendment and related documents, (i) the execution and delivery of the FRG Second Lien Credit Agreement First Amendment and related documents, (j) the execution and delivery of the Second Lien Credit Agreement and the other Second Lien Loan Documents, the creation on or after the Effective Date of the Liens pursuant to the Security Documents (as defined in the Second Lien Credit Agreement) and the incurrence of any borrowings thereunder to be incurred on the Effective Date and (k) the payment of the Transaction Costs related thereto.
“Type,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate or the Alternate Base Rate.
“U.S. Special Resolution Regimes” has the meaning specified in Section 9.20.
“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, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral or the Badcock Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the terms “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unaudited Financial Statements” means (a) the unaudited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of the Lead Borrower ended on or about September 30, 2021 and (b) the unaudited consolidated balance sheet of Badcock, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of Badcock ended on or about September 30, 2021.
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“Unfinanced Capital Expenditures” means, for any period, capital expenditures paid in cash (other than cash constituting proceeds of long-term Indebtedness (other than revolving Indebtedness)) during such period, other than (a) the purchase price paid in connection with a Permitted Acquisition or other similar Investment not prohibited by this Agreement and expenditures made in connection with the Pre-Effective Date Investments or the Transactions, (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (c) expenditures made with the proceeds of Dispositions, Casualty Events or similar dispositions or events that are not required to be applied to repay Indebtedness pursuant to the terms of this Agreement, the ABL Credit Agreement, the Second Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement, (d) expenditures made in leasehold improvements, to the extent reimbursed by the landlord, (e) expenditures to the extent actually paid for by any Person other than any Borrower or Subsidiary and for which no Borrower or Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation in respect of the relevant expenditures to such Person, (f) property, plant and equipment taken in settlement of accounts and (g) that portion of interest on Indebtedness incurred for capital expenditures which is capitalized in accordance with GAAP.
“United States Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(e)(ii)(C).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“Valor” has the meaning assigned to such term in the preliminary statements hereto.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wholly Owned Subsidiary” means any Subsidiary that is a wholly owned subsidiary.
“wholly owned subsidiary” means, with respect to any Person at any date, a subsidiary of such Person of which securities or other ownership interests representing 100% of the Equity Interests (other than (a) directors’ qualifying shares and (b) nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law) are, as of such date, owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
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“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Zero Balance Accounts” means Deposit Accounts in which a balance of zero is maintained by the depository institution at all times by automatically transferring funds from a master Deposit Account to such Zero Balance Account in an amount only large enough to cover checks presented and other debits to such account, such that any such Zero Balance Account maintains an overnight balance of zero dollars at all times.
SECTION 1.02 Classification of Loans and Borrowings.
For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Class (e.g., an “Initial Term Loan”) or by Type (e.g., a “Term Benchmark Loan” or “ABR Loan”) or by Class and Type (e.g., a “Term Benchmark Initial Term Loan”). Borrowings also may be classified and referred to by Class (e.g., an “Initial Term Loan Borrowing”) or by Type (e.g., a “Term Benchmark Borrowing”) or by Class and Type (e.g., a “Term Benchmark Initial Term Loan Borrowing”).
SECTION 1.03 Terms Generally.
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, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document, including all schedules, exhibits and other attachments thereto and as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP.
(a) 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 in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
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(b) Notwithstanding anything to the contrary herein, but subject to Section 1.09, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio, the First Lien Net Leverage Ratio, the Secured Net Leverage Ratio, the Fixed Charge Coverage Ratio and any other financial ratio or test that are calculated with respect to any Test Period during which a Specified Transaction occurs shall be calculated on a Pro Forma Basis. Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Specified Transaction has occurred or (y) any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Subsidiaries or any joint venture since the beginning of such Test Period has consummated any Specified Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Specified Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of calculating compliance with Section 6.10, if applicable, the date of the required calculation shall be the last day of the Test Period, and no Specified Transaction occurring thereafter shall be taken into account).
SECTION 1.05 Effectuation of Transactions.
All references herein to the Borrower and its Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Transactions that occurred on the Effective Date, unless the context otherwise requires.
SECTION 1.06 Limited Conditionality Acquisition.
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDA or total assets or whether a Default or Event of Default has occurred and is continuing or any representations and warranties have been complied with, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred and is continuing shall, at the option of the Lead Borrower (the Lead Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or the date of the declaration or making of such Restricted Payment constituting a Limited Condition Transaction or of the giving of irrevocable (which may be conditional) notice with respect to a repayment, repurchase or redemption of Indebtedness constituting a Limited Condition Transaction, or, as an alternative option with respect to Permitted Acquisitions or investments constituting Limited Condition Transactions, the date of a public announcement of an intention to make an offer in respect of the target of such Permitted Acquisition or investment (the “LCA Test Date”) after giving Pro Forma Effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such transactions occurred at the beginning of the applicable Test Period, and for the avoidance of doubt, if any of such ratios or other provisions are exceeded as a result of fluctuations in such ratio or amount (including due to fluctuations in Consolidated EBITDA of the Borrower or such person subject to such Limited Condition Transaction) or other provisions at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder. If the Lead Borrower has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall be calculated (and tested) on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) had been consummated on the LCA Test Date.
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SECTION 1.07 Certain Determinations.
(a) Notwithstanding anything to the contrary herein, for purposes of the covenants described in Article V and Article VI, if any transaction or action would be permitted pursuant to one or more provisions described therein, the Borrower may divide and classify such transaction or action within the relevant covenant (or other provisions) in any manner that complies with such covenant (or other provision) set forth therein, and may later divide and reclassify any such transaction or action so long as the transaction or action (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception (or other provisions) as of the date of such reclassification; provided that if any financial ratio or test governing any applicable Incurrence Based Amount would be satisfied in any subsequent period following the utilization of any Fixed Amount, such reclassification shall be deemed to have automatically occurred if not elected otherwise by the Lead Borrower; provided, further, that such reclassification shall not be permitted with respect to (i) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(i), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(i), (ii) the Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents, which shall only be permitted under Section 6.01(a)(xxxi), or Liens with respect to the Loans (as defined in the ABL Credit Agreement), which shall only be permitted under Section 6.02(xvii) and (iii) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(xxxii), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(xxi). For the avoidance of doubt, if the applicable date for meeting any requirement hereunder or under any other Loan Document falls on a day that is not a Business Day, compliance with such requirement shall not be required until noon on the first Business Day following such applicable date.
(b) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio or test (including any Total Net Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence.
(c) Notwithstanding the foregoing, for purposes of any determination under Article V, Article VI or Article VII or any determination under any other provision of this Agreement subject to any Dollar limitation, threshold or basket, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars based on the relevant currency exchange rate in effect on the applicable date of determination (rounded to the nearest currency unit, with 0.5 or more of a currency unit being rounded upward); provided, however, that for purposes of determining compliance with Article VI with respect to any amount in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness, Lien or Investment is incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payment in respect of any Junior Financing is made or such transaction with an Affiliate is entered into; provided, further, that, for the avoidance of doubt, the foregoing provisions of this Section 1.07(c) shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness, Lien or Investment may be incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payments in respect of any Junior Financing may be made or such transaction with an Affiliate may be entered into at any time under such Sections. For purposes of any determination of Consolidated Total Indebtedness, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates used in preparing the most recently delivered financial statements pursuant to Section 5.01(a) or Section 5.01(b) adjusted to reflect the currency translation effects, determined in accordance with GAAP, of any Swap Agreements permitted hereunder for currency exchange risks with respect to the applicable currency in effect on the date of determination of the dollar equivalent thereof. Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.
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SECTION 1.08 Divisions.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
SECTION 1.09 Interest Rates; Benchmark Notification.
The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.14(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
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ARTICLE II
The Credits
SECTION 2.01 Commitments.
Subject to the terms and conditions set forth herein, each Initial Term Loan Lender severally agrees to make an Initial Term Loan to the Borrower denominated in dollars on the Effective Date in a principal amount equal to its Initial Term Loan Commitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
(b) Subject to Section 2.14, each Term Loan Borrowing shall be comprised entirely of ABR Loans or Term Benchmark Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement;
(c) At the commencement of each Interest Period for any Term Benchmark Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Term Benchmark Borrowing that results from a continuation of an outstanding Term Benchmark Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of fifteen (15) Term Benchmark Borrowings outstanding.
SECTION 2.03 Requests for Borrowings.
To request a Term Loan Borrowing, the Lead Borrower shall notify the Administrative Agent of such request in writing by telecopy, electronic mail, facsimile or overnight courier (a) in the case of a Term Benchmark Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of the proposed Borrowing, (b) in the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, on the date of the proposed Borrowing; provided that any notice given in connection with Borrowings on the Effective Date (including Term Benchmark Borrowings) may be given not later than 2:00 p.m., New York City time, one (1) Business Day before the Effective Date; provided further that, in each case, the Administrative Agent may in its discretion accept any later request. Each such written Borrowing Request shall be signed by the Lead Borrower substantially in the form of Exhibit S and shall be irrevocable. Each such written Borrowing Request shall specify the following information:
(i) whether the requested Borrowing is to be a Borrowing of Initial Term Loans and/or a Borrowing of any other Class (specifying the Class thereof);
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(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing;
(v) in the case of a Term Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and
(vii) except in the case of any Borrowing that is made on the Effective Date, that as of the date of such Borrowing, the conditions set forth in Sections 4.02(a) and 4.02(b) are satisfied.
If no election as to the Type of Borrowing is specified as to any Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Term Benchmark Borrowing, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04 [Reserved].
SECTION 2.05 [Reserved].
SECTION 2.06 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower designated by the Lead Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.06 and may, in reliance on such assumption and in its sole discretion, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender agrees to pay to the Administrative Agent an amount equal to such share on demand of the Administrative Agent. If such Lender does not pay such corresponding amount forthwith upon demand of the Administrative Agent therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower agrees to pay such corresponding amount to the Administrative Agent forthwith on demand. The Administrative Agent shall also be entitled to recover from such Lender or Borrower interest on such corresponding amount, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing in accordance with Section 2.13. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
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(c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
SECTION 2.07 Interest Elections.
(a) Each Term Loan Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Term Benchmark Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Lead Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Term Benchmark Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Lead Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section 2.07, the Lead Borrower shall notify the Administrative Agent of such election in writing by telecopy, electronic mail, facsimile or overnight courier by the time that a Borrowing Request would be required under Section 2.03 if the Lead Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such written Interest Election Request shall be irrevocable and shall be signed by the Lead Borrower.
(c) Each written Interest Election Request shall specify the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing; and
(iv) if the resulting Borrowing is to be a Term Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
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If any such Interest Election Request requests a Term Benchmark Borrowing but does not specify an Interest Period, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Lead Borrower fails to deliver a timely Interest Election Request with respect to a Term Benchmark Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Lead Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Term Benchmark Borrowing and (ii) unless repaid, each Term Benchmark Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.08 Termination and Reduction of Commitments.
(a) Unless previously terminated, on the Effective Date, the Term Commitments in effect on such date shall terminate upon the making of the relevant Term Loans.
(b) The Lead Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000 unless such amount represents all of the remaining Commitments of such Class.
(c) The Lead Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
SECTION 2.09 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
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(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement. In the event of any inconsistency between the entries made pursuant to paragraphs (b) and (c) of this Section 2.09, the accounts maintained by the Administrative Agent pursuant to paragraph (c) of this Section 2.09 shall control.
(e) Any Lender may request through the Administrative Agent that Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
SECTION 2.10 Repayment of Term Loans.
(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Term Loan Borrowings with respect to the Other Term Loans as specified in the applicable Refinancing Amendment or Loan Modification Agreement; provided, with respect to this clause (a), that any such payment due on a date that is not a Business Day shall instead be due on the next preceding Business Day.
(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) Notwithstanding anything contained herein to the contrary, any prepayment of a Term Loan Borrowing of any Class (i) pursuant to Section 2.11(a) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10 as directed by the Lead Borrower (and absent such direction in direct order of maturity), and (ii) pursuant to Section 2.11(c) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10, or, except as otherwise provided in any Refinancing Amendment or Loan Modification Agreement, pursuant to the corresponding section of such Refinancing Amendment or Loan Modification Agreement, as applicable, in direct order of maturity.
(d) Prior to any repayment of any Term Loan Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Loan Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11 Prepayment of Loans.
(a) (i) Subject to clause (b) below, the Lead Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty.
(ii) Notwithstanding anything in any Loan Document to the contrary but subject to clause (b) below, so long as no Default or Event of Default has occurred and is continuing, the Borrower or any of its Subsidiaries may offer to prepay all or a portion of the outstanding Term Loans on the following basis:
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(A) the Borrower or any of its Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “Discounted Term Loan Prepayment”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that the Borrower or any of its Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by the Borrower or any of its Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date the Borrower or any of its Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the Borrower’s or any of its Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers; provided, further, that each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“Excluded Information”), (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
(B) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “Specified Discount Prepayment Amount”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “Specified Discount”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Specified Discount Prepayment Response Date”).
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(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “Discount Prepayment Accepting Lender”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
(3) If there is at least one Discount Prepayment Accepting Lender, the Borrower or any of its Subsidiaries will make prepayment of outstanding Term Loans pursuant to this subsection (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to paragraph (2) above; provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “Specified Discount Proration”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date and (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by the Borrower or any of its Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(C) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “Discount Range Prepayment Amount”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “Discount Range”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by the Borrower or any of its Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Discount Range Prepayment Response Date”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “Submitted Discount”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “Submitted Amount”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
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(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). The Borrower or any of its Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “Applicable Discount”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following paragraph (3)) at the Applicable Discount (each such Lender, a “Participating Lender”).
(3) If there is at least one Participating Lender, the Borrower or any of its Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “Identified Participating Lenders”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Discount Range Proration”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, and (IV) if applicable, each Identified Participating Lender of the Discount Range Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(D) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate dollar amount of the Term Loans (the “Solicited Discounted Prepayment Amount”) and the tranche or tranches of Term Loans that the Borrower or any of its Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Solicited Discounted Prepayment Response Date”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “Offered Discount”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “Offered Amount”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
(2) The Auction Agent shall promptly provide the Borrower or any of its Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. The Borrower or any of its Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to the Borrower or any of its Subsidiaries (the “Acceptable Discount”), if any. If the Borrower or any of its Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by the Borrower or any of its Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this paragraph (2) (the “Acceptance Date”), the Borrower or any of its Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from the Borrower or any of its Subsidiaries by the Acceptance Date, the Borrower or any of its Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
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(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “Discounted Prepayment Determination Date”), the Auction Agent will determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “Acceptable Prepayment Amount”) to be prepaid by the Borrower or any of its Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If the Borrower or any of its Subsidiaries elects to accept any Acceptable Discount, then the Borrower or any of its Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “Qualifying Lender”). The Borrower or any of its Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “Identified Qualifying Lenders”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Solicited Discount Proration”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) the Borrower or any of its Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, and (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration. Each determination by the Auction Agent of the amounts stated in the foregoing notices to such Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to such Borrower shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(E) In connection with any Discounted Term Loan Prepayment, the Borrower or any of its Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from the Borrower or any of its Subsidiaries in connection therewith.
(F) If any Term Loan is prepaid in accordance with subsections (B) through (D) above, the Borrower or any of its Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. The Borrower or any of its Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, in immediately available funds not later than 11:00 a.m. (New York City time) on the Discounted Prepayment Effective Date and all such prepayments shall be applied to the remaining principal installments (if any) of the relevant tranche of Term Loans on a pro rata basis across such installments. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by the Borrower or any of its Subsidiaries.
(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of the Borrower or any of its Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and its respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
(J) The Borrower or any of its Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by such Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
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(b) (i) In the event that, on or prior to the date that is six (6) months after the Effective Date, the Borrower (x) prepays, repays, refinances, repurchases, substitutes or replaces all or any portion of the Initial Term Loans in connection with a Repricing Transaction or (y) effects any amendment, modification or waiver of, or consent under, this Agreement resulting in a Repricing Transaction (including in the case of any required assignment pursuant to Section 9.02(c)), the Borrower shall pay to the Administrative Agent, for the account of each applicable Lender (including each Lender holding Initial Term Loans immediately prior to the consummation of such Repricing Transaction that withholds its consent to such Repricing Transaction and is replaced as a Non-Consenting Lender pursuant to Section 9.02(c)), (A) in the case of clause (x), a premium of 1.00% of the aggregate principal amount of the Initial Term Loans so prepaid, repaid, refinanced, substituted or replaced and (B) in the case of clause (y), a fee equal to 1.00% of the aggregate principal amount of the Initial Term Loans that are the subject of such Repricing Transaction outstanding immediately prior to such amendment, modification, waiver or consent. For the avoidance of doubt, no prepayment fee shall be payable with respect to the Initial Term Loans at any time on or after the date that is six (6) months after the Effective Date.
(ii) All voluntary prepayments shall be applied to the Term Facility. All voluntary prepayments of the Term Facility shall be applied to the remaining amortization payments (if any) under such Term Facility, as directed by the Lead Borrower (and absent such direction, in direct order of maturity thereof), including to any Class of extending or existing Term Loans in such order as the Lead Borrower may designate.
(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries in respect of any Prepayment Event (other than any Prepayment Event in respect of ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), to the extent such Prepayment Event is in respect of ABL Priority Collateral, as determined by the Lead Borrower in good faith) the Borrower shall, within ten (10) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, on the date of such Prepayment Event), prepay Term Loan Borrowings (with respect to a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, (x) to the extent resulting from the incurrence of Credit Agreement Refinancing Indebtedness, limited to the applicable Refinanced Debt and (y) otherwise, on a pro rata basis among all Term Loan Borrowings) in an aggregate amount equal to 100% of the amount of such Net Proceeds. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.11(c) in respect of any Prepayment Event described in clause (a) of the definition thereof shall be in excess of the amount of ABR Loans at the time outstanding, only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of Borrower, the balance of such required prepayment shall be either (i) deposited in the Collateral Account and applied to the prepayment of Term Benchmark Loans on the last day of the then next-expiring Interest Period for Term Benchmark Loans (with all interest accruing thereon for the account of the Borrower) or (ii) prepaid immediately, together with any amounts owing to the Lenders under Section 2.16. Notwithstanding any such deposit in the Collateral Account, interest shall continue to accrue on such Loans until prepayment.
(d) [Reserved].
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(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any mandatory prepayment of Term Loan Borrowings made at a time when Term Loan Borrowings of more than one Class remain outstanding, the Borrower shall select Term Loan Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Loan Borrowings (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier at least two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined shall first be offered on a pro rata basis to Lenders who did not decline such proceeds, and thereafter (to the extent remaining after compliance with any applicable mandatory prepayment provisions of the ABL Credit Agreement and the Second Lien Credit Agreement), may be retained by the Borrower and added to the Available Amount (such amounts, “Retained Declined Proceeds”). Optional prepayments of Term Loan Borrowings shall be allocated among the Classes of Term Loan Borrowings as directed by the Borrower, and in the absence of a designation by the Borrower, in direct order of maturity, and subject to the foregoing, the Administrative Agent shall apply such prepayments in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16; provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Term Benchmark Loans.
(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) in writing by telecopy, electronic mail, facsimile or overnight courier of any prepayment hereunder (i) in the case of prepayment of a Term Benchmark Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment (or, in each case, such later date or date which the Administrative Agent may agree to in its sole discretion). Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and subject to Section 2.11(b), shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
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(g) Notwithstanding any other provisions of Section 2.11(c), (A) to the extent that any of or all the Net Proceeds of any Prepayment Event set forth in clause (a)(III) of the definition thereof by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.11(c) (a “Foreign Prepayment Event”) are prohibited by, would violate or conflict with, or be delayed by, applicable local law from being repatriated to the Borrower, the portion of such Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary so long, but only so long, as the Lead Borrower determined in good faith that the applicable local law will not permit repatriation to the Borrower and once the Lead Borrower has determined in good faith that such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, such repatriation will be effected as soon as practicable and such repatriated Net Proceeds will be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c), (B) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Prepayment Event would have a material adverse tax or cost consequence with respect to such Net Proceeds, the Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary; provided that if the Lead Borrower determines in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event so affected would no longer have a material adverse tax consequence with respect to such Net Proceeds, such Net Proceeds shall be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c) and (C) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event would conflict with the fiduciary duties of a Subsidiary’s directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any officer, director, employee, manager, member or management or consultant of such Subsidiary, the Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary.
SECTION 2.12 Fees.
(a) [Reserved].
(b) [Reserved].
(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent in the Fee Letter.
(d) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Term Benchmark Borrowing shall bear interest at the Adjusted Term SOFR Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
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(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 any principal of or interest on any Loan or any fee or other amount payable by any Loan Party under a Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, all overdue principal amounts of the Loans shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of the principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided, further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Term Benchmark Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR hereunder shall be computed on the basis of a year of 360 days. Interest computed by reference to the Alternate Base Rate at a time when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). In each case, interest hereunder, shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate or Adjusted Term SOFR Rate, Term SOFR Rate, Adjusted Daily Simple SOFR Rate or Daily Simple SOFR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Benchmark Unavailability; Benchmark Replacement Setting.
(a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.14, if:
(1) the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR Rate or Daily Simple SOFR; or
(2) the Administrative Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period or (B) at any time, the Adjusted Daily Simple SOFR Rate will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;
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then the Administrative Agent shall give notice thereof to the Lead Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.07 or a new Borrowing Request in accordance with the terms of Section 2.03, any Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for an ABR Borrowing if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(1) or (2) above; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.14(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan, then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.07 or a new Borrowing Request in accordance with the terms of Section 2.03, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, an ABR Loan if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(1) or (2) above, on such day.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 2.14), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders of each affected Class.
(c) Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(d) The Administrative Agent will promptly notify the Lead Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event and its related Benchmark Replacement Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iii) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.
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(e) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(f) Upon the Lead Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to an ABR Borrowing if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.14, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, an ABR Loan if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event, on such day.
SECTION 2.15 Increased Costs.
(a) 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 by, any Lender (except any such reserve requirement reflected in the Adjusted Term SOFR Rate);
(ii) subject the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document to any Taxes (other than Indemnified Taxes, Other Taxes or Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Term Benchmark Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Term Benchmark Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred or reduction actually suffered; provided that the Borrower shall not be liable for such compensation if, in the case of requests for reimbursement under clause (ii) above resulting from a market disruption, (A) the relevant circumstances are not generally affecting the banking market or (B) the applicable request has not been made by the Majority in Interest of Term Lenders with respect to Term Loans; provided, further, that to the extent any such costs or reductions are incurred by any Lender as a result of any requests, rules, guidelines or directives enacted or promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Basel III, then such Lender shall be compensated pursuant to this Section 2.15(a) only to the extent such Lender is imposing such charges on similarly situated borrowers where the terms of other syndicated credit facilities permit it to impose such charges.
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(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than one hundred and eighty (180) days prior to the date that such Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
SECTION 2.16 Break Funding Payments.
In the event of (a) the payment of any principal of any Term Benchmark Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Benchmark Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and is revoked in accordance therewith) or (d) the assignment of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. Such loss, cost or expense shall in no event exceed that which would have been incurred by such Lender had it funded each Term Benchmark Loan made by it at the Adjusted Term SOFR Rate for such Loan by a matching deposit or other borrowing in the applicable interbank market for a comparable amount and for a comparable period, whether or not such Term Benchmark Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt of such demand. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements.
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SECTION 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
(b) The Borrower shall timely pay to the relevant Governmental Authority in accordance with Requirements of Law or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c) The Borrower, jointly and severally, shall indemnify the Administrative Agent and each Lender within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document, as the case may be (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
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Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) (such Lender, a “Foreign Lender”) shall deliver (to the extent it is legally entitled to do so) to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Administrative Agent) whichever of the following is applicable:
(A) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty,
(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit Q-1, Q-2, Q-3 or Q-4, as applicable, to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to such Borrower as described in Section 881(c)(3)(C) of the Code (any such certificate a “United States Tax Compliance Certificate”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable (provided that, if the Lender is a partnership and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
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(E) any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(f) If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of Taxes as to which it has been indemnified pursuant to this Section 2.17 or with respect to which additional amounts have been paid pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees promptly to repay the amount paid over to the Borrower pursuant to this Section 2.17(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority (provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary in this Section 2.17(f), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrowers pursuant to this Section 2.17(f) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Notwithstanding anything to the contrary, this Section 2.17(f) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person.
(g) The agreements in this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(h) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.
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SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest or fees, or of amounts payable under Sections 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as may be specified by the Administrative Agent, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Term Benchmark Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension. All payments or prepayments of any Loan shall be made in dollars, all payments of accrued interest payable on a Loan shall be made in dollars, and all other payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (B) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
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(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender 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 Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a) or Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and to be applied to, any future funding obligations of such Lender under any such Section.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall (at the request of the Lead Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder affected by such event, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender is a Defaulting Lender, then the Lead Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Lead Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued but unpaid fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Lead Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
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SECTION 2.20 [Reserved].
SECTION 2.21 Refinancing Amendments.
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans), in the form of Other Term Loans or Other Term Commitments; provided that the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment (or reduction) of outstanding Indebtedness being so refinanced, as the case may be, and accompanied by any prepayment premium payable thereon in accordance with the terms hereof. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $5,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section.
(b) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments. Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to Section 2.05(j) or this Section 2.22(a)(ii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 2.05(j) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
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(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
SECTION 2.23 Illegality.
If any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted Term SOFR Rate, or to determine or charge interest rates based upon the Adjusted Term SOFR Rate, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Term Benchmark Loans denominated in dollars or to convert ABR Loans denominated in dollars to Term Benchmark Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three (3) Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Term Benchmark Loans denominated in dollars of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term Benchmark Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Term Benchmark Loans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted Term SOFR Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted Term SOFR Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted Term SOFR Rate. Each Lender agrees to notify the Administrative Agent and the Lead Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted Term SOFR Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
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SECTION 2.24 Loan Modification Offers.
(a) At any time after the Effective Date, the Lead Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “Loan Modification Offer”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “Affected Class”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Lead Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “Accepting Lenders”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by the Lead Borrower, each applicable Accepting Lender and the Administrative Agent; provided that no Permitted Amendment shall become effective unless the Lead Borrower shall have delivered to the Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall be reasonably requested by the Administrative Agent in connection therewith. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
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(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “Non-Accepting Lender”) then after receipt of consents from Lenders constituting the Required Lenders hereunder, the Lead Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11(a)(i)) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders and each Agent that:
SECTION 3.01 Organization; Powers.
Each of the Borrower and its Subsidiaries (a) is duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the relevant jurisdictions) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdictions) in, every jurisdiction where such qualification is required, except, with respect to clause (a) above (other than with respect to the Borrower), clause (b) above (other than with respect to the Borrower) and clause (c) above, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.02 Authorization; Enforceability.
This Agreement has been duly authorized, executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law, (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in any legal opinion delivered to an Agent in connection with any Loan Document (together, the “Legal Reservations”) and (iv) the Perfection Requirements.
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SECTION 3.03 Governmental Approvals; No Conflicts.
Except as set forth in Schedule 3.03 and subject to the Legal Reservations and the Perfection Requirements, the execution, delivery and performance by any Loan Party of this Agreement or any other Loan Document (a) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of the Borrower or any other Loan Party, or (ii) any Requirements of Law applicable to the Borrower or any other Loan Party, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon the Borrower or any Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by the Borrower or any Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except Liens created under the Loan Documents or permitted by Section 6.02, except (in the case of each of clauses (a), (b)(ii), (c) and (d)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, or imposition of Lien, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.04 Financial Condition; 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, including the notes thereto and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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, including the notes thereto.
(b) The Unaudited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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.
(c) The Borrower has heretofore furnished to the Lead Arranger the consolidated pro forma balance sheet of the Lead Borrower and its Subsidiaries as of and for the period of twelve fiscal months of the Lead Borrower ended on or about September 30, 2021 (the “Pro Forma Financial Statements”), which have been prepared in good faith, based on assumptions believed by the Lead Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respects on a pro forma basis the estimated financial position of the Lead Borrower and its Subsidiaries as at the fiscal quarter of the Lead Borrower ended on or about September 30, 2021, assuming that the Transactions had actually occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of operations).
(d) Since the Effective Date, there has been no Material Adverse Effect.
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SECTION 3.05 Properties.
Each of the Borrower and its Subsidiaries has good title to, or valid interests in, all its real and personal property material to its business, if any (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters.
(a) Except as set forth in Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Subsidiaries that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any of its Subsidiaries (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, to the knowledge of the Borrower, become subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) has, to the knowledge of the Borrower, any basis to reasonably expect that the Borrower or any of its Subsidiaries will become subject to any Environmental Liability.
SECTION 3.07 Compliance with Laws.
Each of the Borrower and its Subsidiaries is in compliance with all Requirements of Law applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08 Investment Company Status.
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
SECTION 3.09 Taxes.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Borrower and each Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets otherwise due and payable (whether or not shown on a Tax return), except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against the Borrower or any Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
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SECTION 3.10 ERISA; Labor Matters.
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as would not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect, (i) each employee benefit plan (as defined in Section 3(2) of ERISA) that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of the Borrower, threatened in writing claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
(d) Except as would not reasonably be expected to have a Material Adverse Effect, (i) none of the Borrower or its Subsidiaries has experienced any labor strike or work stoppage or other collective labor dispute by employees due to labor disagreements and (ii) each of the Borrower and its Subsidiaries is in compliance in all respects with any collective bargaining agreement to which it is a party.
SECTION 3.11 Disclosure.
(a) As of the Effective Date, the written reports, financial statements, certificates or other written factual information (other than projections and information of a general economic or industry specific nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered thereunder (as modified or supplemented by other information so furnished), when taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial information, the Borrower represents only that such information, when taken as a whole, was prepared in good faith based upon assumptions believed by it to be reasonable at the time delivered, it being understood that (i) any such projected financial information is merely a prediction as to future events and is not to be viewed as fact, (ii) such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower or any of its Subsidiaries and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
(b) As of the Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification (if any) provided pursuant to Section 4.01(l) is true and correct in all respects.
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SECTION 3.12 Subsidiaries.
As of the Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and each of its subsidiaries in, each subsidiary of the Lead Borrower.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as would not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Borrower, each of the Borrower and its Subsidiaries owns, licenses or possesses the right to use all Intellectual Property and Badcock Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of the Borrower, no Intellectual Property or Badcock Intellectual Property owned by the Borrower or any Subsidiary and used in the operation of its business as currently conducted infringes upon the Intellectual Property or Badcock Intellectual Property of any Person except for such infringements that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property or the Badcock Intellectual Property is pending or, to the knowledge of the Borrower, threatened in writing against the Borrower or any Subsidiary, which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Solvency.
Immediately after the consummation of each of the Transactions that occurred on the Effective Date (including the execution and delivery of this Agreement, the making of the Loans and the use of proceeds of such Loans on the date hereof), the Lead Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
SECTION 3.15 Federal Reserve Regulations.
None of the Borrower or any of its Subsidiaries is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
SECTION 3.16 Use of Proceeds.
The Borrower will use the proceeds of the Initial Term Loans made on the Effective Date to directly or indirectly finance the Transactions and to fund any original issue discount or upfront fees payable in connection therewith.
SECTION 3.17 Anti-Corruption Laws and Sanctions.
(a) The Borrower and each of its Subsidiaries will not, directly or to their knowledge indirectly, use the proceeds of the Loans to fund any activity or business with any Person, or in any country or territory that, at the time of such funding, is the subject of Sanctions, or in violation of any Anti-Corruption Laws, the USA PATRIOT Act, any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of Treasury and any successor Governmental Authority, or other applicable anti-money laundering or anti-terrorism laws.
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(b) The Borrower and its Subsidiaries and, to the knowledge of the Borrower, the officers, directors, employees and agents of the Borrower and its Subsidiaries are in compliance in all material respects with applicable Anti-Corruption Laws and applicable Sanctions, the USA PATRIOT Act, and other applicable anti-money laundering and anti-terrorism laws.
(c) (i) None of the Borrower or its Subsidiaries and (ii) to the knowledge of the Borrower or its Subsidiaries, none of their respective directors, officers, employees and agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.
(d) The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance in all material respects by the Borrower and its Subsidiaries with applicable Anti-Corruption Laws and applicable Sanctions.
SECTION 3.18 Security Documents.
Subject to Section 5.14, the Legal Reservations and the Perfection Requirements, (a) the Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding and enforceable security interest in the Collateral described therein and proceeds and products thereof and (b) the Badcock Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding and enforceable security interest in the Badcock Collateral described therein and proceeds and products thereof. In the case of (i) Pledged Equity Interests and Badcock Pledged Equity Interests represented by certificates, (x) if and when such certificates are delivered to the Collateral Agent or (y) when financing statements in appropriate form are filed in the appropriate filing offices, (ii) the other Collateral described in the Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Collateral Agreement have been completed and (iii) the other Badcock Collateral described in the Badcock Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Badcock Collateral Agreement have been completed, the Lien created by the Collateral Agreement or the Badcock Collateral Agreement, as applicable, shall constitute, to the extent such perfection is required by the Collateral Agreement or the Badcock Collateral Agreement, as applicable, a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral or the Badcock Collateral, as applicable, and the proceeds and products thereof, as security for the Secured Obligations.
SECTION 3.19 Insurance.
The Borrower and each of its Subsidiaries maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) were financially sound and responsible at the time the relevant coverage was last placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business.
SECTION 3.20 Franchise Agreements.
(a) Schedule 3.20 sets forth a complete and accurate list as of the Effective Date of all Franchise Agreements to which any Loan Party or any of their Subsidiaries is a party.
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(b) Except as set forth on Schedule 3.20, as of the Effective Date, to the knowledge of the Loan Parties, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein which conflicts, or potentially conflicts, with any grant of exclusive rights to a territory granted under any other Franchise Agreement. Except as set forth in Schedule 3.20, as of the Effective Date, no current franchisee under a Franchise Agreement has given written notice to a Loan Party’s management during the six (6) month period before the Effective Date of its intention to rescind or terminate (with or without cause) any Franchise Agreement.
(c) Except as could not reasonably be expected to have a Material Adverse Effect, (i) each Loan Party has prepared and maintained each of its Franchise Disclosure Documents, in an accurate and correct manner, (ii) each Loan Party has filed all required Franchise Disclosure Documents required by law in all states and jurisdictions requiring registration and approval prior to any offers or sales of franchises in such states, and (iii) each Loan Party has filed all material changes, amendments, renewals thereto on a timely and accurate basis as required under, and required by applicable Requirements of Law. Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party’s Franchise Disclosure Documents were prepared in compliance with applicable Franchise Laws and disclosure guidelines, and there were no misrepresentations or omissions of information in any Franchise Disclosure Documents at the time such Loan Party was using such Franchise Disclosure Documents. Each Franchise Agreement complies, and the offer and sale of such Franchise Agreement complied, in each case at the time such offer and sale was made, with all Franchise Laws, except to the extent of any non-compliance therewith which could not reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date.
The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement) that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, and such local counsel as may be reasonably requested by the Administrative Agent in the jurisdictions of organization of any Loan Party, each in form and substance reasonably satisfactory to the Administrative Agent. The Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Effective Date, with appropriate insertions, or otherwise in form and substance reasonably satisfactory to the Administrative Agent, executed by any Responsible Officer of such Loan Party, and including or attaching the documents referred to in paragraph (d) of this Section 4.01, and (ii) a certificate of the Lead Borrower, dated the Effective Date, substantially in the form of Exhibit H, executed by any Responsible Officer of the Lead Borrower.
(d) The Administrative Agent shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) with respect to each Loan Party executing the Loan Documents, an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of such Loan Party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party, certified as of the Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
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(e) The Administrative Agent and Lead Arranger shall have received all fees required to be paid on the Effective Date pursuant to the Fee Letter and reasonable and documented out-of-pocket expenses required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least three (3) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower).
(f) The Collateral and Guarantee Requirement (other than in accordance with Section 5.14) and the Badcock Collateral and Guarantee Requirement (other than in accordance with Section 5.14) shall have been satisfied and the Administrative Agent shall have received a completed Perfection Certificate dated the Effective Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby. Notwithstanding the foregoing, no Collateral or Badcock Collateral shall be subject to any other pledges, security interest or mortgages, except for the Liens permitted under this Agreement.
(g) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the Effective Date; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(h) The Lead Arranger shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) No Default or Event of Default shall have occurred and be continuing or would result from the initial Borrowing hereunder.
(j) The Acquisition shall have been consummated, or substantially simultaneously with the borrowing of the Initial Term Loans on the Effective Date, shall be consummated, in all material respects in accordance with the terms of the Acquisition Agreement.
(k) The Administrative Agent shall have received (i) a certificate from the chief financial officer or equivalent Responsible Officer of the Lead Borrower certifying as to the solvency (as of the Effective Date) of the Lead Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, in substantially the form attached hereto as Exhibit G and (ii) certificates with respect to insurance policies of the Loan Parties as required under Section 5.07, all in form and substance reasonably satisfactory to Administrative Agent.
(l) (i) The Administrative Agent shall have received at least three (3) Business Days before the Effective Date all documentation and other information about the Loan Parties that the Administrative Agent reasonably determines is required by United States regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the USA PATRIOT Act and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Administrative Agent and each initial Lender that requests a Beneficial Ownership Certification will have received, at least three (3) Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower, in each case of clauses (i) and (ii), to the extent that the Administrative Agent has reasonably requested such items in writing delivered to the Loan Parties at least ten (10) Business Days prior to the Effective Date.
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(m) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof.
(n) The Administrative Agent (or its counsel) shall have received from each party thereto (i) a counterpart of the ABL Intercreditor Agreement signed on behalf of such party, (ii) a counterpart of the Badcock Intercreditor Agreement signed on behalf of such party and (iii) a counterpart of the First Lien/Second Lien Intercreditor Agreement signed on behalf of such party.
SECTION 4.02 Each Credit Event after the Effective Date.
After the Effective Date, the obligation of each Lender to make a Loan on the occasion of any Borrowing, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:
(a) In the case of any Borrowing, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
(b) At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.
Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section 4.02) shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 4.02.
ARTICLE V
Affirmative Covenants
From and after the Effective Date and until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Loan Document shall have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information.
Borrower and its Subsidiaries will furnish to the Administrative Agent, on behalf of each Lender:
(a) (i) on or before the date that is 90 days after the end of each fiscal year of the Lead Borrower, commencing with the fiscal year of the Lead Borrower ended on or about December 31, 2021, the audited consolidated balance sheet and audited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case, in comparative form the figures for the previous fiscal year, all reported on by BDO, Deloitte or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any material qualification or exception as to the scope of such audit (other than with respect to, or resulting from, (A) an upcoming maturity date of any indebtedness for borrowed money or (B) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money)) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Lead Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year;
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(b) (i) on or before the date that is 30 days after the end of each of the first three fiscal quarters of each fiscal year of the Lead Borrower, commencing with the first fiscal quarter of the Lead Borrower ended after the Effective Date, the unaudited consolidated balance sheet and unaudited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case, in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of the Lead Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter;
(c) [reserved];
(d) not later than ten (10) Business Days of any delivery of financial statements under paragraph (a) above, a reasonably detailed annual budget for the Borrower and its Subsidiaries on a consolidated basis, in a form customarily prepared by the Lead Borrower or otherwise as may be reasonably agreed between the Lead Borrower and the Administrative Agent (it being agreed that such annual budget shall not be provided to Public Lenders);
(e) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate (a “Compliance Certificate”) of a Financial Officer in the form of Exhibit E hereof (i) certifying as to whether a Default then exists and, if a Default does then exist, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations, to the extent the Financial Maintenance Covenants are then required to be tested, demonstrating compliance with the Financial Maintenance Covenants;
(f) [reserved];
(g) [reserved];
(h) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by the Borrower or any Subsidiary with the SEC or with any national securities exchange; and
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(i) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing.
Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing the Form 10-K or 10-Q (or the equivalent), as applicable, of the Borrower (or a parent company thereof) filed with the SEC within the applicable time periods required by applicable law and regulations; provided that such materials are accompanied by a report and opinion of BDO, Deloitte or any other independent registered public accounting firm of nationally recognized standing, 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 the scope of such audit (other than with respect to, or resulting solely from, (i) an upcoming maturity date of any indebtedness for borrowed money or (ii) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money).
Documents required to be delivered pursuant to Section 5.01(a), (b) or (h) (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 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
Notwithstanding anything to the contrary herein, neither the Borrower nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s obligations under this Section 5.01) to any third party.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Bookrunner will make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or its Affiliates’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Bookrunner, and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Lead Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”; provided that the Borrower’s failure to comply with this sentence shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials as “PUBLIC”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (e) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information.
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SECTION 5.02 Notices of Material Events.
Promptly after any Responsible Officer of the Borrower or any Subsidiary obtains knowledge thereof, the Borrower or the applicable Subsidiary will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default or Event of Default (other than any Default resulting from any non-compliance with Section 5.01);
(b) the occurrence of any ERISA Event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect;
(c) any litigation, or governmental investigation or proceeding pending against the Borrower or any of its Subsidiaries which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect; and
(d) any other development or event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days or such longer period as reasonably agreed to by the Administrative Agent) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or incorporation or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property or Badcock Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
(b) Not later than five (5) Business Days after delivery of financial statements pursuant to Section 5.01(a), the Lead Borrower shall deliver to the Administrative Agent a certificate executed by a Responsible Officer of the Lead Borrower (i) setting forth any material changes to the information required pursuant to the Perfection Certificate or confirming that there has been no material change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section 5.03 and (ii) identifying any Wholly Owned Subsidiary that has become, or ceased to be, a Material Subsidiary or an Excluded Subsidiary during the most recently ended fiscal quarter of the Lead Borrower.
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SECTION 5.04 Existence; Conduct of Business.
The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Material Intellectual Property and Governmental Approvals used in the conduct of its business, except to the extent (other than with respect to the preservation of the existence of the Borrower) that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
SECTION 5.05 Payment of Taxes, etc.
The Borrower will, and will cause each of its Subsidiaries to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by the Borrower or any of its Subsidiaries or (b) the failure to make payment would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 5.06 Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (subject to casualty, condemnation and ordinary wear and tear), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.07 Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. Each such general liability policy of insurance (other than directors and officers policies, workers compensation policies and business interruption insurance), to the extent covering Collateral or Badcock Collateral and to the extent that Collateral Agent can be granted an insurable interest therein, shall (i) in the case of each such general liability policy, name the Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each such casualty insurance policy, contain a loss payable clause or mortgagee endorsement that names the Collateral Agent, on behalf of the Lenders as the loss payee or mortgagee thereunder.
(b) If any portion of any Mortgaged Property or Badcock Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party to (i) if required by the Flood Insurance Laws or other applicable law, maintain, or cause to be maintained, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
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SECTION 5.08 Books and Records; Inspection and Audit Rights.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards) consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or its Subsidiary, as the case may be. The Borrower will, and will cause each of its Subsidiaries that is a Loan Party to, permit any representatives designated by the Administrative Agent or any Lender, during normal business hours and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise visitation and inspection rights of the Administrative Agent and the Lenders under this Section 5.08 and the Administrative Agent shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants.
(b) The Lead Borrower will, within 30 days (or, after using commercially reasonable efforts to schedule such call at a later date agreed to by the Administrative Agent at its sole discretion) after the date of the delivery (or, if later, required delivery) of the quarterly and annual financial information pursuant to Sections 5.01(a) and (b), hold a conference call or teleconference, at a time selected by the Lead Borrower and reasonably acceptable to the Administrative Agent, with all of the Lenders that choose to participate, to review the financial results of the previous fiscal quarter or fiscal year of the Lead Borrower, as the case may be, of the Lead Borrower (it being understood that any such call may be combined with any similar call held for any of the Lead Borrower’s other lenders or security holders).
SECTION 5.09 Compliance with Laws.
(a) The Borrower will, and will cause each of its Subsidiaries to, comply with its Organizational Documents and all Requirements of Law (including ERISA, Environmental Laws, the USA PATRIOT Act, Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, the U.S. Foreign Corrupt Practices Act of 1977 and other anti-money laundering, anti-corruption, sanctions and anti-terrorism laws) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
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(b) The Borrower will not request any Borrowing, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (i) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country except to the extent permissible for a Person required to comply with Sanctions, (ii) in any manner that would result in the violation of any Sanctions applicable to the Borrower and its Subsidiaries or to the knowledge of the Borrower, any other party hereto or (iii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any legislation.
SECTION 5.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans for the purposes set forth in Section 3.16.
SECTION 5.11 Additional Subsidiaries.
(a) If (i) any additional Subsidiary is formed or acquired after the Effective Date (other than Badcock), (ii) any Subsidiary ceases to be an Excluded Subsidiary or (iii) the Borrower, at its option, elects to cause a Domestic Subsidiary, or to the extent reasonably acceptable to the Administrative Agent, a Foreign Subsidiary that is not a Wholly Owned Subsidiary (including any consolidated Affiliate in which the Borrower and its Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party, then, the Borrower will, within thirty (30) days (or such longer period as may be agreed to by the Administrative Agent in its reasonable discretion) after such newly formed or acquired Subsidiary is formed or acquired or such Subsidiary ceases to be an Excluded Subsidiary or the Borrower has made such election, notify the Administrative Agent thereof, and will cause such Subsidiary (unless such Subsidiary is an Excluded Subsidiary) to satisfy the Collateral and Guarantee Requirement with respect to such Subsidiary and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party within thirty (30) days after such notice (or such longer period as the Administrative Agent shall reasonably agree) and the Administrative Agent shall have received a completed Perfection Certificate (or supplement thereof) with respect to such Subsidiary signed by a Responsible Officer, together with all attachments contemplated thereby.
(b) Within sixty (60) days (or, to the extent any new Material Subsidiary is organized or incorporated under the laws of a jurisdiction in which no existing Loan Party is organized or incorporated, within ninety (90) days) (or, in each case, such longer period as otherwise provided in this Agreement or as the Administrative Agent may reasonably agree) after the Borrower identifies any new Material Subsidiary (other than Badcock) pursuant to Section 5.03(b), all actions (if any) required to be taken with respect to such Subsidiary in order to satisfy the Collateral and Guarantee Requirement shall have been taken with respect to such Subsidiary, to the extent not already satisfied pursuant to Section 5.11(a).
(c) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within ninety (90) days, following the formation or acquisition of such real property or such Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
SECTION 5.12 Further Assurances.
(a) The Borrower will, and will cause each Loan Party to, 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, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, in each case, to cause the “Collateral and Guarantee Requirement” (or the “Badcock Collateral and Guarantee Requirement” in the case of Badcock) to be and remain satisfied, all at the expense of the Loan Parties.
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(b) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Material Real Property or improvements thereto or any interest therein, are acquired by the Borrower or any other Loan Party (other than Badcock) or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”. In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party (other than Badcock), as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
(c) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Badcock Material Real Property or improvements thereto or any interest therein, are acquired by Badcock (other than assets constituting Badcock Collateral under a Badcock Security Document that become subject to the Lien created by such Badcock Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent thereof, and, if requested by the Administrative Agent, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause Badcock to take, such actions as shall be necessary and reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Badcock Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Badcock Collateral and Guarantee Requirement”. In the event any Badcock Material Real Property is mortgaged pursuant to this Section 5.12(c), Badcock shall be required to comply with the “Badcock Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Badcock Material Real Property or such longer time period as agreed by the Administrative Agent in its reasonable discretion.
SECTION 5.13 Franchise Agreements.
The Borrower will, and will cause each Loan Party to, satisfy and perform in all material respects all obligations of each such Person under each Franchise Agreement, except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.14 Certain Post-Closing Obligations.
As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14(a) or such later date as the Administrative Agent agrees to in writing, including to reasonably accommodate circumstances unforeseen on the Effective Date, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedules 5.14(a) and 5.14(b), as applicable, that, where such actions are to be taken to reasonably accommodate circumstances unforeseen on the Effective Date, would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Agent pursuant to its authority as set forth in the definition of the terms “Collateral and Guarantee Requirement” and “Badcock Collateral and Guarantee Requirement”.
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SECTION 5.15 Maintenance of Ratings.
The Borrower shall use commercially reasonable efforts to maintain (i) a public corporate credit rating (but not any particular rating) from S&P and a public corporate family rating (but not any particular rating) from Moody’s, in each case in respect of the Lead Borrower, and (ii) a public rating (but not any particular rating) in respect of the Term Loans made available under this Agreement from each of S&P and Moody’s.
ARTICLE VI
Negative Covenants
From and after the Effective Date and until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable (other than (i) contingent amounts not yet due and (ii) Cash Management Obligations) under any Loan Document have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of the Borrower and any of the Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Section 2.20);
(ii) Indebtedness outstanding on the Effective Date and any Permitted Refinancing thereof; provided that any Indebtedness in excess of $6,000,000 for the most recently ended Test Period as of such time, shall only be permitted if set forth on Schedule 6.01;
(iii) Guarantees by the Borrower and its Subsidiaries in respect of Indebtedness of the Borrower or any Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is otherwise permitted by Section 6.04, (B) no Guarantee by any Subsidiary of any Junior Financing or any unsecured Indebtedness for borrowed money that constitutes Material Indebtedness shall be permitted unless such Subsidiary shall have also provided a Guarantee of the applicable Loan Document Obligations pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement, as the case may be, and (C) if the Indebtedness being guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(iv) Indebtedness of the Borrower or any Subsidiary owing to the Borrower or any Subsidiary, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date (or the date of acquisition of such Subsidiary) or such later date as the Administrative Agent may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to material adverse tax consequences) on terms (i) not materially less favorable, taken as a whole, to the Lenders as those set forth in the Master Intercompany Note and the Badcock Master Intercompany Note or (ii) otherwise reasonably satisfactory to the Administrative Agent;
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(v) (A) Indebtedness (including Capital Lease Obligations and purchase money indebtedness) incurred, issued or assumed by the Borrower or any Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that, in the case of any purchase money Indebtedness, such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement; provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) (excluding any Capital Lease Obligations incurred pursuant to a sale and leaseback transaction permitted under Section 6.06) shall not exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(vi) Indebtedness in respect of Swap Agreements not incurred for speculative purposes;
(vii) [reserved];
(viii) [reserved];
(ix) [reserved];
(x) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xi) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, Earn-Outs, incentive non-competes and other contingent obligations) or other similar arrangements incurred or assumed in connection with any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xii) (A) Indebtedness of the Borrower or any of the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xii) shall not exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiii) (A) Indebtedness of, incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures in an aggregate outstanding principal amount not to exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
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(xiv) Indebtedness incurred pursuant to the Second Lien Credit Agreement and the other Second Lien Loan Documents in an aggregate principal amount not to exceed $150,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement;
(xv) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xvi) Indebtedness supported by a letter of credit, in a principal amount not to exceed the face amount of such letter of credit;
(xvii) (A) Indebtedness arising from an agreement providing for indemnification obligations or obligations in respect of purchase price (including earn-outs) or other similar adjustments incurred in any Permitted Acquisition, any other Investment or any Disposition, in each case permitted under this Agreement, and (B) Indebtedness arising from guaranties, letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments securing the performance pursuant to any such agreement described in clause (A);
(xviii) Permitted Unsecured Refinancing Debt and any Permitted Refinancing thereof;
(xix) (A) Permitted First Priority Refinancing Debt and any Permitted Refinancing thereof and (B) Permitted Junior Priority Refinancing Debt and any Permitted Refinancing thereof;
(xx) (A)(I) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into the Borrower or any Subsidiary) after the Effective Date as a result of any Permitted Acquisition or any other Investment not prohibited by Section 6.04, or (II) Indebtedness of any Person that is assumed by the Borrower or any Subsidiary in connection with an acquisition of assets by the Borrower or such Subsidiary in any Permitted Acquisition or any other Investment not prohibited by Section 6.04; provided that such Indebtedness is not incurred in contemplation of such Permitted Acquisition or other Investment and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further, that the aggregate principal amount of Indebtedness at any time outstanding under this clause (xx) shall not exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;
(xxi) (A) Indebtedness of any Subsidiary that is not a Loan Party; provided that the aggregate principal amount of Indebtedness of which the primary obligor or a guarantor is a Subsidiary that is not a Loan Party outstanding in reliance of this clause (xxi) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
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(xxii) Indebtedness incurred by the Borrower or any of the Subsidiaries in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligations regarding workers compensation claims;
(xxiii) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(xxiv) (x) Indebtedness representing deferred compensation or stock-based compensation owed to employees, consultants or independent contractors of the Borrower or its Subsidiaries incurred in the ordinary course of business or consistent with past practice and (y) Indebtedness consisting of obligations of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries under deferred compensation to employees, consultants or independent contractors of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries or other similar arrangements incurred by such Persons in connection with the Pre-Effective Date Investments, the Transactions, any Permitted Acquisition or any other Investment not prohibited by Section 6.04;
(xxv) Indebtedness consisting of unsecured promissory notes issued by the Borrower or any Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, successors, executors, administrators, heirs, legatees or distributees, in each case to finance the purchase or redemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) to the extent permitted by Section 6.07(a);
(xxvi) (A) letters of credit or bank guarantees (exclusive of letters of credit issued pursuant to the ABL Credit Agreement) and similar instruments incurred by the Borrower and the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xxvi) shall not exceed the greater of $16,000,000 and 5.0% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxvii) Capital Lease Obligations arising under any sale and leaseback transaction permitted hereunder in reliance upon Section 6.05(f);
(xxviii) to the extent constituting Indebtedness, motor vehicle leases in the ordinary course of business;
(xxix) Indebtedness of any Loan Parties or Subsidiaries incurred in connection with any non-payment of rent by such Loan Parties or Subsidiaries caused by the COVID-19 Pandemic to the extent the landlord or other party to which such rent is due has accepted such temporary non-payment and has not declared a default under any applicable lease; provided that the aggregate outstanding amount of such Indebtedness attributable to unpaid rent shall not at any time exceed $10,000,000 for the most recently ended Test Period as of such time of determination;
(xxx) [reserved];
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(xxxi) Indebtedness incurred pursuant to any ABL Credit Agreement and the other ABL Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $250,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xxxii) Indebtedness (A) incurred pursuant to any FRG First Lien Credit Agreement and the other FRG First Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $1,000,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the FRG First Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the First Lien Pari Passu Intercreditor Agreement and (B) incurred pursuant to any FRG Second Lien Credit Agreement and the other FRG Second Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $300,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the FRG Second Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement; and
(xxxiii) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxii) above.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, issue any preferred Equity Interests or any Disqualified Equity Interests, except (A) in the case of the Borrower, preferred Equity Interests that are Qualified Equity Interests and (B)(x) preferred Equity Interests issued to and held by the Borrower or any Subsidiary and (y) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (B) (x) any such issuance of preferred Equity Interests that are not Qualified Equity Interests shall constitute incurred Indebtedness and be subject to the provisions set forth in Sections 6.01(a) and (b) (and shall only be permitted if the incurrence of such Indebtedness would have been permitted thereunder) and (y) if so incurred, any cash payments made with respect to such preferred Equity Interests shall constitute Restricted Payments and shall be subject to Section 6.07(a).
For purposes of determining compliance with any dollar denominated restriction on the incurrence of Indebtedness, the dollar equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided, however, that if such Indebtedness is a Permitted Refinancing incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance such dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Permitted Refinancing does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness the Borrower or any Subsidiary may incur pursuant to this Section 6.01 shall not be deemed exceeded by fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of any extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness.
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With respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence.
This Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral.
SECTION 6.02 Liens.
The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens existing on the Effective Date (provided that any Lien securing Indebtedness or other obligations in excess of $6,000,000 shall only be permitted if set forth on Schedule 6.02) and any modifications, replacements, renewals or extensions thereof; provided that (A) such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof, and (B) the obligations secured or benefited by such modified, replacement, renewal or extension Lien are permitted by Section 6.01;
(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property and Badcock Intellectual Property) that do not (A) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor or licensee under any lease or license entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased or licensed;
(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
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(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection, (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(ix) Liens on property or other assets of any Subsidiary that is not a Loan Party, which Liens secure Indebtedness or other obligations of such Subsidiary or another Subsidiary that is not a Loan Party, in each case permitted by this Agreement;
(x) Liens granted by a Subsidiary that is not a Loan Party in favor of any Subsidiary or the Borrower and Liens granted by a Loan Party in favor of any other Loan Party;
(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition);
(xii) any interest or title of a lessor or sublessor under leases or subleases (other than leases constituting Capital Lease Obligations) entered into by the Borrower or any Subsidiary in the ordinary course of business;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by the Borrower or any Subsidiary in the ordinary course of business;
(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
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(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and its Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
(xvii) Liens securing Obligations (as defined in the ABL Credit Agreement) under the ABL Credit Agreement and the other ABL Loan Documents; provided that the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens securing Indebtedness permitted under Section 6.01(a)(xix);
(xx) Liens on real property other than the Mortgaged Properties or the Badcock Mortgaged Properties;
(xxi) Liens securing Secured Obligations (as defined in the Second Lien Credit Agreement) under the Second Lien Credit Agreement and the other Second Lien Loan Documents; provided that the Second Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement;
(xxii) Liens securing Indebtedness permitted under Section 6.01(a)(xii);
(xxiii) Liens on cash and Permitted Investments to secure Indebtedness permitted under Section 6.01(a)(x) or (xxvi);
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) Liens securing Indebtedness permitted under Section 6.01(a)(xxi);
(xxviii) other Liens; provided that at the time of the granting of and after giving Pro Forma Effect to any such Lien and the obligations secured thereby (including the use of proceeds thereof) the lesser of (x) the aggregate outstanding face amount of obligations secured by Liens existing in reliance on this clause (xxviii) and (y) the fair market value of the assets securing such obligations shall not exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period;
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(xxix) Liens in favor of credit card issuers and credit card processors arising in the ordinary course of business securing the obligation to pay customary fees and expenses in connection with credit card arrangements;
(xxx) Liens on motor vehicles securing Indebtedness permitted by clause (xxviii) of Section 6.01; and
(xxxi) Liens securing (A) Secured Obligations (as defined in the FRG First Lien Credit Agreement) under the FRG First Lien Credit Agreement and the other FRG First Lien Loan Documents; provided that the FRG First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the First Lien Pari Passu Intercreditor Agreement and (B) Secured Obligations (as defined in the FRG Second Lien Credit Agreement) under the FRG Second Lien Credit Agreement and the other FRG Second Lien Loan Documents; provided that the FRG Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement.
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness.
SECTION 6.03 Fundamental Changes; Lead Borrower Covenant.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that:
(i) (A) any Subsidiary (other than a Borrower) may merge or consolidate with a Borrower; provided that a Borrower shall be the continuing or surviving Person and (B) any Subsidiary (other than a Borrower) may merge or consolidate with one or more other Subsidiaries; provided that when any Subsidiary Loan Party is merging or consolidating with another Subsidiary the continuing or surviving Person shall be a Subsidiary Loan Party; provided further that if the continuing or surviving Person is not a Subsidiary Loan Party, as applicable, the acquisition of such Subsidiary Loan Party by such surviving non-Loan Party Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Subsidiary that is not a Loan Party may merge or consolidate with or into any other Subsidiary that is not a Loan Party and (B) any Subsidiary may liquidate or dissolve or change its legal form if the Borrower determines in good faith that such action is in the best interests of the Borrower and its Subsidiaries and is not materially disadvantageous to the Lenders;
(iii) (x) any Borrower, other than the Lead Borrower, may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to a Borrower and (y) any Subsidiary may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or another Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment must be a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Lead Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04;
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(iv) a Borrower may merge or consolidate with (or Dispose of all or substantially all of its assets to) any other Person (including another Borrower); provided that (A) a Borrower shall be the continuing or surviving Person (or, if one of the parties to such merger, consolidation or Disposal is the Lead Borrower, then the Lead Borrower shall be the continuing or surviving Person) or (B) if the Person formed by or surviving any such merger or consolidation (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) is not a Borrower or is a Person into which the Borrower has been liquidated (any such Person, the “Successor Borrower”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States, any State thereof or the District of Columbia, (2) the Successor Borrower shall expressly assume all the obligations of a Borrower under this Agreement and the other Loan Documents to which such Borrower is a party, pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Administrative Agent, (3) each Loan Party other than such Borrower, unless it is the other party to such merger or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Administrative Agent, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement, and (4) such Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer and an opinion of counsel, each stating that such merger or consolidation complies with this Agreement; provided further that if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, such Borrower under this Agreement and the other Loan Documents; provided further that such Borrower will use commercially reasonable efforts to provide any documentation and other information about the Successor Borrower as shall have been reasonably requested in writing by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act; provided, further, that a Successor Borrower may not succeed to or be substituted for the Lead Borrower pursuant to this clause (iv);
(v) the Borrower and its Subsidiaries may undertake or consummate any Tax Restructuring;
(vi) [Reserved];
(vii) any Subsidiary may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be a Borrower or a Subsidiary, which together with each of the Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12; and
(viii) any Subsidiary may effect a merger, dissolution, liquidation, consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
(b) Neither the Borrower, nor any Subsidiary Loan Party, shall amend or permit any amendments to such Person’s Organizational Documents after the Effective Date in any manner that (when taken as a whole) would be materially adverse to Lenders.
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(c) The Lead Borrower will not conduct, transact or otherwise engage in any material business or material operations other than (i) the ownership and/or acquisition of the Equity Interests of its Subsidiaries and any other Persons engaged in a Similar Business (subject to Section 6.04), (ii) the performance of obligations under and compliance with its Organizational Documents, or other Requirement of Law (including the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance), ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of any of its Subsidiaries, and including in connection with the maintenance of its status as public company and any activities related or incidental thereto, including compliance with Requirements of Law and requirements, rules, regulations and guidance (whether or not binding) of the SEC and Nasdaq, Inc., (iii) subject to Section 6.04, repurchases of Indebtedness through open market purchases and Dutch auctions (to the extent not in violation hereof and to the extent any Loans so purchased are automatically and irrevocably cancelled after repurchase), the making of any loan to any officers, directors, managers, members of management, consultants or independent contractors and the making of any Investment in any of its Subsidiaries, (iv) participating in tax, accounting and other administrative matters related to the Lead Borrower and its Subsidiaries, (v) the entry into, and exercise of rights and performance of its obligations under and in connection with the Loan Documents and Guarantees of other Indebtedness not prohibited from being incurred under this Agreement by the Lead Borrower and its Subsidiaries, including borrowings under this Agreement, the ABL Credit Agreement, the Second Lien Credit Agreement, the FRG First Lien Credit Agreement, the FRG Second Lien Credit Agreement and any other Indebtedness not prohibited from being incurred under this Agreement, (vi) any issuance or registration of its Qualified Equity Interests for sale or resale (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Qualified Equity Interests), including the costs, fees and expenses related thereto, (vii) holding of any cash and Permitted Investments, (viii) the payment of dividends or making of distributions, making of loans and contributions to the capital of its Subsidiaries and any other Persons engaged in a Similar Business and guaranteeing the obligations of its Subsidiaries and making Investments, in each case, not in violation of Article VI of this Agreement, (ix) incurring fees, costs and expenses relating to overhead and general operating expenses including professional fees for legal, tax and accounting issues and paying taxes, (x) providing indemnification for its current and former officers, directors, managers, members of management, employees, advisors, consultants or independent contractors, (xi) performing of its obligations under the Acquisition Agreement and the other documents and agreements related thereto or contemplated thereby, (xii)(1) the payment of Public Company Costs or (2) activities reasonably incidental to the consummation of a Tax Restructuring, (xiii) activities incidental to the businesses or activities described in the foregoing clauses and (xiv) any business or other activities that are identical, reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the business and activities conducted by or proposed to be conducted by the Lead Borrower on or immediately prior to the Effective Date.
SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
(b) loans or advances to officers, members of the Board of Directors and employees of the Borrower and its Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of the Borrower (or any direct or indirect parent thereof) (provided that the amount of such loans and advances made in cash to such Person shall be immediately contributed to the Lead Borrower in cash as common equity or Qualified Equity Interests and shall not increase the Available Equity Amount or constitute Cure Amounts) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time in reliance on this clause (iii) not to exceed $15,000,000 for the most recently ended Test Period as of such time;
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(c) Investments by any Borrower or Subsidiary in any Borrower or Subsidiary; provided, that Investments by any Loan Parties in any Subsidiaries that are not a Loan Party shall not exceed an aggregate outstanding amount of the greater of $16,000,000 and 5.0% of Consolidated EBITDA for the most recently ended Test Period as of such time;
(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the Effective Date (provided that any Investment in an amount greater than $6,000,000 shall only be permitted if set forth on Schedule 6.04(e)) and any modification, replacement, renewal, reinvestment or extension thereof and (ii) Investments existing on the Effective Date by any Borrower or any Subsidiary in any Borrower or any Subsidiary and any modification, renewal or extension thereof; provided, in each case, that the amount of the Investment as of the Effective Date (or, if later, the date of the initial making of such Investment) is not increased except by the terms of such Investment to the extent, in the event such increase is in excess of $6,000,000 for the most recently ended Test Period as of such time, set forth on Schedule 6.04(e) or as otherwise permitted by this Section 6.04;
(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h) (A) Permitted Acquisitions, (B) the Acquisition and (C) intercompany Investments required (as determined by the Lead Borrower in good faith) to consummate Permitted Acquisitions and the Acquisition;
(i) Investments in connection with the Transactions (as defined in the FRG First Lien Credit Agreement);
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(l) loans and advances to any equity holder of the Lead Borrower (or any direct or indirect parent thereof) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such holder (or such parent) in accordance with Section 6.07(a);
(m) additional Investments and other acquisitions; provided that the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid (excluding the Net Proceeds from the issuance of such Qualified Equity Interests) in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of (A) (i) the greater of $40,000,000 and 12.5% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition; plus (ii) the Available General RP Capacity Amount at such time; plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (C) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (D) Investments in an aggregate outstanding amount not to exceed the portion, if any, of any unused amounts available under Section 6.07(a)(v) or 6.07(a)(xv) for Restricted Payments on the relevant date of determination that the Borrower elects to apply pursuant to this Section 6.04(m); provided that any Investment made in reliance on preceding clause (B) shall be subject to (x) no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 having occurred and be continuing or resulting therefrom and (y) before and after giving Pro Forma Effect to such Investment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.56 to 1.00 as of the end of the most recently ended Test Period as of such time;
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(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests;
(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary (provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(q) receivables owing to the Borrower or any Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
(s) Investments in the Borrower or any Subsidiary in connection with any Tax Restructuring;
(t) additional Investments so long as at the time of any such Investment and after giving effect thereto, (A) on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.06 to 1.00 and (B) no Event of Default exists or would result therefrom;
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;
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(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, Badcock Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) Investments in joint ventures (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in joint ventures) in an aggregate outstanding amount not to exceed the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period;
(y) [reserved];
(z) [reserved];
(aa) Investments in Similar Businesses (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in Similar Businesses) in an aggregate outstanding amount not to exceed the greater of $48,000,000 and 15.0% of Consolidated EBITDA for the most recently ended Test Period;
(bb) (i) Investments arising as a result of sale and leaseback transactions permitted by Section 6.06 hereto and (ii) to the extent constituting Investments, Investments by Badcock consisting of guarantees by Badcock of operating lease liabilities of lessees to the owners of real property sold by Badcock pursuant to and in accordance with Section 6.05(u) (solely with respect to the real property that was the subject of any such sale); and
(cc) loans and advances to franchisees in the ordinary course of business (A) in connection with the sale of Franchise Rights or (B) to provide working capital to franchisees; provided that (i) such loans and advances in excess of $750,000 individually shall be evidenced by promissory notes and any such promissory notes shall be pledged to the Collateral Agent to the extent required by the Security Documents and (ii) the aggregate outstanding principal amount of such loans and advances made in reliance on this clause (cc) shall not exceed $10,000,000 for the most recently ended Test Period at any time.
Notwithstanding anything to the contrary in this Section 6.04, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Material Intellectual Property (except for non-exclusive leases or non-exclusive licenses with respect thereto) as of the Effective Date owned by any Loan Party or any interest in any Franchise Agreement may be contributed and/or assigned as an Investment or otherwise transferred to any non-Loan Party.
SECTION 6.05 Asset Sales.
The Borrower will not, and will not permit any of its Subsidiaries to, (i) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it or (ii) permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to the Borrower or a Subsidiary in compliance with Section 6.04(c)) (each, a “Disposition” and the term “Dispose” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable to maintain, in the conduct of the business of the Borrower and its Subsidiaries (including allowing any registration or application for registration of any Intellectual Property or Badcock Intellectual Property that is no longer used or useful, or economically practicable to maintain, to lapse, go abandoned, be dedicated to the public domain or be invalidated);
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(b) Dispositions of inventory and other assets in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property;
(d) Dispositions of property to the Borrower or a Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (i) the transferee must be a Loan Party, (ii) to the extent constituting an Investment, such Investment must be a Permitted Investment in a Subsidiary that is not a Loan Party, in accordance with Section 6.04 or (iii) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in a Subsidiary that is not a Loan Party, in each case, in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03 and Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
(f) Dispositions of property pursuant to sale and leaseback transactions permitted by Section 6.06 hereto;
(g) Dispositions of Permitted Investments;
(h) Dispositions of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, abandonments, licenses, sublicenses or other disposals (including of Intellectual Property and Badcock Intellectual Property), in each case, (A) granted in the ordinary course of business or (B) that do not materially interfere with the business of the Borrower and its Subsidiaries, taken as a whole;
(j) transfers of property subject to Casualty Events;
(k) Dispositions of property to Persons other than Subsidiaries (including the sale or issuance of Equity Interests of a Subsidiary and including the sale of real property) for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of (x) with respect to any single transaction or series of related transactions, $10,000,000 or (y) with respect to all other Dispositions in any fiscal year of the Lead Borrower not excluded from the requirements of this proviso pursuant to the immediately preceding subclause (x), $20,000,000, the Borrower or any Subsidiary shall receive not less than 75% of such consideration in excess of the amounts referred to subclauses (x) and (y) in the form of cash or Permitted Investments; provided, however, that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of the Borrower or such Subsidiary or in the footnotes thereto) of the Borrower or such Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of the Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by the Borrower or such Subsidiary from such transferee that are converted by the Borrower or such Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result of such Disposition (other than intercompany debt owed to the Borrower or its Subsidiaries), to the extent that the Borrower and all of the Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash and (D) any Designated Non-Cash Consideration received by the Borrower or such Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $25,000,000, with the fair market value (as determined in good faith by the Lead Borrower) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash; provided, further, that, other than in respect of the Disposition described on Schedule 6.05(k), no Event of Default shall have occurred and be continuing at the time of, and after giving effect to, any Disposition made pursuant to this clause (k);
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(l) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(m) Dispositions or forgiveness of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;
(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of the Borrower and its Subsidiaries and (B) made to obtain the approval of any applicable antitrust authority in connection with a Permitted Acquisition;
(o) Dispositions of assets that are not Collateral or Badcock Collateral in an aggregate amount not to exceed the greater of $8,000,000 and 2.5% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(p) transfers of condemned property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) any Disposition of the Equity Interests of any Immaterial Subsidiary;
(r) other Dispositions in an aggregate amount not to exceed the greater of $8,000,000 and 2.5% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(s) [reserved];
(t) sales or other dispositions by any Borrower or any Subsidiary of assets in connection with the closing or sale of a retail store location (the closure of a store is not in and of itself the disposition of assets), warehouse, distribution center or corporate office of such Borrower or Subsidiary in the ordinary course of business of such Borrower or Subsidiary, which sale or disposition consists of leasehold interests in the premises of such store or distribution center, the equipment and fixtures located at such premises and the books and records relating exclusively and directly to the operations of such store or distribution center; provided, that, such sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction; and
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(u) Dispositions of Badcock Collateral for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
Notwithstanding anything to the contrary in this Section 6.05, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Loan Party shall, directly or indirectly, sell or otherwise transfer (except for non-exclusive leases or non-exclusive licenses with respect thereto) any Material Intellectual Property as of the Effective Date or any interest in any Franchise Agreement to any non-Loan Party.
SECTION 6.06 Sale and Leaseback Transactions.
The Borrower will not, and will not permit any of its Subsidiaries to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for (i) sale and leaseback transactions in an aggregate amount not to exceed the greater of $16,000,000 and 5.0% of Consolidated EBITDA, (ii) any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair market value (as determined in good faith by the Lead Borrower) of such fixed or capital asset and is consummated within 270 days after the Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset and (iii) any sale and leaseback transactions of Badcock Collateral so long as such sale is for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:
(i) each Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary; provided that (x) Restricted Payments by Badcock pursuant to this clause (i) shall not, as of any date of determination, exceed in the aggregate the sum of (A) $25,000,000 plus (B) the aggregate amount of proceeds of Equity Interests issued by the Lead Borrower that have been contributed to Badcock after the Effective Date as of such date and (y) in the case of any such Restricted Payment by a Subsidiary that is not a Wholly Owned Subsidiary of the Borrower, such Restricted Payment is made to the Borrower and/or any Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments by Badcock to the Borrower to the extent consisting of proceeds of Dispositions, which proceeds are used by the Borrower to repay the Term Loans pursuant to Section 2.11(c) and the Term Loans (as defined in the Second Lien Credit Agreement) under Section 2.11(c) of the Second Lien Credit Agreement;
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(iv) repurchases of Equity Interests in the Borrower or any Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments used to redeem, acquire, retire, repurchase or settle the Borrower’s Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Lead Borrower (or any direct or indirect parent thereof), and its Subsidiaries (in each case, other than the executive management (i.e., the CEO, the CFO, any executive vice presidents and any similar executive management positions)), upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date not to exceed $10,000,000 in any fiscal year of the Lead Borrower with unused amounts in any fiscal year being carried over solely to the next succeeding fiscal years; provided that such amount in any fiscal year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower or the Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors the Borrower or any Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward solely to the next subsequent fiscal year; provided further that cancellation of Indebtedness owning to the Borrower or any Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Borrower or any Subsidiary in connection with a repurchase of Equity Interests of the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
(vi) [reserved];
(vii) in addition to the foregoing Restricted Payments, the Borrower may make additional Restricted Payments, in an aggregate amount, when taken together with the aggregate amount of loans and advances previously made pursuant to Section 6.04(m) in lieu of Restricted Payments permitted by this clause (vii), not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any Restricted Payment made in reliance on preceding clause (A) shall be subject to, (x) no Event of Default having occurred and be continuing or resulting therefrom (tested at the time of declaration of such Restricted Payment) and (y) before and after giving Pro Forma Effect to such Restricted Payment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.06 to 1.00 as of the end of the most recently ended Test Period (tested at the time of declaration of such Restricted Payment);
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(viii) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions;
(ix) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
(x) Restricted Payments to pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xi) payments made or expected to be made by the Borrower or any Subsidiary in respect of withholding or similar Taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
(xii) [Reserved];
(xiii) [Reserved];
(xiv) [Reserved];
(xv) additional Restricted Payments in an amount not to exceed $120,000,000; provided that after giving effect to such Restricted Payment no Event of Default exists or would result therefrom;
(xvi) [Reserved]; and
(xvii) additional Restricted Payments; provided that after giving effect to such Restricted Payment (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.81 to 1.00 and (B) no Event of Default exists or would result therefrom.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, in each case, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal, premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
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(ii) refinancings of Indebtedness to the extent permitted by Section 6.01;
(iii) (1) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of the Borrower and (2) any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
(iv) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that after giving effect to such prepayments, redemptions, purchases, defeasances or other payments (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.81 to 1.00 and (B) no Event of Default exists or would result therefrom;
(v) [Reserved];
(vi) (A) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing in an aggregate amount not to exceed the greater of $80,000,000 and 25.0% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period plus (B) the amount of Restricted Payments that may be made pursuant to Section 6.07(a)(xv) at such time;
(vii) additional prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that the aggregate amount of such prepayments, redemptions, purchases, defeasances and other payments made in reliance on this clause (vii), shall not exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments; provided that any prepayments, redemptions, purchases, defeasances and other payments made in reliance on preceding clause (A) shall be subject to, before and after giving Pro Forma Effect to such prepayments, redemptions, purchases, defeasances and other payments, the Total Net Leverage Ratio being less than or equal to 3.06 to 1.00 as of the end of the most recently ended Test Period (tested at the time of distribution or delivery of any irrevocable notice of prepayment, redemption, repurchase or defeasance, as applicable, in respect thereof);
(viii) the prepayment of any Junior Financing owed to the Borrower or a Subsidiary or the prepayment of any Permitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing; provided that no Loan Party shall make any prepayment of any Junior Financing owed to any Subsidiary that is not a Loan Party pursuant to this clause (viii); and
(ix) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing within one year of the scheduled maturity of such Junior Financing; provided, that after giving effect to such prepayments, redemptions, purchases, defeasances and other payments, no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 exists or would result therefrom.
SECTION 6.08 Transactions with Affiliates.
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The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among any Borrower or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction and (B) transactions involving aggregate payment or consideration of less than the greater of $24,000,000 and 7.5% of Consolidated EBITDA for the most recently ended Test Period as of such time, (ii) on terms not materially less favorable to the Borrower or such Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate (as determined by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith), (iii) the payment of Transaction Costs, fees and expenses related to the Transactions, (iv) Dispositions in the form of a sale of furniture and assignment of lease agreements to franchisees in the ordinary course of business consistent with past practices, so long as the sale thereof is approved by disinterred members of the Board of Directors (or any committee thereof), (v) issuances of Equity Interests of the Borrower and the Subsidiaries to the extent otherwise permitted by this Agreement, (vi) employment and severance arrangements and other compensation arrangements between the Borrower and its Subsidiaries and their respective officers and employees in the ordinary course of business or otherwise in connection with the Transactions (as defined in the FRG First Lien Credit Agreement) (including loans and advances pursuant to Sections 6.04(b) and 6.04(n)), (vii) investments by Affiliates in Indebtedness and preferred Equity Interests of the Borrower and the Subsidiaries, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the Board of Directors, officers and employees of the Lead Borrower (or any direct or indirect parent thereof) and the Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Lead Borrower and its Subsidiaries, (ix) transactions pursuant to agreements in existence or contemplated on the Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary course of business (including any cash management activities related thereto), (xii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and which are fair to the Borrower and the Subsidiaries, in the reasonable determination of the Lead Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) [reserved], (xiv) customary payments by the Borrower and any Subsidiaries to any Investors made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings), which payments are approved by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith and (xv) payments by the Borrower and any Subsidiaries to reimburse any Investors and other Affiliates for any indemnities and reasonable out-of-pocket costs and expenses incurred in connection with the provision of any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings) by such Investor to Borrower and any Subsidiaries.
SECTION 6.09 Restrictive Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a) restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) [reserved], (4) any documentation governing Permitted Unsecured Refinancing Debt, Permitted First Priority Refinancing Debt or Permitted Junior Priority Refinancing Debt; provided that none of such documentation shall prohibit or limit the Lien in favor of the Collateral Agent for the benefit of the Secured Parties with respect to the Secured Obligations as in effect on the Effective Date, (5) any documentation governing Indebtedness incurred pursuant to Section 6.01(a)(xxi) or Section 6.01(a)(xxvi), (6) the ABL Loan Documents, the Second Lien Loan Documents, the FRG First Lien Loan Documents or the FRG Second Lien Loan Documents or (7) any documentation governing any Permitted Refinancing incurred to refinance any such Indebtedness referenced in clauses (1) through (6) above;
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(b) customary restrictions and conditions existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
(d) customary provisions in leases, licenses, sublicenses and other contracts restricting the assignment thereof;
(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary and the restriction or condition set forth in such agreement does not apply to the Lead Borrower or any other Subsidiary;
(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or, in the case of any Junior Financing, are market terms at the time of issuance and are imposed solely on such Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary; and
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(m) customary provisions related to creditworthiness of the tenant contained in real property leases entered into by Subsidiaries, so long as the Borrower has determined in good faith that such creditworthiness provisions could not reasonably be expected to impair the ability of the Borrower and its Subsidiaries to meet their ongoing obligations.
SECTION 6.10 Financial Maintenance Covenants.
(a) Maximum Total Net Leverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Total Net Leverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, to be greater than (a) for each fiscal quarter (commencing with the first full fiscal quarter ending after the Effective Date) prior to the fiscal quarter ending on or about December 31, 2022, 4.25 to 1.00 and (b) for each fiscal quarter thereafter (beginning with the fiscal quarter ending on or about December 31, 2022), 3.75 to 1.00.
(b) Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Fixed Charge Coverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, on a consolidated basis to be less than 1.50 to 1.00.
SECTION 6.11 Changes in Fiscal Periods.
The Lead Borrower will not make any change in its fiscal year; provided, however, that the Lead Borrower may, upon written notice to the Administrative Agent, change its fiscal year to any other fiscal year reasonably acceptable to the Administrative Agent, in which case, the Lead Borrower and the Administrative Agent will, and are hereby authorized by the Lenders to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year, without any requirement of consent by any Lender or other Person (notwithstanding anything to the contrary in Section 9.02).
SECTION 6.12 Amendment of Financing Documents.
The Borrower will not, and will not permit any of its Subsidiaries to, amend, modify, waive, terminate or release any ABL Loan Document, any Second Lien Loan Document, any FRG First Lien Loan Document, any FRG Second Lien Loan Document or the documentation governing any other Junior Financing, in each case, in a manner restricted by the terms of any applicable intercreditor or subordination agreement.
SECTION 6.13 Franchise Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to, maintain or distribute any Franchise Disclosure Documents, or enter into any Franchise Agreements, in violation of Section 3.20(c).
SECTION 6.14 Badcock.
In addition to the restrictions set forth in Sections 6.1 through 6.13, the Borrower will not permit Badcock to:
(a) create, incur, assume or permit to exist any Indebtedness, except Indebtedness permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) and (a)(xxxiii) (solely as it relates to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) of Section 6.01) of Section 6.01;
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(b) issue any preferred Equity Interests or any Disqualified Equity Interests;
(c) create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except Liens permitted by clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (xii), (xiii), (xv), (xvi), (xviii), (xx), (xxi), (xxiii) (solely in respect of Section 6.01(a)(x)), (xxv), (xxix), (xxx) and (xxxi) of Section 6.02;
(d) merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve;
(e) make or hold any Investment, except Investments permitted by clauses (a), (d), (e), (g), (j), (k), (n), (q), (r), (s), (v), (w) and (bb) of Section 6.04;
(f) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it, except Dispositions permitted by clauses (a), (b), (c), (d), (f), (g), (h), (i), (j), (m), (p), (t) and (u) of Section 6.05; provided that any Disposition by Badcock pursuant to Section 6.05(f) or Section 6.05(u) shall only be permitted hereunder to the extent the Net Proceeds of such Disposition are used to repay Indebtedness hereunder in accordance with the terms of this Agreement;
(g) allow to be effective any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except to the extent permitted by Section 6.06(iii); or
(h) declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except Restricted Payments permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(ix), (a)(x) and (a)(xi) of Section 6.07.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default.
If any of the following events (any such event, an “Event of Default”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
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(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any of the Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect (or all respects to the extent already qualified by materiality) when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of thirty (30) days after notice thereof from the Administrative Agent to the Borrower;
(d) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of the Borrower), 5.10, 5.14 or in Article VI; provided that any Event of Default due to failure to comply with the Financial Maintenance Covenants is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the Cure Expiration Date for the applicable fiscal quarter of the Lead Borrower;
(e) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01) and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent to the Borrower;
(f) any Lien purported to be created under any Badcock Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Badcock Collateral, with the priority required by the applicable Badcock Security Documents, except (i) as a result of the sale or other disposition of the applicable Badcock Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Badcock Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Badcock Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(g) any event or condition occurs that results in any Material Indebtedness, Indebtedness under the ABL Loan Documents, Indebtedness under the Second Lien Credit Agreement, Indebtedness under the FRG First Lien Credit Agreement and/or Indebtedness under the FRG Second Lien Credit Agreement becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired) the holder or holders of any such Indebtedness or any trustee or agent on its or their behalf to cause any such Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement) or (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness, other than on account of failure to make a payment required as a result of such termination or similar events;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
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(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more final, non-appealable, enforceable judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not covered by insurance (including self-insurance) as to which the insurer has been notified of such judgment or order and has not denied coverage) shall be rendered against the Borrower and any of the Material Subsidiaries or any combination thereof and the same shall remain undischarged for a period of sixty (60) consecutive days during which execution shall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such Loan Party that are material to the businesses and operations of the Borrower and its Subsidiaries, taken as a whole, to enforce any such judgment;
(k) an ERISA Event occurs that has resulted or would reasonably be expected to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(m) any material provision of any Loan Document or any material Guarantee of the Loan Document Obligations shall for any reason be asserted in writing by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material Guarantee of the Loan Document Obligations by any Loan Party pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement shall cease to be in full force and effect (other than in accordance with the terms of the Loan Documents); or
(o) a Change of Control shall occur;
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then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Lead Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 7.02 Right to Cure.
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that the Borrower and its Subsidiaries fail to comply with the requirements of the Financial Maintenance Covenants as of the last day of any applicable fiscal quarter of the Lead Borrower, at any time after the end of such fiscal quarter until the expiration of the fifteenth (15th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter of the Lead Borrower (or the fiscal year of the Lead Borrower ended on the last day of such fiscal quarter of the Lead Borrower) are required to be delivered pursuant to Sections 5.01(a) or (b), as applicable (such date, the “Cure Expiration Date”), the Lead Borrower shall have the right to issue Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Administrative Agent) for cash or otherwise receive cash contributions to the capital of the Lead Borrower as cash common equity or other Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Administrative Agent) (collectively, the “Cure Right”), and upon the receipt by the Borrower of the Net Proceeds of such issuance (the “Cure Amount”) pursuant to the exercise by the Borrower of such Cure Right the Financial Maintenance Covenants shall be recalculated giving effect to the following pro forma adjustment:
(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Maintenance Covenants and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and
(ii) if, after giving effect to the foregoing pro forma adjustment (without giving pro forma effect to any repayment of any Indebtedness with any portion of the Cure Amount and without netting against the calculation of Consolidated Total Indebtedness any portion of the Cure Amount on the balance sheet of the Lead Borrower and its Subsidiaries, in each case, with respect to such fiscal quarter only), the Lead Borrower and its Subsidiaries shall then be in compliance with the requirements of the Financial Maintenance Covenants, the Borrower and its Subsidiaries shall be deemed to have satisfied the requirements of the Financial Maintenance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Maintenance Covenants that had occurred shall be deemed cured for the purposes of this Agreement;
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provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by the Borrower (or any other receipt of cash in respect of its Cure Rights).
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Lead Borrower there shall be no more than two (2) fiscal quarters in which the Cure Right is exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times and (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Maintenance Covenants and any amounts in excess thereof shall not be deemed to be a Cure Amount. Notwithstanding any other provision in this Agreement to the contrary, the Cure Amount received pursuant to any exercise of the Cure Right shall be disregarded for purposes of determining any financial ratio based conditions and/or available basket under Article VI of this Agreement (and the Cure Amount shall not be credited as an addition to any basket (including the Available Amount or the Available Equity Amount) or for any other calculation). For the avoidance of doubt, no Cure Amounts shall be applied to reduce the Indebtedness of the Borrower and its Subsidiaries on a Pro Forma Basis (whether by “cash netting” or otherwise) for purposes of determining compliance with the Financial Maintenance Covenants for the fiscal quarter with respect to which such Cure Right was made.
(c) [Reserved].
(d) Notwithstanding anything herein to the contrary, neither the Administrative Agent nor any Lender shall exercise the right to accelerate the Loans under the Term Facility or terminate the Commitments and none of the Administrative Agent, any Lender or any other Secured Party shall exercise any right to foreclose on or take possession of the Collateral or the Badcock Collateral or exercise any remedy solely on the basis of an Event of Default having occurred and being continuing with respect to the Financial Maintenance Covenants, in each case, unless such Event of Default is not cured pursuant to the exercise of the applicable Cure Right on or prior to the applicable Cure Expiration Date (except to the extent that the Lead Borrower has confirmed in writing that it does not intend to provide the Cure Amount).
SECTION 7.03 Application of Proceeds.
(a) Subject to the terms of any applicable Intercreditor Agreement contemplated by this Agreement, in connection with the exercise of remedies provided for in Section 7.01, any amounts received on account of the Secured Obligations (including in respect of any sale of, collection from or other realization upon all or any part of the Collateral or the Badcock Collateral (including any Collateral or Badcock Collateral consisting of cash) or the Guarantees) shall be applied by the Administrative Agent and/or the Collateral Agent, as applicable, to the payment of the Secured Obligations as follows:
(i) first, to the payment of all reasonable and documented or invoiced out of pocket costs and expenses incurred by the Collateral Agent in connection with such sale, collection, other realization or otherwise and to the payment of all other amounts owing to each of the Administrative Agent, and the Collateral Agent in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all reasonable and documented or invoiced out of pocket court costs and the fees and expenses of its agents, the repayment of all advances made by it under any Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy under any Loan Document, in each case, if and to the extent payable pursuant to the terms of the Loan Documents;
(ii) second, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among such Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution) in accordance with this Agreement;
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(iii) third, to any agent of any other junior secured debt, in accordance with any applicable Intercreditor Agreement; and
(iv) fourth, to the Borrower, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Administrative Agent and/or the Collateral Agent, as applicable, shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. In the event that application of payments, Collateral proceeds or Badcock Collateral proceeds is to be made after any bankruptcy or insolvency proceeding has been commenced, references in this Section 7.03(a) with respect to (i) interest shall include interest accruing after the commencement of such bankruptcy or insolvency proceeding whether or not such interest is an allowed claim in such bankruptcy or insolvency proceeding, and (ii) any other amounts shall only include amounts that are allowed claims in such bankruptcy or insolvency proceeding.
(b) Notwithstanding anything to the contrary in Section 7.03(a), Excluded Swap Obligations with respect to any Loan Party shall not be paid with amounts received from such Loan Party or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Secured Obligations otherwise set forth in Section 7.03(a).
ARTICLE VIII
Administrative Agent
SECTION 8.01 Appointment and Authority.
(a) Each of the Lenders hereby irrevocably (i) appoints (A) JPM to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and (B) JPM to act on its behalf as Collateral Agent hereunder and under the other Loan Documents and (ii) authorizes the Administrative Agent and the Collateral Agent (in their capacities as such), as applicable, to take such actions on such Lender’s behalf and to exercise such powers as are delegated to the Administrative Agent and the Collateral Agent, as applicable, by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints JPM to act on its behalf as Collateral Agent under the Security Documents and the Badcock Security Documents and authorizes JPM (in its capacity as Collateral Agent) to take such actions on such Secured Party’s behalf and to exercise such powers as are delegated to the Collateral Agent by the terms hereof or thereof together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirements of Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
(b) Each of the Lenders and each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints and authorizes the Collateral Agent, as applicable, to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral and Badcock Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and/or the Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents and any Lien on the Badcock Collateral (or any portion thereof) granted under the Badcock Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
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SECTION 8.02 Rights as a Lender.
Any Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions.
No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, each Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law;
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity;
(d) shall in no event be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions;
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(e) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment;
(f) shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to such Agent by the Borrower or a Lender;
(g) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents or the Badcock Security Documents, (v) the value or the sufficiency of any Collateral or Badcock Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent; and
(h) shall not be responsible for nor have any duty to monitor the performance or any action of the Borrower or other Loan Party, or any of their directors, members, officers, agents, affiliates or employees, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party, and may assume performance by all such Persons of their respective obligations and shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
SECTION 8.04 Reliance by Agents.
Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. As to any matters not expressly provided for in this Agreement and in the other Loan Documents (including enforcement or collection), the Administrative Agent and/or the Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender. Upon request by the Administrative Agent and/or the Collateral Agent, as the case may be, the Required Lenders shall confirm in writing the Administrative Agent’s authority and/or the Collateral Agent’s authority, as the case may be, to take any action in accordance with the terms of the Loan Documents and this Section 8.04 and may refrain from acting until such confirmation has been provided.
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Notwithstanding anything else to the contrary herein, whenever reference is made in this Agreement, or any other Loan Document, to any discretionary action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent or the Collateral Agent, it is understood that in all cases the Administrative Agent or such Collateral Agent shall be fully justified in failing or refusing to take any such action if it shall not have received written instruction, advice or concurrence from (i) in the case of the Administrative Agent, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in any other Loan Document) or (ii) in the case of the Collateral Agent, the Administrative Agent. The Administrative Agent and Collateral Agent shall have no liability for any failure or delay in taking any actions contemplated above as a result of a failure or delay on the part of the Required Lenders (or Administrative Agent in the case of the Collateral Agent) to provide such instruction, advice or concurrence. This provision is intended solely for the benefit of each of the Administrative Agent and the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto.
Except for any action expressly required of the Administrative Agent or the Collateral Agent hereunder or other Loan Document to which it is a party, it shall in all cases be fully justified in failing or refusing to act unless it shall receive further assurances to its reasonable satisfaction, including indemnification, from the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. No provision of this Agreement or any Loan Document shall require the Administrative Agent or the Collateral Agent to take any action that it reasonably believes to be contrary to applicable law or to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties thereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 8.05 Delegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of any Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Facility as well as activities as such Agent.
SECTION 8.06 Resignation of Administrative Agent; Mergers.
Each Agent may resign upon thirty (30) days’ notice to the Lenders and the Lead Borrower, whether or not a successor Agent has been appointed. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless an Event of Default under Sections 7.01(a), (b), (h) or (i) has occurred and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Agent is replaced, the “Resignation Effective Date”); provided that if the retiring Agent shall notify the Lead Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
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If the Person serving as an Agent is a Defaulting Lender, the Required Lenders and the Lead Borrower may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Agent and, with the consent of the Lead Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed and (ii) with respect to any outstanding payment obligations) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.
Any corporation or association into which an Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which an Agent is a party, will be and become the successor Agent under this Agreement and related Loan Documents and will have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.
SECTION 8.07 Non-Reliance on Agents and Lenders.
Each Lender acknowledges that it has, independently and without reliance upon any Agent, the Lead Arranger, any Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, the Lead Arranger or any Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agents and/or the Lenders on the Effective Date.
No Lender and no other Secured Party shall have any right individually to realize upon any of the Collateral or the Badcock Collateral or to enforce any Guarantee of the Secured Obligations or the Badcock Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent and the Collateral Agent on behalf of the Lenders and the other Secured Parties in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent or the Collateral Agent on any of the Collateral or the Badcock Collateral pursuant to a public or private sale or other disposition, the Administrative Agent, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral or such Badcock Collateral at any such sale or other disposition, and the Administrative Agent or such Collateral Agent, as agent for and representative of the Lenders and the other Secured Parties (but not any Lender, Lenders, Secured Party or Secured Parties in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral or the Badcock Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent or the Collateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral, the Badcock Collateral, the Guarantees of the Secured Obligations and the Badcock Guarantee of the Secured Obligations, to have agreed to the foregoing provisions.
SECTION 8.08 No Other Duties, Etc.
Anything herein to the contrary notwithstanding, neither the Bookrunner nor the Lead Arranger shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
SECTION 8.09 Administrative Agent May File Proofs of Claim.
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, and any Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and such Agent and their respective agents and counsel and all other amounts due the Lenders and each Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
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(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and, by its acceptance of the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of any Agent and its agents and counsel, and any other amounts due such Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any Secured Party that is not a party hereto any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or any Secured Party that is not a party hereto to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or any Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) any Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as an Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to such Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
SECTION 8.11 Withholding Taxes.
To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 8.11. The agreements in this Section 8.11 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
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SECTION 8.12 Credit Bidding.
The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral and/or the Badcock Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral and/or the Badcock Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral and/or Badcock Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
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SECTION 8.13 Erroneous Payments.
(a) If the Administrative Agent (x) notifies a Lender, Secured Party, or any Person who has received funds on behalf of a Lender or Secured Party (any such Lender, Secured Party or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its reasonable discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 8.13 and held in trust for the benefit of the Administrative Agent, and such Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Rate/Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender, Secured Party or any Person who has received funds on behalf of a Lender or Secured Party (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
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(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 8.13(b).
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 8.13(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 8.13(a) or on whether or not an Erroneous Payment has been made.
(c) Each Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender or Secured Party under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned under immediately preceding clause (a).
(d) (i) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, then effective immediately (with the consideration therefor being acknowledged by the parties hereto), (A) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) (on a cashless basis and such amount calculated at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance)), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an approved electronic platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent (but the failure of such Person to deliver any such Notes shall not affect the effectiveness of the foregoing assignment), (B) the Administrative Agent as the assignee Lender shall be deemed to have acquired the Erroneous Payment Deficiency Assignment, (C) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (D) the Administrative Agent and the Borrower shall each be deemed to have waived any consents required under this Agreement to any such Erroneous Payment Deficiency Assignment, and (E) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement.
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(ii) Subject to Section 9.04 (but excluding, in all events, any assignment consent or approval requirements (whether from the Borrower or otherwise)), the Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). In addition, an Erroneous Payment Return Deficiency owing by the applicable Lender (x) shall be reduced by the proceeds of prepayments or repayments of principal and interest, or other distribution in respect of principal and interest, received by the Administrative Agent on or with respect to any such Loans acquired from such Lender pursuant to an Erroneous Payment Deficiency Assignment (to the extent that any such Loans are then owned by the Administrative Agent) and (y) may, in the sole discretion of the Administrative Agent, be reduced by any amount specified by the Administrative Agent in writing to the applicable Lender from time to time.
(e) The parties hereto agree that (x) irrespective of whether the Administrative Agent may be equitably subrogated, in the event that an Erroneous Payment (or portion thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights and interests of such Payment Recipient (and, in the case of any Payment Recipient who has received funds on behalf of a Lender or Secured Party, to the rights and interests of such Lender or Secured Party, as the case may be) under the Loan Documents with respect to such amount (the “Erroneous Payment Subrogation Rights”) (provided that the Loan Parties’ Secured Obligations under the Loan Documents in respect of the Erroneous Payment Subrogation Rights shall not be duplicative of such Secured Obligations in respect of Loans that have been assigned to the Administrative Agent under an Erroneous Payment Deficiency Assignment) and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party; provided that this Section 8.13 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the Obligations of the Borrower relative to the amount (and/or timing for payment) of the Obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower for the purpose of making such Erroneous Payment.
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(f) To the extent permitted by applicable law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 8.13 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, 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 fax or other electronic transmission, as follows:
(i) if to the Borrower, the Administrative Agent or the Collateral Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax or other electronic transmission 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 and other communications 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 Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not 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 (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.
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(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower 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. The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties 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 Borrower in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
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SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.14, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Lead Borrower, the Administrative Agent (to the extent that such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall execute such waiver, amendment or other modification to the extent approved by the Required Lenders) and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or the Collateral Agent, as the case may be, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender or change any ratable sharing or payment provision that directly and adversely affects any Lender (with only such Lenders whose entitlement to a payment under such provisions is reduced being “directly and adversely affected”) without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby, provided that only the consent of the Required Lenders shall be necessary to waive any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan, or the date of any scheduled amortization payment of the principal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date, any scheduled amortization payment or the date for payment of any interest or fees), without the written consent of each Lender directly and adversely affected thereby, (iv) change any of the provisions of this Section without the written consent of each Lender directly and adversely affected thereby; provided that any such change which is in favor of a Class of Lenders holding Loans maturing after the maturity of other Classes of Lenders (and only takes effect after the maturity of such other Classes of Loans or Commitments) will require the written consent of the Required Lenders with respect to each Class directly and adversely affected thereby, (v) change the percentage set forth in the definition of “Required Lenders”, “Majority in Interest” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) subordinate (or have the effect of subordinating) Liens securing any material portion of the Collateral or the Badcock Collateral (other than in connection with debtor-in-possession financing or use of cash collateral in accordance with the terms of the applicable Intercreditor Agreements), without the written consent of each Lender directly and adversely affected thereby, (vii) release (or have the effect of releasing) all or substantially all or any material portion of the value of the Guarantees under the Guarantee Agreement or the Badcock Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender), (viii) release (or have the effect of releasing) all or substantially all or any material portion of the Collateral from the Liens of the Security Documents or the Badcock Collateral from the Liens of the Badcock Security Documents, without the written consent of each Lender (other than a Defaulting Lender) except as expressly provided in the Loan Documents, (ix) change any pro rata sharing and/or payment provisions or any payment “waterfall” herein or in any other Loan Document, without the written consent of each Lender directly and adversely affected thereby, or (x) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of the Required Lenders with respect to any Class directly and adversely affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent without the prior written consent of the Administrative Agent or the Collateral Agent, as applicable, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Lead Borrower and the Administrative Agent in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Administrative Agent, so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, or (iii) to add any provisions to any Loan Documents that, in the reasonable judgment of the Administrative Agent, are more favorable to the Lenders (or to the applicable subset thereof), so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by the Lead Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time and (D) no Lenders other than the Lenders holding a Majority in Interest of the applicable Class shall be required to waive, amend, supplement or modify the conditions precedent to any Borrowings of Loans of such Class. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Lead Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents, Badcock Security Documents and related documents in connection with this Agreement may be in a form reasonably determined by the Administrative Agent and may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Administrative Agent at the request of the Lead Borrower without the need to obtain the consent of any other Lender if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Administrative Agent, so long as the Required Lenders shall not have provided written objection thereto to the Administrative Agent within five days of receipt of notice thereof, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents, or (iv) to integrate any Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents, including the relevant Intercreditor Agreement(s).
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(c) In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders (and, to the extent any Proposed Change requires the consent of Lenders holding Loans of any Class pursuant to clause (iv), (v) or (ix) of paragraph (b) of this Section 9.02, the consent of a Majority in Interest of the outstanding Loans and unused Commitments of such Class) to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “Non-Consenting Lender”), then, so long as the Lender that is acting as Administrative Agent is not a Non-Consenting Lender, the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, (i) if no Event of Default under Sections 7.01(a), (b), (h) or (i) exists, permanently prepay all of the Loans of any Class owing by it to, and terminate any Commitments of, such Non-Consenting Lender or (ii) require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consent shall not unreasonably be withheld, conditioned or delayed, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, Term Loans of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
SECTION 9.03 Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Lead Arranger (limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of Latham & Watkins LLP and, if reasonably necessary, of a single firm of local counsel to the Lead Arranger in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of such other counsel retained with the Lead Borrower’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), in each case incurred in connection with the Term Facility, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof) and (ii) all reasonable and documented out-of-pocket expenses incurred by each Agent or any Lender, including the fees, charges and disbursements of counsel for such Agent and the Lenders, in connection with the preservation, enforcement or protection of any rights or remedies (A) in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws), including its rights under this Section 9.03 or (B) in connection with the Loans made hereunder, including all such out-of-pocket costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that such counsel shall be limited to one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) (and, in the case of a conflict of interest, where each Agent or any Lender affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel, one additional counsel) and such other counsel as may be retained with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the expenses of counsel shall not include any allocated costs of in-house counsel.
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(b) The Borrower shall indemnify each Agent, each Lender, the Lead Arranger, the Bookrunner and each Related Party of any of the foregoing Persons (but excluding any such Person to the extent such Person is acting as a financial advisor to the Investors in connection with the Transactions (any such Person to the extent acting in such capacity, an “Excluded Party”)) (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from (without duplication), any and all losses, claims, damages, liabilities and reasonable and documented out-of-pocket fees and expenses (limited, in the case of legal fees and expenses, to the reasonable and documented fees, charges and disbursements of one counsel for all Indemnitees, to the extent reasonably necessary, a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Indemnitees, taken as a whole (and, solely in the case of an actual or potential conflict of interest, where the Indemnitee affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel after receipt of consent from the Lead Borrower (not to be unreasonably withheld or delayed), of one additional firm of counsel for the affected Indemnitees, and, if reasonably necessary, one additional firm of local counsel in each appropriate material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for such affected Indemnitees, taken as a whole), incurred by or asserted against any Indemnitee by any third party or by the Borrower or any Subsidiary arising out of, in connection with, or as a result of any claim, litigation, investigation or proceeding (including any inquiry or investigation), regardless of whether any such Indemnitee is a party thereto, whether based on contract, tort or any other theory, relating to (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder, the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the Term Facility or the enforcement of any obligations of a Loan Party hereunder or under any other Loan Document, (ii) any Loan or the use of the proceeds therefrom or (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property, any Badcock Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any Subsidiary, or any other Environmental Liability related in any way to the Borrower or any Subsidiary; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitee (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitees (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Agents, the Lead Arranger or the Bookrunner, in each case, in their respective capacities) that does not arise from an act or omission by the Borrower or any Subsidiary. This Section 9.03 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
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(c) To the extent that the Borrower fails to pay any amount required to be paid by it to any Agent or any Lender under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to such Agent or such Lender, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent or such Lender in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the aggregate outstanding Term Loans and unused Commitments at such time (or if all such amounts have been reduced to zero, at the time immediately preceding such reduction). The obligations of the Lenders under this paragraph (c) are subject to the last sentence of Section 2.02(a) (which shall apply mutatis mutandis to the Lenders’ obligations under this paragraph (c)).
(d) To the extent permitted by applicable law, (i) the Borrower shall not assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such direct or actual damages are determined by a court of competent jurisdiction by final, non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of, or a material breach of the Loan Documents by, such Indemnitee or its Related Parties and (ii) no Loan Party (or any Affiliate thereof), Investor (or any Affiliate thereof), or Indemnitee shall be liable for any special, indirect, consequential, incidental, exemplary 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 or thereby, the Financing Transactions, any Loan or the use of the proceeds thereof; provided that nothing in this paragraph shall limit any Loan Party’s (or any Affiliate thereof) or Investor’s (or any Affiliate thereof) indemnity and reimbursement obligations to the extent that such indirect, special, punitive or consequential damages are included in any claim by a third party unaffiliated with the applicable Indemnitee with respect to which the applicable Indemnitee is entitled to indemnification as set forth in this Section 9.03.
(e) All amounts due under this Section 9.03 shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns.
(a) 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 (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. 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 paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent (except with respect to assignments to competitors of the Borrower) not to be unreasonably withheld, conditioned or delayed) of (A) the Lead Borrower; provided that no consent of the Lead Borrower shall be required for an assignment (x) by a Term Lender to any other Lender, any Affiliate of a Lender or any Approved Fund, or (y) if an Event of Default under Sections 7.01(a), (b), (h) or (i) with respect to the Lead Borrower has occurred and is continuing (other than in respect of a proposed assignment to a Disqualified Lender); provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Lead Borrower’s prior written consent; provided further that the Lead Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Lead Borrower or any Subsidiary would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or Term Commitment to (x) a Lender, an Affiliate of a Lender or an Approved Fund or (y) subject to Section 9.04(g), the Borrower or any of its Subsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Lead Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within five (5) Business Days after written notice of such assignment, the Lead Borrower shall be deemed to have consented to such assignment (other than in respect of a proposed assignment to a Disqualified Lender).
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the trade date specified in the Assignment and Assumption with respect to such assignment or, if no trade date is so specified, as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $2,500,000 (and integral multiples of $500,000 in excess thereof), unless the Administrative Agent otherwise consents (such consent not to be unreasonably withheld, conditioned or delayed), (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender or an Affiliate of a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Lead Borrower and the Administrative Agent any tax forms required by Section 2.17(e) and an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain Material Non-Public Information about the Borrower, the other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal and interest amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) 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.
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(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (other than to a Person that is not an Eligible Assignee) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related stated interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form under Section 5f.103-1(c) and proposed Section 1.163-5(b) of the United States Treasury regulations.
(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable 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 Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Lead Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) [Reserved].
(g) Any Lender may, at any time, assign all or a portion of its Term Loans to the Borrower or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) no proceeds from any loans under any revolving credit facilities will be used to fund such assignments, (ii) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (iii) no Event of Default shall have occurred and be continuing and (iv) each Lender making such assignment to the Borrower or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) the Borrower or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders. Except as otherwise set forth in this Agreement, cancellation of Term Loans in connection with this clause (g) shall not constitute a voluntary or mandatory prepayment of Term Loans.
(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Lead Borrower. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to make the list of Disqualified Lenders available to such Lender for inspection. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Lead Borrower to such Lender and the Administrative Agent: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee; provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Lead Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
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SECTION 9.05 Survival.
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of any Agent.
SECTION 9.06 Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the syndication of the Loans and Commitments 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 Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent (whether on its own behalf or on behalf of any Lender), any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Loan Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the Administrative Agent, any Lender or any Affiliates or Related Parties of any of the foregoing for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising as a result of the failure of any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
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SECTION 9.07 Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent then such provisions shall be deemed to be in effect only to the extent not so limited.
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SECTION 9.08 Right of Setoff.
If an Event of Default under Sections 7.01(a), (b), (h) or (i) shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have. Notwithstanding the foregoing, no amount set off from any Loan Party (other than the Borrower) shall be applied to any Excluded Swap Obligation of such Loan Party (other than the Borrower).
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 or, to the extent permitted by law, in such Federal court. Each of the 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 any Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or its properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY 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 ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings.
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 9.12 Confidentiality.
(a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors, in each case, who need to know such Information in connection with the Transactions (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 and any failure of such Persons acting on behalf of the Administrative Agent or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent or the relevant Lender, as applicable), (ii) to the extent requested by any governmental authority or self-regulatory authority having jurisdiction over the Administrative Agent, any Lender or any Affiliates of any of the foregoing, as applicable, or, based on reasonable advice of counsel, to the extent required by (A) an order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, (B) applicable law or by any subpoena or similar compulsory legal process or (C) in connection with the exercise of remedies or enforcement of rights hereunder in any suit, action or proceeding relating to this Agreement; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by bank accountants or governmental or self-regulatory authorities exercising examination or regulatory authority, each Lender and the Administrative Agent shall notify the Lead Borrower as promptly as practicable of any such requested or required disclosure and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, and provided further that in no event shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Borrower or any of its Subsidiaries, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any direct or indirect contractual counterparty to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency in connection with obtaining a rating; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers (including any numbering, administration or settlement service providers) providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the Term Facility (e.g., identities of parties, maturity dates, interest rates, etc.) on a confidential basis, (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or otherwise by reason of improper disclosure by the Administrative Agent any Lender or any Affiliates or Related Parties of any of the foregoing (including the Persons referred to in clauses (i) above) in violation of any confidentiality obligations owing to the Loan Parties or any Subsidiaries, Affiliates or Related Parties of any of the foregoing or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower or any Subsidiary, which source is not known by the recipient of such information to be subject to a confidentiality obligation, or (viii) to the extent that such information was already in the possession of the Administrative Agent or any Lender prior to any duty or other undertaking of confidentiality or is independently developed by the Administrative Agent or any Lender without the use of such information and without otherwise violating the terms of this Section 9.12. For the purposes hereof, “Information” means all information received from or on behalf of the Borrower or any of its Subsidiaries relating to the Borrower, any of its Subsidiaries or their business. Any Person required to maintain the confidentiality of Information as provided in this Section 9.12 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. Notwithstanding the foregoing, other than as set forth in the proviso below, (x) no such information shall be disclosed to a Disqualified Lender or Excluded Party that constitutes a Disqualified Lender or Excluded Party, as applicable, at the time of such disclosure without the Lead Borrower’s prior written consent and (y) in connection with any proposed assignment of Loans and/or Commitments in accordance with Section 9.04, upon request by the applicable potential assignee therefor, the applicable potential assigning Lender may disclose the list of Disqualified Lenders to such potential assignee solely for purposes of enabling such assignee to make a representation in its applicable Assignment and Assumption that such prospective assignee is an Eligible Assignee, provided, however, that, subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, the list of Disqualified Lenders may be disclosed to any bona fide potential assignee or Participant, so that such potential assignee or Participant can represent and warrant that it is neither a Disqualified Lender nor an Affiliate of a Disqualified Lender.
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(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION 9.12) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
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SECTION 9.13 USA PATRIOT Act.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT 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 such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.14 Release of Liens and Guarantees.
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents (including its Guarantee or Badcock Guarantee, as the case may be, of the Secured Obligations) and all security interests created by the Security Documents in Collateral or by the Badcock Security Documents in Badcock Collateral, as the case may be, owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary (including pursuant to a permitted merger with a Subsidiary that is not a Loan Party) or becomes an Excluded Subsidiary (other than solely as a result of such Subsidiary Loan Party ceasing to be a Wholly Owned Subsidiary) or (2) upon the request of the Lead Borrower, in connection with a transaction permitted under this Agreement (but only a transaction (x) in which such Subsidiary Loan Party becomes a bona fide joint venture and the other Person taking an equity interest in such Subsidiary Loan Party takes such equity interest for fair market value (as determined in good faith by the Lead Borrower) and is not an Affiliate of the Borrower (other than as a result of such joint venture), (y) in which such Subsidiary Loan Party does not own or have an exclusive license of any Material Intellectual Property or own any Equity Interests of any Person that owns or is the exclusive licensee of any Material Intellectual Property and (z) the primary purpose (as determined by the Lead Borrower in good faith) of which is not the release of any Guarantee of or Lien on the assets of such Subsidiary Loan Party) as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary. Upon any sale or other transfer by any Loan Party (other than to the Borrower or any Subsidiary Loan Party) of any Collateral and/or Badcock Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral and/or under any Badcock Security Document in any Badcock Collateral, the security interests in such Collateral created by the Security Documents and/or such Badcock Collateral created by the Badcock Security Documents, as the case may be, shall be automatically released. Upon the release of any Subsidiary Loan Party from its Guarantee or Badcock Guarantee, as the case may be, in compliance with this Agreement, the security interest in any Collateral or Badcock Collateral owned by such Subsidiary created by the Security Documents or the Badcock Security Documents, as the case may be, shall be automatically released. Upon termination of the aggregate Commitments and payment in full of all Secured Obligations (other than contingent indemnification obligations), all obligations under the Loan Documents and all security interests created by the Security Documents and the Badcock Security Documents shall be automatically released. In connection with any termination or release pursuant to this Section 9.14, the Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or that Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or that Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement.
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(b) The Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(iv).
(c) Each of the Lenders, and by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to provide any release or evidence of release, termination or subordination contemplated by this Section 9.14. Upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or that Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14.
SECTION 9.15 No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, any of its Affiliates or any other Person and (B) none of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders has any obligation to the Borrower 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; and (iii) the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and none of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
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SECTION 9.16 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 Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
SECTION 9.17 Intercreditor Agreements. Each of the Lenders and, by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, hereby agrees that the Administrative Agent and/or the Collateral Agent may enter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of the Administrative Agent and/or the Collateral Agent (and/or their affiliated designees, representatives or agents) on its behalf as collateral agent, respectively, thereunder. In the event of any conflict between the provisions of this Agreement or any other Loan Document (other than any Intercreditor Agreement) and the provisions of any Intercreditor Agreement, the provisions of such Intercreditor Agreement shall govern and control.
SECTION 9.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with the normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrowers in respect of any such sum due from them to the Administrative Agent or the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or the relevant Lender of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or the relevant Lender may in accordance with the normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender from the Borrowers in the Agreement Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
SECTION 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
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| 1. | the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and |
| 2. | the effects of any Bail-In Action on any such liability, including, if applicable: |
| i. | a reduction in full or in part or cancellation of any such liability; |
| ii. | a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or |
| iii. | the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. |
SECTION 9.20 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
SECTION 9.21 Keepwell. Each Borrower, to the extent constituting a 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 Badcock to honor all of its obligations under the Badcock Guarantee Agreement in respect of Secured Swap Obligations (provided, however, that each such Qualified ECP Guarantor shall only be liable under this Section 9.21 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.21, or otherwise under this Agreement, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Borrower under this Section 9.21 shall remain in full force and effect until the termination of the Badcock Guarantee Agreement in accordance with its terms. Each Borrower intends that this Section 9.21 constitute, and this Section 9.21 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of Badcock for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
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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.
FRANCHISE GROUP, INC., as a Borrower and Lead Borrower
By: /s/ Eric Seeton_________________________
Name: Eric Seeton
Title: Chief Financial Officer
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
valor acquisition, llc, each as a Borrower
By: /s/ Eric Seeton_________________________
Name: Eric Seeton
Title: Chief Financial Officer
[Signature Page to First Lien Credit Agreement (Badcock)]
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Collateral Agent
By: /s/ James A. Knight_________________
Name: James A. Knight
Title: Executive Director
[Signature Page to First Lien Credit Agreement (Badcock)]
JPMORGAN CHASE BANK, N.A.,
as a Lender
By: /s/ James A. Knight_________________
Name: James A. Knight
Title: Executive Director
[Signature Page to First Lien Credit Agreement (Badcock)]
Exhibit 10.10
FIRST LIEN COLLATERAL AGREEMENT
dated as of
November 22, 2021,
among
franchise group, inc.,
FRANCHISE GROUP NEWCO PSP, LLC,
VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
THE OTHER GRANTORS PARTY HERETO
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
TABLE OF CONTENTS
| Article I. | Definitions | 1 |
| Section 1.01. Defined Terms | 1 | |
| Section 1.02. Other Defined Terms | 1 | |
| Article II. | Pledge of Securities | 4 |
| Section 2.01. Pledge | 4 | |
| Section 2.02. Delivery of the Pledged Collateral | 5 | |
| Section 2.03. Representations, Warranties and Covenants | 6 | |
| Section 2.04. Registration in Nominee Name; Denominations | 8 | |
| Section 2.05. Voting Rights; Dividends and Interest | 8 | |
| Section 2.06. Article 8 Opt-In | 10 | |
| Article III. | Security Interests in Personal Property | 10 |
| Section 3.01. Security Interest | 10 | |
| Section 3.02. Representations and Warranties | 12 | |
| Section 3.03. Covenants | 14 | |
| Section 3.04. Other Actions | 15 | |
| Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral | 16 | |
| Article IV. | Remedies | 17 |
| Section 4.01. Remedies upon Default | 17 | |
| Section 4.02. Application of Proceeds | 19 | |
| Section 4.03. Securities Act | 19 | |
| Section 4.04. Grant of License to Use Intellectual Property | 20 | |
| Article V. | Miscellaneous | 21 |
| Section 5.01. Notices | 21 | |
| Section 5.02. Waivers; Amendment | 21 | |
| Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification | 21 | |
| Section 5.04. Successors and Assigns | 22 | |
| Section 5.05. Survival of Agreement | 22 | |
| Section 5.06. Counterparts; Effectiveness; Several Agreement | 22 | |
| Section 5.07. Severability | 23 | |
| Section 5.08. Right of Set-off | 23 | |
| Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 23 | |
| Section 5.10. Waiver of jury trial | 24 | |
| Section 5.11. Headings | 24 | |
| Section 5.12. Security Interest Absolute | 24 | |
| Section 5.13. Termination or Release | 25 | |
| Section 5.14. Additional Subsidiaries | 25 | |
| Section 5.15. Collateral Agent Appointed Attorney-in-Fact | 25 | |
Schedules
| Schedule I | Grantors |
| Schedule II | Pledged Equity Interests; Pledged Debt Securities |
| Schedule III | Intellectual Property |
| Schedule IV | Commercial Tort Claims |
Exhibits
| Exhibit I | Form of Supplement |
| Exhibit II | Form of First Lien Copyright Security Agreement |
| Exhibit III | Form of First Lien Patent Security Agreement |
| Exhibit IV | Form of First Lien Trademark Security Agreement |
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FIRST LIEN COLLATERAL AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“NewCo AF”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”, and together with Lead Borrower, Valor, and NewCo AF, individually and collectively, the “Borrower”), the other GRANTORS from time to time party hereto and JPMORGAN CHASE BANK, N.A., as Collateral Agent (in such capacity, together with its permitted successors and assigns in such capacity, the “Collateral Agent”).
Reference is made to that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among each Borrower, the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as Administrative Agent, and the Collateral Agent. Certain Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Grantors (other than the Borrower) are Affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
Article
I.
Definitions
Section 1.01. Defined Terms. (a) Capitalized terms used in this Agreement (including in the preamble and introductory paragraph hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement; provided that each term defined in the New York UCC (as defined herein) and not defined in this Agreement or the Credit Agreement shall have the meaning specified in the New York UCC. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
Section 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Account Debtor” means any Person that is or may become obligated to any Grantor under, with respect to or on account of an Account, Chattel Paper or General Intangible.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.
“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Collateral” means Article 9 Collateral and Pledged Collateral.
“Collateral Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Copyright License” means any written agreement or license now or hereafter in effect, granting to or from any Person any use right under any Copyright now or hereafter owned by any other Person or that such other Person otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Copyright Security Agreement” means each First Lien Copyright Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit II hereto.
“Copyrights” means (a) all copyright rights in any work arising under the copyright laws of the United States or any other jurisdiction, whether as author, assignee, transferee or otherwise, (b) all registrations and applications for registration of any such copyright, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office, and including, in the case of any Grantor, the United States copyright registrations and applications set forth next to its name on Schedule III hereto and (c) all extensions, renewals, and restorations thereof.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Federal Securities Laws” has the meaning assigned to such term in Section 4.03.
“FG Newco PSP” has the meaning assigned to such term in the preamble to this Agreement.
“NewCo AF” has the meaning assigned to such term in the preamble to this Agreement.
“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Liens not prohibited by Section 6.02 of the Credit Agreement.
“Grantors” means (a) each Borrower, (b) each Subsidiary of the Lead Borrower identified on Schedule I hereto and (c) each Subsidiary of the Lead Borrower that becomes a party to this Agreement as a Grantor after the Effective Date.
“Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in Software, all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, and Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
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“License” means any Patent License, Trademark License or Copyright License.
“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Patent License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to manufacture, use or sell any invention claimed in a Patent, now or hereafter owned by any other Person or that any other Person now or hereafter otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Patent Security Agreement” means each First Lien Patent Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit III hereto.
“Patents” means (a) all patents and patent applications, for letters patent of the United States or any other jurisdiction, including issued patents and pending patent applications in the United States Patent and Trademark Office, including those listed on Schedule III hereto and (b) all reissues, substitutes, divisionals, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof.
“Perfection Certificate” means that certain Perfection Certificate dated as of the Effective Date delivered to the Collateral Agent pursuant to Section 4.01(f) of the Credit Agreement.
“Pledged Collateral” has the meaning assigned to such term in Section 2.01.
“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.
“Pledged Equity Interests” has the meaning assigned to such term in Section 2.01.
“Pledged Securities” means Pledged Equity Interests and Pledged Debt Securities.
“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon and distributions or payments with respect thereto.
“Quarterly Update Date” means the latest of (a) the date of delivery of the Compliance Certificate pursuant to Section 5.01(e) of the Credit Agreement, (b) ninety (90) days after the acquisition of the applicable after-acquired Collateral or occurrence of the applicable change, and (c) any later date agreed by the Collateral Agent in its reasonable discretion.
“Secured Parties” has the meaning assigned to such term in the Credit Agreement.
“Security Interest” has the meaning assigned to such term in Section 3.01(a).
“Software” means computer programs, object code, source code and supporting documentation, including, without limitation, “software” as such term is defined in the UCC and computer programs that may be construed as included in the definition of “goods” in the UCC, including any licensed rights thereto.
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“Supplement” means an instrument in the form of Exhibit I hereto, or any other form approved by the Collateral Agent, and in each case reasonably satisfactory to the Collateral Agent.
“Trade Secrets” means any trade secrets or other proprietary and confidential information, including unpatented inventions, invention disclosures, engineering or other technical data, financial data, procedures, know-how, designs, supplier lists, customer lists, business, production or marketing plans, formulae, methods (whether or not patentable), processes, compositions, schematics, algorithms, techniques, analyses, source code, object code and data collections.
“Trademark License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to use any Trademark now or hereafter owned by any other Person or that any other Person otherwise has the right to license and all rights of any such Person under any such agreement or license.
“Trademark Security Agreement” means each First Lien Trademark Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit IV hereto.
“Trademarks” means (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, logos, domain names and other source identifiers, in each case whether arising under the trademark laws of the United States or any other jurisdiction, (b) all registrations and applications for the registration thereof, including all registrations and applications for registration filed in the United States Patent and Trademark Office, including, in the case of any Grantor, any of the United States trademark registrations or applications set forth next to its name on Schedule III hereto and (c) all of the goodwill of the applicable business connected with the use of and symbolized by any of the foregoing.
“UCC” means the New York UCC; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“Valor” has the meaning assigned to such term in the preamble to this Agreement.
Article
II.
Pledge of Securities
Section 2.01. Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants, assigns and pledges to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under any and all of the following assets, now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located:
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(a) (i) Equity Interests owned by such Grantor, including those listed opposite the name of such Grantor on Schedule II hereto, (ii) any other Equity Interests obtained in the future by such Grantor and (iii) the certificates or other instruments representing all such Equity Interests (if any) together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank (collectively, the “Pledged Equity Interests”); provided that Pledged Equity Interests shall not include any Excluded Assets;
(b) (i) the debt securities owned by such Grantor, including those listed opposite the name of such Grantor on Schedule II hereto, (ii) any debt securities in the future issued to or otherwise acquired by such Grantor and (iii) the promissory notes and any other instruments evidencing all such debt securities referred to in subclauses (i) and (ii) of this paragraph (b) (collectively, the “Pledged Debt Securities”); provided that Pledged Debt Securities shall not include any Excluded Assets;
(c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 2.01 and Section 2.02;
(d) subject to Section 2.05, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, any Pledged Equity Interests or any Pledged Debt Securities;
(e) subject to Section 2.05, all rights and privileges of such Grantor with respect to the securities and other property referred to in paragraphs (a) through (d) above; and
(f) all Proceeds of any of the foregoing unless such Proceeds constitute an Excluded Asset (the items referred to in paragraphs (a) through (e) above being collectively referred to as the “Pledged Collateral”).
Notwithstanding the foregoing, in no event shall the Pledged Collateral include any Excluded Asset.
Section 2.02. Delivery of the Pledged Collateral. (a) Subject to the Intercreditor Agreements, each Grantor agrees to deliver or cause to be delivered to the Collateral Agent (limited, with respect to certificates not constituting “certificated securities” within the meaning of the UCC, to use of commercially reasonable efforts to deliver or cause to be delivered such certificates) (A) on the date such Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) owned by such Grantor on such date and (B) on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) acquired by such Grantor after the date such Grantor becomes party to this Agreement.
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(b) Except as otherwise addressed in Section 3.03(b) herein, subject to the Intercreditor Agreements, (i) on the date such Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion) and (ii) on or before the next Quarterly Update Date occurring after the receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), each Grantor will deliver or cause to be delivered to the Collateral Agent any promissory notes evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to such Grantor by any Person in a principal amount of $5,000,000 or more (other than Excluded Assets); provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties as payees and all such obligors as payors in the form of the Master Intercompany Note.
(c) Upon delivery to the Collateral Agent, (i) any certificate or promissory note representing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer duly executed in blank and reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by undated proper instruments of assignment duly executed in blank by the applicable Grantor and such other instruments and documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be deemed attached to, and shall supplement, Schedule II hereto and be made a part hereof; provided that failure to provide any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
Section 2.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant (solely with respect to clause (c)(iii) and (iv), and (g) below) to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) as of the Effective Date, Schedule II hereto sets forth a true and complete list, with respect to each Grantor, of (A) all the Pledged Equity Interests owned by such Grantor in any Subsidiary and the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity Interests owned by such Grantor and (B) all the Pledged Debt Securities owned by such Grantor evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to such Grantor by any Person in a principal amount of $5,000,000 or more;
(b) (i) the Pledged Equity Interests have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable (to the extent such concept is applicable in the relevant jurisdiction, and other than any assessment of the equity holders imposed as a matter of law) and (ii) the Pledged Debt Securities owned by any Grantor are legal, valid and binding obligations of the issuers thereof, except to the extent that enforceability of such obligations may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditor’s rights generally; provided that the foregoing representations, insofar as they relate to the Pledged Collateral issued by a Person other than the Borrower or any Subsidiary, are made to the knowledge of the Grantors;
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(c) except for the security interests granted hereunder and under any other Loan Documents, Secured Swap Obligations and Secured Cash Management Obligations, each of the Grantors (i) is and, subject to any transfers not prohibited by the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, (iii) will make no further assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, and (iv) will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than Liens not prohibited by Section 6.02 of the Credit Agreement), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations not prohibited by the Loan Documents (including any non-consensual Liens not prohibited by Section 6.02 of the Credit Agreement) or securities laws generally, to the extent issued by the Borrower or any Subsidiary, the Pledged Equity Interests and the Pledged Debt Securities are and will continue to be freely transferable and assignable, and, to the extent issued by the Borrower or any Subsidiary, none of the Pledged Equity Interests or the Pledged Debt Securities are or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law or other organizational document provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner adverse to the Secured Parties in any material respect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;
(f) by virtue of the execution and delivery by the Grantors of this Agreement, when and if any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement and upon the filing of the UCC financing statements described in Section 3.02(b), the Collateral Agent will obtain a legal, valid and perfected First Priority lien upon and security interest in such Pledged Securities, free of any adverse claims (other than Liens not prohibited by Section 6.02 of the Credit Agreement), under the UCC, to the extent such lien and security interest may be created and perfected under the New York UCC, as security for the payment and performance of the Secured Obligations; and
(g) subject to the terms of this Agreement and to the extent permitted by applicable law, each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with the instructions of the Collateral Agent with respect to the Equity Interests in such Grantor that constitute Pledged Equity Interests hereunder without further consent by the applicable owner or holder of such Equity Interests.
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Section 2.04. Registration in Nominee Name; Denominations. If an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantors two (2) Business Days’ prior written notice of its intent to exercise such rights (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to (a) hold the Pledged Securities in the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent or in its own name as pledgee or in the name of its nominee (as pledgee or as sub-agent), and each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor, and (b) exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any reasonable purpose consistent with this Agreement.
Section 2.05. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantors not less than two (2) Business Days’ prior written notice that the rights of the Grantors under this Section 2.05 are being suspended (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration):
(i) each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents;
(ii) the Collateral Agent shall promptly execute and deliver to each Grantor, or cause to be promptly executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section; and
(iii) each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and are otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity Interests or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests in the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by any Grantor, shall, subject to the Intercreditor Agreements, be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent), in each case, to the extent required pursuant to Section 2.02 or Section 2.06.
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(b) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantors with written notice (to the extent required under clause (a) of this Section 2.05), all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to clause (a)(iii) of this Section 2.05 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. Subject to the Intercreditor Agreements, all dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 2.05 shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties and shall be forthwith promptly delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and, to the extent so received, shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Lead Borrower has delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, the Collateral Agent shall promptly repay to each Grantor all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of clause (a)(iii) of this Section 2.05 and that remain in such account.
(c) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantors with written notice (to the extent required under clause (a) of this Section 2.05), all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section 2.05, and the obligations of the Collateral Agent under clause (a)(ii) of this Section 2.05, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers. After all Events of Default have been cured or waived and the Lead Borrower shall have delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, all rights vested in the Collateral Agent pursuant to this paragraph (c) shall cease, and the Grantors shall have the exclusive right to exercise the voting and consensual rights and powers they would otherwise be entitled to exercise pursuant to clause (a)(i) of this Section 2.05.
(d) Any notice given by the Collateral Agent to the Grantors suspending their rights under paragraph (a) of this Section 2.05 (i) shall be given in writing, (ii) may be given with respect to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under clause (a)(i) or clause (a)(iii) of this Section 2.05 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
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(e) In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request.
Section 2.06. Article 8 Opt-In.
(a) No Grantor shall take any action to cause any membership interest, partnership interest, or other equity interest of any limited liability company or limited partnership owned or controlled by any Grantor comprising Collateral to be or become a “security” within the meaning of, or to be governed by, Article 8 of the UCC as in effect under the laws of any state having jurisdiction and shall not cause or permit any such limited liability company or limited partnership to “opt in” or to take any other action seeking to establish any membership interest, partnership interest or other equity interest of such limited liability company or limited partnership comprising the Collateral as a “security” or to become certificated, in each case, without certificating such interest and delivering all certificates evidencing such interest to the Collateral Agent in accordance with and as required by the provisions of Section 2.02.
Article
III.
Security Interests in Personal Property
Section 3.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in all of such Grantor’s right, title and interest in, to and under any and all of the following assets now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located (but in all cases excluding any Excluded Assets):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles, including all Intellectual Property;
(vii) all Instruments and Promissory notes;
(viii) all Inventory;
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(ix) all other Goods;
(x) all Investment Property;
(xi) all Letter-of-Credit Rights;
(xii) all cash and Moneys;
(xiii) all Securities Accounts;
(xiv) all Commercial Tort Claims specifically described on Schedule IV hereto, as such schedule may be supplemented from time to time pursuant to Section 3.04(c);
(xv) all books and records pertaining to the Article 9 Collateral; and
(xvi) to the extent not otherwise included, all Proceeds, substitutions, replacements and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing (all of the above in this Section 3.01, the “Article 9 Collateral”).
It is understood that the term “Article 9 Collateral” shall not include any Excluded Asset; provided, however, that Article 9 Collateral shall include any Proceeds, substitutions or replacements of any of the foregoing (unless such Proceeds, substitutions or replacements would constitute an Excluded Asset).
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant U.S. jurisdiction any financing statements with respect to the Collateral or any part thereof and amendments thereto that (i) describe the collateral covered thereby in any manner that the Collateral Agent reasonably determines is necessary or advisable to ensure the perfection of the security interest in the Collateral granted under this Agreement, including indicating the Collateral as “all assets” of such Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the UCC for the filing of any financing statement or amendment, including whether such Grantor is an organization, the type of organization and, if required, any organizational identification number issued to such Grantor. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.
The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) any Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable, as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks or United States Copyrights granted by each Grantor and naming any Grantor or Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest and the security interest granted pursuant to Article II are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.
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Section 3.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Collateral Agent, for the benefit of the Secured Parties, that:
(a) Each Grantor has good title to or valid rights in (except, in each case, as otherwise permitted by the Loan Documents) the Article 9 Collateral, (i) other than Liens not prohibited by Section 6.02 of the Credit Agreement and (ii) except for defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to have such good title or valid rights would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Grantor has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, the Security Interest in such Grantor’s Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and except to the extent that failure to obtain or make such consent or approval, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name and jurisdiction of organization of each Grantor, is correct and complete in all material respects as of the Effective Date. The Uniform Commercial Code financing statements or other appropriate filings, recordings or registrations prepared by the Collateral Agent based upon the information provided to the Collateral Agent (or otherwise approved by the Collateral Agent) for filing in the appropriate governmental, municipal or other office (or specified by notice from the Lead Borrower to the Collateral Agent after the Effective Date in the case of filings, recordings or registrations required by Section 5.12 of the Credit Agreement) are all the filings, recordings and registrations (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, United States Trademarks and United States Copyrights to the extent that such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office) that are necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States, and as of the date hereof no further or subsequent filing, refiling, recording, rerecording, registration or reregistration (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, Trademarks and Copyrights) is necessary, except as provided under applicable law with respect to the filing of continuation statements (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by a Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office). The Grantors represent and warrant that a fully executed Patent Security Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as applicable, in each case containing a list of the Article 9 Collateral consisting of United States issued Patents, United States registered Trademarks and United States registered Copyrights (and applications for any of the foregoing), as applicable, and executed by each Grantor owning any such Article 9 Collateral, have been delivered to the Collateral Agent in a form suitable for recording with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of registered and applied for Patents, Trademarks and Copyrights in which a security interest may be filed, recorded or registered, in each case, in the United States. No further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by a Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office).
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(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the applicable jurisdiction in the United States pursuant to the Uniform Commercial Code and (iii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of a Patent Security Agreement, a Trademark Security Agreement and/or a Copyright Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement.
(d) As of the Effective Date, Schedule III hereto sets forth a true and complete list, with respect to each Grantor, of (i) all of such Grantor’s Patents and Trademarks applied for or issued or registered with the United States Patent and Trademark Office, including the name of the registered owner or applicant and the registration, application, or patent number, as applicable, of each such Patent or Trademark and (ii) all of such Grantor’s Copyrights applied for or registered with the United States Copyright Office, including the name of the registered owner and the registration number of each such Copyright.
(e) As of the Effective Date, Schedule IV hereto sets forth a true and complete list, with respect to each Grantor, of all of such Grantor’s Commercial Tort Claims (in respect of which a complaint or counterclaim has been filed by or on behalf of such Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith).
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Section 3.03. Covenants. (a) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral (other than Intellectual Property, which is governed by Section 3.05) against all Persons, except with respect to Article 9 Collateral that such Grantor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of such Grantor’s business, and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien prohibited by Section 6.02 of the Credit Agreement, subject to the rights of such Grantor under Section 9.14 of the Credit Agreement and corresponding provisions of the Security Documents to obtain a release of the Liens created under the Security Documents.
(b) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any reasonable and documented or invoiced out-of-pocket fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith, in each case, subject to and in accordance with the terms of this Agreement and of the Credit Agreement. Subject to the Intercreditor Agreements, except to the extent otherwise provided in Article II, if any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note (which may be a global note) or other instrument (other than any promissory note or other instrument in a principal amount of less than $5,000,000 owed to the applicable Grantor by any Person), such note or instrument shall be delivered (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) to the Collateral Agent, for the benefit of the Secured Parties, together with an undated instrument of transfer duly executed in blank and in a manner reasonably satisfactory to the Collateral Agent.
(c) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and prohibited by Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the tangible Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement, this Agreement or any other Loan Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Collateral Agent, within thirty (30) days after demand, for any reasonable payment made or any reasonable and documented or invoiced out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization in accordance with Section 5.03(a); provided that nothing in this paragraph shall be interpreted as imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.
(d) The exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under each contract, agreement or instrument relating to the Article 9 Collateral unless the Collateral Agent has expressly in writing assumed such duties and obligations and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the other Secured Parties from and against any and all liability for such performance, except to the extent resulting from the gross negligence, bad faith or willful misconduct of the Collateral Agent, any other Secured Party or any of their respective controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact.
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(e) Notwithstanding anything herein to the contrary, it is understood that no Grantor shall be required by this Agreement to better assure, preserve, protect or perfect the security interest created hereunder by any means other than (i) filings of financing statements pursuant to the Uniform Commercial Code, (ii) filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of any Copyright Security Agreements, Patent Security Agreements and Trademark Security Agreements, as applicable, in respect of registered, issued or applied for United States Copyrights, United States Patents or United States Trademarks, respectively, (iii) in the case of Collateral that constitutes Instruments, Tangible Chattel Paper or Negotiable Documents (other than those Negotiable Documents held in the ordinary course of business), delivery thereof to the Collateral Agent in accordance with the terms hereof (including the delivery thresholds set forth herein) (together with, where applicable, undated stock or note powers or other undated proper instruments of assignment) and (iv) other actions to the extent required by Section 3.04 or Article II hereunder or otherwise expressly provided under this Agreement. No Grantor shall be required to complete any filings or other action with respect to the better assurance, preservation, protection or perfection of the security interests created hereby in any jurisdiction outside of the United States.
Section 3.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense and subject to the Intercreditor Agreements, to take the following actions with respect to the following Article 9 Collateral:
(a) Instruments. Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any Instruments constituting Collateral (other than Instruments with an individual face amount of less than $5,000,000 and other than checks to be deposited in the ordinary course of business), such Grantor shall (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(b) Investment Property. Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any certificates representing or evidencing Investment Property constituting Collateral (other than (i) Investment Property with an individual value of less than $5,000,000, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)), such Grantor shall, on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
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(c) Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim (in respect of which a complaint or counterclaim has been filed by or on behalf of such Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith), such Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and Schedule IV hereto shall be deemed to be supplemented to include such description of such Commercial Tort Claim as set forth in such writing.
(d) Deposit Accounts and Securities Accounts. Prior to the ABL Obligations Payment Date (as defined in the ABL Intercreditor Agreement) and to the extent similar requirements exist in the ABL Credit Agreement or the ABL Security Documents (as defined in the ABL Intercreditor Agreement), for each Deposit Account or Securities Account (in each case, other than the Excluded Accounts), the respective Grantor shall cause the bank or institution with which the Deposit Account or Securities Account is maintained to execute and deliver to the Collateral Agent, a “control agreement” in a form reasonably acceptable to the Collateral Agent, at the time it enters in a control agreement pursuant to the ABL Credit Agreement or ABL Security Documents. Following the ABL Obligations Payment Date (as defined in the ABL Intercreditor Agreement), no Grantor shall terminate any existing “control agreement” or other control arrangements to which the Collateral Agent is a party with respect to any Deposit Account or Securities Account unless (a) such Deposit Account or Securities Account has become an Excluded Account or has otherwise become excluded from the Collateral in accordance with the Loan Documents or (b) the Collateral Agent has consented to such termination.
Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Except as otherwise determined in such Grantor’s reasonable business judgment, with respect to registration or pending application of each item of its Intellectual Property for which such Grantor has standing and ability to do so, each Grantor agrees to take commercially reasonable efforts to (i) maintain the validity and enforceability of any registered Intellectual Property (or applications therefor) and to maintain such registrations and applications of Intellectual Property in full force and effect and (ii) pursue the registration and maintenance of each Patent, Trademark or Copyright registration or application, in each case, except for any failure to do any of the foregoing that would not reasonably be expected to have a Material Adverse Effect. Except as otherwise determined in such Grantor’s reasonable business judgment, each Grantor shall take commercially reasonable steps to defend title to and ownership of its Intellectual Property, except for any failure to do so that would not reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, nothing in this Section 3.05 shall prevent any Grantor from disposing of, discontinuing the use or maintenance of, abandoning, failing to pursue or enforce or otherwise allowing to lapse, terminate, be invalidated or put into the public domain any of its registered or applied for Intellectual Property that is no longer used, useful, or economically practicable to maintain, or if such Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.
(b) Each Grantor agrees that, should it obtain an ownership or other interest in any Intellectual Property after the Effective Date, should it file an application for the registration or issuance of any Intellectual Property after the Effective Date, and should it file with and have accepted by the United States Patent and Trademark Office a “Statement of Use” or an “Amendment to Allege Use” with respect to any “intent-to-use” Trademark application owned by it after the Effective Date, subject to the immediately succeeding sentence, (i) the provisions of this Agreement shall automatically apply thereto and (ii) any such Intellectual Property shall automatically become subject to the terms and conditions of this Agreement, except to the extent such Intellectual Property is obtained under a license or sublicense from a third party under which a security interest would not be permitted. For the avoidance of doubt, a security interest shall not be granted in any Intellectual Property that constitutes an Excluded Asset.
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(c) Each Grantor, either itself or through any agent, employee, licensee or designee, shall (i) whenever a certificate is delivered or required to be delivered pursuant to Section 5.03(b) of the Credit Agreement, deliver to the Collateral Agent a schedule setting forth all of such Grantor’s Patents, Trademarks and Copyrights, as applicable, that are issued by, registered in, or applied for in the United States Patent and Trademark Office or the United States Copyright Office (including, for the avoidance of doubt, “intent-to-use” Trademark applications for which a “Statement of Use” or an “Amendment to Allege Use” has been filed with and accepted by the United States Patent and Trademark Office) and that are not listed on Schedule III hereto or on a schedule previously provided to the Collateral Agent pursuant to this Section 3.05(c) and (ii) within a reasonable time following the request of the Collateral Agent, and in any event on or prior to the next Quarterly Update Date following such request of the Collateral Agent (or such later date which the Collateral Agent may agree to in its reasonable discretion), execute and deliver a Patent Security Agreement, Trademark Security Agreement or Copyright Security Agreement, as applicable, in respect of such Patents, Trademarks and/or Copyrights; provided, that this clause (ii) shall not apply to any Intellectual Property constituting Excluded Assets.
Article
IV.
Remedies
Section 4.01. Remedies upon Default. Subject to the Intercreditor Agreements, if an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) and all rights under any other applicable law or in equity. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver, on demand, each item of Collateral to the Collateral Agent or any Person designated by the Collateral Agent, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) subject to Section 4.04, with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Collateral Agent, for the benefit of the Secured Parties, or to license or sublicense, whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained) in connection with exercise of its remedies hereunder, and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and the Pledged Collateral and to enter onto and occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located without any obligation to pay rent for a reasonable period in order to effectuate its rights and remedies hereunder or under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law and the notice requirements described below, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
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To the extent notice of sale shall be required by law, the Collateral Agent shall give the applicable Grantors no less than ten (10) days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration). Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent and the other Secured Parties shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, the Collateral Agent on behalf of any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price (which shall decrease the Secured Obligations owed to such Secured Party by such amount used as a credit against the purchase price), and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercial reasonableness standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral and the Collateral Agent may specifically disclaim or modify any warranties of title or the like. The Collateral Agent shall have no obligation to marshal any of the Collateral.
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Section 4.02. Application of Proceeds. Subject to the terms of the Intercreditor Agreements, the Collateral Agent shall apply the proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral (including any Collateral consisting of cash) or the Guarantees, pursuant to the exercise by the Collateral Agent (in accordance with the terms of the Loan Documents) of its remedies, in each case, in accordance with Section 7.03 of the Credit Agreement. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations.
Section 4.03. Securities Act. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable blue sky or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws to the extent the Collateral Agent has determined that such a registration is not required by any Requirements of Law and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent and the other Secured Parties shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 4.03 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.
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Section 4.04. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement upon the occurrence and during the continuance of an Event of Default, at such time as, and to the extent that, the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use or sublicense (to its contractors, agents or representatives, or otherwise exercising its remedies hereunder) any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, to the extent that such non-exclusive license (a) does not violate the express terms of any agreement between a Grantor and a third party governing such Intellectual Property (and shall be subject to any such licenses), or gives such third party any right of acceleration, modification, termination or cancellation therein and (b) is not prohibited by any Requirements of Law; provided that such license and sublicenses with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks. The use of such license by the Collateral Agent may be exercised solely during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance with the provisions of this Agreement shall be binding upon the Grantors, notwithstanding any subsequent cure of an Event of Default.
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Article
V.
Miscellaneous
Section 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Grantor shall be given to it in care of the Lead Borrower as provided in Section 9.01 of the Credit Agreement.
Section 5.02. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default hereunder, regardless of whether the Collateral Agent, Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Collateral Agent may, without the consent of any other Secured Party, consent to a departure by any Grantor from any covenant of such Grantor set forth herein to the extent such departure is consistent with the authority of the Collateral Agent set forth in the definition of the term “Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) Each Grantor, jointly with the other Grantors and severally, agrees to reimburse the Collateral Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) Each Grantor, jointly with the other Grantors and severally, agrees to indemnify the Collateral Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(c) To the fullest extent permitted by applicable law, no Grantor shall assert, and each Grantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of paragraphs (a) and (b) above and this paragraph (c), each reference therein to “the Borrower” shall be deemed to be a reference to “each Grantor” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
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(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
Section 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
Section 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Collateral Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and Secured Cash Management Obligation ,shall have been paid in full in cash.
Section 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
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Section 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 5.08. Right of Set-off. Each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Collateral Agent, the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Grantor or its respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in any Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 5.10. Waiver of jury trial. EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
Section 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 5.12. Security Interest Absolute; Reinstatement. (a) All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement.
(b) If any Secured Party repays, refunds, restores, or returns, in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such Secured Party in full or partial satisfaction of any Secured Obligation, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such Secured Party elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such Secured Party elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and, subject to Section 9.03(a) of the Credit Agreement, as to all reasonable costs, expenses, and external attorneys’ fees of such Secured Party related thereto, (i) the liability of the Grantors with respect to the amount or property repaid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist, and (ii) the Collateral Agent’s Security Interest and other security interests granted to the Collateral Agent in the Collateral securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) the Collateral Agent’s Security Interest or any other security interest of the Collateral Agent on any Collateral to secure the Secured Obligations shall have been released or terminated, or (B) this Agreement shall have been terminated or cancelled, the Collateral Agent’s Security Interest or such other security interest of the Collateral Agent, or this Agreement, as applicable, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Grantor in respect of such liability or any Collateral securing such liability.
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Section 5.13. Termination or Release. Subject to Section 5.12(b), (a) this Agreement, the Security Interest and all other security interests granted hereby shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation, shall have been paid in full in cash.
(b) The Security Interest and all other security interests granted hereby shall also automatically terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Collateral Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or releases in form and substance reasonably satisfactory to the Collateral Agent so long as the applicable Loan Party shall have provided the Collateral Agent such certifications or documents as the Collateral Agent shall reasonably request in order to demonstrate compliance with this Section 5.13. Any execution and delivery of documents by the Collateral Agent pursuant to this Section 5.13 shall be without recourse or warranty by the Collateral Agent or any other Secured Party.
Section 5.14. Additional Subsidiaries. Additional Persons shall become Grantors hereunder as required under the Credit Agreement upon execution and delivery to the Collateral Agent of (a) a Supplement and (b) a supplement to the Perfection Certificate with respect to such Person, and any such Person shall become a Grantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.
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Section 5.15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, the Collateral Agent shall have the right, but only upon the occurrence and during the continuance of an Event of Default and written notice by the Collateral Agent to the Lead Borrower of its intent to exercise such rights (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, indorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of accounts receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes, and (i) to make, settle and adjust claims in respect of Article 9 Collateral under policies of insurance, indorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith or willful misconduct or that of any of their controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact.
Section 5.16. Intercreditor Provisions.
(a) Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement and (ii) the exercise of any right or remedy by the Collateral Agent hereunder or the application of proceeds (including insurance and condemnation proceeds) of any Collateral, in each case, are subject to the limitations and provisions of any applicable Intercreditor Agreement to the extent provided therein. In the event of any conflict between the terms of such applicable Intercreditor Agreement and the terms of this Agreement, the terms of such applicable Intercreditor Agreement shall govern.
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(b) Notwithstanding anything contained in this Agreement or any other Security Document, to the extent that the provisions of this Agreement (or any other Security Document) require the delivery of, or granting of control over, or giving notice with respect to, any Collateral in respect of which any other lenders or other secured parties (or representatives thereof) have a security interest therein that is senior priority relative to the security interest of the Collateral Agent pursuant to any Intercreditor Agreement, then until the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) shall have been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) shall have been terminated, delivery of such Collateral (or control or notice with respect thereto) may instead be made to the applicable lender or other secured party (or representative thereof), to be held in accordance with the applicable Intercreditor Agreements, and any Grantor’s obligations hereunder with respect to such delivery, control or notice shall be deemed satisfied by such delivery to such lender or other secured party (or representative thereof). Furthermore, at all times prior to the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) having been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) having been terminated, the Collateral Agent is authorized by the parties hereto to effect transfers of such Collateral at any time in its possession (and any “control” or similar agreements with respect to such Collateral) to the applicable lender or other secured party or representative thereof in accordance with the applicable Intercreditor Agreements.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
| VITAMIN SHOPPE INDUSTRIES LLC | |
| VITAMIN SHOPPE FRANCHISING, LLC | |
| By: /s/ Laura Coffey | |
| Name: Laura Coffey | |
| Title: Chief Financial Officer | |
| BETANCOURT SPORTS NUTRITION, LLC | |
| VITAMIN SHOPPE MARINER, LLC | |
| VITAMIN SHOPPE GLOBAL, LLC | |
| VITAMIN SHOP FLORIDA, LLC | |
| VITAMIN SHOPPE PROCUREMENT SERVICES, LLC | |
| By: Vitamin Shoppe Industries LLC, its sole Member | |
| By: /s/ Laura Coffey | |
| Name: Laura Coffey | |
| Title: Chief Financial Officer | |
| AMERICAN FREIGHT MANAGEMENT COMPANY, LLC | |
| AMERICAN FREIGHT GROUP, LLC | |
| AMERICAN FREIGHT HOLDINGS, LLC | |
| AMERICAN FREIGHT, LLC | |
| FRANCHISE GROUP ACQUISITION TM, LLC | |
| FRANCHISE GROUP INTERMEDIATE B, LLC | |
| FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC | |
| FRANCHISE GROUP INTERMEDIATE PSP, LLC | |
| FRANCHISE GROUP INTERMEDIATE S, LLC | |
| FRANCHISE GROUP INTERMEDIATE V, LLC | |
| FRANCHISE GROUP NEW HOLDCO, LLC | |
| FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC | |
| FRANCHISE GROUP NEWCO PSP, LLC | |
| FRANCHISE GROUP NEWCO S, LLC | |
| FRANCHISE GROUP NEWCO V, LLC | |
| FRANCHISE GROUP, INC. | |
| VALOR ACQUISITION, LLC |
[Signature Page to First Lien Collateral Agreement (FRG)] |
| FRANCHISE GROUP INTERMEDIATE SL, LLC, | |
| FRANCHISE GROUP NEWCO SL, LLC | |
| FRANCHISE GROUP INTERMEDIATE BHF, LLC | |
| FRANCHISE GROUP NEWCO BHF, LLC | |
| By: /s/ Brian Kahn | |
| Name: Brian Kahn | |
| Title: President and Chief Executive Officer | |
| AMERICAN FREIGHT OUTLET STORES, LLC | |
| OUTLET MERCHANDISE, LLC | |
| By: /s/ Will Powell | |
| Name: Will Powell | |
| Title: President | |
| AMERICAN FREIGHT FRANCHISING, LLC | |
| AMERICAN FREIGHT FRANCHISOR, LLC | |
| AMERICAN FREIGHT FFO, LLC | |
| By: /s/ Will Powell | |
| Name: Will Powell | |
| Title: Chief Executive Officer and President |
[Signature Page to First Lien Collateral Agreement (FRG)] |
| BUDDY'S NEWCO, LLC | |
| BUDDY'S FRANCHISING AND LICENSING LLC | |
| By: /s/ Michael Bennett | |
| Name: Michael Bennett | |
| Title: Chief Executive Officer | |
| PET SUPPLIES “PLUS”, LLC | |
| PSP MIDCO, LLC | |
| PSP SERVICE NEWCO, LLC | |
| PSP STORES, LLC | |
| PSP SUBCO, LLC | |
| PSP GROUP, LLC | |
| PSP FRANCHISING, LLC | |
| PSP DISTRIBUTION, LLC | |
| EDUCATE CORPORATE CENTERS HOLDINGS, LLC | |
| EDUCATE DIGITAL, LLC | |
| EDUCATE OPERATING COMPANY, LLC | |
| EDUCATE, INC. | |
| LEARNING PARTNERSHIPS, LLC | |
| LEARNING SYSTEM OF THE FUTURE, LLC | |
| MARYLAND LEARNING CENTERS, LLC | |
| OMEGA LEARNING CENTERS, LLC | |
| SYLVAN IN-HOME, LLC | |
| SYLVAN LEARNING CENTERS, LLC | |
| SYLVAN LEARNING, LLC | |
| By: /s/ Brian Kahn | |
| Name: Brian Kahn | |
| Title: Vice President |
[Signature Page to First Lien Collateral Agreement (FRG)] |
| JPMORGAN CHASE BANK, N.A., as Collateral Agent | ||
| By: | /s/ James A. Knight | |
| Name: James A. Knight | ||
| Title: Executive Director | ||
[Signature Page to First Lien Collateral Agreement (FRG)]
Exhibit 10.11
Execution Version
FIRST LIEN COLLATERAL AGREEMENT
dated as of
November 22, 2021,
between
W.S. BADCOCK CORPORATION
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
TABLE OF CONTENTS
| Article I. Definitions | 1 | |||
| Section 1.01. Defined Terms | 1 | |||
| Section 1.02. Other Defined Terms | 1 | |||
| Article II. Pledge of Securities | 4 | |||
| Section 2.01. Pledge | 4 | |||
| Section 2.02. Delivery of the Pledged Collateral | 5 | |||
| Section 2.03. Representations, Warranties and Covenants | 6 | |||
| Section 2.04. Registration in Nominee Name; Denominations | 7 | |||
| Section 2.05. Voting Rights; Dividends and Interest | 8 | |||
| Section 2.06. Article 8 Opt-In | 10 | |||
| Article III. Security Interests in Personal Property | 10 | |||
| Section 3.01. Security Interest | 10 | |||
| Section 3.02. Representations and Warranties | 12 | |||
| Section 3.03. Covenants | 14 | |||
| Section 3.04. Other Actions | 15 | |||
| Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral | 16 | |||
| Article IV. Remedies | 17 | |||
| Section 4.01. Remedies upon Default | 17 | |||
| Section 4.02. Application of Proceeds | 19 | |||
| Section 4.03. Securities Act | 19 | |||
| Section 4.04. Grant of License to Use Intellectual Property | 20 | |||
| Article V. Miscellaneous | 20 | |||
| Section 5.01. Notices | 20 | |||
| Section 5.02. Waivers; Amendment | 20 | |||
| Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification | 21 | |||
| Section 5.04. Successors and Assigns | 21 | |||
| Section 5.05. Survival of Agreement | 22 | |||
| Section 5.06. Counterparts; Effectiveness; Several Agreement | 22 | |||
| Section 5.07. Severability | 22 | |||
| Section 5.08. Right of Set-off | 22 | |||
| Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 23 | |||
| Section 5.10. Waiver of jury trial | 23 | |||
| Section 5.11. Headings | 23 | |||
| Section 5.12. Security Interest Absolute | 24 | |||
| Section 5.13. Termination or Release | 24 |
| Section 5.14. Additional Subsidiaries | 25 | |||
| Section 5.15. Collateral Agent Appointed Attorney-in-Fact | 25 |
Schedules
| Schedule I | Grantor | |
| Schedule II | Pledged Equity Interests; Pledged Debt Securities | |
| Schedule III | Intellectual Property | |
| Schedule IV | Commercial Tort Claims |
Exhibits
| Exhibit I | Form of Supplement | |
| Exhibit II | Form of First Lien Copyright Security Agreement | |
| Exhibit III | Form of First Lien Patent Security Agreement | |
| Exhibit IV | Form of First Lien Trademark Security Agreement |
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FIRST LIEN COLLATERAL AGREEMENT, dated as of November 22, 2021 (this “Agreement”), between W.S. BADCOCK CORPORATION, a Florida corporation (the “Grantor”), and JPMORGAN CHASE BANK, N.A., as Collateral Agent (in such capacity, together with its permitted successors and assigns in such capacity, the “Collateral Agent”).
Reference is made to that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Franchise Group, Inc., a Delaware corporation (“Lead Borrower”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”), Franchise Group NewCo Intermediate AF, LLC, a Delaware limited liability company (“Newco AF”), Franchise Group Newco PSP, LLC, a Delaware limited liability company (“FG NewCo PSP”, and together with Lead Borrower, Valor and NewCo AF, individually and collectively, the “Borrower”), the Lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as Administrative Agent, and the Collateral Agent. Certain Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Grantor is an Affiliate of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
Article I.
Definitions
Section 1.01. Defined Terms. (a) Capitalized terms used in this Agreement (including in the preamble and introductory paragraph hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement; provided that each term defined in the New York UCC (as defined herein) and not defined in this Agreement or the Credit Agreement shall have the meaning specified in the New York UCC. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
Section 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Account Debtor” means any Person that is or may become obligated to Grantor under, with respect to or on account of an Account, Chattel Paper or General Intangible.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.
“Collateral” means Article 9 Collateral and Pledged Collateral.
“Collateral Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Copyright License” means any written agreement or license now or hereafter in effect, granting to or from any Person any use right under any Copyright now or hereafter owned by any other Person or that such other Person otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Copyright Security Agreement” means each First Lien Copyright Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit II hereto.
“Copyrights” means (a) all copyright rights in any work arising under the copyright laws of the United States or any other jurisdiction, whether as author, assignee, transferee or otherwise, (b) all registrations and applications for registration of any such copyright, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office, and including, in the case of Grantor, the United States copyright registrations and applications set forth next to its name on Schedule III hereto and (c) all extensions, renewals, and restorations thereof.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Federal Securities Laws” has the meaning assigned to such term in Section 4.03.
“First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Liens not prohibited by Section 6.02 of the Credit Agreement.
“Grantor” has the meaning assigned to such term in the preamble to this Agreement.
“Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in Software, all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, and Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world.
“License” means any Patent License, Trademark License or Copyright License.
“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Patent License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to manufacture, use or sell any invention claimed in a Patent, now or hereafter owned by any other Person or that any other Person now or hereafter otherwise has the right to license, and all rights of any such Person under any such agreement or license.
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“Patent Security Agreement” means each First Lien Patent Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit III hereto.
“Patents” means (a) all patents and patent applications, for letters patent of the United States or any other jurisdiction, including issued patents and pending patent applications in the United States Patent and Trademark Office, including those listed on Schedule III hereto and (b) all reissues, substitutes, divisionals, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof.
“Perfection Certificate” means that certain Perfection Certificate dated as of the Effective Date delivered to the Collateral Agent pursuant to Section 4.01(f) of the Credit Agreement.
“Pledged Collateral” has the meaning assigned to such term in Section 2.01.
“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.
“Pledged Equity Interests” has the meaning assigned to such term in Section 2.01.
“Pledged Securities” means Pledged Equity Interests and Pledged Debt Securities.
“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon and distributions or payments with respect thereto.
“Quarterly Update Date” means the latest of (a) the date of delivery of the Compliance Certificate pursuant to Section 5.01(e) of the Credit Agreement, (b) ninety (90) days after the acquisition of the applicable after-acquired Collateral or occurrence of the applicable change, and (c) any later date agreed by the Collateral Agent in its reasonable discretion.
“Secured Parties” has the meaning assigned to such term in the Credit Agreement.
“Security Interest” has the meaning assigned to such term in Section 3.01(a).
“Software” means computer programs, object code, source code and supporting documentation, including, without limitation, “software” as such term is defined in the UCC and computer programs that may be construed as included in the definition of “goods” in the UCC, including any licensed rights thereto.
“Supplement” means an instrument in the form of Exhibit I hereto, or any other form approved by the Collateral Agent, and in each case reasonably satisfactory to the Collateral Agent.
“Trade Secrets” means any trade secrets or other proprietary and confidential information, including unpatented inventions, invention disclosures, engineering or other technical data, financial data, procedures, know-how, designs, supplier lists, customer lists, business, production or marketing plans, formulae, methods (whether or not patentable), processes, compositions, schematics, algorithms, techniques, analyses, source code, object code and data collections.
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“Trademark License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to use any Trademark now or hereafter owned by any other Person or that any other Person otherwise has the right to license and all rights of any such Person under any such agreement or license.
“Trademark Security Agreement” means each First Lien Trademark Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit IV hereto.
“Trademarks” means (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, logos, domain names and other source identifiers, in each case whether arising under the trademark laws of the United States or any other jurisdiction, (b) all registrations and applications for the registration thereof, including all registrations and applications for registration filed in the United States Patent and Trademark Office, including, in the case of Grantor, any of the United States trademark registrations or applications set forth next to its name on Schedule III hereto and (c) all of the goodwill of the applicable business connected with the use of and symbolized by any of the foregoing.
“UCC” means the New York UCC; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
Article II.
Pledge of Securities
Section 2.01. Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, Grantor hereby grants, assigns and pledges to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest in, all of Grantor’s right, title and interest in, to and under any and all of the following assets, now owned or at any time hereafter acquired by Grantor or in which Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located:
(a) (i) Equity Interests owned by Grantor, including those listed opposite the name of Grantor on Schedule II hereto, (ii) any other Equity Interests obtained in the future by Grantor and (iii) the certificates or other instruments representing all such Equity Interests (if any) together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank (collectively, the “Pledged Equity Interests”); provided that Pledged Equity Interests shall not include any Excluded Assets;
(b) (i) the debt securities owned by Grantor, including those listed opposite the name of Grantor on Schedule II hereto, (ii) any debt securities in the future issued to or otherwise acquired by Grantor and (iii) the promissory notes and any other instruments evidencing all such debt securities referred to in subclauses (i) and (ii) of this paragraph (b) (collectively, the “Pledged Debt Securities”); provided that Pledged Debt Securities shall not include any Excluded Assets;
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(c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 2.01 and Section 2.02;
(d) subject to Section 2.05, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, any Pledged Equity Interests or any Pledged Debt Securities;
(e) subject to Section 2.05, all rights and privileges of Grantor with respect to the securities and other property referred to in paragraphs (a) through (d) above; and
(f) all Proceeds of any of the foregoing unless such Proceeds constitute an Excluded Asset (the items referred to in paragraphs (a) through (e) above being collectively referred to as the “Pledged Collateral”).
Notwithstanding the foregoing, in no event shall the Pledged Collateral include any Excluded Asset.
Section 2.02. Delivery of the Pledged Collateral. (a) Subject to the Intercreditor Agreements, Grantor agrees to deliver or cause to be delivered to the Collateral Agent (limited, with respect to certificates not constituting “certificated securities” within the meaning of the UCC, to use of commercially reasonable efforts to deliver or cause to be delivered such certificates) (A) on the date Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) owned by Grantor on such date and (B) on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) acquired by Grantor after the date Grantor becomes party to this Agreement.
(b) Except as otherwise addressed in Section 3.03(b) herein, subject to the Intercreditor Agreements, (i) on the date Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion) and (ii) on or before the next Quarterly Update Date occurring after the receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), Grantor will deliver or cause to be delivered to the Collateral Agent any promissory notes evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to Grantor by any Person in a principal amount of $5,000,000 or more (other than Excluded Assets); provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Grantor as payee and all Loan Parties as payors in the form of the Master Intercompany Note.
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(c) Upon delivery to the Collateral Agent, (i) any certificate or promissory note representing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer duly executed in blank and reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by undated proper instruments of assignment duly executed in blank by Grantor and such other instruments and documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be deemed attached to, and shall supplement, Schedule II hereto and be made a part hereof; provided that failure to provide any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
Section 2.03. Representations, Warranties and Covenants. Grantor represents, warrants and covenants (solely with respect to clause (c)(iii) and (iv), and (g) below) to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) as of the Effective Date, Schedule II hereto sets forth a true and complete list, with respect to Grantor, of (A) all the Pledged Equity Interests owned by Grantor in any Subsidiary and the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity Interests owned by Grantor and (B) all the Pledged Debt Securities owned by Grantor evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to Grantor by any Person in a principal amount of $5,000,000 or more;
(b) (i) the Pledged Equity Interests have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable (to the extent such concept is applicable in the relevant jurisdiction, and other than any assessment of the equity holders imposed as a matter of law) and (ii) the Pledged Debt Securities owned by Grantor are legal, valid and binding obligations of the issuers thereof, except to the extent that enforceability of such obligations may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditor’s rights generally; provided that the foregoing representations, insofar as they relate to the Pledged Collateral issued by a Person other than the Borrower or any Subsidiary, are made to the knowledge of Grantor;
(c) except for the security interests granted hereunder and under any other Loan Documents, Secured Swap Obligations and Secured Cash Management Obligations, Grantor (i) is and, subject to any transfers not prohibited by the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities owned by Grantor, (ii) holds the same free and clear of all Liens, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, (iii) will make no further assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, and (iv) will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than Liens not prohibited by Section 6.02 of the Credit Agreement), however arising, of all Persons whomsoever;
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(d) except for restrictions and limitations not prohibited by the Loan Documents (including any non-consensual Liens not prohibited by Section 6.02 of the Credit Agreement) or securities laws generally, to the extent issued by the Borrower or any Subsidiary, the Pledged Equity Interests and the Pledged Debt Securities are and will continue to be freely transferable and assignable, and, to the extent issued by the Borrower or any Subsidiary, none of the Pledged Equity Interests or the Pledged Debt Securities are or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law or other organizational document provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner adverse to the Secured Parties in any material respect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) Grantor has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;
(f) by virtue of the execution and delivery by the Grantor of this Agreement, when and if any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement and upon the filing of the UCC financing statements described in Section 3.02(b), the Collateral Agent will obtain a legal, valid and perfected First Priority lien upon and security interest in such Pledged Securities, free of any adverse claims (other than Liens not prohibited by Section 6.02 of the Credit Agreement), under the UCC, to the extent such lien and security interest may be created and perfected under the New York UCC, as security for the payment and performance of the Secured Obligations; and
(g) subject to the terms of this Agreement and to the extent permitted by applicable law, Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with the instructions of the Collateral Agent with respect to the Equity Interests in Grantor that constitute Pledged Equity Interests hereunder without further consent by the applicable owner or holder of such Equity Interests.
Section 2.04. Registration in Nominee Name; Denominations. If an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantor two (2) Business Days’ prior written notice of its intent to exercise such rights (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to (a) hold the Pledged Securities in the name of Grantor, endorsed or assigned in blank or in favor of the Collateral Agent or in its own name as pledgee or in the name of its nominee (as pledgee or as sub-agent), and Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of Grantor, and (b) exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any reasonable purpose consistent with this Agreement.
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Section 2.05. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantor not less than two (2) Business Days’ prior written notice that the rights of the Grantor under this Section 2.05 are being suspended (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration):
(i) Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents;
(ii) the Collateral Agent shall promptly execute and deliver to Grantor, or cause to be promptly executed and delivered to Grantor, all such proxies, powers of attorney and other instruments as Grantor may reasonably request for the purpose of enabling Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section; and
(iii) Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and are otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity Interests or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests in the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by Grantor, shall, subject to the Intercreditor Agreements, be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent), in each case, to the extent required pursuant to Section 2.02 or Section 2.06.
(b) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantor with written notice (to the extent required under clause (a) of this Section 2.05), all rights of Grantor to dividends, interest, principal or other distributions that Grantor is authorized to receive pursuant to clause (a)(iii) of this Section 2.05 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. Subject to the Intercreditor Agreements, all dividends, interest, principal or other distributions received by Grantor contrary to the provisions of this Section 2.05 shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties and shall be forthwith promptly delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and, to the extent so received, shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Lead Borrower has delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, the Collateral Agent shall promptly repay to Grantor all dividends, interest, principal or other distributions that Grantor would otherwise be permitted to retain pursuant to the terms of clause (a)(iii) of this Section 2.05 and that remain in such account.
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(c) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantor with written notice (to the extent required under clause (a) of this Section 2.05), all rights of Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section 2.05, and the obligations of the Collateral Agent under clause (a)(ii) of this Section 2.05, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers. After all Events of Default have been cured or waived and the Lead Borrower shall have delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, all rights vested in the Collateral Agent pursuant to this paragraph (c) shall cease, and the Grantor shall have the exclusive right to exercise the voting and consensual rights and powers it would otherwise be entitled to exercise pursuant to clause (a)(i) of this Section 2.05.
(d) Any notice given by the Collateral Agent to the Grantor suspending its rights under paragraph (a) of this Section 2.05 (i) shall be given in writing, (ii) [reserved] and (iii) may suspend the rights of the Grantor under clause (a)(i) or clause (a)(iii) of this Section 2.05 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
(e) In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request.
Section 2.06. Article 8 Opt-In.
(a) Grantor shall not take any action to cause any membership interest, partnership interest, or other equity interest of any limited liability company or limited partnership owned or controlled by Grantor comprising Collateral to be or become a “security” within the meaning of, or to be governed by, Article 8 of the UCC as in effect under the laws of any state having jurisdiction and shall not cause or permit any such limited liability company or limited partnership to “opt in” or to take any other action seeking to establish any membership interest, partnership interest or other equity interest of such limited liability company or limited partnership comprising the Collateral as a “security” or to become certificated, in each case, without certificating such interest and delivering all certificates evidencing such interest to the Collateral Agent in accordance with and as required by the provisions of Section 2.02.
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Article III.
Security Interests in Personal Property
Section 3.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Secured Obligations, Grantor hereby grants to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in all of Grantor’s right, title and interest in, to and under any and all of the following assets now owned or at any time hereafter acquired by Grantor or in which Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located (but in all cases excluding any Excluded Assets):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles, including all Intellectual Property;
(vii) all Instruments and Promissory notes;
(viii) all Inventory;
(ix) all other Goods;
(x) all Investment Property;
(xi) all Letter-of-Credit Rights;
(xii) all cash and Moneys;
(xiii) all Securities Accounts;
(xiv) all Commercial Tort Claims specifically described on Schedule IV hereto, as such schedule may be supplemented from time to time pursuant to Section 3.04(c);
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(xv) all books and records pertaining to the Article 9 Collateral; and
(xvi) to the extent not otherwise included, all Proceeds, substitutions, replacements and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing (all of the above in this Section 3.01, the “Article 9 Collateral”).
It is understood that the term “Article 9 Collateral” shall not include any Excluded Asset; provided, however, that Article 9 Collateral shall include any Proceeds, substitutions or replacements of any of the foregoing (unless such Proceeds, substitutions or replacements would constitute an Excluded Asset).
(b) Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant U.S. jurisdiction any financing statements with respect to the Collateral or any part thereof and amendments thereto that (i) describe the collateral covered thereby in any manner that the Collateral Agent reasonably determines is necessary or advisable to ensure the perfection of the security interest in the Collateral granted under this Agreement, including indicating the Collateral as “all assets” of Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the UCC for the filing of any financing statement or amendment, including whether Grantor is an organization, the type of organization and, if required, any organizational identification number issued to Grantor. Grantor agrees to provide such information to the Collateral Agent promptly upon request.
The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) any Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable, as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks or United States Copyrights granted by Grantor and naming Grantor as debtor and the Collateral Agent as secured party.
(c) The Security Interest and the security interest granted pursuant to Article II are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of Grantor with respect to or arising out of the Collateral.
Section 3.02. Representations and Warranties. The Grantor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, that:
(a) Grantor has good title to or valid rights in (except, in each case, as otherwise permitted by the Loan Documents) the Article 9 Collateral, (i) other than Liens not prohibited by Section 6.02 of the Credit Agreement and (ii) except for defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to have such good title or valid rights would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Grantor has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, the Security Interest in Grantor’s Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and except to the extent that failure to obtain or make such consent or approval, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
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(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name and jurisdiction of organization of Grantor, is correct and complete in all material respects as of the Effective Date. The Uniform Commercial Code financing statements or other appropriate filings, recordings or registrations prepared by the Collateral Agent based upon the information provided to the Collateral Agent (or otherwise approved by the Collateral Agent) for filing in the appropriate governmental, municipal or other office (or specified by notice from the Lead Borrower to the Collateral Agent after the Effective Date in the case of filings, recordings or registrations required by Section 5.12 of the Credit Agreement) are all the filings, recordings and registrations (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, United States Trademarks and United States Copyrights to the extent that such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office) that are necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States, and as of the date hereof no further or subsequent filing, refiling, recording, rerecording, registration or reregistration (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, Trademarks and Copyrights) is necessary, except as provided under applicable law with respect to the filing of continuation statements (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office). The Grantor represents and warrants that a fully executed Patent Security Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as applicable, in each case containing a list of the Article 9 Collateral consisting of United States issued Patents, United States registered Trademarks and United States registered Copyrights (and applications for any of the foregoing), as applicable, and executed by Grantor owning any such Article 9 Collateral, have been delivered to the Collateral Agent in a form suitable for recording with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of registered and applied for Patents, Trademarks and Copyrights in which a security interest may be filed, recorded or registered, in each case, in the United States. No further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office).
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(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the applicable jurisdiction in the United States pursuant to the Uniform Commercial Code and (iii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of a Patent Security Agreement, a Trademark Security Agreement and/or a Copyright Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement.
(d) As of the Effective Date, Schedule III hereto sets forth a true and complete list, with respect to Grantor, of (i) all of Grantor’s Patents and Trademarks applied for or issued or registered with the United States Patent and Trademark Office, including the name of the registered owner or applicant and the registration, application, or patent number, as applicable, of each such Patent or Trademark and (ii) all of Grantor’s Copyrights applied for or registered with the United States Copyright Office, including the name of the registered owner and the registration number of each such Copyright.
(e) As of the Effective Date, Schedule IV hereto sets forth a true and complete list, with respect to Grantor, of all of Grantor’s Commercial Tort Claims (in respect of which a complaint or counterclaim has been filed by or on behalf of Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith).
Section 3.03. Covenants. (a) Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral (other than Intellectual Property, which is governed by Section 3.05) against all Persons, except with respect to Article 9 Collateral that Grantor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of Grantor’s business, and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien prohibited by Section 6.02 of the Credit Agreement, subject to the rights of Grantor under Section 9.14 of the Credit Agreement and corresponding provisions of the Security Documents to obtain a release of the Liens created under the Security Documents.
(b) Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any reasonable and documented or invoiced out-of-pocket fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith, in each case, subject to and in accordance with the terms of this Agreement and of the Credit Agreement. Subject to the Intercreditor Agreements, except to the extent otherwise provided in Article II, if any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note (which may be a global note) or other instrument (other than any promissory note or other instrument in a principal amount of less than $5,000,000 owed to Grantor by any Person), such note or instrument shall be delivered (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) to the Collateral Agent, for the benefit of the Secured Parties, together with an undated instrument of transfer duly executed in blank and in a manner reasonably satisfactory to the Collateral Agent.
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(c) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and prohibited by Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the tangible Article 9 Collateral to the extent Grantor fails to do so as required by the Credit Agreement, this Agreement or any other Loan Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and Grantor jointly and severally agrees to reimburse the Collateral Agent, within thirty (30) days after demand, for any reasonable payment made or any reasonable and documented or invoiced out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization in accordance with Section 5.03(a); provided that nothing in this paragraph shall be interpreted as imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.
(d) The exercise by the Collateral Agent of any of its rights hereunder shall not release Grantor from any of its duties or obligations under each contract, agreement or instrument relating to the Article 9 Collateral unless the Collateral Agent has expressly in writing assumed such duties and obligations and Grantor agrees to indemnify and hold harmless the Collateral Agent and the other Secured Parties from and against any and all liability for such performance, except to the extent resulting from the gross negligence, bad faith or willful misconduct of the Collateral Agent, any other Secured Party or any of their respective controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact.
(e) Notwithstanding anything herein to the contrary, it is understood that Grantor shall not be required by this Agreement to better assure, preserve, protect or perfect the security interest created hereunder by any means other than (i) filings of financing statements pursuant to the Uniform Commercial Code, (ii) filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of any Copyright Security Agreements, Patent Security Agreements and Trademark Security Agreements, as applicable, in respect of registered, issued or applied for United States Copyrights, United States Patents or United States Trademarks, respectively, (iii) in the case of Collateral that constitutes Instruments, Tangible Chattel Paper or Negotiable Documents (other than those Negotiable Documents held in the ordinary course of business), delivery thereof to the Collateral Agent in accordance with the terms hereof (including the delivery thresholds set forth herein) (together with, where applicable, undated stock or note powers or other undated proper instruments of assignment) and (iv) other actions to the extent required by Section 3.04 or Article II hereunder or otherwise expressly provided under this Agreement. Grantor shall not be required to complete any filings or other action with respect to the better assurance, preservation, protection or perfection of the security interests created hereby in any jurisdiction outside of the United States.
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Section 3.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, Grantor agrees, in each case at Grantor’s own expense and subject to the Intercreditor Agreements, to take the following actions with respect to the following Article 9 Collateral:
(a) Instruments. Except to the extent otherwise provided in Article II, if Grantor shall at any time hold or acquire any Instruments constituting Collateral (other than Instruments with an individual face amount of less than $5,000,000 and other than checks to be deposited in the ordinary course of business), Grantor shall (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(b) Investment Property. Except to the extent otherwise provided in Article II, if Grantor shall at any time hold or acquire any certificates representing or evidencing Investment Property constituting Collateral (other than (i) Investment Property with an individual value of less than $5,000,000, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)), Grantor shall, on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(c) Commercial Tort Claims. If Grantor shall at any time hold or acquire a Commercial Tort Claim (in respect of which a complaint or counterclaim has been filed by or on behalf of Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith), Grantor shall promptly notify the Collateral Agent thereof in a writing signed by Grantor, including a summary description of such claim, and Schedule IV hereto shall be deemed to be supplemented to include such description of such Commercial Tort Claim as set forth in such writing.
Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Except as otherwise determined in Grantor’s reasonable business judgment, with respect to registration or pending application of each item of its Intellectual Property for which Grantor has standing and ability to do so, Grantor agrees to take commercially reasonable efforts to (i) maintain the validity and enforceability of any registered Intellectual Property (or applications therefor) and to maintain such registrations and applications of Intellectual Property in full force and effect and (ii) pursue the registration and maintenance of each Patent, Trademark or Copyright registration or application, in each case, except for any failure to do any of the foregoing that would not reasonably be expected to have a Material Adverse Effect. Except as otherwise determined in Grantor’s reasonable business judgment, Grantor shall take commercially reasonable steps to defend title to and ownership of its Intellectual Property, except for any failure to do so that would not reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, nothing in this Section 3.05 shall prevent Grantor from disposing of, discontinuing the use or maintenance of, abandoning, failing to pursue or enforce or otherwise allowing to lapse, terminate, be invalidated or put into the public domain any of its registered or applied for Intellectual Property that is no longer used, useful, or economically practicable to maintain, or if Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.
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(b) Grantor agrees that, should it obtain an ownership or other interest in any Intellectual Property after the Effective Date, should it file an application for the registration or issuance of any Intellectual Property after the Effective Date, and should it file with and have accepted by the United States Patent and Trademark Office a “Statement of Use” or an “Amendment to Allege Use” with respect to any “intent-to-use” Trademark application owned by it after the Effective Date, subject to the immediately succeeding sentence, (i) the provisions of this Agreement shall automatically apply thereto and (ii) any such Intellectual Property shall automatically become subject to the terms and conditions of this Agreement, except to the extent such Intellectual Property is obtained under a license or sublicense from a third party under which a security interest would not be permitted. For the avoidance of doubt, a security interest shall not be granted in any Intellectual Property that constitutes an Excluded Asset.
(c) Grantor, either itself or through any agent, employee, licensee or designee, shall (i) whenever a certificate is delivered or required to be delivered pursuant to Section 5.03(b) of the Credit Agreement, deliver to the Collateral Agent a schedule setting forth all of Grantor’s Patents, Trademarks and Copyrights, as applicable, that are issued by, registered in, or applied for in the United States Patent and Trademark Office or the United States Copyright Office (including, for the avoidance of doubt, “intent-to-use” Trademark applications for which a “Statement of Use” or an “Amendment to Allege Use” has been filed with and accepted by the United States Patent and Trademark Office) and that are not listed on Schedule III hereto or on a schedule previously provided to the Collateral Agent pursuant to this Section 3.05(c) and (ii) within a reasonable time following the request of the Collateral Agent, and in any event on or prior to the next Quarterly Update Date following such request of the Collateral Agent (or such later date which the Collateral Agent may agree to in its reasonable discretion), execute and deliver a Patent Security Agreement, Trademark Security Agreement or Copyright Security Agreement, as applicable, in respect of such Patents, Trademarks and/or Copyrights; provided, that this clause (ii) shall not apply to any Intellectual Property constituting Excluded Assets.
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Article IV.
Remedies
Section 4.01. Remedies upon Default. Subject to the Intercreditor Agreements, if an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) and all rights under any other applicable law or in equity. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, Grantor agrees to deliver, on demand, each item of Collateral to the Collateral Agent or any Person designated by the Collateral Agent, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) subject to Section 4.04, with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by Grantor to the Collateral Agent, for the benefit of the Secured Parties, or to license or sublicense, whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained) in connection with exercise of its remedies hereunder, and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and the Pledged Collateral and to enter onto and occupy any premises owned or, to the extent lawful and permitted, leased by Grantor where the Collateral or any part thereof is assembled or located without any obligation to pay rent for a reasonable period in order to effectuate its rights and remedies hereunder or under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law and the notice requirements described below, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of Grantor, and Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
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To the extent notice of sale shall be required by law, the Collateral Agent shall give Grantor no less than ten (10) days’ written notice (which Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration). Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent and the other Secured Parties shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, the Collateral Agent on behalf of any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from Grantor as a credit against the purchase price (which shall decrease the Secured Obligations owed to such Secured Party by such amount used as a credit against the purchase price), and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and Grantor shall not be entitled to the return of the Collateral or any portion thereof subject thereto. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercial reasonableness standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral and the Collateral Agent may specifically disclaim or modify any warranties of title or the like. The Collateral Agent shall have no obligation to marshal any of the Collateral.
Section 4.02. Application of Proceeds. Subject to the terms of the Intercreditor Agreements, the Collateral Agent shall apply the proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral (including any Collateral consisting of cash) or the Guarantees, pursuant to the exercise by the Collateral Agent (in accordance with the terms of the Loan Documents) of its remedies, in each case, in accordance with Section 7.03 of the Credit Agreement. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations.
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Section 4.03. Securities Act. In view of the position of the Grantor in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable blue sky or other state securities laws or similar laws analogous in purpose or effect. Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws to the extent the Collateral Agent has determined that such a registration is not required by any Requirements of Law and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent and the other Secured Parties shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 4.03 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.
Section 4.04. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement upon the occurrence and during the continuance of an Event of Default, at such time as, and to the extent that, the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to Grantor) to use or sublicense (to its contractors, agents or representatives, or otherwise exercising its remedies hereunder) any Intellectual Property now owned or hereafter acquired by Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, to the extent that such non-exclusive license (a) does not violate the express terms of any agreement between Grantor and a third party governing such Intellectual Property (and shall be subject to any such licenses), or gives such third party any right of acceleration, modification, termination or cancellation therein and (b) is not prohibited by any Requirements of Law; provided that such license and sublicenses with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks. The use of such license by the Collateral Agent may be exercised solely during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance with the provisions of this Agreement shall be binding upon Grantor, notwithstanding any subsequent cure of an Event of Default.
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Article V.
Miscellaneous
Section 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to Grantor shall be given to it in care of the Lead Borrower as provided in Section 9.01 of the Credit Agreement.
Section 5.02. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default hereunder, regardless of whether the Collateral Agent, Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
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(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and Grantor with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Collateral Agent may, without the consent of any other Secured Party, consent to a departure by Grantor from any covenant of Grantor set forth herein to the extent such departure is consistent with the authority of the Collateral Agent set forth in the definition of the term “Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) Grantor agrees to reimburse the Collateral Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) Grantor agrees to indemnify the Collateral Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(c) To the fullest extent permitted by applicable law, Grantor shall not assert, and Grantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of paragraphs (a) and (b) above and this paragraph (c), each reference therein to “the Borrower” shall be deemed to be a reference to “Grantor” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
Section 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
Section 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Collateral Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation, shall have been paid in full in cash.
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Section 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to Grantor when a counterpart hereof executed on behalf of Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of Grantor, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood that Grantor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement.
Section 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 5.08. Right of Set-off. Each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Collateral Agent, the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against Grantor or its properties in the courts of any jurisdiction.
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(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in any Loan Document, Secured Swap Obligations or Secured Cash Management Obligation will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 5.10. Waiver of jury trial. EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
Section 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 5.12. Security Interest Absolute; Reinstatement. (a) All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Grantor in respect of the Secured Obligations or this Agreement.
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(b) If any Secured Party repays, refunds, restores, or returns, in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such Secured Party in full or partial satisfaction of any Secured Obligation, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such Secured Party elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such Secured Party elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and, subject to Section 9.03(a) of the Credit Agreement, as to all reasonable costs, expenses, and external attorneys’ fees of such Secured Party related thereto, (i) the liability of the Grantor with respect to the amount or property repaid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist, and (ii) the Collateral Agent’s Security Interest and other security interests granted to the Collateral Agent in the Collateral securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) the Collateral Agent’s Security Interest or any other security interest of the Collateral Agent on any Collateral to secure the Secured Obligations shall have been released or terminated, or (B) this Agreement shall have been terminated or cancelled, the Collateral Agent’s Security Interest or such other security interest of the Collateral Agent, or this Agreement, as applicable, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of Grantor in respect of such liability or any Collateral securing such liability.
Section 5.13. Termination or Release. Subject to Section 5.12(b), (a) this Agreement, the Security Interest and all other security interests granted hereby shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation, shall have been paid in full in cash.
(b) The Security Interest and all other security interests granted hereby shall also automatically terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Collateral Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or releases in form and substance reasonably satisfactory to the Collateral Agent so long as the applicable Loan Party shall have provided the Collateral Agent such certifications or documents as the Collateral Agent shall reasonably request in order to demonstrate compliance with this Section 5.13. Any execution and delivery of documents by the Collateral Agent pursuant to this Section 5.13 shall be without recourse or warranty by the Collateral Agent or any other Secured Party.
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Section 5.14. [Reserved].
Section 5.15. Collateral Agent Appointed Attorney-in-Fact. Grantor hereby makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) the attorney-in-fact of Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, the Collateral Agent shall have the right, but only upon the occurrence and during the continuance of an Event of Default and written notice by the Collateral Agent to the Lead Borrower of its intent to exercise such rights (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), with full power of substitution either in the Collateral Agent’s name or in the name of Grantor (a) to receive, indorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of accounts receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes, and (i) to make, settle and adjust claims in respect of Article 9 Collateral under policies of insurance, indorsing the name of Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith or willful misconduct or that of any of their controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact.
Section 5.16. Intercreditor Provisions.
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(a) Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement and (ii) the exercise of any right or remedy by the Collateral Agent hereunder or the application of proceeds (including insurance and condemnation proceeds) of any Collateral, in each case, are subject to the limitations and provisions of any applicable Intercreditor Agreement to the extent provided therein. In the event of any conflict between the terms of such applicable Intercreditor Agreement and the terms of this Agreement, the terms of such applicable Intercreditor Agreement shall govern.
(b) Notwithstanding anything contained in this Agreement or any other Security Document, to the extent that the provisions of this Agreement (or any other Security Document) require the delivery of, or granting of control over, or giving notice with respect to, any Collateral in respect of which any other lenders or other secured parties (or representatives thereof) have a security interest therein that is senior priority relative to the security interest of the Collateral Agent pursuant to any Intercreditor Agreement, then until the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) shall have been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) shall have been terminated, delivery of such Collateral (or control or notice with respect thereto) may instead be made to the applicable lender or other secured party (or representative thereof), to be held in accordance with the applicable Intercreditor Agreements, and Grantor’s obligations hereunder with respect to such delivery, control or notice shall be deemed satisfied by such delivery to such lender or other secured party (or representative thereof). Furthermore, at all times prior to the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) having been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) having been terminated, the Collateral Agent is authorized by the parties hereto to effect transfers of such Collateral at any time in its possession (and any “control” or similar agreements with respect to such Collateral) to the applicable lender or other secured party or representative thereof in accordance with the applicable Intercreditor Agreements.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
W.S. BADCOCK CORPORATION, as a Grantor
By /s/ Brian Kahn________________________
Name: Brian Kahn
Title: Senior Vice President
[Signature Page to First Lien Collateral Agreement (Badcock)]
JPMORGAN CHASE BANK, N.A., as Collateral Agent
By /s/ James A. Knight____________________
Name: James A. Knight
Title: Executive Director
[Signature Page to First Lien Collateral Agreement (Badcock)]
Exhibit 10.12
Execution Version
First LIEN GUARANTEE AGREEMENT
dated as of
November 22, 2021,
among
franchise group, inc.,
VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
FRANCHISE GROUP NEWCO PSP, LLC,
THE OTHER GUARANTORS FROM TIME TO TIME PARTY HERETO
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
TABLE OF CONTENTS
Page
| ARTICLE I | DEFINITIONS | 1 | |||
| SECTION 1.01. | Credit Agreement | 1 | |||
| SECTION 1.02. | Other Defined Terms | 1 | |||
| ARTICLE II | THE GUARANTEES | 3 | |||
| SECTION 2.01. | Guarantee | 3 | |||
| SECTION 2.02. | Guarantee of Payment; Continuing Guarantee | 3 | |||
| SECTION 2.03. | No Limitations | 3 | |||
| SECTION 2.04. | Reinstatement | 5 | |||
| SECTION 2.05. | Agreement to Pay; Subrogation | 6 | |||
| SECTION 2.06. | Information | 6 | |||
| SECTION 2.07. | Payments | 6 | |||
| SECTION 2.08. | Excluded Swap Obligations | 6 | |||
| SECTION 2.09. | Keepwell | 6 | |||
| ARTICLE III | INDEMNITY, SUBROGATION AND SUBORDINATION | 9 | |||
| SECTION 3.01. | Indemnity and Subrogation | 9 | |||
| SECTION 3.02. | Contribution and Subrogation | 9 | |||
| SECTION 3.03. | Subordination | 9 | |||
| ARTICLE IV | REPRESENTATIONS AND WARRANTIES | 10 | |||
| ARTICLE V | MISCELLANEOUS | 10 | |||
| SECTION 5.01. | Notices | 10 | |||
| SECTION 5.02. | Waivers; Amendment | 10 | |||
| SECTION 5.03. | Administrative Agent’s Fees and Expenses; Indemnification | 11 | |||
| SECTION 5.04. | Successors and Assigns | 12 | |||
| SECTION 5.05. | Survival of Agreement | 12 | |||
| SECTION 5.06. | Counterparts; Effectiveness; Several Agreement | 12 | |||
| SECTION 5.07. | Severability | 13 | |||
| SECTION 5.08. | Right of Set-Off | 13 | |||
| SECTION 5.09. | Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 13 | |||
| SECTION 5.10. | WAIVER OF JURY TRIAL | 14 | |||
| SECTION 5.11. | Headings | 14 | |||
| SECTION 5.12. | Termination or Release | 14 | |||
| SECTION 5.13. | Additional Guarantors | 15 |
-i-
FIRST LIEN GUARANTEE AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“NewCo AF”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”, and together with Lead Borrower, Valor and NewCo AF individually and collectively, the “Borrower”), the other GUARANTORS from time to time party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent on behalf of itself and the other Secured Parties (in such capacity, together with its permitted successors and assigns in such capacity, the “Administrative Agent”).
Reference is made to (i) that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among each Borrower, the Lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as Administrative Agent, and the Collateral Agent and (ii) that certain First Lien Collateral Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Collateral Agreement”), among each Borrower, the other Grantors (as defined therein) from time to time party thereto and the Collateral Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Subsidiary Guarantors (as defined below) are affiliates of each Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement (including in the introductory paragraphs hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement.
(b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Administrative Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
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“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Claiming Party” has the meaning assigned to such term in Section 3.02.
“Contributing Party” has the meaning assigned to such term in Section 3.02.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“FG Newco PSP” has the meaning assigned to such term in the preamble to this Agreement.
“NewCo AF” has the meaning assigned to such term in the preamble to this Agreement.
“Guarantors” means each Borrower (except with respect to obligations of such Borrower) and the Subsidiary Guarantors.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Qualified ECP Guarantor” shall mean, in respect of any Secured Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act, as amended, 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, as amended.
“Subsidiary Guarantors” means the Subsidiaries of Lead Borrower identified as such on Schedule I hereto and each other Subsidiary of Lead Borrower that becomes a party to this Agreement as a Subsidiary Guarantor after the Effective Date pursuant to Section 5.13; provided that if a Subsidiary is released from its obligations as a Subsidiary Guarantor hereunder as provided in Section 5.12(b), such Subsidiary shall cease to be a Subsidiary Guarantor hereunder effective upon such release. For the avoidance of doubt, (i) FG Newco PSP is not a Subsidiary Guarantor and (ii) Subsidiary Guarantors are referred to as “Subsidiary Loan Parties” in the Credit Agreement.
“Supplement” means an instrument in the form of Exhibit A hereto, or any other form reasonably satisfactory to the Administrative Agent.
“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“Valor” has the meaning assigned to such term in the preamble to this Agreement.
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ARTICLE
II
THE GUARANTEES
SECTION 2.01. Guarantee. Each Guarantor absolutely, irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to each of the Secured Parties, jointly with the other Guarantors and severally, the due and punctual payment and performance of the Secured Obligations. Each Guarantor further agrees that the Secured Obligations may be increased, extended or renewed, in whole or in part, or amended or modified, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such increase, extension or renewal, or amendment or modification, of any of the Secured Obligations. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Secured Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment, notice of dishonor, default and nonpayment. Notwithstanding anything to the contrary contained herein, the obligations of each Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable provisions of any other applicable law.
SECTION 2.02. Guarantee of Payment; Continuing Guarantee. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Secured Obligations or operated as a discharge thereof) and not merely of collection, and waives diligence, marshaling, and any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of any of the Secured Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Borrower, any other Loan Party or any other Person. Each Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all of the Secured Obligations, whether currently existing or hereafter incurred.
SECTION 2.03. No Limitations. (a) Except for (x) the termination or release of a Guarantor’s obligations hereunder as expressly provided in Section 5.12, (y) the limitations set forth in Section 2.01 and (z) the limitations, if any, specified in a Supplement with respect to any Subsidiary that becomes a party hereto pursuant to Section 5.13, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise of any of the Secured Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Secured Obligations, any impossibility in the performance of any of the Secured Obligations or otherwise. Without limiting the generality of the foregoing, except for (x) the termination or release of a Guarantor’s obligations hereunder as expressly provided in Section 5.12, (y) the limitations set forth in Section 2.01 and (z) the limitations, if any, specified in a Supplement with respect to any Subsidiary that becomes a party hereto pursuant to Section 5.13, if applicable, the obligations of each Guarantor hereunder, to the fullest extent permitted by applicable Requirements of Law, shall not be discharged or impaired or otherwise affected by:
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(i) the failure of any Secured Party or any other Person to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document, Secured Swap Obligation or Secured Cash Management Obligation or otherwise;
(ii) any rescission, waiver, amendment, supplement, restatement or modification of, or any release or departure from any of the terms or provisions of, any Loan Document, any Secured Swap Obligation or Secured Cash Management Obligation or any other agreement, including with respect to any other Guarantor under this Agreement;
(iii) the release of, or any impairment of or failure to perfect any Lien on, any security held by any Secured Party for any of the Secured Obligations;
(iv) any default, failure or delay, willful or otherwise, in the performance of any of the Secured Obligations;
(v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(vi) any illegality, lack of validity or lack of enforceability of any of the Credit Agreement, any other Loan Document, or the Secured Obligations;
(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any of the Secured Obligations (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(viii) the existence of any claim, set-off or other rights that any Guarantor may have at any time against the Borrower, any other Guarantor, the Administrative Agent, any other Secured Party or any other Person, whether in connection with the Credit Agreement, the other Loan Documents, Secured Swap Obligations or Secured Cash Management Obligations or any unrelated transaction;
(ix) this Agreement having been determined (on whatsoever grounds) to be invalid, non-binding or unenforceable against any other Guarantor ab initio or at any time after the Effective Date;
(x) the fact that any Person that, pursuant to the Loan Documents, was required to become a party hereto may not have executed or is not effectually bound by this Agreement, whether or not this fact is known to the Secured Parties;
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(xi) any action permitted or authorized hereunder;
(xii) any other circumstance (including any statute of limitations), or any existence of or reliance on any representation by the Administrative Agent, any other Secured Party or any other Person, that might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower, any other Guarantor or any other guarantor or surety (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due)); or
(xiii) any renewal, extension or acceleration of, or any increase in the amount of the Secured Obligations.
(b) Each Guarantor expressly authorizes the Secured Parties to take and hold security in accordance with the terms of the Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations for the payment and performance of the Secured Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Secured Obligations, all without affecting the obligations of any Guarantor hereunder.
(c) To the fullest extent permitted by applicable Requirements of Law, each Guarantor hereby waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Secured Obligations and/or the termination or release of such Guarantor’s obligations hereunder as expressly provided under Section 5.12. The Administrative Agent and the other Secured Parties may, at their election and in accordance with the terms of the Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Secured Obligations have been paid in full in cash and/or such Guarantor has been subject to the termination or release of such Guarantor’s obligations hereunder as expressly provided in Section 5.12. To the fullest extent permitted by applicable law, each Guarantor 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 Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.
SECTION 2.04. Reinstatement. Each Guarantor agrees that, unless released pursuant to Section 5.12(b), its guarantee hereunder shall continue to be effective or automatically and immediately be reinstated, as the case may be, if at any time payment, or any part thereof, of any Secured Obligations is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization (or any analogous proceeding in any jurisdiction) of the Borrower, any other Loan Party or otherwise.
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SECTION 2.05. Agreement to Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at applicable law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Secured Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties, in cash the amount of such unpaid Secured Obligation. Upon payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of such Guarantor against the Borrower or 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 subject to Article III.
SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.
SECTION 2.07. Payments. Any and all payments by or on account of any obligation of any Guarantor hereunder or under any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation shall be made without setoff or counterclaim and free and clear of and without deduction for any Indemnified Taxes or Other Taxes, except as required by applicable Requirements of Law, on the same terms and to the same extent that payments by the Borrower are required to be so made pursuant to the terms of Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall apply to each Guarantor, mutatis mutandis.
SECTION 2.08. Excluded Swap Obligations. Notwithstanding any provision hereof or in any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation to the contrary, the Secured Obligations shall not include any Excluded Swap Obligations.
SECTION 2.09. 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 this Agreement in respect of Secured Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 2.09 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 2.09, or otherwise under this Agreement, 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 2.09 shall remain in full force and effect until the termination of this Agreement in full or, with respect to such Qualified ECP Guarantor, in accordance with Section 5.12 hereof. Each Qualified ECP Guarantor intends that this Section 2.09 constitute, and this Section 2.09 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.
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ARTICLE
III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 3.03) in respect of any payment hereunder, each Borrower agrees that (a) in the event a payment in respect of any obligation of any Borrower shall be made by any Guarantor (other than a Borrower in respect of its own obligations) under this Agreement, the Borrowers shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor (other than a Borrower in respect of its own obligations) shall be sold pursuant to any Security Document to satisfy in whole or in part any Secured Obligations owed to any Secured Party, the Borrowers shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
SECTION 3.02. Contribution and Subrogation. Each Guarantor (a “Contributing Party”) agrees (subject to Section 3.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Secured Obligations (other than payments made by a Borrower with respect to its own obligations) or assets of any other Guarantor (other than a Borrower in satisfaction of its own obligations) shall be sold pursuant to any Security Document to satisfy any Secured Obligation owed to any Secured Party and such other Guarantor (the “Claiming Party”) shall not have been fully indemnified as provided in Section 3.01, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Party on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 5.13, the date of the Supplement executed and delivered by such Guarantor) and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 5.13, such other date). Any Contributing Party making any payment to a Claiming Party pursuant to this Section 3.02 shall be subrogated to the rights of such Claiming Party under Section 3.01 to the extent of such payment.
SECTION 3.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 3.01 and 3.02 and all other rights of the Guarantors of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of all the Secured Obligations. No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 3.01 and 3.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.
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(b) Each Guarantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, all Indebtedness and other monetary obligations owed by it to, or to it by, any other Guarantor or any other Subsidiary shall be fully subordinated to the payment in full in cash of all the Secured Obligations, and any such Indebtedness collected or received by such Guarantor after an Event of Default has occurred and continuing shall be held in trust for the Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Secured Obligations, but without affecting, impairing or limiting in any manner the liability of such Guarantor under any other provision hereof.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
Each Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that (a) this Agreement has been duly executed and delivered by such Guarantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law and (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in a legal opinion, and (b) all representations and warranties (limited, on the Effective Date, to the Specified Representations) set forth in the Credit Agreement as to such Guarantor are true and correct in all material respects; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date; provided further that, in each case, any such representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language is true and correct in all respects.
ARTICLE
V
MISCELLANEOUS
SECTION 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it in care of Lead Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 5.02. Waivers; Amendment. (a) No failure or delay by the Administrative Agent, any Lender or any other Secured Party in exercising any right or power hereunder or under any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Lenders and any other Secured Parties hereunder and under the other Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
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(b) Neither this Agreement nor any provision hereof may be waived, amended, restated, amended and restated or otherwise modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Guarantor or Guarantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Administrative Agent may, without the consent of any Secured Party, consent to a departure by any Guarantor from any covenant of such Guarantor set forth herein to the extent such departure is consistent with the authority of the Administrative Agent set forth in the definition of the term “Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
SECTION 5.03. Administrative Agent’s Fees and Expenses; Indemnification. (a) Each Guarantor, jointly with the other Guarantors and severally, agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) Each Guarantor, jointly with the other Guarantors and severally, agrees to indemnify the Administrative Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(c) To the fullest extent permitted by applicable law, no Guarantor shall assert, and each Guarantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of clauses (a), (b) and (c) above, each reference therein to “the Borrower” shall be deemed to be a reference to “each Guarantor” or the “Guarantors”.
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
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SECTION 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of any Guarantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.
SECTION 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation, shall have been paid in full in cash.
SECTION 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Guarantor when a counterpart hereof executed on behalf of such Guarantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Guarantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Guarantor, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood and agreed that no Guarantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Guarantor and may be amended, restated, amended and restated, modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and without affecting the obligations of any other Guarantor hereunder.
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SECTION 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 5.08. Right of Set-Off. Each Lender and each other Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Person as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
SECTION 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement (and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement) shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Administrative Agent, any Lender or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against any Guarantor or its respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement will affect the right of any party to this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation to serve process in any other manner permitted by law.
(e) Each Guarantor hereby irrevocably designates, appoints and empowers the Lead Borrower as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents that may be served in any such action or proceeding and the Lead Borrower hereby accepts such designation and appointment.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 SECURED SWAP OBLIGATION, SECURED CASH MANAGEMENT OBLIGATION, 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 PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
SECTION 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 5.12. Termination or Release. (a) Subject to Section 2.04, this Agreement and the Guarantees made herein shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation shall have been paid in full.
(b) The guarantees made herein shall also terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or release so long as the applicable Loan Party shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 5.12. Any execution and delivery of documents by the Administrative Agent pursuant to this Section 5.12 shall be without recourse or warranty by the Administrative Agent or any other Secured Party.
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SECTION 5.13. Additional Guarantors. Additional Persons may become Guarantors after the date hereof as contemplated by the Credit Agreement. Upon execution and delivery by the Administrative Agent and a Person of a Supplement, any such Person shall become a Guarantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any Person as a party to this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.,
VALOR ACQUISITION, LLC
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
[Signature Page to First Lien Guarantee Agreement (FRG)]
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE FLORIDA, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | President |
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | Chief Executive Officer and President |
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
[Signature Page to First Lien Guarantee Agreement (FRG)]
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
[Signature Page to First Lien Guarantee Agreement (FRG)]
JPMORGAN CHASE BANK, N.A., as Administrative Agent on behalf of itself and the other Secured Parties
By /s/ James A. Knight____________________
Name: James A. Knight
Title: Executive Director
[Signature Page to First Lien Guarantee Agreement (FRG)]
Exhibit 10.13
Execution Version
FIRST LIEN GUARANTEE AGREEMENT
dated as of
November 22, 2021,
between
W.S. BADCOCK CORPORATION
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
TABLE OF CONTENTS
Page
| ARTICLE I | DEFINITIONS | 1 |
| SECTION 1.01. | Credit Agreement | 1 |
| SECTION 1.02. | Other Defined Terms | 1 |
| ARTICLE II | THE GUARANTEES | 3 |
| SECTION 2.01. | Guarantee | 3 |
| SECTION 2.02. | Guarantee of Payment; Continuing Guarantee | 3 |
| SECTION 2.03. | No Limitations | 3 |
| SECTION 2.04. | Reinstatement | 5 |
| SECTION 2.05. | Agreement to Pay; Subrogation | 6 |
| SECTION 2.06. | Information | 6 |
| SECTION 2.07. | Payments | 6 |
| SECTION 2.08. | Excluded Swap Obligations | 6 |
| SECTION 2.09. | Keepwell | 6 |
| ARTICLE III | INDEMNITY, SUBROGATION AND SUBORDINATION | 9 |
| SECTION 3.01. | Indemnity and Subrogation | 9 |
| SECTION 3.02. | Reserved | 9 |
| SECTION 3.03. | Subordination | 9 |
| ARTICLE IV | REPRESENTATIONS AND WARRANTIES | 10 |
| ARTICLE V | MISCELLANEOUS | 10 |
| SECTION 5.01. | Notices | 10 |
| SECTION 5.02. | Waivers; Amendment | 10 |
| SECTION 5.03. | Administrative Agent’s Fees and Expenses; Indemnification | 11 |
| SECTION 5.04. | Successors and Assigns | 12 |
| SECTION 5.05. | Survival of Agreement | 12 |
| SECTION 5.06. | Counterparts; Effectiveness | 12 |
| SECTION 5.07. | Severability | 13 |
| SECTION 5.08. | Right of Set-Off | 13 |
| SECTION 5.09. | Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 13 |
| SECTION 5.10. | WAIVER OF JURY TRIAL | 14 |
| SECTION 5.11. | Headings | 14 |
| SECTION 5.12. | Termination or Release | 14 |
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FIRST LIEN GUARANTEE AGREEMENT, dated as of November 22, 2021 (this “Agreement”), between W.S. BADCOCK CORPORATION, a Florida corporation (the “Guarantor”), and JPMORGAN CHASE BANK, N.A., as Administrative Agent on behalf of itself and the other Secured Parties (in such capacity, together with its permitted successors and assigns in such capacity, the “Administrative Agent”).
Reference is made to (i) that certain First Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Franchise Group, Inc., a Delaware corporation (“Lead Borrower”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”), Franchise Group NewCo Intermediate AF, LLC, a Delaware limited liability company (“Newco AF”), Franchise Group Newco PSP, LLC, a Delaware limited liability company (“FG NewCo PSP”, and together with Lead Borrower, Valor and NewCo AF, individually and collectively, the “Borrower”), the Lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as Administrative Agent, and the Collateral Agent and (ii) that certain First Lien Collateral Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Collateral Agreement”), between the Guarantor and the Collateral Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Guarantor is an affiliate of each Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement (including in the introductory paragraphs hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement.
(b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Administrative Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
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“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Guarantor” has the meaning assigned to such term in the preamble to this Agreement.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
ARTICLE
II
THE GUARANTEE
SECTION 2.01. Guarantee. The Guarantor absolutely, irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to each of the Secured Parties the due and punctual payment and performance of the Secured Obligations. The Guarantor further agrees that the Secured Obligations may be increased, extended or renewed, in whole or in part, or amended or modified, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such increase, extension or renewal, or amendment or modification, of any of the Secured Obligations. The Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Secured Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment, notice of dishonor, default and nonpayment. Notwithstanding anything to the contrary contained herein, the obligations of the Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable provisions of any other applicable law.
SECTION 2.02. Guarantee of Payment; Continuing Guarantee. The Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Secured Obligations or operated as a discharge thereof) and not merely of collection, and waives diligence, marshaling, and any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of any of the Secured Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Borrower, any other Loan Party or any other Person. The Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all of the Secured Obligations, whether currently existing or hereafter incurred.
SECTION 2.03. No Limitations. (a) Except for (x) the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12 and (y) the limitations set forth in Section 2.01, the obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise of any of the Secured Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Secured Obligations, any impossibility in the performance of any of the Secured Obligations or otherwise. Without limiting the generality of the foregoing, except for (x) the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12 and (y) the limitations set forth in Section 2.01, the obligations of the Guarantor hereunder, to the fullest extent permitted by applicable Requirements of Law, shall not be discharged or impaired or otherwise affected by:
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(i) the failure of any Secured Party or any other Person to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document, Secured Swap Obligation or Secured Cash Management Obligation or otherwise;
(ii) any rescission, waiver, amendment, supplement, restatement or modification of, or any release or departure from any of the terms or provisions of, any Loan Document, any Secured Swap Obligation or Secured Cash Management Obligation or any other agreement;
(iii) the release of, or any impairment of or failure to perfect any Lien on, any security held by any Secured Party for any of the Secured Obligations;
(iv) any default, failure or delay, willful or otherwise, in the performance of any of the Secured Obligations;
(v) any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a matter of law or equity (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(vi) any illegality, lack of validity or lack of enforceability of any of the Credit Agreement, any other Loan Document, or the Secured Obligations;
(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any of the Secured Obligations (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(viii) the existence of any claim, set-off or other rights that the Guarantor may have at any time against the Borrower, any other guarantor, the Administrative Agent, any other Secured Party or any other Person, whether in connection with the Credit Agreement, the other Loan Documents, Secured Swap Obligations or Secured Cash Management Obligations or any unrelated transaction;
(ix) [reserved];
(x) [reserved];
(xi) any action permitted or authorized hereunder;
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(xii) any other circumstance (including any statute of limitations), or any existence of or reliance on any representation by the Administrative Agent, any other Secured Party or any other Person, that might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower or any other guarantor or surety (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due)); or
(xiii) any renewal, extension or acceleration of, or any increase in the amount of the Secured Obligations.
(b) The Guarantor expressly authorizes the Secured Parties to take and hold security in accordance with the terms of the Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations for the payment and performance of the Secured Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Secured Obligations, all without affecting the obligations of the Guarantor hereunder.
(c) To the fullest extent permitted by applicable Requirements of Law, the Guarantor hereby waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Secured Obligations and/or the termination or release of the Guarantor’s obligations hereunder as expressly provided under Section 5.12. The Administrative Agent and the other Secured Parties may, at their election and in accordance with the terms of the Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of the Guarantor hereunder except to the extent the Secured Obligations have been paid in full in cash and/or the Guarantor has been subject to the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12. To the fullest extent permitted by applicable law, the Guarantor 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 the Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.
SECTION 2.04. Reinstatement. The Guarantor agrees that, unless released pursuant to Section 5.12(b), its guarantee hereunder shall continue to be effective or automatically and immediately be reinstated, as the case may be, if at any time payment, or any part thereof, of any Secured Obligations is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization (or any analogous proceeding in any jurisdiction) of the Borrower, any other Loan Party or otherwise.
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SECTION 2.05. Agreement to Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at applicable law or in equity against the Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Secured Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties, in cash the amount of such unpaid Secured Obligation. Upon payment by the Guarantor of any sums to the Administrative Agent as provided above, all rights of the Guarantor against the Borrower or 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 subject to Article III.
SECTION 2.06. Information. The Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that the Guarantor assumes and incurs hereunder, and agrees that none of the Secured Parties will have any duty to advise the Guarantor of information known to it or any of them regarding such circumstances or risks.
SECTION 2.07. Payments. Any and all payments by or on account of any obligation of the Guarantor hereunder or under any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation shall be made without setoff or counterclaim and free and clear of and without deduction for any Indemnified Taxes or Other Taxes, except as required by applicable Requirements of Law, on the same terms and to the same extent that payments by the Borrower are required to be so made pursuant to the terms of Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall apply to the Guarantor, mutatis mutandis.
SECTION 2.08. Excluded Swap Obligations. Notwithstanding any provision hereof or in any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation to the contrary, the Secured Obligations shall not include any Excluded Swap Obligations.
ARTICLE
III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantor may have under applicable law (but subject to Section 3.03) in respect of any payment hereunder, each Borrower agrees that (a) in the event a payment in respect of any obligation of any Borrower shall be made by the Guarantor under this Agreement, the Borrower shall indemnify the Guarantor for the full amount of such payment and the Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of the Guarantor shall be sold pursuant to any Security Document to satisfy in whole or in part any Secured Obligations owed to any Secured Party, the Borrower shall indemnify the Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
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SECTION 3.02. Reserved.
SECTION 3.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantor under Section 3.01 and all other rights of the Guarantor of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of all the Secured Obligations. No failure on the part of the Borrower to make the payments required by Section 3.01 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of the Guarantor with respect to its obligations hereunder, and the Guarantor shall remain liable for the full amount of the obligations of the Guarantor hereunder.
(b) The Guarantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, all Indebtedness and other monetary obligations owed by it to, or to it by, any other guarantor shall be fully subordinated to the payment in full in cash of all the Secured Obligations, and any such Indebtedness collected or received by the Guarantor after an Event of Default has occurred and continuing shall be held in trust for the Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Secured Obligations, but without affecting, impairing or limiting in any manner the liability of the Guarantor under any other provision hereof.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that (a) this Agreement has been duly executed and delivered by the Guarantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law and (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in a legal opinion, and (b) all representations and warranties set forth in the Credit Agreement as to the Guarantor are true and correct in all material respects; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date; provided further that, in each case, any such representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language is true and correct in all respects.
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ARTICLE
V
MISCELLANEOUS
SECTION 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to the Guarantor shall be given to it in care of Lead Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 5.02. Waivers; Amendment. (a) No failure or delay by the Administrative Agent, any Lender or any other Secured Party in exercising any right or power hereunder or under any other Loan Document, Secured Swap Obligation and/or Secured Cash Management Obligation shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Lenders and any other Secured Parties hereunder and under the other Loan Documents, the Secured Swap Obligations and the Secured Cash Management Obligations are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended, restated, amended and restated or otherwise modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Guarantor, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Administrative Agent may, without the consent of any Secured Party, consent to a departure by the Guarantor from any covenant of the Guarantor set forth herein to the extent such departure is consistent with the authority of the Administrative Agent set forth in the definition of the term “Badcock Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
SECTION 5.03. Administrative Agent’s Fees and Expenses; Indemnification. (a) The Guarantor agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) The Guarantor agrees to indemnify the Administrative Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
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(c) To the fullest extent permitted by applicable law, the Guarantor shall not assert, and the Guarantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of clauses (a), (b) and (c) above, each reference therein to “the Borrower” shall be deemed to be a reference to “the Guarantor”.
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
SECTION 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Guarantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.
SECTION 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation, shall have been paid in full in cash.
SECTION 5.06. Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic
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transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to the Guarantor when a counterpart hereof executed on behalf of the Guarantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon the Guarantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of the Guarantor, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood and agreed that the Guarantor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement.
SECTION 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 5.08. Right of Set-Off. Each Lender and each other Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Person as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
SECTION 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement (and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement) shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Administrative Agent, any Lender or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against the Guarantor or its respective properties in the courts of any jurisdiction.
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(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement will affect the right of any party to this Agreement or any other Loan Document, Secured Swap Obligation or Secured Cash Management Obligation to serve process in any other manner permitted by law.
(e) The Guarantor hereby irrevocably designates, appoints and empowers the Lead Borrower as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents that may be served in any such action or proceeding.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 SECURED SWAP OBLIGATION, SECURED CASH MANAGEMENT OBLIGATION, 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 PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
SECTION 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 5.12. Termination or Release. (a) Subject to Section 2.04, this Agreement and the Guarantee made herein shall automatically terminate when (i) the Commitments shall have expired or been terminated and (ii) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, any Secured Swap Obligation and any Secured Cash Management Obligation shall have been paid in full.
(b) The guarantee made herein shall also terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
| 10 |
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Administrative Agent shall execute and deliver to the Guarantor, at the Guarantor’s expense, all documents that the Guarantor shall reasonably request to evidence or effect such termination or release so long as the Guarantor shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 5.12. Any execution and delivery of documents by the Administrative Agent pursuant to this Section 5.12 shall be without recourse or warranty by the Administrative Agent or any other Secured Party.
[Signature Pages Follow]
| 11 |
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
W.S. BADCOCK CORPORATION, as a Guarantor
By /s/ Brian Kahn________________________
Name: Brian Kahn
Title: Senior Vice President
[Signature Page to First Lien Guarantee Agreement]
JPMORGAN CHASE BANK, N.A., as Administrative Agent on behalf of itself and the other Secured Parties
By /s/ James A. Knight____________________
Name: James A. Knight
Title: Executive Director
[Signature Page to First Lien Guarantee Agreement]
Exhibit 10.14
SECOND LIEN CREDIT AGREEMENT
dated as of
November 22, 2021
among
FRANCHISE GROUP, INC.,
as a Borrower and Lead Borrower,
FRANCHISE GROUP NEWCO PSP, LLC,
as a Borrower,
VALOR ACQUISITION, LLC,
as a Borrower,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
as a Borrower,
the Lenders from time to time party hereto,
ALTER DOMUS (US) LLC,
as Administrative Agent and as Collateral Agent
and
JPMORGAN CHASE BANK, N.A.,
as Sole Lead Arranger and Sole Bookrunner
Table of Contents
Page
| ARTICLE I Definitions | 1 | ||||
| SECTION 1.01 | Defined Terms. | 1 | |||
| SECTION 1.02 | Classification of Loans and Borrowings. | 70 | |||
| SECTION 1.03 | Terms Generally. | 70 | |||
| SECTION 1.04 | Accounting Terms; GAAP. | 70 | |||
| SECTION 1.05 | Effectuation of Transactions. | 71 | |||
| SECTION 1.06 | Limited Conditionality Acquisition. | 71 | |||
| SECTION 1.07 | Certain Determinations. | 72 | |||
| SECTION 1.08 | Divisions. | 73 | |||
| SECTION 1.09 | Interest Rates; Benchmark Notification. | 73 | |||
| ARTICLE II The Credits | 74 | ||||
| SECTION 2.01 | Commitments. | 74 | |||
| SECTION 2.02 | Loans and Borrowings. | 74 | |||
| SECTION 2.03 | Requests for Borrowings. | 74 | |||
| SECTION 2.04 | [Reserved]. | 75 | |||
| SECTION 2.05 | [Reserved]. | 75 | |||
| SECTION 2.06 | Funding of Borrowings. | 75 | |||
| SECTION 2.07 | Interest Elections. | 76 | |||
| SECTION 2.08 | Termination and Reduction of Commitments. | 77 | |||
| SECTION 2.09 | Repayment of Loans; Evidence of Debt. | 77 | |||
| SECTION 2.10 | Repayment of Term Loans. | 78 | |||
| SECTION 2.11 | Prepayment of Loans. | 78 | |||
| SECTION 2.12 | Fees. | 87 | |||
| SECTION 2.13 | Interest. | 87 | |||
| SECTION 2.14 | Benchmark Unavailability; Benchmark Replacement Setting. | 88 | |||
| SECTION 2.15 | Increased Costs. | 90 | |||
| SECTION 2.16 | Break Funding Payments. | 92 | |||
| SECTION 2.17 | Taxes. | 92 | |||
| SECTION 2.18 | Payments Generally; Pro Rata Treatment; Sharing of Setoffs. | 95 | |||
| SECTION 2.19 | Mitigation Obligations; Replacement of Lenders. | 96 | |||
| SECTION 2.20 | [Reserved]. | 97 | |||
| SECTION 2.21 | Refinancing Amendments. | 97 | |||
| SECTION 2.22 | Defaulting Lenders. | 98 | |||
| SECTION 2.23 | Illegality. | 99 | |||
| SECTION 2.24 | Loan Modification Offers. | 99 | |||
| ARTICLE III Representations and Warranties | 100 | ||||
| SECTION 3.01 | Organization; Powers. | 100 | |||
| SECTION 3.02 | Authorization; Enforceability. | 101 | |||
| SECTION 3.03 | Governmental Approvals; No Conflicts. | 101 | |||
| SECTION 3.04 | Financial Condition; No Material Adverse Effect. | 101 | |||
| SECTION 3.05 | Properties. | 102 | |||
| SECTION 3.06 | Litigation and Environmental Matters. | 102 | |||
| SECTION 3.07 | Compliance with Laws. | 102 | |||
| SECTION 3.08 | Investment Company Status. | 102 | |||
| SECTION 3.09 | Taxes. | 103 | |||
| SECTION 3.10 | ERISA; Labor Matters. | 103 | |||
Table of Contents
(continued)
Page
| SECTION 3.11 | Disclosure. | 103 | |||
| SECTION 3.12 | Subsidiaries. | 104 | |||
| SECTION 3.13 | Intellectual Property; Licenses, Etc. | 104 | |||
| SECTION 3.14 | Solvency. | 104 | |||
| SECTION 3.15 | Federal Reserve Regulations. | 104 | |||
| SECTION 3.16 | Use of Proceeds. | 105 | |||
| SECTION 3.17 | Anti-Corruption Laws and Sanctions. | 105 | |||
| SECTION 3.18 | Security Documents. | 105 | |||
| SECTION 3.19 | Insurance. | 106 | |||
| SECTION 3.20 | Franchise Agreements. | 106 | |||
| ARTICLE IV Conditions | 106 | ||||
| SECTION 4.01 | Effective Date. | 106 | |||
| SECTION 4.02 | Each Credit Event after the Effective Date. | 108 | |||
| ARTICLE V Affirmative Covenants | 109 | ||||
| SECTION 5.01 | Financial Statements and Other Information. | 109 | |||
| SECTION 5.02 | Notices of Material Events. | 111 | |||
| SECTION 5.03 | Information Regarding Collateral. | 112 | |||
| SECTION 5.04 | Existence; Conduct of Business. | 112 | |||
| SECTION 5.05 | Payment of Taxes, etc. | 112 | |||
| SECTION 5.06 | Maintenance of Properties. | 113 | |||
| SECTION 5.07 | Insurance. | 113 | |||
| SECTION 5.08 | Books and Records; Inspection and Audit Rights. | 113 | |||
| SECTION 5.09 | Compliance with Laws. | 114 | |||
| SECTION 5.10 | Use of Proceeds. | 114 | |||
| SECTION 5.11 | Additional Subsidiaries. | 114 | |||
| SECTION 5.12 | Further Assurances. | 115 | |||
| SECTION 5.13 | Franchise Agreements. | 116 | |||
| SECTION 5.14 | Certain Post-Closing Obligations. | 116 | |||
| ARTICLE VI Negative Covenants | 116 | ||||
| SECTION 6.01 | Indebtedness; Certain Equity Securities. | 116 | |||
| SECTION 6.02 | Liens. | 121 | |||
| SECTION 6.03 | Fundamental Changes; Lead Borrower Covenant . | 125 | |||
| SECTION 6.04 | Investments, Loans, Advances, Guarantees and Acquisitions. | 127 | |||
| SECTION 6.05 | Asset Sales. | 130 | |||
| SECTION 6.06 | Sale and Leaseback Transactions. | 132 | |||
| SECTION 6.07 | Restricted Payments; Certain Payments of Indebtedness. | 133 | |||
| SECTION 6.08 | Transactions with Affiliates. | 136 | |||
| SECTION 6.09 | Restrictive Agreements. | 137 | |||
| SECTION 6.10 | Financial Maintenance Covenants. | 138 | |||
| SECTION 6.11 | Changes in Fiscal Periods. | 139 | |||
| SECTION 6.12 | Amendment of Financing Documents. | 139 | |||
| SECTION 6.13 | Franchise Agreements. | 139 | |||
| SECTION 6.14 | Anti-Layering. | 139 | |||
| SECTION 6.15 | Badcock. | 139 | |||
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Table of Contents
(continued)
Page
| ARTICLE VII Events of Default | 140 | ||||
| SECTION 7.01 | Events of Default. | 140 | |||
| SECTION 7.02 | Right to Cure. | 143 | |||
| SECTION 7.03 | Application of Proceeds. | 144 | |||
| ARTICLE VIII Administrative Agent | 145 | ||||
| SECTION 8.01 | Appointment and Authority. | 145 | |||
| SECTION 8.02 | Rights as a Lender. | 146 | |||
| SECTION 8.03 | Exculpatory Provisions. | 146 | |||
| SECTION 8.04 | Reliance by Agents. | 147 | |||
| SECTION 8.05 | Delegation of Duties. | 148 | |||
| SECTION 8.06 | Resignation of Administrative Agent; Mergers. | 148 | |||
| SECTION 8.07 | Non-Reliance on Agents and Lenders. | 149 | |||
| SECTION 8.08 | No Other Duties, Etc. | 150 | |||
| SECTION 8.09 | Administrative Agent May File Proofs of Claim. | 150 | |||
| SECTION 8.10 | No Waiver; Cumulative Remedies; Enforcement. | 151 | |||
| SECTION 8.11 | Withholding Taxes. | 151 | |||
| SECTION 8.12 | Credit Bidding. | 152 | |||
| SECTION 8.13 | Erroneous Payments. | 153 | |||
| ARTICLE IX Miscellaneous | 154 | ||||
| SECTION 9.01 | Notices. | 154 | |||
| SECTION 9.02 | Waivers; Amendments. | 156 | |||
| SECTION 9.03 | Expenses; Indemnity; Damage Waiver. | 159 | |||
| SECTION 9.04 | Successors and Assigns. | 161 | |||
| SECTION 9.05 | Survival. | 166 | |||
| SECTION 9.06 | Counterparts; Integration; Effectiveness. | 166 | |||
| SECTION 9.07 | Severability. | 167 | |||
| SECTION 9.08 | Right of Setoff. | 168 | |||
| SECTION 9.09 | Governing Law; Jurisdiction; Consent to Service of Process. | 168 | |||
| SECTION 9.10 | WAIVER OF JURY TRIAL. | 169 | |||
| SECTION 9.11 | Headings. | 169 | |||
| SECTION 9.12 | Confidentiality. | 169 | |||
| SECTION 9.13 | USA PATRIOT Act. | 171 | |||
| SECTION 9.14 | Release of Liens and Guarantees. | 171 | |||
| SECTION 9.15 | No Advisory or Fiduciary Responsibility. | 172 | |||
| SECTION 9.16 | Interest Rate Limitation. | 172 | |||
| SECTION 9.17 | Intercreditor Agreements | 173 | |||
| SECTION 9.18 | Judgment Currency | 173 | |||
| SECTION 9.19 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 173 | |||
| SECTION 9.20 | Acknowledgement Regarding Any Supported QFCs | 174 | |||
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SCHEDULES:
| Schedule 2.01 | — | Commitments and Loans | ||
| Schedule 2.02 | — | Effective Date Badcock Material Real Property | ||
| Schedule 3.03 | — | Government Approvals; No Conflicts | ||
| Schedule 3.06 | — | Litigation and Environmental Matters | ||
| Schedule 3.12 | — | Subsidiaries | ||
| Schedule 3.20 | — | Franchise Agreements | ||
| Schedule 5.14(a) | — | Certain Post-Closing Obligations | ||
| Schedule 6.01 | — | Existing Indebtedness | ||
| Schedule 6.02 | — | Existing Liens | ||
| Schedule 6.04(e) | — | Existing Investments | ||
| Schedule 6.05(k) | — | Specified Disposition | ||
| Schedule 6.08 | — | Existing Affiliate Transactions | ||
| Schedule 6.09 | — | Existing Restrictions | ||
| Schedule 9.01 | — | Notices |
EXHIBITS:
| Exhibit A | — | Form of Assignment and Assumption | ||
| Exhibit B | — | Form of Badcock Guarantee Agreement | ||
| Exhibit C | — | Form of Perfection Certificate | ||
| Exhibit D | — | Form of Badcock Collateral Agreement | ||
| Exhibit E | — | Form of Compliance Certificate | ||
| Exhibit F | — | [Reserved] | ||
| Exhibit G | — | Form of Solvency Certificate | ||
| Exhibit H | — | Form of Closing Certificate | ||
| Exhibit I | — | Form of Master Intercompany Note | ||
| Exhibit J | — | Form of Specified Discount Prepayment Notice | ||
| Exhibit K | — | Form of Specified Discount Prepayment Response | ||
| Exhibit L | — | Form of Discount Range Prepayment Notice | ||
| Exhibit M | — | Form of Discount Range Prepayment Offer | ||
| Exhibit N | — | Form of Solicited Discounted Prepayment Notice | ||
| Exhibit O | — | Form of Solicited Discounted Prepayment Offer | ||
| Exhibit P | — | Form of Acceptance and Prepayment Notice | ||
| Exhibit Q-1 | — | Form of United States Tax Compliance Certificate 1 | ||
| Exhibit Q-2 | — | Form of United States Tax Compliance Certificate 2 | ||
| Exhibit Q-3 | — | Form of United States Tax Compliance Certificate 3 | ||
| Exhibit Q-4 | — | Form of United States Tax Compliance Certificate 4 | ||
| Exhibit R | — | Form of Note | ||
| Exhibit S | — | Form of Notice of Borrowing | ||
| Exhibit T | — | Form of Interest Election Request |
-iv-
SECOND LIEN CREDIT AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”) and FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“FG Newco Intermediate AF”, and together with Lead Borrower, FG Newco PSP and Valor, individually and collectively, the “Borrower”), the Lenders from time to time party hereto and ALTER DOMUS (US) LLC, as Administrative Agent and as Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified below:
“A Team” means A Team Sales, LLC, a Delaware limited liability company.
“ABL Agent” means JPM, as agent under the ABL Credit Agreement or any successor thereto acting in such capacities.
“ABL Credit Agreement” means (i) that certain Third Amended and Restated Loan and Security Agreement, as in effect on the Effective Date (after giving effect to the ABL Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement), among each Loan Party party thereto, certain lenders party thereto and the ABL Agent, and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent asset-based revolving credit facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not an ABL Credit Agreement hereunder. Any reference to the ABL Credit Agreement hereunder shall be deemed a reference to any ABL Credit Agreement then in existence.
“ABL Credit Agreement First Amendment” means that certain First Amendment to ABL Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto and the ABL Agent.
“ABL Intercreditor Agreement” means (a) that certain Amended and Restated Intercreditor Agreement, dated as of the Effective Date, by and among the Collateral Agent, the First Lien Agent, the FRG First Lien Agent, the FRG Second Lien Agent and the ABL Agent (and any other Persons party thereto), and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement among the ABL Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the ABL Credit Agreement and the other ABL Loan Documents), the Agents (or any of them) and the First Lien Agent (and any other Persons party thereto), that is reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
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“ABL Loan Documents” shall have the meaning ascribed to the term “Financing Agreements” in the ABL Credit Agreement.
“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Acceptable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(2).
“Acceptable Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Acceptance and Prepayment Notice” means an irrevocable written notice from a Term Lender accepting a Solicited Discounted Prepayment Offer to make a Discounted Term Loan Prepayment at the Acceptable Discount specified therein pursuant to Section 2.11(a)(ii)(D)(2) substantially in the form of Exhibit P.
“Acceptance Date” has the meaning specified in Section 2.11(a)(ii)(D)(2).
“Accepting Lenders” has the meaning specified in Section 2.24(a).
“Acquired EBITDA” means, with respect to any Pro Forma Entity, for any period, the amount of Consolidated EBITDA of such Pro Forma Entity (determined as if references to the Borrower and its Subsidiaries in the definition of “Consolidated EBITDA” were references to such Pro Forma Entity and its subsidiaries that will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“Acquired Entity or Business” has the meaning given such term in the definition of “Consolidated EBITDA.”
“Acquisition” means the acquisition of Badcock pursuant to the Acquisition Agreement.
“Acquisition Agreement” means that certain Stock Purchase Agreement, dated as of November 22, 2021 (including the schedules, exhibits and disclosure letters thereto) by and among Badcock, William K. Pou, Jr., as seller representative, the shareholders of Badcock and Franchise Group Newco BHF, LLC.
“Additional Lender” means any Additional Term Lender.
“Additional Term Lender” means, at any time, any bank, financial institution or other institutional lender or investor that agrees to provide any portion of any Credit Agreement Refinancing Indebtedness with respect to any existing Term Loans or Term Commitments, as applicable, pursuant to a Refinancing Amendment in accordance with Section 2.21; provided that each Additional Term Lender shall be subject to the approval of the Administrative Agent if such consent would be required under Section 9.04(b) for an assignment of Term Loans or Term Commitments, as applicable, to such bank, financial institution or other institutional lender or investor (such approval not to be unreasonably withheld, conditioned or delayed) and the Lead Borrower.
-2-
“Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) Daily Simple SOFR, plus (b) (i) for one month Daily Simple SOFR borrowings, 0.11448%, (ii) for three month Daily Simple SOFR borrowings, 0.26161% and (iii) for six month Daily Simple SOFR borrowings, 0.42826%; provided that if the Adjusted Daily Simple SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) (i) for one month Term SOFR Rate borrowings, 0.10%, (ii) for three month Term SOFR Rate borrowings, 0.15% and (iii) for six month Term SOFR Rate borrowings, 0.25%; provided that if the Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Administrative Agent” means Alter Domus, in its capacity as administrative agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Administrative Agent Fee Letter” means that certain Administrative Agent Fee Letter, dated as of the Effective Date, by and among the Borrower and the Administrative Agent.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Affected Class” has the meaning specified in Section 2.24(a).
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.
“Agent” means the Administrative Agent and the Collateral Agent, and any successors and assigns in such capacity, and “Agents” means two or more of them.
“Agent Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Agent Parties” has the meaning given to such term in Section 9.01(c).
“Aggregate Cure Amount” has the meaning given to such term in Section 7.02(a).
“Agreement” has the meaning given to such term in the preliminary statements hereto.
“Agreement Currency” has the meaning given to such term in Section 9.18.
“Alter Domus” means Alter Domus (US) LLC.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1.00% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. (Chicago time) on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 2.00%, such rate shall be deemed to be 2.00% for purposes of this Agreement.
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“Ancillary Document” has the meaning assigned to such term in Section 9.06.
“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, and all other applicable laws, rules, and regulations concerning or relating to bribery or corruption.
“Applicable Account” means, with respect to any payment to be made to the Administrative Agent hereunder, the account specified by the Administrative Agent from time to time for the purpose of receiving payments of such type.
“Applicable Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“Applicable Rate” means, (a) with respect to any Initial Term Loans maintained as ABR Loans, 6.50% per annum, and with respect to any Initial Term Loans maintained as Term Benchmark Loans, 7.50% per annum, and (b) with respect to any Other Term Loans, as set forth in the applicable Refinancing Amendment or Loan Modification Agreement.
“Approved Bank” has the meaning assigned to such term in the definition of the term “Permitted Investments.”
“Approved Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any Person whose consent is required by Section 9.04), substantially in the form of Exhibit A or any other form reasonably approved by the Administrative Agent.
“Auction Agent” means (a) the Administrative Agent or (b) any other financial institution or advisor employed by the Borrower (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Discounted Term Loan Prepayment pursuant to Section 2.11(a)(ii)(A); provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent).
“Audited Financial Statements” means (a) the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of the Lead Borrower ended on or about December 31, 2020 and (b) the audited consolidated balance sheet of Badcock, and the related audited statements of income, cash flows and stockholders’ equity, for the fiscal year of Badcock, ended on or about December 31, 2020.
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“Available Amount” means, as of any date of determination, a cumulative amount equal to (without duplication and without duplication of any amount included in the Available Equity Amount):
(a) [Reserved], plus
(b) the sum of an amount (which amount shall not be less than zero) equal to the sum of (x) Excess Cash Flow (but not less than zero in any period) for the fiscal year of the Lead Borrower ending on or about December 31, 2021 and (y) Excess Cash Flow for each succeeding completed fiscal year as of such date, in each case, that was not required to prepay Term Loan Borrowings (as defined in the FRG First Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG First Lien Credit Agreement or Term Loan Borrowings (as defined in the FRG Second Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG Second Lien Credit Agreement, plus
(c) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower and its Subsidiaries on Investments made using the Available Amount (not to exceed the original amount of such Investments), plus
(d) [Reserved], plus
(e) the Net Proceeds of a sale or other Disposition received by the Borrower or any Subsidiary of Investments made using the Available Amount, plus
(f) [Reserved], plus
(g) [Reserved], plus
(h) the aggregate amount of any Retained Declined Proceeds and Retained Asset Sale Proceeds.
“Available Equity Amount” means a cumulative amount equal to (without duplication, and without duplication of any amount included in the Available Amount):
(a) without duplication of any amount included in the Available Amount, the Net Proceeds of new public or private issuances after the Effective Date of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement) of the Lead Borrower, plus
(b) capital contributions received by the Lead Borrower after the Effective Date in cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash capital contributions) in respect of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), plus
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(c) the net cash proceeds received by the Borrower or any Subsidiary from Indebtedness and Disqualified Equity Interest issuances issued after the Effective Date and which have been exchanged or converted into Qualified Equity Interests, plus
(d) returns, profits, distributions and similar amounts received in (or converted into) cash or Permitted Investments (and the fair market value (as determined in good faith by the Lead Borrower) of non-cash returns, profits, distributions and similar amounts) by the Borrower or any Subsidiary on Investments made using the Available Equity Amount (not to exceed the original amount of such Investments).
“Available General RP Capacity Amount” means (i) the amount of Restricted Payments that may be made at the time of determination pursuant to Section 6.07(a)(xv) plus (ii) the amount of prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing that may be made at the time of determination pursuant to Section 6.07(b)(vi)(A) minus (iii) the sum of the amount of the Available General RP Capacity Amount utilized by the Borrower or any Subsidiary prior to such time to make (a) Restricted Payments pursuant to Section 6.07(a)(xv), (b) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(A), (c) Investments pursuant to Section 6.04(m)(A)(ii) utilizing the Available General RP Capacity Amount or (d) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing pursuant to Section 6.07(b)(vi)(B) utilizing the Available General RP Capacity Amount.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.14(e).
“Badcock” means W.S. Badcock Corporation, a Florida corporation.
“Badcock Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Badcock Security Documents as security for the Secured Obligations. For the avoidance of doubt, Collateral does not constitute “Badcock Collateral”.
“Badcock Collateral Agreement” means the Second Lien Collateral Agreement, dated as of the Effective Date, between Badcock and the Collateral Agent, substantially in the form of Exhibit D.
“Badcock Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent and the Lenders shall have received from Badcock
(i) a counterpart of the Badcock Guarantee Agreement duly executed and delivered on behalf of Badcock, and
(ii) a counterpart of the Badcock Collateral Agreement duly executed and delivered on behalf of Badcock,
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in each case under this clause (a) together with opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
(b) all outstanding Equity Interests of each direct Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of Badcock, shall have been pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;
(c) (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Badcock as payee and all such obligors as payors in the form of the Badcock Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to Badcock and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Badcock Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Badcock Collateral owned by Badcock, all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Badcock Intellectual Property Security Agreements required by this Agreement, the Badcock Security Documents, Requirements of Law and reasonably requested by the Collateral Agent or the Required Lenders to be filed, delivered, registered or recorded to create the Liens intended to be created by the Badcock Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Badcock Security Documents, the Intercreditor Agreements and the other provisions of the term “Badcock Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording no later than the tenth (10th) Business Day following the Effective Date (other than with respect to Uniform Commercial Code financing statements); and
(e) the Collateral Agent shall have received (i) counterparts of a Badcock Mortgage with respect to each Badcock Material Real Property duly executed and delivered by Badcock; provided, that, to the extent any Badcock Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Collateral Agent will cooperate with the Lead Borrower in order to minimize the amount of tax payable in connection with such Badcock Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Badcock Mortgage to the book value of such Badcock Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Badcock Mortgage as a first priority Lien on the Mortgaged Property described therein (subject to the terms of the Intercreditor Agreements), free of any other Liens except as expressly permitted by Section 6.02 and Section 6.15, together with such customary lender’s endorsements as the Collateral Agent or the Required Lenders may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Badcock Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Badcock Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Badcock Mortgaged Property, and if any Badcock Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Collateral Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Badcock Mortgaged Property is located regarding the enforceability of the Badcock Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent and the Required Lenders, (v) a survey or existing survey together with a no change affidavit of such Badcock Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent and the Required Lenders, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Badcock Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s); provided further that, with respect to any Effective Date Badcock Material Real Property, the requirements set forth in this clause (e) shall not be required to be satisfied until the date set forth on Schedule 2.02 for such Effective Date Badcock Material Real Property, or such longer time period as agreed by the Required Lenders in their reasonable discretion.
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of the Loan Parties (other than Badcock) or (ii) particular assets of Badcock, if, solely for purposes of this clause (a)(ii), and for so long as the Required Lenders and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Badcock Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Badcock Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents, in which case Badcock shall be required to use commercially reasonable efforts to cause the Collateral Agent to be a party to such control agreements or control or similar arrangements; (d) in no event shall Badcock be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall the Collateral Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall Badcock be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Badcock Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall Badcock be required to complete any filings or other action with respect to security interests in Badcock Intellectual Property beyond the filing of Badcock Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Badcock Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Badcock Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Required Lenders may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets and any other obligations under this definition where they determine that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Badcock Security Documents.
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“Badcock Guarantee Agreement” means the Second Lien Guarantee Agreement, dated as of the Effective Date, between Badcock and the Administrative Agent, substantially in the form of Exhibit B.
“Badcock Intellectual Property” has the meaning assigned to such term in the Badcock Collateral Agreement.
“Badcock Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Badcock Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Badcock Collateral that can be perfected by the filing of such security agreements, in each case, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Badcock Intercreditor Agreement” means that certain that certain Four Lien Intercreditor Agreement, dated as of the Effective Date, by and among the Agents, the FRG First Lien Agent, the FRG Second Lien Agent and the First Lien Agent and acknowledged by Badcock, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
“Badcock Master Intercompany Note” means the Master Intercompany Note, dated the Effective Date, pursuant to which Badcock is the “payee” and the Lead Borrower and its Subsidiaries (other than Badcock) are the “payors” substantially in the form of Exhibit I.
“Badcock Material Real Property” means (a) the real property described on Schedule 2.02 (the “Effective Date Badcock Material Real Property”) and (b) any other real property (including fixtures) (i) located in the United States, (ii) first acquired by Badcock after the Effective Date and (iii) owned (but not leased or ground-leased) by Badcock with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Material Real Property does not constitute “Badcock Material Real Property”.
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“Badcock Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Badcock Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Badcock Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent, the Required Lenders and the Borrower.
“Badcock Mortgaged Property” means each parcel of Badcock Material Real Property with respect to which a Badcock Mortgage is granted pursuant to the “Badcock Collateral and Guarantee Requirement”, Section 5.12(a) or Section 5.12(c).
“Badcock Pledged Equity Interests” has the meaning set forth in the Badcock Collateral Agreement.
“Badcock Security Documents” means the Badcock Collateral Agreement, the Badcock Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Badcock Collateral and Guarantee Requirement” and/or Section 5.12(a) (solely as it may relate to Badcock) or Section 5.12(c) to secure any of the Secured Obligations.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Basel III” means: (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010, each as amended, supplemented or restated; (ii) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
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“Benchmark” means, initially, with respect to any Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.14(b).
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Required Lenders for the applicable Benchmark Replacement Date:
(a) the Adjusted Daily Simple SOFR Rate;
(b) the sum of: (1) the alternate benchmark rate that has been selected by the Required Lenders (in consultation with the Administrative Agent and the Lead Borrower) as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (2) the related Benchmark Replacement Adjustment.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero), that has been selected by the Required Lenders and the Lead Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Required Lenders decide may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Required Lenders decide that adoption of any portion of such market practice is not administratively feasible or if the Required Lenders determine that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Required Lenders decide is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents); provided that any such changes shall be administratively feasible for the Administrative Agent.
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“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
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(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (a) or (b) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board of Directors” means, with respect to any Person, (a) in the case of any corporation, the board of directors of such Person or any committee thereof duly authorized to act on behalf of such board, (b) in the case of any limited liability company, the board of managers, board of directors, manager or managing member of such Person or the functional equivalent of the foregoing or any committee thereof duly authorized to act on behalf of such board, manager or managing member, (c) in the case of any partnership, the board of directors or board of managers of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.
“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States of America.
“Bookrunner” means JPM, in its capacity as sole bookrunner.
“Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Borrower Materials” has the meaning assigned to such term in Section 5.01.
“Borrower Offer of Specified Discount Prepayment” means the offer by the Borrower to make a voluntary prepayment of Term Loans at a Specified Discount to par pursuant to Section 2.11(a)(ii)(B).
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“Borrower Solicitation of Discount Range Prepayment Offers” means the solicitation by the Borrower of offers for, and the corresponding acceptance by a Term Lender of, a voluntary prepayment of Term Loans at a specified range at a discount to par pursuant to Section 2.11(a)(ii)(C).
“Borrower Solicitation of Discounted Prepayment Offers” means the solicitation by the Borrower of offers for, and the subsequent acceptance, if any, by a Term Lender of, a voluntary prepayment of Term Loans at a discount to par pursuant to Section 2.11(a)(ii)(D).
“Borrowing” means Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a single Interest Period is in effect.
“Borrowing Minimum” means $1,000,000.
“Borrowing Multiple” means $500,000.
“Borrowing Request” means a written request by the Borrower for a Borrowing in accordance with Section 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Chicago are authorized or required by Requirements of Law to remain closed.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any Capitalized Leases; provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”). For purposes of Section 6.02, a Capital Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.
“Capitalized Lease” means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by that Person (a) as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as an operating lease for accounting purposes but with respect to which payments of rent are intended to be treated as payments of principal and interest on a loan for Federal income Tax purposes); provided, that lease liabilities and associated expenses recorded by the Loan Parties (or any other applicable Persons) pursuant to ASU 2016-02, Leases, shall not be treated as Indebtedness and shall not be included in Consolidated Cash Interest Charges or clause (b) of the definition of “Fixed Charge Coverage Ratio”, unless the corresponding leases would have been treated as Capitalized Leases under GAAP as in effect prior to the adoption of ASU 2016-02, Leases (in which case such leases shall be treated as Capitalized Leases, and the interest component of such Capitalized Leases shall be included in Consolidated Cash Interest Charges, and, by virtue thereof, clause (b) of the definition of “Fixed Charge Coverage Ratio”).
“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by the Borrower and its Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of the Borrower and its Subsidiaries.
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“Cash Management Obligations” means (a) obligations of the Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services or any automated clearing house transfers of funds and (b) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements.
“Casualty Event” means any event that gives rise to the receipt by the Borrower or any Subsidiary of any insurance proceeds or condemnation awards, in each case, in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.
“Change in Law” means: (a) the adoption of any rule, regulation, treaty or other law after the date of this Agreement, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all rules, regulations, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” to the extent enacted, adopted, promulgated or issued after the date of this Agreement, but only to the extent such rules, regulations, or published interpretations or directives are applied to the Borrower and its Subsidiaries by the Administrative Agent or any Lender in substantially the same manner as applied to other similarly situated borrowers under comparable syndicated credit facilities, including for purposes of Section 2.15.
“Change of Control” means (x) the acquisition of beneficial ownership, directly or indirectly, by any Person or group, other than the Permitted Holders (directly or indirectly, including through one or more holding companies), of Equity Interests representing 35% or more of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the Lead Borrower and the percentage of the aggregate ordinary voting power so held is greater than the percentage of the aggregate ordinary voting power represented by the Equity Interests in the Lead Borrower held by the Permitted Holders, unless the Permitted Holders (directly or indirectly, including through one or more holding companies) otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint (and do so designate, nominate or appoint) a majority of the Board of Directors of the Lead Borrower or (y) any “change of control” or similar event under the ABL Credit Agreement, the First Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement.
For purposes of this definition, (i) “beneficial ownership” shall be as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act, (ii) the phrase “Person or group” is within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person or “group” and its subsidiaries and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan, and (iii) if any Person or “group” includes one or more Permitted Holders, the issued and outstanding Equity Interests of the Lead Borrower directly or indirectly owned by the Permitted Holders that are part of such Person or “group” shall not be treated as being owned by such Person or “group” for purposes of determining whether clause (c) of this definition is triggered.
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“Class” when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Initial Term Loans or Other Term Loans, (b) any Commitment, refers to whether such Commitment is an Initial Term Loan Commitment or Other Term Commitment and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class of Loans or Commitments. Other Term Commitments and Other Term Loans that have different terms and conditions shall be construed to be in different Classes.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means any and all assets, whether real or personal, tangible or intangible, on which Liens are purported to be granted pursuant to the Security Documents as security for the Secured Obligations. For the avoidance of doubt, Badcock Collateral does not constitute “Collateral”.
“Collateral Account” means an account of the Administrative Agent as the Administrative Agent may designate to the Lead Borrower from time to time as the “Collateral Account” for purposes of this Agreement and the other Loan Documents.
“Collateral Agent” means Alter Domus, in its capacity as collateral agent hereunder and under the other Loan Documents, and its successors in such capacity as provided in Article VIII.
“Collateral Agreement” means the Second Lien Collateral Agreement, dated as of the Effective Date, among the Borrower, each other Loan Party (other than Badcock) and the Collateral Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Collateral and Guarantee Requirement” means, at any time, the requirement that:
(a) the Administrative Agent and the Lenders shall have received from
(i) each Borrower and Subsidiary (other than any Excluded Subsidiary or Badcock) either (x) in the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Guarantee Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary but excluding Badcock), a supplement to the Guarantee Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person, and
(ii) each Borrower and Subsidiary (other than any Excluded Subsidiary or Badcock) either (x) in the case of any Person that is a Loan Party on the Effective Date, a counterpart of the Collateral Agreement duly executed and delivered on behalf of such Person or (y) in the case of any Person that becomes a Loan Party after the Effective Date (including by ceasing to be an Excluded Subsidiary but excluding Badcock), a supplement to the Collateral Agreement, in substantially the form specified therein, duly executed and delivered on behalf of such Person,
in each case under this clause (a) together with, in the case of any such Loan Documents executed and delivered after the Effective Date, to the extent reasonably requested by the Administrative Agent or the Required Lenders, opinions and documents of the type referred to in Sections 4.01(b) and 4.01(d);
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(b) subject to Section 5.14, all outstanding Equity Interests of the Borrower and each Subsidiary (other than (i) any Equity Interests constituting Excluded Assets, (ii) Equity Interests of Immaterial Subsidiaries, (iii) Equity Interests in any Person other than a Borrower or Subsidiary and (iv) Equity Interests in any Foreign Subsidiary (other than, with respect to this clause (iv), to the extent constituting “securities” within the meaning of the UCC)) owned by or on behalf of any Loan Party (other than Badcock), shall have been pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received certificates, if any, of such entity reflecting the pledge, or other instruments, if any, representing all such Equity Interests (other than such Equity Interests in Immaterial Subsidiaries), together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank; provided, that, with respect to any Equity Interests of Badcock (which the Lead Borrower hereby agrees shall be evidenced by a certificate following the First Amendment Effective Date), the requirements set forth in this clause (b) (including the issuance of such certificate) shall not be required to be satisfied until the date that is sixty (60) days following the First Amendment Effective Date, or such longer time period as agreed by the First Lien Agent in its reasonable discretion;
(c) subject to Section 5.14, (i) if any intercompany Indebtedness for borrowed money of the Borrower, any other Loan Party or any Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness shall be evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement, and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties (other than Badcock) as payees and all such obligors as payors in the form of the Master Intercompany Note and (ii) if any Indebtedness for borrowed money of any Person that is not a Loan Party or a Subsidiary in a principal amount of $7,500,000 or more is owing by such obligor to any Loan Party (other than Badcock) and such Indebtedness is evidenced by a promissory note, such promissory note shall be pledged pursuant to the Collateral Agreement and, subject to the Intercreditor Agreements, the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d) with respect to any Collateral owned by any Loan Party (other than Badcock), all certificates, agreements, documents and instruments, including Uniform Commercial Code financing statements and Intellectual Property Security Agreements required by this Agreement, the Security Documents, Requirements of Law and reasonably requested by the Collateral Agent or the Required Lenders to be filed, delivered, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement, the Security Documents, the Intercreditor Agreements and the other provisions of the term “Collateral and Guarantee Requirement,” shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording; and
(e) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property duly executed and delivered by the record owner of such Mortgaged Property; provided, that, to the extent any Mortgaged Property is located in a jurisdiction that imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the Collateral Agent will cooperate with the Borrower or the applicable Loan Party in order to minimize the amount of tax payable in connection with such Mortgage as permitted by, and in accordance with, applicable law including, to the extent permitted by applicable law, limiting the amount secured by such Mortgage to the book value of such Mortgaged Property, as reasonably determined by the Lead Borrower, if such limitation results in such mortgage tax being calculated based upon such book value, (ii) a policy or policies of title insurance (or marked unconditional commitment to issue such policy or policies) issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a first priority Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 6.02, together with such customary lender’s endorsements as the Collateral Agent or the Required Lenders may reasonably request to the extent available in the applicable jurisdiction at commercially reasonable rates (it being agreed that the Collateral Agent shall accept zoning reports from a nationally recognized zoning company in lieu of zoning endorsements to such title insurance policies), in an amount equal to the book value of such Mortgaged Property or as otherwise reasonably agreed by the parties; provided that in no event will the Borrower be required to obtain independent appraisals of such Mortgaged Properties, unless required by FIRREA, (iii) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property, and if any Mortgaged Property is located in an area determined by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, a duly executed notice about special flood hazard area status and flood disaster assistance and evidence of such flood insurance as provided in Section 5.07(b), (iv) opinions, addressed to the Collateral Agent and the Secured Parties, from counsel qualified to opine in each jurisdiction where a Mortgaged Property is located regarding the enforceability of the Mortgage and such other matters as may be in form and substance reasonably satisfactory to the Collateral Agent and the Required Lenders, (v) a survey or existing survey together with a no change affidavit of such Mortgaged Property, in compliance with the 2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys or such other ALTA/NSPS requirements as are in effect on the date of preparation of such survey and otherwise reasonably satisfactory to the Collateral Agent and the Required Lenders, and (vi) evidence of payment of title insurance premiums and expenses and all recording, mortgage, transfer and stamp taxes and fees payable in connection with recording the Mortgage, any amendments thereto and any fixture filings in appropriate county land office(s).
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Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing provisions of this definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, (i) any assets of Badcock or (ii) particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if, solely for purposes of this clause (a)(ii), and for so long as the Required Lenders and the Lead Borrower reasonably agree in writing that the cost, burden, difficulty or consequence of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets, or providing such Guarantees (taking into account any adverse tax consequences to the Borrower and its Affiliates (including the imposition of withholding or other material taxes)), outweighs the benefits to be obtained by the Lenders therefrom; (b) Liens required to be granted from time to time pursuant to the term “Collateral and Guarantee Requirement” shall be subject to exceptions and limitations set forth in the Security Documents and the Intercreditor Agreements; (c) control agreements or control or similar arrangements shall not be required with respect to deposit or securities accounts, except to the extent required under the Loan Documents with respect to an account in respect of which such a control agreement or control or similar arrangement is required under the ABL Loan Documents, in which case the applicable Loan Parties shall be required to use commercially reasonable efforts to cause the Collateral Agent to be a party to such control agreements or control or similar arrangements; (d) in no event shall any Loan Party be required to complete any filings or other action with respect to the perfection of security interests in any jurisdiction outside of the United States, and no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken, nor shall the Collateral Agent be authorized to take any such action, to create any security interests or to perfect or make enforceable any security interests in any such assets; (e) in no event shall any Loan Party be required to complete any filings or other action with respect to perfection of security interests in assets subject to certificates of title beyond the filing of UCC financing statements; (f)(i) in the case of intercompany debt described in the first clause (c)(i) of this definition, other than the filing of UCC financing statements and the delivery of the Master Intercompany Note, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000 and (ii) in the case of third party debt described in the first clause (c)(ii) of this definition, other than the filing of UCC financing statements, no perfection shall be required with respect to promissory notes evidencing such debt for borrowed money in a principal amount (individually) of less than $7,500,000; (g) in no event shall any Loan Party be required to complete any filings or other action with respect to security interests in Intellectual Property beyond the filing of Intellectual Property Security Agreements with the United States Patent and Trademark Office or the United States Copyright Office; (h) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of UCC financing statements), except to the extent constituting a supporting obligation for other Collateral as to which perfection is accomplished by the filing of a UCC financing statement; (i) in no event shall the Collateral include any Excluded Assets; (j) landlord lien waivers, bailee waivers, collateral access agreements or similar agreements shall not be required, except to the extent required under the Loan Documents with respect to distribution centers of the Loan Parties; (k) notices shall not be required to be sent to account debtors or other contractual third parties, except to the extent set forth in the Loan Documents following the occurrence and during the continuance of an Event of Default; and (l) notices to, or acknowledgements from, counterparts under, or compliance with the Assignment of Claims Act (or any state or municipal equivalent) shall not be required. The Required Lenders may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) and any other obligations under this definition where they determine that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.
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“Commitment” means with respect to any Lender, the Term Commitment or Other Term Commitment of any Class or any combination thereof (as the context requires).
“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.
“Compliance Certificate” has the meaning assigned to such term in Section 5.01(e).
“Consolidated Cash Interest Charges” means, for any period, the total interest expense of the Borrower and its Subsidiaries for such period determined on a consolidated basis net of any interest income, which shall be determined on a cash basis only and solely in respect of Indebtedness of the type described in the definition of Consolidated Total Indebtedness and excluding, for the avoidance of doubt, (i) any non-cash interest expense and any capitalized interest, whether paid or accrued, (ii) the amortization of original issue discount resulting from the issuance of Indebtedness at less than par, (iii) amortization of deferred financing costs, debt issuance costs, commissions, fees and expenses (including agency costs, amendment, consent or other front end, one-off or similar non-recurring fees), (iv) any expenses resulting from discounting of indebtedness in connection with the application of recapitalization accounting or purchase accounting, (v) penalties or interest related to taxes and any other amounts of non-cash interest resulting from the effects of acquisition method accounting or pushdown accounting, (vi) the accretion or accrual of, or accrued interest on, discounted liabilities (other than Indebtedness) during such period, (vii) non-cash interest expense attributable to the movement of the mark-to-market valuation of obligations under hedging agreements or other derivative instruments pursuant to FASB Accounting Standards Codification No. 815-Derivatives and Hedging, (viii) any one-time cash costs associated with breakage in respect of Swap Agreements for interest rates, (ix) any payments with respect to make whole premiums, commissions or other breakage costs of any Indebtedness, (x) all non-recurring interest expense consisting of liquidated damages for failure to timely comply with registration rights obligations, all as calculated on a consolidated basis in accordance with GAAP, (xi) expensing of bridge, arrangement, structuring, commitment, fronting or other financing fees, (xii) fees and expenses (including any penalties and interest relating to Taxes but excluding any bona fide interest expense) associated with the consummation of the Transactions (as defined in the FRG First Lien Credit Agreement), (xiii) agency fees paid to the administrative agents and collateral agents under any credit facilities or other debt instruments or documents and (xiv) fees (including any ticking fees) and expenses (including any penalties and interest relating to Taxes) associated with any Investment not prohibited by Section 6.04 or the issuance of Equity Interests or Indebtedness (in each case excluding any bona fide interest expense).
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“Consolidated EBITDA” means, for any period, Consolidated Net Income for such period, plus:
(a) without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) total interest expense and, to the extent not reflected in such total interest expense, the sum of (A) premium payments, debt discount, fees, charges and related expenses incurred in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets plus (B) the portion of rent expense with respect to such period under Capitalized Leases that is treated as interest expense in accordance with GAAP plus (C) the implied interest component of synthetic leases with respect to such period plus (D) any losses on hedging obligations or other derivative instruments entered into for the purpose of hedging interest rate risk, net of interest income and gains on such hedging obligations or such derivative instruments plus (E) bank and letter of credit fees and costs of surety bonds in connection with financing activities, plus (F) amortization or write-off of deferred financing fees, debt issuance costs, debt discount or premium, terminated hedging obligations and other commissions, financing fees and expenses and, adjusted, to the extent included, to exclude any refunds or similar credits received in connection with the purchasing or procurement of goods or services under any purchasing card or similar program;
(ii) provision for taxes based on income, profits, revenue or capital and sales taxes, including federal, foreign, state, franchise, excise, and similar taxes paid or accrued during such period (including in respect of repatriated funds) including penalties and interest related to such taxes or arising from any tax examinations;
(iii) Non-Cash Charges;
(iv) [reserved];
(v) net cash received from A Team and its Subsidiaries and utilized to repay or prepay Indebtedness;
(vi) severance, relocation, integration and facilities’ opening costs and expenses and other business optimization costs and expenses and operating improvements (including related to new product introductions and any operating expenses, losses or charges related to the implementation of cost savings initiatives, operating expense reductions and other similar initiatives), recruiting fees, signing costs, reserve, retention, recruiting, relocation and signing bonuses and expenses, transition costs, costs related to closure/consolidation of facilities, internal costs in respect of strategic initiatives and curtailments or modifications to pension and post-retirement employee benefit plans (including any settlement of pension liabilities), contract terminations, professional and consulting fees incurred in connection with any of the foregoing and other one-time and nonoperational costs and expenses;
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(vii) restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves), whether or not classified as restructuring expense on the consolidated financial statements;
(viii) the amount of any non-controlling interest consisting of income attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary deducted (and not added back in such period) in calculating Consolidated Net Income, excluding cash distributions in respect thereof;
(ix) [reserved];
(x) any non-cash loss attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(xi) any loss relating to amounts paid in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income for such period;
(xii) any gain relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clause (c)(iv) below;
(xiii) any net pension or other post-employment benefit costs representing amortization of unrecognized prior service costs, actuarial losses, including amortization of such amounts arising in prior periods, amortization of the unrecognized net obligation (and loss or cost) existing at the date of initial application of FASB Accounting Standards Codification 715, and any other items of a similar nature;
(xiv) charges, losses, lost profits, expenses (including litigation expenses, fee and charges) or write-offs to the extent indemnified or insured by a third party, including expenses or losses covered by indemnification provisions or by any insurance provider in connection with the Pre-Effective Date Transactions, the Transactions, a Permitted Acquisition or any other acquisition or Investment, disposition or any Casualty Event, in each case, to the extent that coverage has not been denied and so long as such amounts are actually reimbursed in cash within one year after the related amount is first added to Consolidated EBITDA pursuant to this clause (xiv) (and if not so reimbursed within one year, such amount shall be deducted from Consolidated EBITDA during the next measurement period);
(xv) cash receipts (or any netting arrangements resulting in reduced cash expenses) not included in Consolidated EBITDA in any period to the extent non-cash gains relating to such receipts were deducted in the calculation of Consolidated EBITDA pursuant to clause (c) below for any previous period and not added back;
(xvi) Earn-Out payments, contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments incurred in connection with the Acquisition (as defined in the FRG First Lien Credit Agreement) and/or any acquisition or other investment (including any acquisition or other investment consummated prior to the Effective Date) which are paid or accrued during the applicable period; and
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(xvii) other adjustments (i) identified to the Lenders prior to the Effective Date, (ii) set forth in (A) the Model (as defined in the FRG First Lien Credit Agreement) or (B) the quality of earnings report prepared by independent registered public accountants of recognized national standing or any other accounting firm reasonably acceptable to the Commitment Parties (as defined in the FRG Second Lien Credit Agreement) and delivered to the Commitment Parties (as defined in the FRG Second Lien Credit Agreement) in connection with the Transactions (as defined in the FRG First Lien Credit Agreement) or (iii) contemplated by the Acquisition Agreement (as defined in the FRG First Lien Credit Agreement); plus
(b) without duplication, (i) the amount of “run rate” cost savings, operating expense reductions and synergies related to any of the Pre-Effective Date Transactions, any of the Transactions, any Specified Transaction, any restructuring, any business optimization activities, cost saving initiatives and operating improvements or other initiatives, actions or events (each of the foregoing, an “Event”) that are reasonably identifiable and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Event (or, if the underlying Event is any of the Transactions, within 18 months after the Effective Date) (including actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower) (which cost savings, operating expense reductions and synergies shall be added to Consolidated EBITDA until fully realized and calculated on a pro forma basis as though such cost savings, operating expense reductions and synergies had been realized on the first day of the relevant period), net of the amount of actual benefits realized from such actions; provided that no cost savings, operating expense reductions or synergies shall be added pursuant to this clause (b) to the extent duplicative of any expenses or charges relating to such cost savings, operating expense reductions, other operating improvements or synergies that are included above or in the definition of “Pro Forma Basis” (it being understood and agreed that “run rate” shall mean the full recurring benefit that is associated with any action taken); provided, further that the aggregate amount of addbacks to Consolidated EBITDA pursuant this clause (b) for any period, excluding any addbacks for such period pursuant to this clause (b) where the underlying Event is any of the Transactions (as defined in the FRG First Lien Credit Agreement), shall not exceed 20.0% of Consolidated EBITDA for such period (calculated after giving effect to such addbacks); less
(c) without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i) non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business);
(ii) any non-cash gain attributable to the mark to market movement in the valuation of any Equity Interests, and hedging obligations or other derivative instruments (in each case, including pursuant to Financial Accounting Standards Codification No. 815—Derivatives and Hedging);
(iii) any gain relating to amounts received in cash prior to the stated settlement date of any hedging obligation that has been reflected in Consolidated Net Income in such period;
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(iv) any loss relating to hedging obligations that has been reflected in Consolidated Net Income in prior periods and excluded from Consolidated EBITDA pursuant to clauses (a)(xi) and (a)(xii) above;
(v) the amount of any non-controlling interest consisting of loss attributable to non-controlling interests of third parties in any Non-Wholly Owned Subsidiary added (and not deducted in such period) to Consolidated Net Income;
(vi) non-cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or cash reserve for a potential cash item that reduced Consolidated EBITDA in any prior period, any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase Consolidated EBITDA in such prior period, and any non-cash gains attributable to accrual of revenue or recording of receivables in the ordinary course of business; and
(vii) any amount included in Consolidated Net Income of such Person for such period attributable to non-controlling interests pursuant to the application of FASB Accounting Standards Codification Topic 810-10-45;
in each case, as determined on a consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP; provided that:
(I) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA currency translation gains and losses related to currency remeasurements of assets or liabilities (including the net loss or gain resulting from hedging agreements for currency exchange risk and revaluations of intercompany balances),
(II) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA for any period any adjustments resulting from the application of Financial Accounting Standards Codification No. 815—Derivatives and Hedging,
(III) there shall be included in determining Consolidated EBITDA for any period, without duplication, (A) to the extent not included in Consolidated Net Income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to the Pre-Effective Date Investments and the Transactions, an “Acquired Entity or Business”), based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis and (B) in the case of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting, the Consolidated EBITDA of such Person multiplied by the ownership percentage of the Borrower or applicable Subsidiary therein;
(IV) there shall be (A) to the extent included in Consolidated Net Income, excluded in determining Consolidated EBITDA for any period the Disposed EBITDA of any Person, property, business or asset sold, transferred or otherwise disposed of, closed or classified as discontinued operations in accordance with GAAP (other than (x) if so classified on the basis that it is being held for sale unless such sale has actually occurred during such period and (y) for periods prior to the applicable sale, transfer or other disposition, if the Disposed EBITDA of such Person, property, business or asset is positive (i.e., if such Disposed EBITDA is negative, it shall be added back in determining Consolidated EBITDA for any period)) by the Borrower or any Subsidiary during such period (each such Person, property, business or asset so sold, transferred or otherwise disposed of, closed or classified, a “Sold Entity or Business”), based on the Disposed EBITDA of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, disposition, closure, classification or conversion) determined on a historical Pro Forma Basis and (B) to the extent not included in Consolidated Net Income, included in determining Consolidated EBITDA for any period in which a Sold Entity or Business is disposed, an adjustment equal to the Pro Forma Disposal Adjustment with respect to such Sold Entity or Business (including the portion thereof occurring prior to such disposal) as specified in the Pro Forma Disposal Adjustment certificate delivered to the Administrative Agent (for further delivery to the Lenders); and
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(V) to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDA any non-cash expense (or income) as a result of adjustments recorded to contingent consideration liabilities relating to the Transaction or any Permitted Acquisition (or other Investment permitted hereunder).
Notwithstanding the foregoing, Consolidated EBITDA shall be deemed to equal (a) $102,145,028 for the fiscal quarter of the Lead Borrower ended on or about December 31, 2020, (b) $135,453,700 for the fiscal quarter of the Lead Borrower ended on or about March 31, 2021, (c) $129,457,547 for the fiscal quarter of the Lead Borrower ended on or about June 30, 2021 and (d) $115,698,793 for the fiscal quarter of the Lead Borrower ended on or about September 30, 2021 (it being understood that such amounts are subject to adjustments, as and to the extent otherwise contemplated in this Agreement, in connection with any calculation on a Pro Forma Basis (including, for the avoidance of doubt, in respect of any disposition of Badcock Collateral during the relevant periods)); provided that such amounts of Consolidated EBITDA for any such fiscal quarter shall be adjusted to include, without duplication, any cost savings that would otherwise be included pursuant to clause (b) of this definition.
“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) unusual, or non-recurring gains or losses for such period,
(b) the cumulative effect of a change in accounting principles during such period;
(c) any Transaction Costs incurred during such period,
(d) any fees, costs and expenses (including (x) any transaction or retention bonus or similar payment and (y) any indemnities) incurred during such period, or any amortization thereof for such period, in connection with or in relation to any acquisition (including any acquisition of a franchisee), non-recurring costs to acquire equipment to the extent not capitalized in accordance with GAAP, Investment, recapitalization, asset disposition, non-competition agreement, incurrence, issuance or repayment of debt or similar transaction, issuance of equity securities, option buyouts, refinancing transaction or amendment or other modification of or waiver or consent relating to any debt instrument or similar transaction (in each case, including the Transaction Costs and any such transaction consummated prior to the Effective Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction, in each case whether or not successful (including, for the avoidance of doubt, the effects of expensing all transaction-related expenses in accordance with FASB Accounting Standards Codification 805 and gains or losses associated with FASB Accounting Standards Codification 460),
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(e) any income (loss) (and all fees and expenses or charges relating thereto) for such period attributable to the early extinguishment of Indebtedness, hedging agreements or other derivative instruments,
(f) accruals and reserves that are established or adjusted as a result of the Pre-Effective Date Investments, the Transactions or any Permitted Acquisition or other Investment not prohibited under this Agreement in accordance with GAAP (including any adjustment of estimated payouts on Earn-Outs) or changes as a result of the adoption or modification of accounting policies during such period,
(g) stock-based award compensation expenses (including any one-time compensation related to unvested options outstanding as of the Effective Date),
(h) any income (loss) attributable to deferred compensation plans or trusts,
(i) any income (loss) from Investments recorded using the equity method,
(j) the amount of any expense required to be recorded as compensation expense related to contingent transaction consideration,
(k) any unrealized gain or loss due solely to fluctuations in currency values and the related tax effects, determined in accordance with GAAP,
(l) [Reserved],
(m) (A) the amount of management, monitoring, consulting and advisory fees, indemnities and related expenses paid or accrued in such period (including any termination fees payable in connection with the early termination of management and monitoring agreements) and (B) the amount of expenses relating to payments made to option holders of the Lead Borrower or any of its direct or indirect parent companies in connection with, or as a result of, any distribution being made to shareholders of such Person or its direct or indirect parent companies, which payments are being made to compensate such option holders as though they were shareholders at the time of, and entitled to share in, such distribution, in each case, to the extent permitted in the Loan Documents,
(n) any costs or expenses incurred by the Borrower or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, any severance agreement or any stock subscription or shareholder agreement, to the extent that such costs or expenses are non-cash or otherwise funded with cash proceeds contributed to the capital of the Borrower or Net Proceeds of an issuance of Equity Interests of the Borrower (other than Disqualified Equity Interests),
(o) the Consolidated Net Income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Consolidated Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, and
(p) any non-cash goodwill impairment charges or other intangible asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of ASC 350 or other non-cash asset impairment charges incurred subsequent to the date of this Agreement resulting from the application of SFAS 144.
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There shall be included in Consolidated Net Income, without duplication, the amount of any cash tax benefits related to the tax amortization of intangible assets in such period. There shall be excluded from Consolidated Net Income for any period the effects from applying acquisition method accounting, including applying acquisition method accounting to inventory, property and equipment, loans and leases, software and other intangible assets and deferred revenue (including deferred costs related thereto and deferred rent) required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its Subsidiaries), as a result of the Pre-Effective Date Investments, the Transactions, any acquisition or Investment consummated prior to the Effective Date and any Permitted Acquisitions (or other Investment not prohibited hereunder) or the amortization or write-off of any amounts thereof.
In addition, to the extent included in the Consolidated Net Income of such Person and its Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall (i) exclude any expenses and charges that are reimbursed by indemnification or other reimbursement provisions in connection with any acquisition or other investment or any sale, conveyance, transfer or other disposition of assets permitted hereunder and (ii) include the amount of business interruption insurance proceeds received and, to the extent covered by insurance and actually reimbursed, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days), expenses with respect to liability or casualty events or business interruption.
“Consolidated Secured Indebtedness” means, as of any date of determination, Consolidated Total Indebtedness secured by Liens on the Collateral and the Badcock Collateral.
“Consolidated Total Indebtedness” means, as of any date of determination, (i) the aggregate amount of Indebtedness of the Lead Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP (but excluding the effects of any discounting of Indebtedness resulting from the application of the acquisition method accounting in connection with the Pre-Effective Date Investments, the Transactions or any Permitted Acquisition (or other Investment not prohibited hereunder)) consisting only of third-party Indebtedness for borrowed money, drawn but unreimbursed obligations under letters of credit, letters of guaranty and bankers’ acceptances and third-party debt obligations evidenced by bonds, debentures, loan agreements, promissory notes or similar instruments, and, in each case, without duplication, Guarantees by the Lead Borrower and its Subsidiaries outstanding on such date, determined on a consolidated basis in accordance with GAAP, in respect of any of the foregoing Indebtedness of any other Person minus (ii) the sum of (x) unrestricted cash and cash equivalents of the Lead Borrower and its Subsidiaries in an aggregate amount not to exceed $150,000,000 and (y) cash and cash equivalents restricted in favor of the Administrative Agent, the Collateral Agent or any Lender (which may also include cash and cash equivalents securing other indebtedness (including Indebtedness under the ABL Loan Documents, the First Lien Loan Documents, the FRG First Lien Loan Documents or the FRG Second Lien Loan Documents) secured by a Lien on the Collateral and the Badcock Collateral).
“Consolidated Working Capital” means, at any date, the excess of (a) the sum of all amounts (other than cash and Permitted Investments) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Subsidiaries at such date, excluding the current portion of current and deferred income taxes over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Lead Borrower and its Subsidiaries on such date, including deferred revenue but excluding, without duplication, (i) the current portion of any Funded Debt, (ii) all Indebtedness consisting of Loans to the extent otherwise included therein, (iii) the current portion of interest and (iv) the current portion of current and deferred income taxes; provided that, for purposes of calculating Excess Cash Flow, increases or decreases in working capital (A) arising from acquisitions or dispositions by the Lead Borrower and its Subsidiaries shall be measured from the date on which such acquisition or disposition occurred until the first anniversary of such acquisition or disposition with respect to the Person subject to such acquisition or disposition and (B) shall exclude (I) the impact of non-cash adjustments contemplated in the Excess Cash Flow calculation, (II) the impact of adjusting items in the definition of Consolidated Net Income and (III) any changes in current assets or current liabilities as a result of (x) the effect of fluctuations in the amount of accrued or contingent obligations, assets or liabilities under hedging agreements or other derivative obligations, (y) any reclassification in accordance with GAAP of assets or liabilities, as applicable, between current and noncurrent or (z) the effects of acquisition method accounting.
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“Contract Consideration” has the meaning assigned to such term in the definition of “Excess Cash Flow”.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b) or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning specified in Section 9.20.
“COVID-19 Pandemic” means the global spread of the coronavirus illness, which was declared to be a pandemic by the World Health Organization on March 11, 2020.
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“Credit Agreement Refinancing Indebtedness” means Indebtedness issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) by the Borrower or any other Loan Party in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Term Loans (“Refinanced Debt”); provided that such exchanging, extending, renewing, replacing or refinancing Indebtedness (a) is in an original aggregate principal amount not greater than the aggregate principal amount of the Refinanced Debt (plus any premium, accrued interest, original issue discount and fees and expenses incurred in connection with such exchange, extension, renewal, replacement or refinancing), (b) does not mature earlier than or have a Weighted Average Life to Maturity shorter than the Refinanced Debt (other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (c) if such Indebtedness is unsecured or secured by the Collateral and the Badcock Collateral on a junior lien basis to the Secured Obligations, does not (1) mature prior to the date that is 91 days after the maturity date of the Refinanced Debt (or if later, 91 days after the Latest Maturity Date), (2) have a Weighted Average Life to Maturity shorter than the Refinanced Debt (or any later maturing Term Facility then in effect) plus 91 days, or (3) have mandatory prepayment, redemption or offer to purchase events more onerous than those with respect to Refinanced Debt (and shall otherwise be subject to the same terms as the Refinanced Debt) (in each case other than with respect to any customary bridge loan facility, so long as the long-term Indebtedness into which any such customary bridge facility is to be converted or exchanged satisfies the requirements of this clause (c) and such conversion or exchange is subject only to the conditions customary for similar conversions or exchanges), (d) [reserved], (e) shall not be guaranteed by any entity that is not a Loan Party, (f) in the case of any secured Indebtedness (i) is not secured by any assets not securing the Secured Obligations, (ii) if not comprising Indebtedness hereunder, is subject to the relevant Intercreditor Agreement(s) and (iii) in the case of Refinanced Debt that was secured on a junior basis to the Secured Obligations, shall be secured on a junior basis to the Secured Obligations; provided that any unsecured Refinanced Debt shall not be refinanced with secured Credit Agreement Refinancing Indebtedness, (g) in the case of Refinanced Debt that is subordinated in right of payment to the Secured Obligations, shall be subordinated on the same basis, (h) has covenants, events of default and guarantees (excluding, for avoidance of doubt, pricing, interest rate margins, rate floors, discounts, fees, premiums and prepayment or redemption provisions) of any such Indebtedness, that are not materially more restrictive to the Borrower and the Subsidiaries, when taken as a whole, than the Refinanced Debt (or, with respect to any Permitted First Priority Refinancing Debt, than the Indebtedness under the First Lien Credit Agreement) (as determined by the Lead Borrower in good faith) unless (1) the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (2) any such provisions apply after the Latest Maturity Date at the time of such refinancing, (3) such terms shall be reasonably satisfactory to the Administrative Agent and the Lead Borrower or (4) such terms reflect market terms and conditions (taken as a whole) at the time of such refinancing (as determined by the Lead Borrower in good faith) and are also added for the benefit of the Lenders of the Initial Term Loans (to the extent remaining outstanding after the incurrence or issuance of such refinancing Indebtedness) (it being understood to the extent that any such terms are added for the benefit of the Lenders of the Initial Term Loans, no consent shall be required from the Administrative Agent or any such Lenders of the Initial Term Loans), and (i) (1) if such Indebtedness is secured on a pari passu basis with the Liens securing the Secured Obligations, such Indebtedness may participate on a pro rata basis or a less than a pro rata basis (but not greater than a pro rata basis) in any mandatory repayments or prepayments in respect of the Term Loans and (2) if such Indebtedness is secured on a senior priority basis relative to the Liens securing the Secured Obligations, such Indebtedness may participate on a greater than pro rata, pro rata or less than pro rata basis in any mandatory repayments or prepayments in respect of the Term Loans; provided that a certificate of a Responsible Officer delivered to the Administrative Agent (to be promptly distributed by the Administrative Agent to the Lenders) at least five (5) Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such resulting Indebtedness or drafts of the documentation relating thereto, stating that the Lead Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement, shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement unless the Required Lenders notify the Lead Borrower within such five (5) Business Day period that they disagree with such determination (including a reasonably detailed description of the basis upon which they disagree). For the avoidance of doubt, such Credit Agreement Refinancing Indebtedness shall not be subject to any “most favored nation” pricing provisions.
“Cure Amount” has the meaning assigned to such term in Section 7.02(a).
“Cure Expiration Date” has the meaning assigned to such term in Section 7.02(a).
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“Cure Right” has the meaning assigned to such term in Section 7.02(a).
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day, a “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Debtor Relief Laws” means the Bankruptcy Code, 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 upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Lead Borrower or the Administrative Agent, or any other Lender, as applicable, in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by the Administrative Agent or any other Lender, as applicable, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans and under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or any other Lender’s, as applicable, receipt of such certification in form and substance satisfactory to it and the Administrative Agent or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.
“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Designated Non-Cash Consideration” means the fair market value of non-cash consideration received by the Borrower or a Subsidiary in connection with a Disposition pursuant to Section 6.05(k) that is designated as Designated Non-Cash Consideration pursuant to a certificate of a Responsible Officer of the Lead Borrower, setting forth the basis of such valuation (which amount will be reduced by the fair market value of the portion of the non-cash consideration converted to cash within 180 days following the consummation of the applicable Disposition or, if converted to cash after 180 days, the lesser of (a) the consideration in cash or cash equivalents received from such conversion and (b) the fair market value of such non-cash consideration at the time of such conversion).
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“Discount Prepayment Accepting Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(2).
“Discount Range” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Prepayment Notice” means a written notice of a Borrower Solicitation of Discount Range Prepayment Offers made pursuant to Section 2.11(a)(ii)(C)(1) substantially in the form of Exhibit L.
“Discount Range Prepayment Offer” means the irrevocable written offer by a Term Lender, substantially in the form of Exhibit M, submitted in response to an invitation to submit offers following the Auction Agent’s receipt of a Discount Range Prepayment Notice.
“Discount Range Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Discount Range Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Discounted Prepayment Determination Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Discounted Prepayment Effective Date” means in the case of a Borrower Offer of Specified Discount Prepayment or Borrower Solicitation of Discount Range Prepayment Offer, five (5) Business Days following the receipt by each relevant Term Lender of notice from the Auction Agent in accordance with Section 2.11(a)(ii)(B), Section 2.11(a)(ii)(C) or Section 2.11(a)(ii)(D), as applicable, unless a shorter period is agreed to between the Borrower and the Auction Agent.
“Discounted Term Loan Prepayment” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Dispose” and “Disposition” each has the meaning assigned to such term in Section 6.05.
“Disposed EBITDA” means, with respect to any Sold Entity or Business for any period through (but not after) the date of such disposition, the amount for such period of Consolidated EBITDA of such Sold Entity or Business (determined as if references to the Borrower and its Subsidiaries in the definition of the term “Consolidated EBITDA” (and in the component financial definitions used therein) were references to such Sold Entity or Business and its subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business.
“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest in such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
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(a) matures or is mandatorily redeemable or contains any mandatory put, redemption or repayment provision (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b) is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests);
(c) is redeemable (other than solely for Equity Interests in such Person that do not constitute Disqualified Equity Interests and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person or any of its Affiliates, in whole or in part, at the option of the holder thereof; or
(d) in the case of any preferred Equity Interest, provides for scheduled payments of dividends and/or distributions in cash;
in each case, on or prior to the date ninety-one (91) days after the Latest Maturity Date; provided, however, that (i) an Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” or similar event shall not constitute a Disqualified Equity Interest if any such requirement becomes operative only after, or payment thereunder is subject to the prior, repayment in full of all the Loans and all other Loan Document Obligations that are accrued and payable and the termination of the Commitments, (ii) if an Equity Interest in any Person is issued pursuant to any plan for the benefit of employees of the Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Borrower or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person and (iii) any Equity Interest in any Person that would not constitute a Disqualified Equity Interest but for a requirement of payment of dividends or distributions in violation of clauses (a) or (b) above shall not constitute a Disqualified Equity Interest if the terms of such Equity Interest (x) give the applicable issuer the option to elect to pay such dividends or distributions on a non-cash basis and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under Section 6.07 of this Agreement or would result in an Event of Default hereunder.
“Disqualified Lenders” means (i) those Persons identified by the Lead Borrower to the Lenders in writing prior to the Effective Date as being “Disqualified Lenders”, (ii) those Persons who are competitors of the Lead Borrower, Badcock and/or any of their Subsidiaries or Persons Controlling or Controlled by any of the foregoing, in each case, identified by the Lead Borrower to the Lenders (or on and following the Effective Date, the Administrative Agent) from time to time in writing (including by email) which designation shall become effective three (3) Business Days after the delivery of each such written designation to the Administrative Agent, but which shall not apply retroactively to disqualify any persons that have previously acquired, or entered into a trade to acquire, an assignment or participation interest in the Loan and (iii) in the case of each Person identified pursuant to clauses (i) and (ii) above, any of their Affiliates (other than any such Affiliate that is primarily engaged in, or that advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course and with respect to which the primary Disqualified Lender does not possess the power to direct or cause the direction of the investment policies of such entity referenced in clause (ii) above, unless separately identified by the Lead Borrower pursuant to clause (i) above) that are either (x) identified in writing by the Lead Borrower to the Lenders (or, on and following the Effective Date, the Administrative Agent) from time to time or (y) clearly identifiable as Affiliates on the basis of such Affiliate’s name. Such list of Disqualified Lenders shall be available for inspection upon request by any Lender. Notwithstanding anything to the contrary contained in this Agreement, (a) each Borrower and the Lenders acknowledge and agree that the Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to assignments or participations to a Disqualified Lender and (b) each Borrower and the Lenders agree that the Administrative Agent shall have no responsibility or obligation to determine whether any Lender or potential Lender is a Disqualified Lender and the Administrative Agent shall have no liability with respect to any assignment or participation made to a Disqualified Lender.
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“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any state thereof or the District of Columbia.
“Earn-Outs” means, with respect to any Person, obligations of such Person arising from Permitted Acquisitions or other Investments permitted hereunder which are payable to the sellers thereunder in their capacity as such based on the achievement of specified financial results or other criteria or milestones over time.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means November 22, 2021.
“Effective Date Badcock Material Real Property” has the meaning assigned to such term in the definition of the term “Badcock Material Real Property.”
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than the Borrower or any of its Affiliates), other than, in each case, (i) a natural person (or a holding company, investments vehicle, investment vehicle or trust for, or owned and operated by or for the primary benefit of a natural person), (ii) a Defaulting Lender or (iii) a Disqualified Lender; provided that a Disqualified Lender will constitute an Eligible Assignee solely to the extent that such assignment is consented to in writing by the Lead Borrower.
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“Environmental Laws” means all applicable treaties, rules, regulations, codes, ordinances, judgments, orders, decrees and other applicable Requirements of Law, and all applicable injunctions or binding agreements issued, promulgated or entered into by or with any Governmental Authority, in each instance relating to the protection of the environment, to preservation or reclamation of natural resources, to Release or threatened Release of any Hazardous Material or to the extent relating to exposure to Hazardous Materials, to health or safety matters.
“Environmental Liability” means any liability, obligation, loss, claim, action, order or cost, contingent or otherwise (including any liability for damages, costs of medical monitoring, costs of environmental remediation or restoration, administrative oversight costs, consultants’ fees, fines, penalties and indemnities) directly or indirectly resulting from or based upon (a) any actual or alleged violation of any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, or treatment of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or 414(c) of the Code or, solely for purposes of Title IV and Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 4001(b) of ERISA or Section 414 of the Code.
“ERISA Event” means (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (e) the incurrence by a Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to the termination of any Plan or by application of Section 4069 of ERISA with respect to any terminated plan; (f) the receipt by a Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or to an intention to terminate or to appoint a trustee to administer any plan or plans in respect of which such Loan Party or ERISA Affiliate would be deemed to be an employer under Section 4069 of ERISA; (g) the incurrence by a Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Multiemployer Plan; (h) the receipt by a Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from a Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability, or the failure of a Loan Party or any ERISA Affiliate to pay when due, after the expiration of any applicable grace period, any installment payment with respect to any Withdrawal Liability; or (i) the withdrawal of a Loan Party or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity 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.
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“Erroneous Payment” has the meaning assigned to such term in Section 8.13(a).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excess Cash Flow” means, for any period, an amount equal to the excess of:
(a) the sum, without duplication, of:
(i) Consolidated Net Income for such period,
(ii) an amount equal to the amount of all Non-Cash Charges to the extent deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital and long-term account receivables for such period,
(iv) an amount equal to the aggregate net non-cash loss on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent deducted in arriving at such Consolidated Net Income, and
(v) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) gains, less:
(b) the sum, without duplication, of:
(i) an amount equal to the amount of all non-cash credits included in arriving at such Consolidated Net Income (including any amounts included in Consolidated Net Income pursuant to the last sentence of the definition of “Consolidated Net Income” to the extent such amounts are due but not received during such period) and cash charges included in clauses (a) through (j) of the definition of “Consolidated Net Income” (other than cash charges to the extent financed with the proceeds of long-term Indebtedness (other than revolving Indebtedness)),
(ii) the amount of capital expenditures made in cash or accrued during such period, except to the extent that such capital expenditures were financed with the proceeds of (x) long term Indebtedness of the Borrower or its Subsidiaries (other than revolving Indebtedness) or (y) the issuance of Equity Interests,
(iii) (x) the aggregate amount of all principal payments of Indebtedness (including the principal component of payments in respect of Capitalized Leases, but excluding (A) all principal payments of Indebtedness to the extent reducing the required prepayment of Term Loans (as defined in the FRG First Lien Credit Agreement) pursuant to Section 2.11(d) of the FRG First Lien Credit Agreement as a result of the application of clauses (i) through (v) of the first proviso thereof, (B) all prepayments of revolving loans except to the extent there is an equivalent permanent reduction in commitments thereunder and (C) all principal payments of Indebtedness to the extent financed with long-term Indebtedness (other than revolving Indebtedness)) and (y) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and its Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, to the extent not financed with long-term Indebtedness (other than revolving Indebtedness),
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(iv) an amount equal to the aggregate net non-cash gain on dispositions by the Borrower and its Subsidiaries during such period (other than dispositions in the ordinary course of business) to the extent included in arriving at such Consolidated Net Income,
(v) increases in Consolidated Working Capital and long-term account receivables for such period,
(vi) cash payments by the Borrower and its Subsidiaries during such period in respect of long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness,
(vii) the aggregate amount of payments and expenditures actually made by the Borrower and its Subsidiaries in cash during such period (including expenditures for the payment of financing fees) to the extent that such payments and expenditures are not expensed during such period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries other than revolving Indebtedness or (y) the issuance of Equity Interests,
(viii) cash payments by the Borrower and its Subsidiaries during such period in respect of Non-Cash Charges included in the calculation of Consolidated Net Income in any prior period, except to the extent financed with the proceeds of (x) long-term Indebtedness of the Borrower or its Subsidiaries or (y) the issuance of Equity Interests,
(ix) without duplication of amounts deducted from Excess Cash Flow in respect of a prior period, at the option of the Lead Borrower, the aggregate consideration (including Earn-Outs) required to be paid in cash by the Borrower and its Subsidiaries pursuant to binding contracts, commitments, letters of intent or purchase orders (the “Contract Consideration”) entered into prior to or during such period relating to capital expenditures, Permitted Acquisitions or other Investments permitted hereunder (other than intercompany Investments or Investments in cash equivalents) to be consummated or made during the period of four consecutive fiscal quarters of Lead Borrower following the end of such period (except, in each case, to the extent financed with long-term Indebtedness (other than revolving Indebtedness)); provided that to the extent the aggregate amount actually utilized to finance such capital expenditures, Permitted Acquisitions or other applicable Investments during such subsequent period of four consecutive fiscal quarters is less than the Contract Consideration, the amount of such shortfall shall be added to the calculation of Excess Cash Flow at the end of such subsequent period of four consecutive fiscal quarters,
(x) the amount of cash rent payments made in such period to the extent they exceed the amount of rent payments deducted in determining Consolidated Net Income for such period,
(xi) the amount of taxes (including penalties and interest) paid in cash and/or tax reserves set aside or payable (without duplication) in such period to the extent they exceed the amount of tax expense deducted in determining Consolidated Net Income for such period, and
(xii) extraordinary (as defined under GAAP as in effect prior to FASB Update No. 2015-01) losses or charges.
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“Exchange Act” means the United States Securities Exchange Act of 1934, as amended from time to time.
“Excluded Accounts” means (a) Zero Balance Accounts (provided that, upon any such account ceasing to be a Zero Balance Account, such account shall cease to be an Excluded Account), (b) Store Accounts, (c) accounts into which government receivables and government reimbursement payments are deposited, (d) payroll accounts (including accounts used for the disbursement of payroll, payroll taxes and other employee wage and benefit payments, including 401(k) and other retirement plans, rabbi trusts for deferred compensation and health care benefits), (e) withholding and trust accounts, escrow and other fiduciary accounts, (f) Manual Sweeping Accounts, (g) Deposit Accounts, Securities Accounts and commodity accounts that (x) individually have a daily balance of not more than $100,000 and (y) together with all other Deposit Accounts, Securities Accounts and commodity accounts constituting Excluded Accounts under this clause (g), have a daily balance of not more than $2,500,000 in the aggregate for all such Deposit Accounts, Securities Accounts or commodity accounts and (h) consisting solely of cash or Cash Equivalents securing Indebtedness permitted by Section 6.01(a)(xxvi) to the extent such security constitutes Liens permitted by Section 6.02(xxiii).
“Excluded Assets” means, (a) any fee-owned real property that is not Material Real Property, all leasehold (including ground lease) interests in real property (including requirements to deliver landlord lien waivers, estoppels and collateral access letters) and any real property that contains improvements and is located in an area determined (as of the Effective Date with respect to real property owned on the Effective Date and as of the date of acquisition of any real property acquired after the Effective Date) by the Federal Emergency Management Agency (or any successor agency) to be a special flood hazard area, (b) motor vehicles, railcars, trailers, aircraft, aircraft engines, construction and earth moving equipment and other assets subject to certificates of title or ownership (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (c) letter of credit rights (except to the extent constituting supporting obligations (as defined under the UCC) in which a security interest can be perfected with the filing of a UCC-1 financing statement or equivalent financing statement with a central registry), (d) commercial tort claims with an individual value, as determined by the Lead Borrower in good faith, of less than $5,000,000 and commercial tort claims for which no complaint or counterclaim has been filed in a court of competent jurisdiction, (e) Equity Interests in any Person (other than any Wholly Owned Subsidiaries) to the extent the pledge thereof to the Collateral Agent is not permitted by the terms of such Person’s organizational, incorporation or joint venture documents, (f) [Reserved], (g) Equity Interests of any Immaterial Subsidiary (except to the extent perfection of a security interest therein can be accomplished by filing of a UCC-1 financing statement or equivalent financing statement with a central registry), not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries (including real estate special purpose entities), (h) [reserved], (i) any lease, license or other agreement, government approval or franchise with any Person if, to the extent and for so long as, the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, such lease, license or other agreement, government approval or franchise (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code, (j) any asset subject to a Lien of the type permitted by Section 6.02(iv) (whether or not incurred pursuant to such Section) or a Lien permitted by Section 6.02(xi), in each case if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations constitutes a breach of or a default under, or creates a right of termination in favor of any party (other than any Loan Party) to, any agreement pursuant to which such Lien has been created (but only to the extent any of the foregoing is not rendered ineffective by, or is otherwise unenforceable under, the Uniform Commercial Code or any applicable Requirements of Law), (k) any intent-to-use trademark applications filed in the United States Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. Section 1051, prior to the accepted filing of a “Statement of Use” and issuance of a “Certificate of Registration” pursuant to Section 1(d) of the Lanham Act or an accepted filing of an “Amendment to Allege Use” whereby such intent-to-use trademark application is converted to a “use in commerce” application pursuant to Section 1(c) of the Lanham Act, (l) any asset if, to the extent and for so long as the grant of a Lien thereon to secure the Secured Obligations is prohibited by any applicable Requirements of Law, rule or regulation, or agreements with any Governmental Authority (other than to the extent that any such prohibition would be rendered ineffective pursuant to the Uniform Commercial Code or any other applicable Requirements of Law) or which would require consent, approval, license or authorization from any Governmental Authority or regulatory authority, unless such consent, approval, license or authorization has been received in consultation with the Collateral Agent, (m) margin stock (within the meaning of Regulation U of the Board of Governors, as in effect from time to time) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Borrower or any Material Subsidiary of the Borrower), under the terms of any applicable organizational or incorporation documents, joint venture agreement or shareholders’ agreement, equity interests in any person other than Material Subsidiaries that are Wholly Owned Subsidiaries after giving effect to the anti-assignment provisions of the UCC or any other applicable Requirements of Law, (n) Excluded Accounts, (o) assets to the extent a security interest in such assets would result in material adverse tax consequences to the Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (p) assets sold to any Person who is not a Loan Party in compliance with the Loan Documents, (q) assets owned by a Subsidiary Loan Party after the release of the Guarantee of such Subsidiary Loan Party pursuant to the Loan Documents, and (r) any assets with respect to which, in the reasonable judgment of the Required Lenders and the Lead Borrower (as agreed to in writing), the cost or other consequences (including adverse tax consequences as determined by the Lead Borrower and the Required Lenders in good faith) of pledging such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.
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“Excluded Information” has the meaning assigned to such term in Section 2.11(a)(ii)(A).
“Excluded Party” has the meaning assigned to such term in Section 9.03(b).
“Excluded Subsidiary” means (a) any Subsidiary that is not a Wholly Owned Subsidiary of the Lead Borrower, (b) any Subsidiary that is prohibited by applicable law, rule or regulation or contractual obligation (so long as any such contractual prohibition is not incurred in contemplation of the acquisition of such Subsidiary, and only for so long as such contractual prohibition shall be continuing) existing on the Effective Date or, if later, the date such Subsidiary first becomes a Subsidiary, from guaranteeing the Secured Obligations or which would require any governmental or regulatory consent, approval, license or authorization to do so, unless such consent, approval, license or authorization has been obtained (c) any Subsidiary acquired pursuant to a Permitted Acquisition or similar Investment financed with secured Indebtedness permitted to be incurred pursuant to Section 6.01(xx) (and not incurred in contemplation of such Permitted Acquisition or similar Investment) and any subsidiary thereof that guarantees such Indebtedness, in each case to the extent, and so long as, such secured Indebtedness prohibits such Subsidiary from becoming a Loan Party, providing a Guarantee of the Secured Obligations or granting Liens on its assets as security for the Secured Obligations, (d) any direct or indirect U.S. subsidiary of a Subsidiary that is a “controlled foreign corporation” within the meaning of Section 957 of the Code, and any direct or indirect U.S. Subsidiary that has no material assets other than the equity of (or equity of and obligations owed to or treated as owed by) one or more direct or indirect non-U.S. subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of the Code, (e) any Immaterial Subsidiary, (f) any other Subsidiary with respect to which, in the reasonable judgment of the Required Lenders and the Lead Borrower (as agreed in writing), the cost or other consequences (including any adverse tax consequences as determined in good faith by the Borrower and the Required Lenders) of providing the guaranty shall be excessive in view of the benefits to be obtained by the Lenders therefrom, (g) any Subsidiary if the provision of a guaranty by such Subsidiary would result in material adverse tax consequences to the Lead Borrower (or any direct or indirect parent or beneficial owner thereof) or one of its subsidiaries (as determined in good faith by the Lead Borrower), (h) any other Subsidiary excused from becoming a Loan Party pursuant to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”, (i) any Subsidiary that is (or, if it were a Loan Party, would be) an “investment company” under the Investment Company Act of 1940, as amended, (j) any not-for profit Subsidiaries, captive insurance companies or other special purpose subsidiaries and (k) any Foreign Subsidiary; provided that any Immaterial Subsidiary that is a signatory to the Collateral Agreement and the Guarantee Agreement shall be deemed not to be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents unless the Lead Borrower has otherwise notified the Administrative Agent; provided further that the Lead Borrower may at any time and in its sole discretion, with the consent of the Required Lenders (such consent not to be unreasonably withheld, conditioned or delayed), cause any Subsidiary to not be an Excluded Subsidiary for purposes of this Agreement and the other Loan Documents; provided, further, that notwithstanding the foregoing, no Subsidiary that Guarantees the obligations under the ABL Credit Agreement, the First Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement shall be an Excluded Subsidiary hereunder.
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“Excluded Taxes” means, with respect to any Recipient, (a) Taxes imposed on (or measured by) net income (however denominated) and franchise Taxes by a jurisdiction (i) as a result of such recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office located in such jurisdiction (or any political subdivision thereof), or (ii) that are Other Connection Taxes, (b) any branch profits tax imposed under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) any withholding Tax imposed pursuant to FATCA, (d) any Tax that is attributable to a Lender’s failure to comply with Section 2.17(e) and (e) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Lead Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17(a), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office.
“Existing Badcock Loan Agreements” means (a) that certain Loan Agreement, dated as of March 6, 2013, by and among Badcock, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof and (b) that certain Credit Agreement, dated as of June 26, 2018, by and among Badcock, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“Existing Badcock Construction Loan Agreement” means that certain Construction Loan Agreement, dated as of March 27, 2015, by and among Badcock, the lenders from time to time party thereto, and Wells Fargo Bank, National Association, as administrative agent and collateral agent, as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof.
“FATCA” means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable thereto and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
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“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“FG Newco Intermediate AF” has the meaning assigned to such term in the preliminary statements hereto.
“FG Newco PSP” has the meaning assigned to such term in the preliminary statements hereto.
“Financial Maintenance Covenants” means the covenants set forth in Section 6.10.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or corporate controller of the Lead Borrower, another officer of the Lead Borrower with similar responsibilities, or the chief executive officer or chief operating officer of the Lead Borrower.
“Financing Transactions” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party and (b) the borrowing of Loans hereunder and the use of the proceeds thereof.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.
“First Lien Agent” means JPM, as administrative agent and collateral agent under the First Lien Credit Agreement, or any successor thereto acting in such capacities.
“First Lien Credit Agreement” means (i) that certain First Lien Credit Agreement, dated as of the Effective Date and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement), among each Loan Party party thereto, the lender(s) party thereto and the First Lien Agent and (ii) any other credit agreement, loan agreement, note agreement, promissory note, indenture or other agreement or instrument evidencing or governing the terms of any Indebtedness or other financial accommodation that has been incurred to refinance (subject to the limitations set forth herein (including by reference to the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement and the Badcock Intercreditor Agreement)) in whole or in part the Indebtedness and other obligations outstanding under (x) the credit agreement referred to in clause (i) or (y) any subsequent first lien term loan facility, unless the agreement or instrument related thereto expressly provides that it is not intended to be and is not a First Lien Credit Agreement hereunder. Any reference to the First Lien Credit Agreement hereunder shall be deemed a reference to any First Lien Credit Agreement then in existence. For the avoidance of doubt, the FRG First Lien Credit Agreement shall not constitute a “First Lien Credit Agreement” hereunder.
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“First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the First Lien Credit Agreement.
“First Lien/Second Lien Intercreditor Agreement” means (a) that certain Amended and Restated First Lien/Second Lien Intercreditor Agreement, dated as of the Effective Date, by and among the Agents, the First Lien Agent, the FRG First Lien Agent and the FRG Second Lien Agent, and acknowledged by the Loan Parties, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof or (b) such other intercreditor agreement or arrangement between the First Lien Agent (or other applicable representative on behalf of the holders of the Indebtedness incurred under the First Lien Credit Agreement and the other First Lien Loan Documents) and the Agents (or any of them) (and any other Persons party thereto), that is reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof, as applicable.
“Fixed Amounts” has the meaning assigned to such term in Section 1.07(b).
“Fixed Charge Coverage Ratio” means, for any period of four fiscal quarters of the Lead Borrower, the ratio of (a) Consolidated EBITDA for such period minus (i) all Unfinanced Capital Expenditures for such period and (ii) cash taxes paid (including in the form of tax distributions) for such period (net of cash refunds received during such period) to (b) the sum of (i) Consolidated Cash Interest Charges paid or payable currently for such period plus (ii) scheduled amortization of Funded Debt (including Capitalized Leases) paid or payable currently in cash for such period.
“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate, as applicable. For the avoidance of doubt, the initial Floor for each of the Adjusted Term SOFR Rate and the Adjusted Daily Simple SOFR Rate shall be 1.00%.
“Foreign Lender” has the meaning assigned to such term in Section 2.17(e)(ii).
“Foreign Prepayment Event” has the meaning assigned to such term in Section 2.11(g).
“Foreign Subsidiary” means each Subsidiary that is organized under or incorporated in the laws of a jurisdiction other than the United States, any state thereof or the District of Columbia.
“Franchise Agreement” means a franchising agreement between any Loan Party or any Subsidiary thereof, as franchisor, and any other Person, as franchisee, pertaining to the establishment and operation of a business with operations comparable to the operations of the Lead Borrower and its Subsidiaries.
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“Franchise Disclosure Documents” means any uniform franchise offering circulars and franchise disclosure documents used by (and, to the extent required, filed by) any Loan Party or Subsidiary of a Loan Party to comply with any applicable law, rule, regulation or order of any Governmental Authority.
“Franchise Laws” means all applicable laws, rules, regulations, orders, binding guidance or other requirements of the United States Federal Trade Commission or any other Governmental Authority relating to the relationship between franchisor and franchisees or to the offer, sale, termination, non-renewal or transfer of a franchise.
“Franchise Rights” mean the rights of a franchisee of any Loan Party or Subsidiary within any specified geographic area.
“FRG First Lien Agent” means JPM, as administrative agent and collateral agent under the FRG First Lien Credit Agreement, or any successor thereto acting in such capacities.
“FRG First Lien Credit Agreement” means that certain First Lien Credit Agreement, dated as of March 10, 2021, among the Borrower, the FRG First Lien Agent and the lenders from time to time party thereto, as in effect on the Effective Date (after giving effect to the FRG First Lien Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the Badcock Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).
“FRG First Lien Credit Agreement First Amendment” means that certain First Amendment to First Lien Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto, the lenders party thereto and the FRG First Lien Agent.
“FRG First Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the FRG First Lien Credit Agreement.
“FRG Second Lien Agent” means Alter Domus (US) LLC, as administrative agent and collateral agent under the FRG Second Lien Credit Agreement, or any successor thereto acting in such capacities.
“FRG Second Lien Credit Agreement” means that certain Second Lien Credit Agreement, dated as of March 10, 2021, among the Borrower, the FRG Second Lien Agent and the lenders from time to time party thereto, as in effect on the Effective Date (after giving effect to the FRG Second Lien Credit Agreement First Amendment) and as the same may be amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof (including by reference to the Badcock Intercreditor Agreement and the First Lien/Second Lien Intercreditor Agreement).
“FRG Second Lien Credit Agreement First Amendment” means that certain First Amendment to Second Lien Credit Agreement, dated as of the Effective Date, among the Borrower, the other Loan Parties party thereto, the lenders party thereto and the FRG Second Lien Agent.
“FRG Second Lien Loan Documents” shall have the meaning ascribed to the term “Loan Documents” in the FRG Second Lien Credit Agreement.
“Funded Debt” means all Indebtedness of the Borrower and its Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including Indebtedness in respect of the Loans and in respect of the Loans under and as defined in each of the ABL Credit Agreement, the First Lien Credit Agreement, the FRG First Lien Credit Agreement and the FRG Second Lien Credit Agreement.
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“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Indebtedness of any subsidiary at “fair value,” as defined therein and (b) the amount of any Indebtedness under GAAP with respect to Capital Lease Obligations or Capitalized Leases shall be determined in accordance with the definitions of such terms.
“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, registrations and filings with, and reports to, Governmental Authorities.
“Governmental Authority” means any (i) federal, state, local, municipal, or other government, (ii) governmental or quasi-Governmental Authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (iii) body exercising, or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Effective Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). 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 in good faith by a Financial Officer. The term “Guarantee” as a verb has a corresponding meaning.
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“Guarantee Agreement” means the Second Lien Guarantee Agreement, dated as of the Effective Date, among the Loan Parties (other than Badcock) and the Administrative Agent, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Hazardous Materials” means all explosive, radioactive, hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum by-products or distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances, wastes, chemicals, pollutants, contaminants of any nature and in any form regulated pursuant to any Environmental Law.
“IBA” has the meaning specified in Section 1.09.
“Identified Participating Lenders” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(3).
“Identified Qualifying Lenders” has the meaning specified in Section 2.11(a)(ii)(D)(3).
“Immaterial Subsidiary” means any Subsidiary other than a Material Subsidiary.
“Increased Amount” of any Indebtedness shall mean any increase in the amount of such Indebtedness in connection with any accrual of interest, the accretion of accreted value, the amortization of original issue discount, the payment of interest in the form of additional Indebtedness or in the form of Qualified Equity Interests of the Borrower or any of its direct or indirect parent entities, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies.
“Incurrence Based Amounts” has the meaning assigned to such term in Section 1.07(b).
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet of such Person prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (w) trade accounts payable in the ordinary course of business, (x) any Earn-Out obligation, purchase price adjustment or similar obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and if not paid within thirty (30) days after being due and payable, (y) liabilities associated with customer prepayments and deposits and (z) expenses accrued in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; provided that the term “Indebtedness” shall not include (i) deferred or prepaid revenue, (ii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the seller, (iii) contingent indemnity and similar obligations incurred in the ordinary course of business (iv) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (v) Indebtedness of any Person that is a direct or indirect parent of the Borrower appearing on the balance sheet of the Borrower, or solely by reason of push down accounting under GAAP, (vi) any non-compete or consulting obligations incurred in connection with a Permitted Acquisition, (vii) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (viii) for the avoidance of doubt, any Qualified Equity Interests issued by the Borrower. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property encumbered thereby as determined by such Person in good faith. For all purposes hereof, the Indebtedness of the Borrower and its Subsidiaries shall exclude intercompany liabilities arising from their cash management, tax, and accounting operations and intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any rollover or extensions of terms).
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“Indemnified Taxes” means Taxes imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document, other than Excluded Taxes and Other Taxes.
“Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Information” has the meaning assigned to such term in Section 9.12(a).
“Initial Term Loan Commitment” means the commitment of a Lender to make Initial Term Loans, and “Initial Term Loan Commitments” means such commitments of all Lenders. The aggregate amount of the Initial Term Loan Commitments as of the Effective Date is $150,000,000.
“Initial Term Loan Lender” means a Lender with an Initial Term Loan Commitment or an outstanding Initial Term Loan.
“Initial Term Loans” means the Term Loans made on the Effective Date pursuant to Section 2.01.
“Intellectual Property” has the meaning assigned to such term in the Collateral Agreement.
“Intellectual Property Security Agreement” means short-form security agreements, suitable for filing with the United States Patent and Trademark Office or the United States Copyright Office (as applicable), with respect to any Intellectual Property that is registered, issued, or applied for registration or issuance in the United States and that constitute Collateral that can be perfected by the filing of such security agreements.
“Intercreditor Agreement” means the ABL Intercreditor Agreement, the First Lien/Second Lien Intercreditor Agreement, the Badcock Intercreditor Agreement, the Parity Lien Intercreditor Agreement and/or the Junior Lien Intercreditor Agreement, as the context may require.
“Interest Election Request” means a written request by the Borrower to convert or continue a Term Loan Borrowing in accordance with Section 2.07.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last Business Day of each March, June, September and December and on the Term Maturity Date and (b) with respect to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the Term Maturity Date.
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“Interest Period” means, with respect to any Term Benchmark Borrowing, the period commencing on the date such Borrowing is disbursed or converted to or continued as a Term Benchmark Borrowing and ending on the date that is one, three or six months thereafter as selected by the Borrower in its Borrowing Request (or, if agreed to by each Lender participating therein, twelve months or such other period less than one month thereafter as the Borrower may elect; in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Commitment and the administrative feasibility for the Administrative Agent); provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month at the end of such Interest Period, (c) no Interest Period shall extend beyond the Term Maturity Date and (d) no tenor that has been removed from this definition pursuant to Section 2.14(e) shall be available for specification in such Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“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 or Indebtedness or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other Indebtedness or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person (excluding, in the case of the Borrower and the Subsidiaries (i) intercompany advances arising from their cash management, tax, and accounting operations and (ii) intercompany loans, advances, or Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms)) or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, minus any cash payments actually received by such investor representing interest in respect of such Investment (to the extent any such payment to be deducted does not exceed the remaining principal amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be 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 in good faith by a Financial Officer, (c) any Investment in the form of a transfer of Equity Interests or other non-cash property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair market value (as determined in good faith by a Financial Officer) of such Equity Interests or other property as of the time of the transfer, minus any payments actually received by such investor representing a return of capital of, or dividends or other distributions in respect of, such Investment (to the extent such payments do not exceed, in the aggregate, the original amount of such Investment and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment, and (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) by the specified Person in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any other Person shall be the original cost of such Investment (including any Indebtedness assumed in connection therewith), plus (i) the cost of all additions thereto and minus (ii) the amount of any portion of such Investment that has been repaid to the investor in cash as a repayment of principal or a return of capital, and of any cash payments actually received by such investor representing interest, dividends or other distributions in respect of such Investment (to the extent the amounts referred to in clause (ii) do not, in the aggregate, exceed the original cost of such Investment plus the costs of additions thereto and without duplication of amounts increasing the Available Amount or the Available Equity Amount), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
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“Investment-Linked Refinancing Transaction” means the refinancing in full of the Term Facility undertaken in connection with (x) the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary, of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person or (y) any similar Investment. Any determination by the Required Lenders with respect to whether an Investment-Linked Refinancing Transaction shall have occurred shall be conclusive and binding on all Lenders holding the Initial Term Loans.
“Investors” means the one or more co-investors and other investors (which may include existing shareholders, board members, management or other rollover investors of PSP Midco, LLC) who were holders of Equity Interests in the Borrower (or any direct or indirect parent thereof) on March 10, 2021 after giving effect to the Transactions (as defined in the FRG First Lien Credit Agreement), together with their Affiliates.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“JPM” means JPMorgan Chase Bank, N.A.
“Judgment Currency” has the meaning assigned to such term in Section 9.18.
“Junior Financing” means (a) any Indebtedness (other than any permitted intercompany Indebtedness owing to the Borrower or any Subsidiary) for borrowed money in a principal amount in excess of $11,500,000 that is secured on a junior basis to the Secured Obligations, unsecured or contractually subordinated in right of payment or right of lien to the Loan Document Obligations and (b) any Permitted Refinancing in respect of the foregoing.
“Junior Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral and the Badcock Collateral on a junior basis (but without regard to the control of remedies) in customary form reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
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“Latest Maturity Date” means, at any date of determination, the latest maturity or expiration date applicable to any Loan or Commitment hereunder at such time, including the latest maturity or expiration date of any Other Term Loan or any Other Term Commitment, in each case as extended in accordance with this Agreement from time to time.
“LCA Election” has the meaning assigned to such term in Section 1.06.
“LCA Test Date” has the meaning assigned to such term in Section 1.06.
“Lead Arranger” means JPM, in its capacity as sole lead arranger.
“Lead Borrower” has the meaning assigned to such term in the preliminary statements hereto.
“Legal Reservations” has the meaning assigned to such term in Section 3.02.
“Lender Indemnitee” has the meaning assigned to such term in Section 9.03(b).
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, a Loan Modification Agreement or a Refinancing Amendment, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, ground lease, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Limited Condition Transaction” means any Permitted Acquisition or other investment, incurrence of Indebtedness, Restricted Payment or repayment, repurchase or redemption of Indebtedness permitted hereunder by the Borrower or one or more of its Subsidiaries.
“Loan Document Obligations” means (a) the due and punctual payment in cash by the Borrower of (i) the principal of the Loans and all accrued and unpaid interest thereon at the Applicable Rate or rates provided in this Agreement (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under or pursuant to this Agreement and each of the other Loan Documents to which it is a party, including obligations to pay fees, expenses, reimbursement obligations and indemnification obligations and obligations to provide cash collateral, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual payment in cash and performance of all other monetary obligations of the Borrower under or pursuant to each of the Loan Documents to which it is a party and (c) the due and punctual payment and performance of all the monetary obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents to which it is a party (including interest and monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
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“Loan Documents” means this Agreement, any Refinancing Amendment, any Loan Modification Agreement, the Guarantee Agreement, the Badcock Guarantee Agreement, the Collateral Agreement, the Badcock Collateral Agreement, the other Security Documents, the other Badcock Security Documents, each Intercreditor Agreement then in effect, the Administrative Agent Fee Letter and, except for purposes of Section 9.02, any Note delivered pursuant to Section 2.09(e).
“Loan Modification Agreement” means a Loan Modification Agreement, in form reasonably satisfactory to the Administrative Agent, among the Borrower, the Administrative Agent and one or more Accepting Lenders, effecting one or more Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.24.
“Loan Modification Offer” has the meaning specified in Section 2.24(a).
“Loan Parties” means the Borrower and any Subsidiary Loan Parties.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Majority in Interest”, when used in reference to Lenders of any Class, means, at any time, Lenders holding outstanding Term Loans of such Class representing more than 50% of all Term Loans of such Class outstanding at such time; provided that whenever there are one or more Defaulting Lenders, the total outstanding Term Loans each Defaulting Lender shall be excluded for purposes of making a determination of the Majority in Interest.
“Manual Sweeping Accounts” shall have the meaning ascribed to the term “Manual Sweeping Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Master Agreement” has the meaning assigned to such term in the definition of “Swap Agreement”.
“Master Intercompany Note” means the Amended and Restated Master Intercompany Note, dated the Effective Date, pursuant to which the Lead Borrower and its Subsidiaries (other than Badcock) are the “payees” and the Lead Borrower and its Subsidiaries are the “payors”.
“Material Adverse Effect” means a circumstance or condition that would materially and adversely affect (a) the business, results of operations or financial condition of the Lead Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Loan Parties, taken as a whole, to perform their payment obligations under the applicable Loan Documents or (c) the rights and remedies, taken as a whole, of the Agents and the Lenders under the Loan Documents.
“Material Indebtedness” means Indebtedness for borrowed money (other than the Loan Document Obligations), Capital Lease Obligations, unreimbursed obligations for letter of credit drawings and financial guarantees (other than ordinary course of business contingent reimbursement obligations) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $57,500,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Material Intellectual Property” means any intellectual property owned by the Borrower or any of its Subsidiaries, the loss of which would reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
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“Material Non-Public Information” means material non-public information with respect to the Lead Borrower or its Affiliates, or the respective securities of any of the foregoing for purposes of United States Federal and state securities laws.
“Material Real Property” means real property (including fixtures) (i) located in the United States, (ii) first acquired by any Loan Party (other than Badcock) after the Effective Date and (iii) owned (but not leased or ground-leased) by any Loan Party (other than Badcock) with a book value, as reasonably determined by the Lead Borrower in good faith on the date of acquisition thereof, greater than or equal to $7,500,000. For the avoidance of doubt, Badcock Material Real Property does not constitute “Material Real Property”.
“Material Subsidiary” means each Wholly Owned Subsidiary that, as of the last day of the fiscal quarter of the Lead Borrower most recently ended, had net revenues or total assets for such quarter in excess of 2.5% of the consolidated net revenues or total assets, as applicable, of the Lead Borrower and its Subsidiaries for such fiscal quarter; provided that in the event that the Immaterial Subsidiaries, taken together, had as of the last day of the fiscal quarter of the Lead Borrower most recently ended net revenues or total assets in excess of 7.5% of the consolidated net revenues or total assets, as applicable, of the Borrower and its Subsidiaries for such fiscal quarter, the Lead Borrower shall designate at its sole discretion one or more Immaterial Subsidiaries to be a Material Subsidiary as may be necessary such that the foregoing 7.5% limit shall not be exceeded, and any such Subsidiary shall thereafter be deemed to be a Material Subsidiary hereunder; provided, further, that the Borrower may re-designate Material Subsidiaries as Immaterial Subsidiaries so long as Borrower is in compliance with the foregoing.
“Maximum Rate” has the meaning assigned to such term in Section 9.16.
“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.
“Mortgage” means a mortgage, deed of trust, deed to secure debt or other security document granting a Lien on any Mortgaged Property in favor of the Collateral Agent for the benefit of the Secured Parties to secure the Secured Obligations, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time. Each Mortgage shall be in form and substance reasonably satisfactory to the Collateral Agent, the Required Lenders and the Borrower.
“Mortgaged Property” means each parcel of Material Real Property with respect to which a Mortgage is granted pursuant to the “Collateral and Guarantee Requirement”, Section 5.11, Section 5.12 or Section 5.14 (if any).
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Proceeds” means, with respect to any event, (a) the proceeds received in respect of such event in cash or Permitted Investments, including (i) any cash or Permitted Investments received in respect of any Designated Non-Cash Consideration or other non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or Earn-Out, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds that are actually received, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments that are actually received, minus (b) the sum of (i) all fees and out-of-pocket expenses paid by the Borrower and its Subsidiaries in connection with such event (including attorney’s fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses and brokerage, consultant, accountant and other customary fees), (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), (x) the amount of all payments that are permitted hereunder and are made by the Borrower and its Subsidiaries as a result of such event to repay Indebtedness (other than (A) the Loans, (B) in respect of the Collateral, Indebtedness secured by a lien on such Collateral that is pari passu or junior to the lien on such Collateral securing the Secured Obligations and (C) in respect of the Badcock Collateral, Indebtedness secured by a lien on such Badcock Collateral that is pari passu or junior to the lien on such Badcock Collateral securing the Secured Obligations) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, (y) the pro rata portion of net cash proceeds thereof (calculated without regard to this clause (y)) attributable to minority interests and not available for distribution to or for the account of the Borrower or its Subsidiaries as a result thereof and (z) the amount of any liabilities directly associated with such asset and retained by the Borrower or any Subsidiary and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established by the Borrower and its Subsidiaries to fund contingent liabilities reasonably estimated to be payable, that are directly attributable to such event, provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respect thereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.
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“Non-Accepting Lender” has the meaning assigned to such term in Section 2.24(c).
“Non-Cash Charges” means (a) any impairment charge or asset write-off or write-down, including impairment charges or asset write-offs or write-downs related to intangible assets (including goodwill), long-lived assets, and Investments in debt and equity securities or as a result of a change in law or regulation, in each case pursuant to GAAP, and the amortization of intangibles pursuant to GAAP (which, without limiting the foregoing, shall include any impairment charges resulting from the application of FASB Statements No. 142 and 144 and the amortization of intangibles arising pursuant to No. 141), (b) all losses from Investments recorded using the equity method, (c) all Non-Cash Compensation Expenses, (d) the non-cash impact of acquisition method accounting, (e) depreciation and amortization (including amortization of deferred financing fees or costs, Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses related to pension and other post-employment benefits) and (f) other non-cash charges (including non-cash charges related to deferred rent) (provided, in each case, that if any non-cash charges represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).
“Non-Cash Compensation Expense” means any non-cash expenses and costs that result from the issuance of stock-based awards, partnership interest-based awards and similar incentive based compensation awards or arrangements.
“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(c).
“Non-Wholly Owned Subsidiary” means any Subsidiary other than a Wholly Owned Subsidiary.
“Not Otherwise Applied” means, with reference to the Available Amount or the Available Equity Amount, that such amount was not previously applied pursuant to 6.04(m), 6.07(a)(vii) and 6.07(b)(vii).
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“Note” means a promissory note of the Borrower, in substantially the form of Exhibit R, payable to a Lender in a principal amount equal to the principal amount of the Term Loans of such Lender.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the average rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from three federal fund brokers of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Offered Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Offered Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Organizational Documents” means, with respect to any Person, the charter, articles of association or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of any present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient (x) having executed, delivered, become a party to, performed its obligations or received payments under, received or perfected a security interest under or enforced any Loan Documents or engaged in any other transaction pursuant to this Agreement or (y) having sold or assigned an interest in any Loan Documents).
“Other Taxes” means any and all present or future recording, stamp, documentary or similar Taxes arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)).
“Other Term Commitments” means one or more Classes of term loan commitments hereunder that result from a Refinancing Amendment or a Loan Modification Agreement.
“Other Term Loans” means one or more Classes of Term Loans that result from a Refinancing Amendment or a Loan Modification Agreement.
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar borrowings denominated in dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Parity Lien Intercreditor Agreement” means any intercreditor agreement among the Agents (or any of them) and one or more Representatives for holders of Indebtedness permitted by this Agreement to be secured by the Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations in customary form reasonably acceptable to the Collateral Agent, the Required Lenders and the Lead Borrower, as amended, amended and restated, modified, supplemented, extended or renewed from time to time not in violation of the terms hereof or thereof.
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“Participant” has the meaning assigned to such term in Section 9.04(c)(i).
“Participant Register” has the meaning assigned to such term in Section 9.04(c)(ii).
“Participating Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(2).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Perfection Certificate” means a certificate substantially in the form of Exhibit C.
“Perfection Requirements” means the need for appropriate filings, registrations, endorsements, notarizations, stampings and/or notifications of the Security Documents, the Badcock Security Documents, the Collateral or the Badcock Collateral and any other steps or actions necessary in any jurisdiction or under any laws or regulations in order to (i) create or perfect the Liens on the Collateral granted by the Loan Parties (other than Badcock) in favor of the Secured Parties, (ii) create or perfect the Liens on the Badcock Collateral granted by Badcock in favor of the Secured Parties and/or (iii) achieve the relevant priority expressed therein or in the Intercreditor Agreements (including the delivery of any stock certificate or promissory note required to be delivered pursuant to the applicable Loan Documents).
“Permitted Acquisition” means the purchase or other acquisition, by merger, consolidation or otherwise, by the Borrower or any Subsidiary of any Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person; provided that (a) in the case of any purchase or other acquisition of Equity Interests in a Person, (i) such Person, upon the consummation of such purchase or acquisition, will be a Subsidiary (including as a result of a merger or consolidation between any Subsidiary and such Person), or (ii) such Person is merged into or consolidated with a Subsidiary and such Subsidiary is the surviving entity of such merger or consolidation, (b) the business of such Person, or such assets, as the case may be, constitute a Similar Business (or assets with respect thereto), (c) with respect to each such purchase or other acquisition, all actions required to be taken with respect to such newly created or acquired Subsidiary (including each subsidiary thereof) or assets in order to satisfy the requirements set forth in clauses (a), (b), (c) and (d) of the definition of the term “Collateral and Guarantee Requirement” to the extent applicable shall have been taken to the extent required by Sections 5.11 or 5.12 (or shall be taken within the time periods set forth in this Agreement or such later date as agreed to by the Required Lenders in their sole discretion) (other than with respect to any Subsidiary of such newly created or acquired Subsidiary that is an Excluded Subsidiary), (d) subject to Section 1.06, after giving effect to any such purchase or other acquisition no Event of Default shall have occurred and be continuing, (e) the total consideration paid in connection with all such purchases and acquisitions of the Equity Interests in any Person which will not become a Loan Party (within the time periods set forth in this Agreement), or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person if substantially all of such assets will not become owned by a Loan Party (or a Person that will become a Loan Party within the time periods set forth in this Agreement), shall not exceed $23,000,000 in the aggregate, unless financed with the proceeds of Qualified Equity Interests (excluding (i) Qualified Equity Interests the proceeds of which will be applied as Aggregate Cure Amounts and (ii) any other Qualified Equity Interests used for, or otherwise having the effect of increasing, any other basket under this Agreement), (f) after giving effect to such purchase or acquisition, on a Pro Forma Basis, the Total Net Leverage Ratio is no greater than 3.31 to 1.00 and (g) the total consideration paid in connection with (i) any individual purchase or acquisition shall not exceed $75,000,000 and (ii) all such purchases and acquisitions shall not exceed $250,000,000 in the aggregate (in each case with respect to this clause (g) calculated without giving effect to any non-cash consideration or consideration paid with the proceeds of substantially concurrent capital contributions or issuances or sales of Equity Interests).
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“Permitted Amendment” means an amendment to this Agreement and, if applicable the other Loan Documents, effected in connection with a Loan Modification Offer pursuant to Section 2.24, providing for an extension of a maturity date applicable to the Loans and/or Commitments of the Accepting Lenders and, in connection therewith, (a) a change in the Applicable Rate with respect to the Loans and/or Commitments of the Accepting Lenders and/or (b) a change in the fees payable to, or the inclusion of new fees to be payable to, the Accepting Lenders and/or (c) additional covenants or other provisions (i) with respect to which the Lenders under the Term Loans also receive the benefit of such more restrictive terms (it being understood to the extent that any covenant is added for the benefit of any such Indebtedness, no consent shall be required from the Administrative Agent or any Lender to the extent that such covenant is also added for the benefit of any corresponding existing Term Loans), (ii) to the extent any such provisions apply after the Latest Maturity Date at the time of such Loan Modification Offer, or (iii) to the extent such terms shall be reasonably satisfactory to the Required Lenders and the Lead Borrower.
“Permitted Encumbrances” means:
(a) Liens for Taxes, assessments or governmental charges that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(b) Liens with respect to outstanding motor vehicle fines and Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or construction contractors’ Liens and other similar Liens arising in the ordinary course of business that secure amounts not overdue for a period of more than 30 days or, if more than 30 days overdue, are unfiled and no other action has been taken to enforce such Lien or that are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, in each case so long as such Liens do not individually or in the aggregate have a Material Adverse Effect;
(c) Liens incurred, pledges or deposits made in the ordinary course of business (i) in connection with payroll taxes, workers’ compensation, unemployment insurance and other social security legislation, public liability laws or similar legislation or (ii) securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instrument for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary or otherwise supporting the payment of items of the type set forth in the foregoing clause (i);
(d) Liens incurred or deposits made to secure the performance of tenders, bids, trade contracts, customer claims, governmental contracts and leases, statutory obligations, surety, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations) and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, in each case incurred in the ordinary course of business or consistent with past practices;
(e) easements, licenses, servitudes, restrictive covenants, rights-of-way, restrictions, encroachments, protrusions, zoning restrictions and other similar encumbrances and title defects affecting real property that, in the aggregate, do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
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(f) leases or subleases of real or personal property granted to other Persons (as lessee thereof) that do not materially interfere with the ordinary conduct of the business of the Borrower and its Subsidiaries taken as a whole;
(g) rights of future tenants pursuant to written leases entered into in accordance with the terms hereof;
(h) Liens securing, or otherwise arising from, judgments not constituting an Event of Default under Section 7.01(j) and any pledge and/or deposit securing any settlement of threatened litigation;
(i) Liens on (i) goods the purchase price of which is financed by a documentary letter of credit issued for the account of the Borrower or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments; provided that such Lien secures only the obligations of the Borrower or such Subsidiaries in respect of such letter of credit to the extent such obligations are permitted by Section 6.01 and (ii) specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
(j) Liens arising from precautionary Uniform Commercial Code financing statements or similar filings made in respect of operating leases entered into by the Borrower or any of its Subsidiaries;
(k) rights of recapture of unused real property (other than any Mortgaged Property or any Badcock Mortgaged Property) in favor of the seller of such property set forth in customary purchase agreements and related arrangements with any Governmental Authority;
(l) Liens in favor of deposit banks or securities intermediaries securing customary fees, expenses or charges in connection with the establishment, operation or maintenance of deposit accounts or securities accounts;
(m) liens in favor of obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any of the Subsidiaries or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case in the ordinary course of business or consistent with past practice;
(n) Liens arising from grants of non-exclusive licenses or sublicenses of Intellectual Property or Badcock Intellectual Property, or covenants not to sue with respect to Intellectual Property or Badcock Intellectual Property, made in the ordinary course of business;
(o) rights of setoff, banker’s lien, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments;
(p) Liens arising from the right of distress enjoyed by landlords or Liens otherwise granted to landlords, in either case, to secure the payment of arrears of rent or performance of other obligations in respect of leased properties, so long as such Liens are not exercised or except where the exercise of such Liens would not reasonably be expected to have a Material Adverse Effect;
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(q) Liens or security given to public utilities or to any municipality or Governmental Authority when required by the utility, municipality or Governmental Authority in connection with the supply of services or utilities to the Borrower or any of its Subsidiaries;
(r) servicing agreements, development agreements, site plan agreements, subdivision agreements, facilities sharing agreements, cost sharing agreements and other agreements pertaining to the use or development of any of the assets of the Person, provided the same do not result in (i) a substantial and prolonged interruption or disruption of the business activities of the Borrower and its Subsidiaries, taken as a whole, or (ii) a Material Adverse Effect; and
(s) Liens securing Priority Obligations;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money other than Liens referred to in clauses (d) and (k) above securing obligations under letters of credit or bank guarantees or similar instruments related thereto and in clause (g) above, in each case to the extent any such Lien would constitute a Lien securing Indebtedness for borrowed money.
“Permitted First Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations (as defined in the First Lien Credit Agreement), (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Holders” means (a) Vintage Capital Management, LLC, (b) Brian Kahn, (c) Lauren Kahn, (d) Tributum, L.P., (e) Stefac LP, (f) Vintage Tributum, L.P., (g) Kahn Capital Management, LLC, (h) Vintage Vista GP, LLC, (i) Andrew Laurence, (j) B. Riley FBR, Inc., (k) Bryant R. Riley, (l) any direct or indirect current or former equity holders of Buddy’s Newco, LLC or Franchise Group New Holdco, LLC, (m) Samjor Family LP, (n) Vintage RTO, L.P. and (o) any Affiliates, general partners, limited partners, investment managers, investment advisors, investment funds or direct or indirect equity holders, successors or assigns of any of the foregoing.
“Permitted Investments” means any of the following, to the extent owned by the Borrower or any Subsidiary:
(a) dollars, euros, Swiss francs, Sterling, Canadian dollars, or such other currencies held by it from time to time in the ordinary course of business;
(b) readily marketable obligations issued or directly and fully guaranteed or insured by the government or any agency or instrumentality of (i) the United States, (ii) the United Kingdom, (iii) Canada, (iv) Switzerland or (v) any member nation of the European Union rated A (or the equivalent thereof) or better by S&P and A2 (or the equivalent thereof) or better by Moody’s, having average maturities of not more than 24 months from the date of acquisition thereof; provided that the full faith and credit of such country or such member nation of the European Union is pledged in support thereof;
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(c) time deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) is a Lender or (ii) has combined capital and surplus of at least $250,000,000 in the case of U.S. banks and $100,000,000 (or the dollar equivalent as of the date of determination) in the case of foreign banks (any such bank in the foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(d) commercial paper and variable or fixed rate notes issued by an Approved Bank (or by the parent company thereof) or any variable or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody’s, in each case with average maturities of not more than 12 months from the date of acquisition thereof;
(e) repurchase agreements entered into by any Person with an Approved Bank, a bank or trust company (including any of the Lenders) or recognized securities dealer covering securities described in clauses (b) and (c) above;
(f) marketable short-term money market and similar highly liquid funds substantially all of the assets of which are comprised of securities of the types described in clauses (b) through (e) above;
(g) securities with average maturities of 24 months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, the United Kingdom, Canada, Switzerland, a member of the European Union or by any political subdivision or taxing authority of any such state, member, commonwealth or territory having an investment grade rating from either S&P or Moody’s (or the equivalent thereof);
(h) investments with average maturities of 12 months or less from the date of acquisition in mutual funds rated AA- (or the equivalent thereof) or better by S&P or Aa3 (or the equivalent thereof) or better by Moody’s;
(i) instruments equivalent to those referred to in clauses (a) through (h) above denominated in euros or any other foreign currency comparable in credit quality and tenor to those referred to above and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized or incorporated in such jurisdiction;
(j) investments, classified in accordance with GAAP as current assets of the Borrower or any Subsidiary, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions having capital of at least $250,000,000 or its equivalent, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (a) through (i) of this definition;
(k) demand deposit accounts holding cash;
(l) interest bearing instruments with a maximum maturity of 180 days in respect of which the obligor is a G7 government or other G7 governmental agency or a G7 financial institution with credit ratings from S&P of at least “A-2” or the equivalent thereof or from Moody’s of at least “P-2” or the equivalent thereof;
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(m) other short-term investments of a type analogous to the foregoing utilized by Foreign Subsidiaries;
(n) investment funds investing at least 90% of their assets in securities of the types described in clauses (a) through (m) above; and
(o) any guarantee or indemnity for the obligations of a Subsidiary in connection with a Subsidiary claiming exemption from audit, the preparation and filing of its accounts or other similar exemptions (including under section 394C, 448C or 479C of the Companies Act 2006 or other similar or equivalent provisions).
“Permitted Junior Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of secured notes or secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a junior basis to the Secured Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted Junior Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted Junior Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Parity Priority Refinancing Debt” means any secured Indebtedness incurred by any Loan Party in the form of one or more series of senior secured notes or senior secured loans; provided that (i) such Indebtedness is secured by the Collateral and the Badcock Collateral on a pari passu basis (but without regard to the control of remedies) with the Loan Document Obligations, (ii) such Indebtedness constitutes Credit Agreement Refinancing Indebtedness, and (iii) a Representative acting on behalf of the holders of such Indebtedness shall have become party to the relevant Intercreditor Agreement(s); provided that if such Indebtedness is the initial Permitted First Priority Refinancing Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Agents (or any of them) and the Representative for such Indebtedness shall have executed and delivered the relevant Intercreditor Agreement(s). Permitted First Priority Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal, exchange or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed, exchanged or extended except (i) by an amount equal to unpaid accrued interest and premium thereon plus underwriting discounts, other amounts paid, and fees and expenses (including upfront fees, original issue discount or initial yield payments) incurred, in connection with such modification, refinancing, refunding, renewal or extension, (ii) by an amount equal to any existing revolving commitments unutilized thereunder to the extent that the portion of any existing and unutilized revolving commitment being refinanced was permitted to be drawn under Section 6.01 immediately prior to such refinancing (other than by reference to a Permitted Refinancing) and such drawing shall be deemed to have been made and (iii) to the extent such excess amounts is otherwise permitted to be incurred under Section 6.01, (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to Section 6.01(a)(v), (a)(xii) and (a)(xxvi), Indebtedness resulting from such modification, refinancing, refunding, renewal, exchange or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended; provided that the foregoing requirements of this clause (b) shall not apply to the extent such Indebtedness constitutes a customary bridge facility, so long as the long-term Indebtedness into which any such bridge facility is to be converted or exchanged satisfies the requirements of this clause (b) and such conversion or exchange is subject only to conditions customary for similar conversions or exchanges (c) if the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended is subordinated in right of payment to the Loan Document Obligations, Indebtedness resulting from such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Loan Document Obligations on terms not materially less favorable, taken as a whole, to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed, exchanged or extended, (d) such Permitted Refinancing is not secured by a Lien on any assets other than the collateral securing, and, to the extent secured by the Collateral and the Badcock Collateral, with no higher priority than the Liens securing, the Indebtedness being refinanced, except for accessions and additions to such property and replacements and proceeds thereof (unless permitted to be secured by another provision of Section 6.02), (e) if unsecured, such Indebtedness shall remain unsecured (unless permitted to be secured by another provision of Section 6.02) and (f) no Loan Party that was not an obligor with respect to the Indebtedness being refinanced shall be an obligor under the Permitted Refinancing and if the Indebtedness being refinanced was (or was required to be) subject to an Intercreditor Agreement, the holders of such Permitted Refinancing (if such Indebtedness is secured) or their authorized representative on their behalf, shall become party to such Intercreditor Agreement, in each case providing for the same (or lesser) lien priority renewed, exchanged or extended. For the avoidance of doubt, it is understood that a Permitted Refinancing may constitute a portion of an issuance of Indebtedness in excess of the amount of such Permitted Refinancing; provided that such excess amount is otherwise permitted to be incurred under Section 6.01. For the avoidance of doubt, it is understood and agreed that a Permitted Refinancing includes successive Permitted Refinancings of the same Indebtedness to the extent such successive Permitted Refinancings satisfy the foregoing requirements.
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“Permitted Unsecured Refinancing Debt” means any unsecured Indebtedness incurred by the Loan Parties in the form of one or more series of senior unsecured notes or senior unsecured loans; provided that such Indebtedness constitutes Credit Agreement Refinancing Indebtedness. Permitted Unsecured Refinancing Debt will include any Registered Equivalent Notes issued in exchange therefor.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity, whether existing as of the Effective Date or subsequently created or coming to exist.
“Plan” means any employee pension benefit plan as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which a Loan Party or any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“Platform” has the meaning assigned to such term in Section 5.01.
“Pledged Equity Interests” has the meaning set forth in the Collateral Agreement.
“Post-Transaction Period” means, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the eighth full consecutive fiscal quarter of the Lead Borrower immediately following the date on which such Specified Transaction is consummated.
“Pre-Effective Date Investments” means, collectively, (i) the Transactions (as defined in the FRG First Lien Credit Agreement) and (ii) any Permitted Acquisitions or any other Investment, in the case of this clause (ii), that was consummated after March 10, 2021 and prior to the Effective Date and that, if such Permitted Acquisition or other Investment were to have been consummated on or after the Effective Date, would be permitted by Section 6.04.
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“Pre-Effective Date Transactions” means, collectively, (i) the Transactions (as defined in the FRG First Lien Credit Agreement) and (ii) any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event, in the case of this clause (ii), that was consummated after March 10, 2021 and prior to the Effective Date and that, if such event were to have been consummated on or after the Effective Date, would be permitted to be included in the determination of “Pro Forma Basis” hereunder.
“Prepayment Event” means:
(a) (I) the Disposition described on Schedule 6.05(k), (II) Dispositions by Badcock pursuant to Section 6.05(f) and Section 6.05(u) and/or (III) any other non-ordinary course sale, transfer or other disposition of any property or asset of the Borrower or any of its Subsidiaries pursuant to Section 6.05(k) or the occurrence of any other Casualty Event, in each case of this clause (III) resulting in aggregate Net Proceeds exceeding (A) with respect to any single transaction or series of related transactions, the greater of $8,000,000 and 2.5% of Consolidated EBITDA individually or (B) with respect to all dispositions pursuant to Section 6.05(k) or Casualty Events in each case not excluded pursuant to previous clause (A), the greater of $16,000,000 and 5.0% of Consolidated EBITDA in the aggregate in any fiscal year of the Lead Borrower, other than dispositions constituting a sale and leaseback transaction to the extent consummated substantially contemporaneously with the acquisition by the Borrower or such Subsidiary of the property subject to such sale and leaseback transaction; provided that, for the avoidance of doubt, in each case of this clause (III), (x) only Net Proceeds in excess of such amount shall be subject to the mandatory prepayment provisions set forth in Section 2.11(c) and (y) no Prepayment Event shall occur in any fiscal year of the Lead Borrower until the Net Proceeds received during such fiscal year that are subject to clause (B) above exceed the amount set forth in clause (B) above; or
(b) the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 6.01 (other than Credit Agreement Refinancing Indebtedness) or permitted by the Required Lenders pursuant to Section 9.02.
“Prime Rate” means the per annum rate publicly quoted from time to time by The Wall Street Journal as the “Prime Rate” in the United States (or, if The Wall Street Journal ceases quoting a prime rate of the type described, either (a) the per annum rate quoted as the base rate on such corporate loans in a different national publication as reasonably selected by Administrative Agent or (b) the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as the Bank prime loan rate or its equivalent).
“Priority Obligation” means any obligation that is secured by a Lien on any Collateral and/or any Badcock Collateral in favor of a Governmental Authority, which Lien ranks or is capable of ranking prior to or pari passu with the Liens created thereon by the applicable Security Documents and/or Badcock Security Documents, as the case may be, including any such Lien securing amounts owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, other Taxes, workers compensation, governmental royalties and stumpage or pension fund obligations.
“Pro Forma Basis,” “Pro Forma Compliance” and “Pro Forma Effect” mean, as to any Person, for any events as described below that occur subsequent to the commencement of a period for which the effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the four (4) consecutive fiscal quarter of the Lead Borrower period ended on or before the occurrence of such event (the “Reference Period”):
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(a) in making any determination of Consolidated EBITDA or any component thereof or the determination of financial ratios and tests hereunder, effect shall be given to the Pre-Effective Date Transactions, the Transactions, any Specified Transaction made during the applicable Test Period and any synergies, operating improvements, operating expense reductions or cost savings pertaining to the business of the Borrower or any of its Subsidiaries, in each case, that occurred during the Reference Period or with respect to any such event or transaction included in the definition of Pre-Effective Date Transactions or the definition of Specified Transactions and projected by the Lead Borrower in good faith to result from actions that either have been taken, with respect to which substantial steps have been taken or that are expected to be taken within 18 months after the date of consummation of such Transaction (as defined in the FRG First Lien Credit Agreement) or such Specified Transaction, synergies, operating improvements, operating expense reductions or cost savings (or, with respect to the Transactions, within 18 months of the Effective Date) (including, in each case, actions initiated prior to the Effective Date) (in the good faith determination of the Lead Borrower), net of the amount of actual benefits realized, and without duplication of any such amount included in Consolidated EBITDA pursuant to the definition thereof;
(b) in making any determination on a Pro Forma Basis, of Pro Forma Compliance or of Pro Forma Effect, (i) all Indebtedness (including Indebtedness issued, incurred or assumed as a result of, or to finance, any relevant transactions and for which the financial effect is being calculated, whether incurred under the Loan Documents or otherwise) issued, incurred, assumed or repaid during the Reference Period (or with respect to Indebtedness repaid, during the Reference Period or subsequent to the end of the Reference Period and prior to, or simultaneously with, the event for which the calculation of any such ratio is made) shall be deemed to have been issued, incurred, assumed or repaid at the beginning of such period, (ii) such calculation shall be made without regard to the netting of any cash proceeds of Indebtedness incurred in connection with the relevant transactions, (iii) in the case of any Indebtedness in the nature of a revolving credit facility, the entire principal amount of such credit facility shall be deemed to have been fully drawn and (iv) interest expense of such Person attributable to interest on any Indebtedness for which pro forma effect is being given as provided in preceding clause (i) bearing floating interest rates shall be computed on a pro forma basis at the rate which is or would be in effect with respect to such Indebtedness as of the relevant date of determination,
(c) [Reserved], and
(d) income statement items (whether positive or negative) attributable to all property acquired or disposed of in such relevant transaction shall be included as if such transaction had occurred as of the first day of the relevant Test Period. Whenever a financial ratio or test or covenant is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which financial statements of the Borrower were delivered pursuant to Section 5.01(a) or (b).
“Pro Forma Disposal Adjustment” means, for any Test Period that includes all or a portion of a fiscal quarter of the Lead Borrower included in any Post-Transaction Period with respect to any Sold Entity or Business, the pro forma increase or decrease in Consolidated EBITDA projected by the Lead Borrower in good faith as a result of contractual arrangements between the Borrower or any Subsidiary entered into with such Sold Entity or Business at the time of its disposal or within the Post-Transaction Period and which represent an increase or decrease in Consolidated EBITDA which is incremental to the Disposed EBITDA of such Sold Entity or Business for the most recent Test Period prior to its disposal.
“Pro Forma Entity” means any Acquired Entity or Business.
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“Pro Forma Financial Statements” has the meaning assigned to such term in Section 3.04(c).
“Proposed Change” has the meaning assigned to such term in Section 9.02(c).
“Public Company Costs” means, as to any Person, costs associated with, or in anticipation of, or preparation for, compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith and charges relating to compliance with the provisions of the Securities Act and the Exchange Act, as applicable to companies with equity or debt securities held by the public, the rules of national securities exchange companies with listed equity or debt securities, directors’ or managers’ compensation, fees and expense reimbursement, charges relating to investor relations, shareholder meetings and reports to shareholders or debtholders, directors’ and officers’ insurance and other executive costs, legal and other professional fees and listing fees.
“Public Lender” has the meaning assigned to such term in Section 5.01.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning specified in Section 9.20.
“Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.
“Qualifying Lender” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document.
“Reference Time” with respect to any setting of the then-current Benchmark means (a) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two Business Days prior to the date of such setting, (b) if such Benchmark is Daily Simple SOFR, four Business Days prior to such setting or (c) if such Benchmark is not the Term SOFR Rate or Daily Simple SOFR, the time determined by the Required Lenders in their reasonable discretion, and notified to the Administrative Agent.
“Refinanced Debt” has the meaning assigned to such term in the definition of “Credit Agreement Refinancing Indebtedness.”
“Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Lead Borrower executed by each of (a) the Lead Borrower, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Credit Agreement Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.21.
“Register” has the meaning assigned to such term in Section 9.04(b)(iv).
“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.
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“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the partners, directors, officers, employees, trustees, agents, controlling persons, advisors and other representatives of such Person and of each of such Person’s Affiliates and permitted successors and assigns of each of the foregoing.
“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, emptying, escaping, pumping, discharge, dispersal, leaching or migration into or through the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) and including the environment within any building, or any occupied structure, facility or fixture.
“Relevant Governmental Body” means the Board of Governors and/or the NYFRB, the CME Term SOFR Administrator, or a committee officially endorsed or convened by the Board of Governors and/or the NYFRB, or, in each case, any successor thereto.
“Relevant Rate” means with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate.
“Removal Effective Date” has the meaning assigned to such term in Section 8.06.
“Representative” means, with respect to any series of Indebtedness permitted by this Agreement to be secured by the Collateral and/or the Badcock Collateral on a senior, pari passu or junior or “silent” subordinated basis, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Indebtedness is issued, incurred or otherwise obtained, as the case may be, and each of their successors in such capacities.
“Required Lenders” means, at any time, Lenders having Term Loans and unused Commitments representing more than 50% of the aggregate Term Loans and unused Commitments at such time; provided that to the extent set forth in Section 9.02 or Section 9.04 whenever there are one or more Defaulting Lenders, the total outstanding Term Loans and the unused Commitments of each Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
“Requirements of Law” means, with respect to any Person, any statutes, laws, treaties, rules, regulations, orders, decrees, writs, injunctions or determinations of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Resignation Effective Date” has the meaning assigned to such term in Section 8.06.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, vice president, chief financial officer, treasurer or assistant treasurer, company secretary or other similar officer, manager or a member of the Board of Directors of a Loan Party and with respect to certain limited liability companies or partnerships that do not have officers, any manager, sole member, managing member or general partner thereof, and as to any document delivered on the Effective Date or thereafter pursuant to paragraph (a)(i) of the definition of the term “Collateral and Guarantee Requirement,” any secretary, assistant secretary, company secretary or director of a Loan Party, and as to the Lead Borrower, any Financial Officer. 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.
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“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.
“Retained Asset Sale Proceeds” means any proceeds of any Prepayment Event described in clause (a) of the definition of the term “Prepayment Event” that are not required to be used to prepay Term Loan Borrowings pursuant to Section 2.11(c) or Term Loan Borrowings (as defined in the First Lien Credit Agreement) pursuant to Section 2.11(c) of the First Lien Credit Agreement.
“Retained Declined Proceeds” has the meaning assigned to such term in Section 2.11(e).
“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor to its rating agency business.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union, any EU member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned 50% or more by any such Person in the foregoing clauses (a) and (b), or (d) any Person otherwise the subject of Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, or Her Majesty’s Treasury of the United Kingdom.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Secured Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Secured Obligations” means the Loan Document Obligations.
“Secured Parties” means (a) each Lender, (b) the Administrative Agent, (c) the Collateral Agent, (d) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the permitted successors and assigns of each of the foregoing.
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“Security Documents” means the Collateral Agreement, the Mortgages (if any) and each other security agreement or pledge agreement executed and delivered pursuant to the “Collateral and Guarantee Requirement” and/or Section 5.11, Section 5.12(a) (other than as it may relate to Badcock), Section 5.12(b) or Section 5.14 to secure any of the Secured Obligations.
“Securities Accounts” shall have the meaning set forth in Article 9 of the UCC.
“Similar Business” means (1) any business conducted by the Borrower or any Subsidiary on the Effective Date or (2) any business or other activities that are reasonably similar, ancillary, incidental, complementary or related to (including non-core incidental businesses acquired in connection with any permitted Investment), or a reasonable extension, development or expansion of, the businesses that the Borrower and its Subsidiaries conduct or propose to conduct on the Effective Date.
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the NYFRB on the NYFRB’s Website on the immediately succeeding Business Day. If SOFR as so determined is less than zero, it shall be deemed to be zero for purposes of calculating the rate.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the NYFRB, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”.
“Sold Entity or Business” has the meaning assigned to such term in the definition of the term “Consolidated EBITDA.”
“Solicited Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(3).
“Solicited Discounted Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
“Solicited Discounted Prepayment Notice” means an irrevocable written notice of a Borrower Solicitation of Discounted Prepayment Offers made pursuant to Section 2.11(a)(ii)(D) substantially in the form of Exhibit N.
“Solicited Discounted Prepayment Offer” means the irrevocable written offer by each Term Lender, substantially in the form of Exhibit O, submitted following the Administrative Agent’s receipt of a Solicited Discounted Prepayment Notice.
“Solicited Discounted Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(D)(1).
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“Solvent” means, with respect to the Lead Borrower and its Subsidiaries, (i) each of the Fair Value and the Present Fair Salable Value of the assets of the Lead Borrower and its Subsidiaries taken as a whole exceed their Stated Liabilities and Identified Contingent Liabilities, (ii) the Lead Borrower and its Subsidiaries taken as a whole do not have Unreasonably Small Capital and (iii) the Lead Borrower and its Subsidiaries taken as a whole can pay their Stated Liabilities and Identified Contingent Liabilities as they mature. For the purposes of this definition, capitalized terms used and not defined in this Agreement shall have the meanings provided for in Exhibit G.
“Specified Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Prepayment Notice” means an irrevocable written notice of the Borrower Offer of Specified Discount Prepayment made pursuant to Section 2.11(a)(ii)(B) substantially in the form of Exhibit J.
“Specified Discount Prepayment Response” means the irrevocable written response by each Term Lender, substantially in the form of Exhibit K, to a Specified Discount Prepayment Notice.
“Specified Discount Prepayment Response Date” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(1).
“Specified Discount Proration” has the meaning assigned to such term in Section 2.11(a)(ii)(B)(3).
“Specified Transaction” means, with respect to any period, any Investment, sale, transfer or other disposition of assets, incurrence or repayment of Indebtedness, Restricted Payment, subsidiary designation or other event that by the terms of the Loan Documents requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis.
“Store Accounts” shall have the meaning ascribed to the term “Store Accounts” in the ABL Credit Agreement as in effect on the date hereof.
“Submitted Amount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“Submitted Discount” has the meaning assigned to such term in Section 2.11(a)(ii)(C)(1).
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held (unless parent does not Control such entity), or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent; in each case, whether existing as of the Effective Date or subsequently created or coming to exist.
“Subsidiary” means any subsidiary of the Lead Borrower (unless otherwise specified or the context otherwise requires).
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“Subsidiary Loan Party” means (i) each Subsidiary of the Lead Borrower (other than FG Newco PSP, Valor and FG Newco Intermediate AF) that is party to the Guarantee Agreement and (ii) Badcock.
“Successor Borrower” has the meaning specified in Section 6.03(a)(iv).
“Supported QFC” has the meaning specified in Section 9.20.
“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Tax Restructuring” means any reorganizations and other activities related to tax planning and tax reorganization (as determined by Lead Borrower in good faith) entered into after the Effective Date so long as such Tax Restructuring does not materially impair the Guarantee, the Badcock Guarantee, the security interests of the Agents and the Lenders under the Security Documents in the Collateral or the security interests of the Agents and the Lenders under the Badcock Security Documents in the Badcock Collateral, taken as a whole, and Borrower and its Subsidiaries otherwise comply with Sections 5.11 and 5.12.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.
“Term Commitment” means, with respect to each Lender, the Initial Term Loan Commitment, if any, of such Lender to make Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to an Assignment and Assumption, (ii) a Refinancing Amendment or (iii) a Loan Modification Agreement. The amount of each Lender’s Term Commitment is set forth on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Term Commitment, Loan Modification Agreement or Refinancing Amendment, as the case may be. As of the Effective Date, the total Term Commitment is $150,000,000.
“Term Facility” means the Term Loans provided to or for the benefit of the Borrower pursuant to the terms of this Agreement.
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“Term Lender” means a Lender with a Term Commitment or an outstanding Term Loan.
“Term Loans” means, individually or collectively as the context requires, Initial Term Loans and Other Term Loans.
“Term Maturity Date” means (a) in the case of the Initial Term Loans, November 22, 2023 and (b) in the case of any Other Term Loan, the date set forth in the applicable documentation in respect thereof; provided, however, if such day is not a Business Day, then the next succeeding Business Day.
“Term SOFR Determination Day” has the meaning specified in the definition of Term SOFR Reference Rate.
“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m. (Chicago time), two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.
“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 p.m. (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such Term SOFR Determination Day.
“Test Period” means, at any date of determination, the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time for which financial statements are delivered pursuant to Section 5.01(a) or (b); provided that for any date of determination before the delivery of the first financial statements pursuant to Section 5.01(a) or (b), the Test Period shall be the period of four consecutive fiscal quarters of the Lead Borrower then last ended as of such time.
“Total Net Leverage Ratio” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Total Indebtedness as of such date to (b) Consolidated EBITDA for the most recently completed Test Period.
“Transaction Costs” means all fees, premiums, costs and expenses incurred or payable by the Borrower or any other Subsidiary in connection with the Transactions.
“Transactions” means (a) the Acquisition, (b) the execution and delivery of the Loan Documents, the creation of the Liens pursuant to the Security Documents and the incurrence of the Term Facility and the funding of the Initial Term Loans on the Effective Date, (c) the consummation of the other transactions contemplated by this Agreement on the Effective Date, (d) the consummation of any other transactions in connection with the foregoing, (e) the repayment of the existing Indebtedness under the Existing Badcock Loan Agreements and the termination of such Existing Badcock Loan Agreements and the documents related thereto, (f) the repayment of the existing Indebtedness under the Existing Badcock Construction Loan Agreement and the termination of the Existing Badcock Construction Loan Agreement and the documents related thereto, (g) the execution and delivery of the ABL Credit Agreement First Amendment and related documents, (h) the execution and delivery of the FRG First Lien Credit Agreement First Amendment and related documents, (i) the execution and delivery of the FRG Second Lien Credit Agreement First Amendment and related documents, (j) the execution and delivery of the First Lien Credit Agreement and the other First Lien Loan Documents, the creation on or after the Effective Date of the Liens pursuant to the Security Documents (as defined in the First Lien Credit Agreement) and the incurrence of any borrowings thereunder to be incurred on the Effective Date and (k) the payment of the Transaction Costs related thereto.
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“Type,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate or the Alternate Base Rate.
“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, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s security interest in any item or portion of the Collateral or the Badcock Collateral is governed by the Uniform Commercial Code as in effect in a U.S. jurisdiction other than the State of New York, the terms “UCC” and “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unaudited Financial Statements” means (a) the unaudited consolidated balance sheet of the Lead Borrower and its Subsidiaries, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of the Lead Borrower ended on or about September 30, 2021 and (b) the unaudited consolidated balance sheet of Badcock, and the related unaudited statements of income, cash flows and stockholders’ equity, for the fiscal quarter of Badcock ended on or about September 30, 2021.
“Unfinanced Capital Expenditures” means, for any period, capital expenditures paid in cash (other than cash constituting proceeds of long-term Indebtedness (other than revolving Indebtedness)) during such period, other than (a) the purchase price paid in connection with a Permitted Acquisition or other similar Investment not prohibited by this Agreement and expenditures made in connection with the Pre-Effective Date Investments or the Transactions, (b) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (c) expenditures made with the proceeds of Dispositions, Casualty Events or similar dispositions or events that are not required to be applied to repay Indebtedness pursuant to the terms of this Agreement, the ABL Credit Agreement, the First Lien Credit Agreement, the FRG First Lien Credit Agreement or the FRG Second Lien Credit Agreement, (d) expenditures made in leasehold improvements, to the extent reimbursed by the landlord, (e) expenditures to the extent actually paid for by any Person other than any Borrower or Subsidiary and for which no Borrower or Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation in respect of the relevant expenditures to such Person, (f) property, plant and equipment taken in settlement of accounts and (g) that portion of interest on Indebtedness incurred for capital expenditures which is capitalized in accordance with GAAP.
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“United States Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(e)(ii)(C).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Special Resolution Regimes” has the meaning specified in Section 9.20.
“USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.
“Valor” has the meaning assigned to such term in the preliminary statements hereto.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Wholly Owned Subsidiary” means any Subsidiary that is a wholly owned subsidiary.
“wholly owned subsidiary” means, with respect to any Person at any date, a subsidiary of such Person of which securities or other ownership interests representing 100% of the Equity Interests (other than (a) directors’ qualifying shares and (b) nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law) are, as of such date, owned, controlled or held by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
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“Zero Balance Accounts” means Deposit Accounts in which a balance of zero is maintained by the depository institution at all times by automatically transferring funds from a master Deposit Account to such Zero Balance Account in an amount only large enough to cover checks presented and other debits to such account, such that any such Zero Balance Account maintains an overnight balance of zero dollars at all times.
SECTION 1.02 Classification of Loans and Borrowings.
For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Class (e.g., an “Initial Term Loan”) or by Type (e.g., a “Term Benchmark Loan” or “ABR Loan”) or by Class and Type (e.g., a “Term Benchmark Initial Term Loan”). Borrowings also may be classified and referred to by Class (e.g., an “Initial Term Loan Borrowing”) or by Type (e.g., a “Term Benchmark Borrowing”) or by Class and Type (e.g., a “Term Benchmark Initial Term Loan Borrowing”).
SECTION 1.03 Terms Generally.
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, (a) any definition of or reference to any agreement (including this Agreement and the other Loan Documents), instrument or other document herein shall be construed as referring to such agreement, instrument or other document, including all schedules, exhibits and other attachments thereto and as from time to time amended, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or other modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.04 Accounting Terms; GAAP.
(a) 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 in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Notwithstanding anything to the contrary herein, but subject to Section 1.09, for purposes of determining compliance with any test contained in this Agreement, the Total Net Leverage Ratio, the Secured Net Leverage Ratio, the Fixed Charge Coverage Ratio and any other financial ratio or test that are calculated with respect to any Test Period during which a Specified Transaction occurs shall be calculated on a Pro Forma Basis. Further, if since the beginning of any such Test Period and on or prior to the date of any required calculation of any financial ratio or test (x) any Specified Transaction has occurred or (y) any Person that subsequently became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Subsidiaries or any joint venture since the beginning of such Test Period has consummated any Specified Transaction, then, in each case, any applicable financial ratio or test shall be calculated on a Pro Forma Basis for such Test Period as if such Specified Transaction had occurred at the beginning of the applicable Test Period (it being understood, for the avoidance of doubt, that solely for purposes of calculating compliance with Section 6.10, if applicable, the date of the required calculation shall be the last day of the Test Period, and no Specified Transaction occurring thereafter shall be taken into account).
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SECTION 1.05 Effectuation of Transactions.
All references herein to the Borrower and its Subsidiaries shall be deemed to be references to such Persons, and all the representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made, in each case, after giving effect to the Transactions that occurred on the Effective Date, unless the context otherwise requires.
SECTION 1.06 Limited Conditionality Acquisition.
Notwithstanding anything in this Agreement or any Loan Document to the contrary, when calculating any applicable ratio, the amount or availability of the Available Amount or any other basket based on Consolidated EBITDA or total assets or whether a Default or Event of Default has occurred and is continuing or any representations and warranties have been complied with, in each case in connection with a Limited Condition Transaction, the date of determination of such ratio or other provisions, determination of whether any Default or Event of Default has occurred and is continuing shall, at the option of the Lead Borrower (the Lead Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCA Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into or the date of the declaration or making of such Restricted Payment constituting a Limited Condition Transaction or of the giving of irrevocable (which may be conditional) notice with respect to a repayment, repurchase or redemption of Indebtedness constituting a Limited Condition Transaction, or, as an alternative option with respect to Permitted Acquisitions or investments constituting Limited Condition Transactions, the date of a public announcement of an intention to make an offer in respect of the target of such Permitted Acquisition or investment (the “LCA Test Date”) after giving Pro Forma Effect to such Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if such transactions occurred at the beginning of the applicable Test Period, and for the avoidance of doubt, if any of such ratios or other provisions are exceeded as a result of fluctuations in such ratio or amount (including due to fluctuations in Consolidated EBITDA of the Borrower or such person subject to such Limited Condition Transaction) or other provisions at or prior to the consummation of the relevant Limited Condition Transaction, such ratios and other provisions will not be deemed to have been exceeded as a result of such fluctuations solely for purposes of determining whether the Limited Condition Transaction is permitted hereunder. If the Lead Borrower has made an LCA Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio on or following the relevant LCA Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio shall be calculated (and tested) on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) had been consummated on the LCA Test Date.
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SECTION 1.07 Certain Determinations.
(a) Notwithstanding anything to the contrary herein, for purposes of the covenants described in Article V and Article VI, if any transaction or action would be permitted pursuant to one or more provisions described therein, the Borrower may divide and classify such transaction or action within the relevant covenant (or other provisions) in any manner that complies with such covenant (or other provision) set forth therein, and may later divide and reclassify any such transaction or action so long as the transaction or action (as so divided and/or reclassified) would be permitted to be made in reliance on the applicable exception (or other provisions) as of the date of such reclassification; provided that if any financial ratio or test governing any applicable Incurrence Based Amount would be satisfied in any subsequent period following the utilization of any Fixed Amount, such reclassification shall be deemed to have automatically occurred if not elected otherwise by the Lead Borrower; provided, further, that such reclassification shall not be permitted with respect to (i) the Indebtedness consisting of the Initial Term Loans, which shall only be permitted under Section 6.01(a)(i), or Liens with respect to the Initial Term Loans, which shall only be permitted under Section 6.02(i), (ii) the Indebtedness under the ABL Credit Agreement and the other ABL Loan Documents, which shall only be permitted under Section 6.01(a)(xxxi), or Liens with respect to the Loans (as defined in the ABL Credit Agreement), which shall only be permitted under Section 6.02(xvii) and (iii) the Indebtedness consisting of the Initial Term Loans (as defined in the First Lien Credit Agreement), which shall only be permitted under Section 6.01(a)(xxxii), or Liens with respect to the Initial Term Loans (as defined in the First Lien Credit Agreement), which shall only be permitted under Section 6.02(xxi). For the avoidance of doubt, if the applicable date for meeting any requirement hereunder or under any other Loan Document falls on a day that is not a Business Day, compliance with such requirement shall not be required until noon on the first Business Day following such applicable date.
(b) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that does not require compliance with a financial ratio or test (including any Total Net Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Agreement that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence.
(c) Notwithstanding the foregoing, for purposes of any determination under Article V, Article VI or Article VII or any determination under any other provision of this Agreement subject to any Dollar limitation, threshold or basket, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars based on the relevant currency exchange rate in effect on the applicable date of determination (rounded to the nearest currency unit, with 0.5 or more of a currency unit being rounded upward); provided, however, that for purposes of determining compliance with Article VI with respect to any amount in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness, Lien or Investment is incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payment in respect of any Junior Financing is made or such transaction with an Affiliate is entered into; provided, further, that, for the avoidance of doubt, the foregoing provisions of this Section 1.07(c) shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness, Lien or Investment may be incurred or Disposition, Restricted Payment or prepayment, redemption, purchase, defeasance or other payments in respect of any Junior Financing may be made or such transaction with an Affiliate may be entered into at any time under such Sections. For purposes of any determination of Consolidated Total Indebtedness, amounts in currencies other than Dollars shall be translated into Dollars at the currency exchange rates used in preparing the most recently delivered financial statements pursuant to Section 5.01(a) or Section 5.01(b) adjusted to reflect the currency translation effects, determined in accordance with GAAP, of any Swap Agreements permitted hereunder for currency exchange risks with respect to the applicable currency in effect on the date of determination of the dollar equivalent thereof. Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.
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SECTION 1.08 Divisions.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
SECTION 1.09 Interest Rates; Benchmark Notification.
The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.14(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. Without limiting the Administrative Agent’s obligations under this Agreement to determine interest rates as and to the extent set forth in this Agreement, the Administrative Agent shall not be under any obligation to (i) to monitor, determine or verify the unavailability or cessation of any interest rate used in this Agreement (or other applicable benchmark index) or whether or when there has occurred any Benchmark Transition Event, Benchmark Replacement Date or Benchmark Unavailability Period, or (ii) to select, determine or designate any Benchmark Replacement, or other successor or replacement benchmark index, or (iii) to select, determine or designate any Benchmark Replacement Adjustment, or other modifier to any replacement or successor index (provided, that the Administrative Agent may be required to calculate Benchmark Replacement Adjustments or other modifiers as and to the extent set forth herein), or (iv) to determine whether or what Benchmark Replacement Conforming Changes are necessary or advisable, if any, in connection with any of the foregoing.
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ARTICLE II
The Credits
SECTION 2.01 Commitments.
Subject to the terms and conditions set forth herein, each Initial Term Loan Lender severally agrees to make an Initial Term Loan to the Borrower denominated in dollars on the Effective Date in a principal amount equal to its Initial Term Loan Commitment. Amounts repaid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02 Loans and Borrowings.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder, provided that the Commitments of the Lenders are several and other than as expressly provided herein with respect to a Defaulting Lender, no Lender shall be responsible for any other Lender’s failure to make Loans as required hereby.
(b) Subject to Section 2.14, each Term Loan Borrowing shall be comprised entirely of ABR Loans or Term Benchmark Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement;
(c) At the commencement of each Interest Period for any Term Benchmark Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum; provided that a Term Benchmark Borrowing that results from a continuation of an outstanding Term Benchmark Borrowing may be in an aggregate amount that is equal to such outstanding Borrowing. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of twelve (12) Term Benchmark Borrowings outstanding.
SECTION 2.03 Requests for Borrowings.
To request a Term Loan Borrowing, the Lead Borrower shall notify the Administrative Agent of such request in writing by electronic mail or overnight courier (a) in the case of a Term Benchmark Borrowing, not later than 12:00 p.m., New York City time, three (3) Business Days before the date of the proposed Borrowing, (b) in the case of an ABR Borrowing, not later than 12:00 p.m., New York City time, one (1) Business Day before the date of the proposed Borrowing; provided that any notice given in connection with Borrowings on the Effective Date (including Term Benchmark Borrowings) may be given not later than 2:00 p.m., New York City time, one (1) Business Day before the Effective Date; provided further that, in each case, the Administrative Agent may in its discretion accept any later request. Each such written Borrowing Request shall be signed by the Lead Borrower substantially in the form of Exhibit S and shall be irrevocable. Each such written Borrowing Request shall specify the following information:
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(i) whether the requested Borrowing is to be a Borrowing of Initial Term Loans and/or a Borrowing of any other Class (specifying the Class thereof);
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing;
(v) in the case of a Term Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and
(vii) except in the case of any Borrowing that is made on the Effective Date, that as of the date of such Borrowing, the conditions set forth in Sections 4.02(a) and 4.02(b) are satisfied.
If no election as to the Type of Borrowing is specified as to any Borrowing, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Term Benchmark Borrowing, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
SECTION 2.04 [Reserved].
SECTION 2.05 [Reserved].
SECTION 2.06 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the Applicable Account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. Upon satisfaction or waiver of the conditions precedent specified herein applicable to such Loan and receipt of all requested funds from each Lender (provided, for avoidance of doubt, that this sentence shall not limit any obligations of the Lenders to provide such funds), Administrative Agent will make such Loans available to the Borrower by promptly wiring the amounts so received, in like funds, to an account of the Borrower designated by the Lead Borrower in the applicable Borrowing Request.
(b) [Intentionally Omitted].
(c) The obligations of the Lenders hereunder to make Term Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).
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SECTION 2.07 Interest Elections.
(a) Each Term Loan Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Term Benchmark Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03. Thereafter, the Lead Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Term Benchmark Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.07. The Lead Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section 2.07, the Lead Borrower shall notify the Administrative Agent of such election in writing by electronic mail or overnight courier by the time that a Borrowing Request would be required under Section 2.03 if the Lead Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such written Interest Election Request shall be irrevocable and shall be signed by the Lead Borrower and shall be substantially in the form of Exhibit T.
(c) Each written Interest Election Request shall specify the following information in compliance with Section 2.03:
(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing; and
(iv) if the resulting Borrowing is to be a Term Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”
If any such Interest Election Request requests a Term Benchmark Borrowing but does not specify an Interest Period, then the Lead Borrower shall be deemed to have selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request in accordance with this Section 2.07, the Administrative Agent shall advise each Lender of the applicable Class of the details thereof and of such Lender’s portion of each resulting Borrowing.
(e) If the Lead Borrower fails to deliver a timely Interest Election Request with respect to a Term Benchmark Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Lead Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Term Benchmark Borrowing and (ii) unless repaid, each Term Benchmark Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
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SECTION 2.08 Termination and Reduction of Commitments.
(a) Unless previously terminated, on the Effective Date, the Term Commitments in effect on such date shall terminate upon the making of the relevant Term Loans.
(b) The Lead Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class, provided that each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $500,000 and not less than $1,000,000 unless such amount represents all of the remaining Commitments of such Class.
(c) The Lead Borrower shall notify the Administrative Agent, in writing, of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.08 no later than 2:00 p.m., New York City time, at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.08 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.
SECTION 2.09 Repayment of Loans; Evidence of Debt.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section 2.09 shall be prima facie evidence of the existence and amounts of the obligations recorded therein, provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to pay any amounts due hereunder in accordance with the terms of this Agreement. In the event of any inconsistency between the entries made pursuant to paragraphs (b) and (c) of this Section 2.09, the accounts maintained by the Administrative Agent pursuant to paragraph (c) of this Section 2.09 shall control.
(e) Any Lender may request that the Loans of any Class made by it be evidenced by a Note. In such event, the Borrower shall execute and deliver to such Lender a Note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns).
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SECTION 2.10 Repayment of Term Loans.
(a) Subject to adjustment pursuant to paragraph (c) of this Section 2.10, the Borrower shall repay Term Loan Borrowings with respect to the Other Term Loans as specified in the applicable Refinancing Amendment or Loan Modification Agreement; provided, with respect to this clause (a), that any such payment due on a date that is not a Business Day shall instead be due on the next preceding Business Day.
(b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Maturity Date.
(c) Notwithstanding anything contained herein to the contrary, any prepayment of a Term Loan Borrowing of any Class (i) pursuant to Section 2.11(a) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10 as directed by the Lead Borrower (and absent such direction in direct order of maturity), and (ii) pursuant to Section 2.11(c) shall be applied to reduce the subsequent scheduled and outstanding repayments of the Term Loan Borrowings of such Class to be made pursuant to this Section 2.10, or, except as otherwise provided in any Refinancing Amendment or Loan Modification Agreement, pursuant to the corresponding section of such Refinancing Amendment or Loan Modification Agreement, as applicable, in direct order of maturity.
(d) Prior to any repayment of any Term Loan Borrowings of any Class hereunder, the Borrower shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent in writing by telecopy, electronic mail, facsimile or overnight courier of such election not later than 2:00 p.m., New York City time, one (1) Business Day before the scheduled date of such repayment. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Loan Borrowings shall be accompanied by accrued interest on the amount repaid.
SECTION 2.11 Prepayment of Loans.
(a) (i) Subject to clause (b) below, the Lead Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty.
(ii) Notwithstanding anything in any Loan Document to the contrary but subject to clause (b) below, so long as no Default or Event of Default has occurred and is continuing, the Borrower or any of its Subsidiaries may offer to prepay all or a portion of the outstanding Term Loans on the following basis:
(A) the Borrower or any of its Subsidiaries shall have the right to make a voluntary prepayment of Term Loans at a discount to par (such prepayment, the “Discounted Term Loan Prepayment”) pursuant to a Borrower Offer of Specified Discount Prepayment, Borrower Solicitation of Discount Range Prepayment Offers or Borrower Solicitation of Discounted Prepayment Offers, in each case made in accordance with this Section 2.11(a)(ii); provided that the Borrower or any of its Subsidiaries shall not initiate any action under this Section 2.11(a)(ii) in order to make a Discounted Term Loan Prepayment unless (I) at least ten (10) Business Days shall have passed since the consummation of the most recent Discounted Term Loan Prepayment as a result of a prepayment made by the Borrower or any of its Subsidiaries on the applicable Discounted Prepayment Effective Date; or (II) at least three (3) Business Days shall have passed since the date the Borrower or any of its Subsidiaries were notified that no Term Lender was willing to accept any prepayment of any Term Loan and/or Other Term Loan at the Specified Discount, within the Discount Range or at any discount to par value, as applicable, or in the case of Borrower Solicitation of Discounted Prepayment Offers, the date of the Borrower’s or any of its Subsidiaries’ election not to accept any Solicited Discounted Prepayment Offers; provided, further, that each Lender participating in any Discounted Term Loan Prepayment acknowledges and agrees that in connection with such Discounted Term Loan Prepayment, (1) the Borrower then may have, and later may come into possession of, information regarding the Term Loans or the Loan Parties hereunder that is not known to such Lender and that may be material to a decision by such Lender to participate in such Discounted Term Loan Prepayment (“Excluded Information”), (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to participate in such Discounted Term Loan Prepayment notwithstanding such Lender’s lack of knowledge of the Excluded Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Excluded Information; provided further that any Term Loan that is prepaid will be automatically and irrevocably cancelled.
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(B) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time offer to make a Discounted Term Loan Prepayment by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Specified Discount Prepayment Notice; provided that (I) any such offer shall be made available, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such offer shall specify the aggregate principal amount offered to be prepaid (the “Specified Discount Prepayment Amount”) with respect to each applicable tranche, the tranche or tranches of Term Loans subject to such offer and the specific percentage discount to par (the “Specified Discount”) of such Term Loans to be prepaid (it being understood that different Specified Discounts and/or Specified Discount Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Specified Discount Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such offer shall remain outstanding through the Specified Discount Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Specified Discount Prepayment Notice and a form of the Specified Discount Prepayment Response to be completed and returned by each such Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Specified Discount Prepayment Response Date”).
(2) Each relevant Term Lender receiving such offer shall notify the Auction Agent (or its delegate) by the Specified Discount Prepayment Response Date whether or not it agrees to accept a prepayment of any of its relevant then outstanding Term Loans at the Specified Discount and, if so (such accepting Term Lender, a “Discount Prepayment Accepting Lender”), the amount and the tranches of such Lender’s Term Loans to be prepaid at such offered discount. Each acceptance of a Discounted Term Loan Prepayment by a Discount Prepayment Accepting Lender shall be irrevocable. Any Term Lender whose Specified Discount Prepayment Response is not received by the Auction Agent by the Specified Discount Prepayment Response Date shall be deemed to have declined to accept the applicable Borrower Offer of Specified Discount Prepayment.
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(3) If there is at least one Discount Prepayment Accepting Lender, the Borrower or any of its Subsidiaries will make prepayment of outstanding Term Loans pursuant to this subsection (B) to each Discount Prepayment Accepting Lender in accordance with the respective outstanding amount and tranches of Term Loans specified in such Lender’s Specified Discount Prepayment Response given pursuant to paragraph (2) above; provided that, if the aggregate principal amount of Term Loans accepted for prepayment by all Discount Prepayment Accepting Lenders exceeds the Specified Discount Prepayment Amount, such prepayment shall be made pro-rata among the Discount Prepayment Accepting Lenders in accordance with the respective principal amounts accepted to be prepaid by each such Discount Prepayment Accepting Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its reasonable discretion) will calculate such proration (the “Specified Discount Proration”). The Auction Agent shall promptly, and in any case within three (3) Business Days following the Specified Discount Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such offer, the Discounted Prepayment Effective Date and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, and the aggregate principal amount and the tranches of Term Loans to be prepaid at the Specified Discount on such date, (III) each Discount Prepayment Accepting Lender of the Specified Discount Proration, if any, and confirmation of the principal amount, tranche and Type of Loans of such Lender to be prepaid at the Specified Discount on such date and (IV) the Administrative Agent of the Discounted Prepayment Effective Date, and the aggregate principal amount, tranche and Types of Loans to be prepaid at the Specified Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by the Borrower or any of its Subsidiaries on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(C) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Discount Range Prepayment Offers by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Discount Range Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate principal amount of the relevant Term Loans (the “Discount Range Prepayment Amount”), the tranche or tranches of Term Loans subject to such offer and the maximum and minimum percentage discounts to par (the “Discount Range”) of the principal amount of such Term Loans with respect to each relevant tranche of Term Loans willing to be prepaid by the Borrower or any of its Subsidiaries (it being understood that different Discount Ranges and/or Discount Range Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Discount Range Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Discount Range Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Discount Range Prepayment Notice and a form of the Discount Range Prepayment Offer to be submitted by a responding relevant Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time, on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Discount Range Prepayment Response Date”). Each relevant Term Lender’s Discount Range Prepayment Offer shall be irrevocable and shall specify a discount to par within the Discount Range (the “Submitted Discount”) at which such Term Lender is willing to allow prepayment of any or all of its then outstanding Term Loans of the applicable tranche or tranches and the maximum aggregate principal amount and tranches of such Lender’s Term Loans (the “Submitted Amount”) such Lender is willing to have prepaid at the Submitted Discount. Any Term Lender whose Discount Range Prepayment Offer is not received by the Auction Agent by the Discount Range Prepayment Response Date shall be deemed to have declined to accept a Discounted Term Loan Prepayment of any of its Term Loans at any discount to their par value within the Discount Range.
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(2) The Auction Agent shall review all Discount Range Prepayment Offers received on or before the applicable Discount Range Prepayment Response Date and shall determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the Applicable Discount and Term Loans to be prepaid at such Applicable Discount in accordance with this subsection (C). The Borrower or any of its Subsidiaries agree to accept on the Discount Range Prepayment Response Date all Discount Range Prepayment Offers received by the Auction Agent by the Discount Range Prepayment Response Date, in the order from the Submitted Discount that is the largest discount to par to the Submitted Discount that is the smallest discount to par, up to and including the Submitted Discount that is the smallest discount to par within the Discount Range (such Submitted Discount that is the smallest discount to par within the Discount Range being referred to as the “Applicable Discount”) which yields a Discounted Term Loan Prepayment in an aggregate principal amount equal to the lower of (I) the Discount Range Prepayment Amount and (II) the sum of all Submitted Amounts. Each Lender that has submitted a Discount Range Prepayment Offer to accept prepayment at a discount to par that is larger than or equal to the Applicable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Submitted Amount (subject to any required proration pursuant to the following paragraph (3)) at the Applicable Discount (each such Lender, a “Participating Lender”).
(3) If there is at least one Participating Lender, the Borrower or any of its Subsidiaries will prepay the respective outstanding Term Loans of each Participating Lender in the aggregate principal amount and of the tranches specified in such Lender’s Discount Range Prepayment Offer at the Applicable Discount; provided that if the Submitted Amount by all Participating Lenders offered at a discount to par greater than the Applicable Discount exceeds the Discount Range Prepayment Amount, prepayment of the principal amount of the relevant Term Loans for those Participating Lenders whose Submitted Discount is a discount to par greater than or equal to the Applicable Discount (the “Identified Participating Lenders”) shall be made pro-rata among the Identified Participating Lenders in accordance with the Submitted Amount of each such Identified Participating Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Discount Range Proration”). The Auction Agent shall promptly, and in any case within five (5) Business Days following the Discount Range Prepayment Response Date, notify (I) the Borrower or any of its Subsidiaries of the respective Term Lenders’ responses to such solicitation, the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount and tranches of Term Loans to be prepaid at the Applicable Discount on such date, (III) each Participating Lender of the aggregate principal amount and tranches of such Lender to be prepaid at the Applicable Discount on such date, (IV) if applicable, each Identified Participating Lender of the Discount Range Proration and (V) the Administrative Agent of the Discounted Prepayment Effective Date, the Applicable Discount, and the aggregate principal amount of the Discounted Term Loan Prepayment and the tranches to be prepaid at the Applicable Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to the Borrower or any of its Subsidiaries and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to the Borrower or any of its Subsidiaries shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
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(D) (1) Subject to the proviso to subsection (A) above, the Borrower or any of its Subsidiaries may from time to time solicit Solicited Discounted Prepayment Offers by providing the Auction Agent (with a copy to the Administrative Agent) with three (3) Business Days’ notice in the form of a Solicited Discounted Prepayment Notice; provided that (I) any such solicitation shall be extended, at the sole discretion of the Borrower or any of its Subsidiaries, to each Term Lender and/or each Lender with respect to any Class of Term Loans on an individual tranche basis, (II) any such notice shall specify the maximum aggregate dollar amount of the Term Loans (the “Solicited Discounted Prepayment Amount”) and the tranche or tranches of Term Loans that the Borrower or any of its Subsidiaries is willing to prepay at a discount (it being understood that different Solicited Discounted Prepayment Amounts may be offered with respect to different tranches of Term Loans and, in such an event, each such offer will be treated as a separate offer pursuant to the terms of this Section), (III) the Solicited Discounted Prepayment Amount shall be in an aggregate amount not less than $1,000,000 and whole increments of $500,000 in excess thereof and (IV) each such solicitation by the Borrower or any of its Subsidiaries shall remain outstanding through the Solicited Discounted Prepayment Response Date. The Auction Agent will promptly provide each relevant Term Lender with a copy of such Solicited Discounted Prepayment Notice and a form of the Solicited Discounted Prepayment Offer to be submitted by a responding Term Lender to the Auction Agent (or its delegate) by no later than 5:00 p.m., New York City time on the third Business Day after the date of delivery of such notice to the relevant Term Lenders (the “Solicited Discounted Prepayment Response Date”). Each Term Lender’s Solicited Discounted Prepayment Offer shall (x) be irrevocable, (y) remain outstanding until the Acceptance Date, and (z) specify both a discount to par (the “Offered Discount”) such Term Lender is willing to allow to be applied to the prepayment of its then outstanding Term Loan and the maximum aggregate principal amount and tranches of such Term Loans (the “Offered Amount”) such Term Lender is willing to have prepaid subject to such Offered Discount. Any Term Lender whose Solicited Discounted Prepayment Offer is not received by the Auction Agent by the Solicited Discounted Prepayment Response Date shall be deemed to have declined prepayment of any of its Term Loans at any discount.
(2) The Auction Agent shall promptly provide the Borrower or any of its Subsidiaries with a copy of all Solicited Discounted Prepayment Offers received on or before the Solicited Discounted Prepayment Response Date. The Borrower or any of its Subsidiaries shall review all such Solicited Discounted Prepayment Offers and select the largest of the Offered Discounts specified by the relevant responding Term Lenders in the Solicited Discounted Prepayment Offers that is acceptable to the Borrower or any of its Subsidiaries (the “Acceptable Discount”), if any. If the Borrower or any of its Subsidiaries elects to accept any Offered Discount as the Acceptable Discount, then as soon as practicable after the determination of the Acceptable Discount, but in no event later than by the third Business Day after the date of receipt by the Borrower or any of its Subsidiaries from the Auction Agent of a copy of all Solicited Discounted Prepayment Offers pursuant to the first sentence of this paragraph (2) (the “Acceptance Date”), the Borrower or any of its Subsidiaries shall submit an Acceptance and Prepayment Notice to the Auction Agent setting forth the Acceptable Discount. If the Auction Agent shall fail to receive an Acceptance and Prepayment Notice from the Borrower or any of its Subsidiaries by the Acceptance Date, the Borrower or any of its Subsidiaries shall be deemed to have rejected all Solicited Discounted Prepayment Offers.
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(3) Based upon the Acceptable Discount and the Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, within three (3) Business Days after receipt of an Acceptance and Prepayment Notice (the “Discounted Prepayment Determination Date”), the Auction Agent will determine (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) the aggregate principal amount and the tranches of Term Loans (the “Acceptable Prepayment Amount”) to be prepaid by the Borrower or any of its Subsidiaries at the Acceptable Discount in accordance with this Section 2.11(a)(ii)(D). If the Borrower or any of its Subsidiaries elects to accept any Acceptable Discount, then the Borrower or any of its Subsidiaries agrees to accept all Solicited Discounted Prepayment Offers received by Auction Agent by the Solicited Discounted Prepayment Response Date, in the order from largest Offered Discount to smallest Offered Discount, up to and including the Acceptable Discount. Each Lender that has submitted a Solicited Discounted Prepayment Offer with an Offered Discount that is greater than or equal to the Acceptable Discount shall be deemed to have irrevocably consented to prepayment of Term Loans equal to its Offered Amount (subject to any required pro-rata reduction pursuant to the following sentence) at the Acceptable Discount (each such Lender, a “Qualifying Lender”). The Borrower or any of its Subsidiaries will prepay outstanding Term Loans pursuant to this subsection (D) to each Qualifying Lender in the aggregate principal amount and of the tranches specified in such Lender’s Solicited Discounted Prepayment Offer at the Acceptable Discount; provided that if the aggregate Offered Amount by all Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount exceeds the Solicited Discounted Prepayment Amount, prepayment of the principal amount of the Term Loans for those Qualifying Lenders whose Offered Discount is greater than or equal to the Acceptable Discount (the “Identified Qualifying Lenders”) shall be made pro-rata among the Identified Qualifying Lenders in accordance with the Offered Amount of each such Identified Qualifying Lender and the Auction Agent (in consultation with the Borrower or any of its Subsidiaries and subject to rounding requirements of the Auction Agent made in its sole reasonable discretion) will calculate such proration (the “Solicited Discount Proration”). On or prior to the Discounted Prepayment Determination Date, the Auction Agent shall promptly notify (I) the Borrower or any of its Subsidiaries of the Discounted Prepayment Effective Date and Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be prepaid, (II) each Term Lender who made a Solicited Discounted Prepayment Offer of the Discounted Prepayment Effective Date, the Acceptable Discount, and the Acceptable Prepayment Amount of all Term Loans and the tranches to be prepaid to be prepaid at the Applicable Discount on such date, (III) each Qualifying Lender of the aggregate principal amount and the tranches of such Lender to be prepaid at the Acceptable Discount on such date, (IV) if applicable, each Identified Qualifying Lender of the Solicited Discount Proration and (V) the Administrative Agent of the Discounted Prepayment Effective Date, the Acceptable Discount, the Acceptable Prepayment Amount comprising the Discounted Term Loan Prepayment and the tranches to be repaid at the Applicable Discount on such date. Each determination by the Auction Agent of the amounts stated in the foregoing notices to such Borrower and Lenders shall be conclusive and binding for all purposes absent manifest error. The payment amount specified in such notice to such Borrower shall be due and payable by such Borrower on the Discounted Prepayment Effective Date in accordance with subsection (F) below (subject to subsection (J) below).
(E) In connection with any Discounted Term Loan Prepayment, the Borrower or any of its Subsidiaries and the Lenders acknowledge and agree that the Auction Agent may require as a condition to any Discounted Term Loan Prepayment, the payment of reasonable and customary fees and expenses from the Borrower or any of its Subsidiaries in connection therewith.
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(F) If any Term Loan is prepaid in accordance with subsections (B) through (D) above, the Borrower or any of its Subsidiaries shall prepay such Term Loans on the Discounted Prepayment Effective Date. The Borrower or any of its Subsidiaries shall make such prepayment to the Auction Agent, for the account of the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable, in immediately available funds not later than 11:00 a.m. (New York City time) on the Discounted Prepayment Effective Date and all such prepayments shall be applied to the remaining principal installments (if any) of the relevant tranche of Term Loans on a pro rata basis across such installments. The Term Loans so prepaid shall be accompanied by all accrued and unpaid interest on the par principal amount so prepaid up to, but not including, the Discounted Prepayment Effective Date. Each prepayment of the outstanding Term Loans pursuant to this Section 2.11(a)(ii) shall be paid to the Discount Prepayment Accepting Lenders, Participating Lenders, or Qualifying Lenders, as applicable. The aggregate principal amount of the tranches and installments of the relevant Term Loans outstanding shall be deemed reduced by the full par value of the aggregate principal amount of the tranches of Term Loans prepaid on the Discounted Prepayment Effective Date in any Discounted Term Loan Prepayment.
(G) To the extent not expressly provided for herein, each Discounted Term Loan Prepayment shall be consummated pursuant to procedures consistent with the provisions in this Section 2.11(a)(ii), established by the Auction Agent acting in its reasonable discretion and as reasonably agreed by the Borrower or any of its Subsidiaries.
(H) Notwithstanding anything in any Loan Document to the contrary, for purposes of this Section 2.11(a)(ii), each notice or other communication required to be delivered or otherwise provided to the Auction Agent (or its delegate) shall be deemed to have been given upon Auction Agent’s (or its delegate’s) actual receipt during normal business hours of such notice or communication; provided that any notice or communication actually received outside of normal business hours shall be deemed to have been given as of the opening of business on the next Business Day.
(I) Each of the Borrower or any of its Subsidiaries and the Lenders acknowledges and agrees that the Auction Agent may perform any and all of its duties under this Section 2.11(a)(ii) by itself or through any Affiliate of the Auction Agent and expressly consents to any such delegation of duties by the Auction Agent to such Affiliate and the performance of such delegated duties by such Affiliate. The exculpatory provisions pursuant to this Agreement shall apply to each Affiliate of the Auction Agent and its respective activities in connection with any Discounted Term Loan Prepayment provided for in this Section 2.11(a)(ii) as well as activities of the Auction Agent.
(J) The Borrower or any of its Subsidiaries shall have the right, by written notice to the Auction Agent, to revoke in full (but not in part) its offer to make a Discounted Term Loan Prepayment and rescind the applicable Specified Discount Prepayment Notice, Discount Range Prepayment Notice or Solicited Discounted Prepayment Notice therefor at its discretion at any time on or prior to the applicable Specified Discount Prepayment Response Date, Discount Range Prepayment Response Date or Solicited Discounted Prepayment Response Date, as applicable (and if such offer is revoked pursuant to the preceding clauses, any failure by such Borrower to make any prepayment to a Term Lender, as applicable, pursuant to this Section 2.11(a)(ii) shall not constitute a Default or Event of Default under Section 7.01 or otherwise).
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(b) All voluntary prepayments shall be applied to the Term Facility. All voluntary prepayments of the Term Facility shall be applied to the remaining amortization payments (if any) under such Term Facility, as directed by the Lead Borrower (and absent such direction, in direct order of maturity thereof), including to any Class of extending or existing Term Loans in such order as the Lead Borrower may designate.
(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries in respect of any Prepayment Event (other than any Prepayment Event in respect of ABL Priority Collateral (as defined in the ABL Intercreditor Agreement), to the extent such Prepayment Event is in respect of ABL Priority Collateral, as determined by the Lead Borrower in good faith) the Borrower shall, within ten (10) Business Days after such Net Proceeds are received (or, in the case of a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, on the date of such Prepayment Event), prepay Term Loan Borrowings (with respect to a Prepayment Event described in clause (b) of the definition of “Prepayment Event”, (x) to the extent resulting from the incurrence of Credit Agreement Refinancing Indebtedness, limited to the applicable Refinanced Debt and (y) otherwise, on a pro rata basis among all Term Loan Borrowings) in an aggregate amount equal to 100% of the amount of such Net Proceeds. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.11(c) in respect of any Prepayment Event described in clause (a) of the definition thereof shall be in excess of the amount of ABR Loans at the time outstanding, only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of Borrower, the balance of such required prepayment shall be either (i) deposited in the Collateral Account and applied to the prepayment of Term Benchmark Loans on the last day of the then next-expiring Interest Period for Term Benchmark Loans (with all interest accruing thereon for the account of the Borrower) or (ii) prepaid immediately, together with any amounts owing to the Lenders under Section 2.16. Notwithstanding any such deposit in the Collateral Account, interest shall continue to accrue on such Loans until prepayment.
(d) [Reserved].
(e) Prior to any optional prepayment of Borrowings pursuant to Section 2.11(a)(i), the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (f) of this Section 2.11. In the event of any mandatory prepayment of Term Loan Borrowings made at a time when Term Loan Borrowings of more than one Class remain outstanding, the Borrower shall select Term Loan Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between Term Loan Borrowings (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, the Borrowings of such Class) pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that any Term Lender (and, to the extent provided in the Refinancing Amendment or Loan Modification Agreement for any Class of Other Term Loans, any Lender that holds Other Term Loans of such Class) may elect, by notice to the Administrative Agent in writing by electronic mail or overnight courier no later than 2:00 p.m., New York City time, two (2) Business Days prior to the prepayment date, to decline all or any portion of any prepayment of its Term Loans or Other Term Loans of any such Class pursuant to this Section 2.11 (other than an optional prepayment pursuant to paragraph (a)(i) of this Section or a mandatory prepayment as a result of the Prepayment Event set forth in clause (b) of the definition thereof, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Term Loans or Other Term Loans of any such Class but was so declined (to the extent remaining after compliance with any applicable mandatory prepayment provisions of the ABL Credit Agreement and the First Lien Credit Agreement) shall be retained by the Borrower and added to the Available Amount (such amounts, “Retained Declined Proceeds”). Any Lender that fails to provide written notice to the Administrative Agent in the time frame set forth above shall be deemed to have accepted the prepayment. Optional prepayments of Term Loan Borrowings shall be allocated among the Classes of Term Loan Borrowings as directed by the Borrower, and in the absence of a designation by the Borrower, in direct order of maturity (to the extent relevant), and subject to the foregoing, the Administrative Agent shall apply such prepayments in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.16; provided that, in connection with any mandatory prepayments by the Borrower of the Term Loans pursuant to Section 2.11(c), such prepayments shall be applied on a pro rata basis to the then outstanding Term Loans being prepaid irrespective of whether such outstanding Term Loans are ABR Loans or Term Benchmark Loans.
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(f) The Borrower shall notify the Administrative Agent of any optional prepayment pursuant to Section 2.11(a)(i) or mandatory prepayment pursuant to Section 2.11(c) in writing by electronic mail or overnight courier of any prepayment hereunder (i) in the case of voluntary prepayment of a Term Benchmark Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment, (ii) in the case of voluntary prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one (1) Business Day before the date of prepayment or (iii) in the case of a mandatory prepayment, not later than 2:00 p.m., New York City time, three (3) Business Days prior to the date of such prepayment (or, in each case, such later date or date which the Administrative Agent may agree to in its sole discretion). Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or the occurrence of some other identifiable event or condition, in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13, and shall be without premium or penalty. At the Borrower’s election in connection with any prepayment pursuant to this Section 2.11, such prepayment shall not be applied to any Term Loan of a Defaulting Lender (under any of subclauses (a), (b) or (c) of the definition of “Defaulting Lender”) and shall be allocated ratably among the relevant non-Defaulting Lenders.
(g) Notwithstanding any other provisions of Section 2.11(c), (A) to the extent that any of or all the Net Proceeds of any Prepayment Event set forth in clause (a)(III) of the definition thereof by a Foreign Subsidiary giving rise to a prepayment pursuant to Section 2.11(c) (a “Foreign Prepayment Event”) are prohibited by, would violate or conflict with, or be delayed by, applicable local law from being repatriated to the Borrower, the portion of such Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary so long, but only so long, as the Lead Borrower determined in good faith that the applicable local law will not permit repatriation to the Borrower and once the Lead Borrower has determined in good faith that such repatriation of any of such affected Net Proceeds is permitted under the applicable local law, such repatriation will be effected as soon as practicable and such repatriated Net Proceeds will be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c), (B) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any or all of the Net Proceeds of any Foreign Prepayment Event would have a material adverse tax or cost consequence with respect to such Net Proceeds, the Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary; provided that if the Lead Borrower determines in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event so affected would no longer have a material adverse tax consequence with respect to such Net Proceeds, such Net Proceeds shall be applied (net of additional taxes payable or reserved against as a result thereof) to the repayment of the Term Loans pursuant to Section 2.11(c), and (C) to the extent that and for so long as the Lead Borrower has determined in good faith that repatriation of any of or all the Net Proceeds of any Foreign Prepayment Event would conflict with the fiduciary duties of a Subsidiary’s directors, or result in, or could reasonably be expected to result in, a material risk of personal or criminal liability for any officer, director, employee, manager, member or management or consultant of such Subsidiary, the Net Proceeds so affected will not be required to be applied to repay Term Loans at the times provided in Section 2.11(c) and such amounts may be retained by such Subsidiary.
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(h) Notwithstanding anything to the contrary herein, until the Discharge of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) has occurred, the Borrower shall only be required to make mandatory prepayments pursuant to Section 2.11(c) by applying any such amounts that are otherwise (i.e., in the absence of this clause (h)) required to be used to make a mandatory prepayment pursuant to Section 2.11(c) and that are declined or waived by the holders of the First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) (provided, for avoidance of doubt, if the applicable First Lien Loan Documents (as defined in the First Lien/Second Lien Intercreditor Agreement) provide that mandatory payments that are declined or waived by certain holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement) thereunder shall be offered to any other holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor Agreement), such payments shall not be considered declined or waived for purposes of this clause (h) until such payments shall have been declined or waived by all applicable holders of First Lien Obligations (as defined in the First Lien/Second Lien Intercreditor)) as a mandatory repayment of Loans, and such mandatory repayment shall be made in accordance with the requirements of this Section 2.11 within five (5) Business Days after the applicable deadline for the holders of such First Lien Obligations to decline or waive such payment.
SECTION 2.12 Fees.
(a) [Reserved].
(b) The Loans shall be issued at a price equal to 98.875%.
(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees in respect of the Term Facility payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent in the Administrative Agent Fee Letter.
(d) Notwithstanding the foregoing, and subject to Section 2.22, the Borrower shall not be obligated to pay any amounts to any Defaulting Lender pursuant to this Section 2.12.
SECTION 2.13 Interest.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Term Benchmark Borrowing shall bear interest at the Adjusted Term SOFR Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if upon the occurrence and during the continuance of any Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 any principal of or interest on any Loan or any fee or other amount payable by any Loan Party under a Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, all overdue principal amounts of the Loans shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of the principal of any Loan, 2.00% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.13 or (ii) in the case of any other amount, 2.00% per annum plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.13; provided that no amount shall be payable pursuant to this Section 2.13(c) to a Defaulting Lender so long as such Lender shall be a Defaulting Lender; provided, further that no amounts shall accrue pursuant to this Section 2.13(c) on any overdue amount or other amount payable to a Defaulting Lender so long as such Lender shall be a Defaulting Lender.
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(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan, provided that (i) interest accrued pursuant to paragraph (c) of this Section 2.13 shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Term Benchmark Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(e) Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR hereunder shall be computed on the basis of a year of 360 days. Interest computed by reference to the Alternate Base Rate at a time when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). In each case, interest hereunder shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate or Adjusted Term SOFR Rate, Term SOFR Rate, Adjusted Daily Simple SOFR Rate or Daily Simple SOFR shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.14 Benchmark Unavailability; Benchmark Replacement Setting.
(a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.14, if:
(1) the Administrative Agent or the Required Lenders determine (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR Rate or Daily Simple SOFR; or
(2) the Administrative Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period or (B) at any time, the Adjusted Daily Simple SOFR Rate will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;
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then the Administrative Agent shall give notice thereof to the Lead Borrower and the Lenders in writing by telecopy, electronic mail, facsimile or overnight courier as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.07 or a new Borrowing Request in accordance with the terms of Section 2.03, any Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for an ABR Borrowing if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(1) or (2) above; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.14(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan, then until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.07 or a new Borrowing Request in accordance with the terms of Section 2.03, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, an ABR Loan if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(1) or (2) above, on such day.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document (and any Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 2.14), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document.
(c) In connection with the implementation of a Benchmark Replacement, the Required Lenders (in consultation with the Lead Borrower) will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, without the Administrative Agent’s express written consent, the Administrative Agent shall not be bound to follow or agree to any Benchmark Replacement Conforming Changes that would (i) increase or materially change or affect the duties, obligations or liabilities of the Administrative Agent (including without limitation the imposition or expansion of discretionary authority), or reduce, eliminate, limit or otherwise change any right, privilege or protection of the Administrative Agent, in each case, in a manner that would be materially adverse to the interests of the Administrative Agent, or (ii) otherwise materially and adversely affect the Administrative Agent, in each case of clauses (i) and (ii) hereof, as determined by the Administrative Agent in its reasonable judgment.
(d) The Required Lenders will promptly notify, in writing, the Lead Borrower and the Administrative Agent of any occurrence of a Benchmark Transition Event and the applicable Benchmark Replacement and Benchmark Replacement Date with respect thereto, and upon receipt of such notice, the Administrative Agent will promptly (and in any event within one (1) Business Day) notify the Lenders of such Benchmark Transition Event and its related Benchmark Replacement and Benchmark Replacement Date. Promptly (and in any event within one (1) Business Day) upon receipt of notice thereof from the Required Lenders, the Administrative Agent will notify the Lenders of, as applicable, (i) the effectiveness of any Benchmark Replacement Conforming Changes, (ii) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (iii) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lenders (or any group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14. In the event that the applicable Benchmark is not available on any determination date, then unless the Administrative Agent is notified, in writing, of a replacement Benchmark in accordance with the provisions of this Agreement within two (2) Business Days, the Administrative Agent shall use the interest rate in effect for the immediately prior Interest Period.
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(e) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Required Lenders may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Required Lenders may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor, and the Required Lenders shall promptly notify the Administrative Agent and the Lead Borrower of any such modification. In the event that the applicable Benchmark is not available on any determination date, then unless the Administrative Agent is notified of a replacement Benchmark in accordance with the provisions of this Agreement within two (2) Business Days, the Administrative Agent shall use the interest rate in effect for the immediately prior Interest Period.
(f) Upon the Lead Borrower’s receipt of notice from the Required Lenders of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to an ABR Borrowing if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.14, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, an ABR Loan if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event, on such day.
SECTION 2.15 Increased Costs.
(a) 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 by, any Lender (except any such reserve requirement reflected in the Adjusted Term SOFR Rate);
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(ii) subject the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document to any Taxes (other than Indemnified Taxes, Other Taxes or Excluded Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Term Benchmark Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Term Benchmark Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender (whether of principal, interest or otherwise), then, from time to time upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased costs actually incurred or reduction actually suffered; provided that the Borrower shall not be liable for such compensation if, in the case of requests for reimbursement under clause (ii) above resulting from a market disruption, (A) the relevant circumstances are not generally affecting the banking market or (B) the applicable request has not been made by the Majority in Interest of Term Lenders with respect to Term Loans; provided, further, that to the extent any such costs or reductions are incurred by any Lender as a result of any requests, rules, guidelines or directives enacted or promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Basel III, then such Lender shall be compensated pursuant to this Section 2.15(a) only to the extent such Lender is imposing such charges on similarly situated borrowers where the terms of other syndicated credit facilities permit it to impose such charges.
(b) If any Lender determines that any Change in Law regarding capital requirements has the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then, from time to time upon request of such Lender, the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction actually suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company in reasonable detail, as the case may be, as specified in paragraph (a) or (b) of this Section 2.15 delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 2.15 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 2.15 for any increased costs incurred or reductions suffered more than one hundred and eighty (180) days prior to the date that such Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
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SECTION 2.16 Break Funding Payments.
In the event of (a) the payment of any principal of any Term Benchmark Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Term Benchmark Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and is revoked in accordance therewith) or (d) the assignment of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(c), then, in any such event, the Borrower shall, after receipt of a written request by any Lender affected by any such event (which request shall set forth in reasonable detail the basis for requesting such amount), compensate each Lender for the loss, cost and expense (excluding loss of profit) actually incurred by it as a result of such event. Such loss, cost or expense shall in no event exceed that which would have been incurred by such Lender had it funded each Term Benchmark Loan made by it at the Adjusted Term SOFR Rate for such Loan by a matching deposit or other borrowing in the applicable interbank market for a comparable amount and for a comparable period, whether or not such Term Benchmark Loan was in fact so funded. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 and the reasons therefor delivered to the Borrower shall be prima facie evidence of such amounts. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen (15) days after receipt of such demand. Notwithstanding the foregoing, this Section 2.16 will not apply to losses, costs or expenses resulting from Taxes, as to which Section 2.17 shall govern. Notwithstanding the foregoing, no Lender shall demand compensation pursuant to this Section 2.16 if it shall not at the time be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements.
SECTION 2.17 Taxes.
(a) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made free and clear of and without deduction for any Taxes, except as required by applicable Requirements of Law. If the applicable withholding agent shall be required by applicable Requirements of Law (as determined in the good faith discretion of the applicable withholding agent) to deduct any Taxes from such payments, then the applicable withholding agent shall make such deductions and shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law, and if such Taxes are Indemnified Taxes, then the amount payable by the applicable Loan Party shall be increased as necessary so that after all such required deductions have been made (including such deductions applicable to additional amounts payable under this Section 2.17), each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made.
(b) The Borrower shall timely pay to the relevant Governmental Authority in accordance with Requirements of Law or, at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c) The Borrower, jointly and severally, shall indemnify the Administrative Agent and each Lender within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Administrative Agent or such Lender as the case may be, on or with respect to any payment by or on account of any obligation of any Loan Party under any Loan Document, as the case may be (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.17) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
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(d) As soon as practicable after any payment of any Taxes by a Loan Party to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any properly completed and executed documentation prescribed by any Requirement of Law, or reasonably requested by Borrower or the Administrative Agent, certifying as to any entitlement of such Lender to an exemption from, or reduction in, any withholding Tax with respect to any payments to be made to such Lender under the Loan Documents. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation expired, obsolete or inaccurate in any respect (including any specific documentation required below in this Section 2.17(e)), deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent in writing of its legal ineligibility to do so. Unless the applicable withholding agent has received forms or other documents satisfactory to it indicating that payments under any Loan Document to or for a Lender are not subject to withholding tax or are subject to Tax at a rate reduced by an applicable tax treaty, Borrower, Administrative Agent or other applicable withholding agent shall withhold amounts required to be withheld by applicable law from such payments at the applicable statutory rate.
Without limiting the generality of the foregoing:
(i) Each Lender that is a United States person (as defined in Section 7701(a)(30) of the Code) shall deliver to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) two properly completed and duly signed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax.
(ii) Each Lender that is not a United States person (as defined in Section 7701(a)(30) of the Code) (such Lender, a “Foreign Lender”) shall deliver (to the extent it is legally entitled to do so) to Borrower and the Administrative Agent on or before the date on which it becomes a party to this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Administrative Agent) whichever of the following is applicable:
(A) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty,
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(B) two properly completed and duly signed copies of Internal Revenue Service Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) two properly completed and duly signed certificates, substantially in the form of Exhibit Q-1, Q-2, Q-3 or Q-4, as applicable, to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of such Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to such Borrower as described in Section 881(c)(3)(C) of the Code (any such certificate a “United States Tax Compliance Certificate”), and (y) two properly completed and duly signed copies of Internal Revenue Service Form W-8BEN or W-8BEN-E, as applicable (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Lender is a partnership or a participating Lender), two properly completed and duly signed copies of Internal Revenue Service Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY (or other successor forms) or any other required information from each beneficial owner, as applicable (provided that, if the Lender is a partnership and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Lender on behalf of such direct or indirect partner(s)), or
(E) any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit Borrower and the Administrative Agent to determine the withholding or deduction required to be made.
(iii) If a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine whether such Lender has or has not complied with such Lender’s obligations under FATCA and to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(f) If the Administrative Agent or a Lender determines, in its sole discretion exercised in good faith, that it has received a refund of Taxes as to which it has been indemnified pursuant to this Section 2.17 or with respect to which additional amounts have been paid pursuant to this Section 2.17, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Administrative Agent or such Lender, agrees promptly to repay the amount paid over to the Borrower pursuant to this Section 2.17(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. The Administrative Agent or such Lender, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant taxing authority (provided that the Administrative Agent or such Lender may delete any information therein that the Administrative Agent or such Lender deems confidential). Notwithstanding anything to the contrary in this Section 2.17(f), in no event will the Administrative Agent or any Lender be required to pay any amount to the Borrowers pursuant to this Section 2.17(f) the payment of which would place the Administrative Agent or such Lender in a less favorable net after-Tax position than the Administrative Agent or such Lender would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. Notwithstanding anything to the contrary, this Section 2.17(f) shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to Taxes which it deems confidential) to any Loan Party or any other person.
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(g) The agreements in this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(h) For purposes of this Section 2.17, the term “applicable Requirements of Law” includes FATCA.
(i) Each Lender shall severally indemnify the Administrative Agent, within thirty (30) days after written demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting any obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Lenders by the Administrative Agent, shall be conclusive absent manifest error.
SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest or fees, or of amounts payable under Sections 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without condition or deduction for any counterclaim, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as may be specified by the Administrative Agent, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day. If any payment on a Term Benchmark Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. In the case of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate for the period of such extension. All payments or prepayments of any Loan shall be made in dollars, all payments of accrued interest payable on a Loan shall be made in dollars, and all other payments under each Loan Document shall be made in dollars.
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(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Term Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Term Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Term Loans to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Term Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest and (ii) the provisions of this paragraph shall not be construed to apply to (A) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (B) any disproportionate payment obtained by a Lender of any Class as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or any increase in the Applicable Rate in respect of Loans of Lenders that have consented to any such extension. The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) [Intentionally Omitted].
(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(a) or Section 2.06(b), Section 2.18(d) or Section 9.03(c), then the Administrative Agent may, in its discretion and in the order determined by the Administrative Agent (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and to be applied to, any future funding obligations of such Lender under any such Section.
SECTION 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or any event gives rise to the operation of Section 2.23, then such Lender shall (at the request of the Lead Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder affected by such event, or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17 or mitigate the applicability of Section 2.23, as the case may be, and (ii) would not subject such Lender to any unreimbursed cost or expense reasonably deemed by such Lender to be material and would not be inconsistent with the internal policies of, or otherwise be disadvantageous in any material economic, legal or regulatory respect to, such Lender.
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(b) If (i) any Lender requests compensation under Section 2.15 or gives notice under Section 2.23, (ii) the Borrower is required to pay any additional amount to any Lender or to any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender is a Defaulting Lender, then the Lead Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment and delegation); provided that (A) the Lead Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consents, in each case, shall not unreasonably be withheld or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued but unpaid interest thereon, accrued but unpaid fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts), (C) the Borrower or such assignee shall have paid (unless waived) to the Administrative Agent the processing and recordation fee specified in Section 9.04(b)(ii) and (D) in the case of any such assignment resulting from a claim for compensation under Section 2.15, or payments required to be made pursuant to Section 2.17 or a notice given under Section 2.23, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise (including as a result of any action taken by such Lender under paragraph (a) above), the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Lead Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.
SECTION 2.20 [Reserved].
SECTION 2.21 Refinancing Amendments.
(a) At any time after the Effective Date, the Borrower may obtain, from any Lender or any Additional Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Term Loans then outstanding under this Agreement (which for purposes of this clause (a) will be deemed to include any then outstanding Other Term Loans), in the form of Other Term Loans or Other Term Commitments; provided that the Net Proceeds of such Credit Agreement Refinancing Indebtedness shall be applied, substantially concurrently with the incurrence thereof, to the prepayment (or reduction) of outstanding Indebtedness being so refinanced, as the case may be, and accompanied by any prepayment premium payable thereon in accordance with the terms hereof. Each Class of Credit Agreement Refinancing Indebtedness incurred under this Section 2.21 shall be in an aggregate principal amount that is (x) not less than $5,000,000 in the case of Other Term Loans and (y) an integral multiple of $1,000,000 in excess thereof (in each case unless the Borrower and the Administrative Agent otherwise agree). The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Refinancing Amendment. Each of the parties hereto hereby agrees that, upon the effectiveness of any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Credit Agreement Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat the Loans and Commitments subject thereto as Other Term Loans). Any Refinancing Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Lead Borrower, to effect the provisions of this Section.
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(b) This Section 2.21 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
SECTION 2.22 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 9.02.
(ii) Reallocation of Payments. Subject to the last sentence of Section 2.11(f), any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 9.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Loan Party as a result of any judgment of a court of competent jurisdiction obtained by any Loan Party against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans and such Lender is a Defaulting Lender under clause (a) of the definition thereof, such payment shall be applied solely to pay the relevant Loans of the relevant non-Defaulting Lenders on a pro rata basis prior to being applied pursuant to Section 2.05(j) or this Section 2.22(a)(ii). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 2.05(j) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), such Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided further that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
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SECTION 2.23 Illegality.
If any Lender determines that any law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender to make, maintain or fund Loans whose interest is determined by reference to the Adjusted Term SOFR Rate, or to determine or charge interest rates based upon the Adjusted Term SOFR Rate, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Term Benchmark Loans denominated in dollars or to convert ABR Loans denominated in dollars to Term Benchmark Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate, the interest rate on such ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon three (3) Business Days’ notice from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Term Benchmark Loans denominated in dollars of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR Rate component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term Benchmark Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Term Benchmark Loans, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Adjusted Term SOFR Rate, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Adjusted Term SOFR Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted Term SOFR Rate. Each Lender agrees to notify the Administrative Agent and the Lead Borrower in writing promptly upon becoming aware that it is no longer illegal for such Lender to determine or charge interest rates based upon the Adjusted Term SOFR Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
SECTION 2.24 Loan Modification Offers.
(a) At any time after the Effective Date, the Lead Borrower may on one or more occasions, by written notice to the Administrative Agent, make one or more offers (each, a “Loan Modification Offer”) to all the Lenders of one or more Classes (each Class subject to such a Loan Modification Offer, an “Affected Class”) to effect one or more Permitted Amendments relating to such Affected Class pursuant to procedures reasonably specified by the Administrative Agent and reasonably acceptable to the Lead Borrower (including mechanics to permit cashless rollovers and exchanges by Lenders). Such notice shall set forth (i) the terms and conditions of the requested Permitted Amendment and (ii) the date on which such Permitted Amendment is requested to become effective. Permitted Amendments shall become effective only with respect to the Loans and Commitments of the Lenders of the Affected Class that accept the applicable Loan Modification Offer (such Lenders, the “Accepting Lenders”) and, in the case of any Accepting Lender, only with respect to such Lender’s Loans and Commitments of such Affected Class as to which such Lender’s acceptance has been made.
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(b) A Permitted Amendment shall be effected pursuant to a Loan Modification Agreement executed and delivered by the Lead Borrower, each applicable Accepting Lender and the Administrative Agent; provided that no Permitted Amendment shall become effective unless the Lead Borrower shall have delivered to the Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall be reasonably requested by the Administrative Agent in connection therewith. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Loan Modification Agreement. Each Loan Modification Agreement may, without the consent of any Lender other than the applicable Accepting Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of this Section 2.24, including any amendments necessary to treat the applicable Loans and/or Commitments of the Accepting Lenders as a new “Class” of loans and/or commitments hereunder.
(c) If, in connection with any proposed Loan Modification Offer, any Lender declines to consent to such Loan Modification Offer on the terms and by the deadline set forth in such Loan Modification Offer (each such Lender, a “Non-Accepting Lender”) then after receipt of consents from Lenders constituting the Required Lenders hereunder, the Lead Borrower may, on notice to the Administrative Agent and the Non-Accepting Lender, (i) replace such Non-Accepting Lender in whole or in part by causing such Lender to (and such Lender shall be obligated to) assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.04) all or any part of its interests, rights and obligations under this Agreement in respect of the Loans and Commitments of the Affected Class to one or more Eligible Assignees (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that neither the Administrative Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender; provided, further, that (a) the applicable assignee shall have agreed to provide Loans and/or Commitments on the terms set forth in the applicable Permitted Amendment, (b) such Non-Accepting Lender shall have received payment of an amount equal to the outstanding principal of the Loans of the Affected Class assigned by it pursuant to this Section 2.24(c), accrued interest thereon, accrued fees and all other amounts (including any amounts under Section 2.11(a)(i)) payable to it hereunder from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
(d) Notwithstanding anything to the contrary, this Section 2.24 shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders and each Agent that:
SECTION 3.01 Organization; Powers.
Each of the Borrower and its Subsidiaries (a) is duly organized or incorporated, validly existing and in good standing (to the extent such concept exists in the relevant jurisdictions) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other organizational power and authority to carry on its business as now conducted and to execute, deliver and perform its obligations under each Loan Document to which it is a party and (c) is qualified to do business in, and is in good standing (to the extent such concept exists in the relevant jurisdictions) in, every jurisdiction where such qualification is required, except, with respect to clause (a) above (other than with respect to the Borrower), clause (b) above (other than with respect to the Borrower) and clause (c) above, where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
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SECTION 3.02 Authorization; Enforceability.
This Agreement has been duly authorized, executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party, as the case may be, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law, (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in any legal opinion delivered to an Agent in connection with any Loan Document (together, the “Legal Reservations”) and (iv) the Perfection Requirements.
SECTION 3.03 Governmental Approvals; No Conflicts.
Except as set forth in Schedule 3.03 and subject to the Legal Reservations and the Perfection Requirements, the execution, delivery and performance by any Loan Party of this Agreement or any other Loan Document (a) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate (i) the Organizational Documents of the Borrower or any other Loan Party, or (ii) any Requirements of Law applicable to the Borrower or any other Loan Party, (c) will not violate or result in a default under any indenture or other agreement or instrument binding upon the Borrower or any Subsidiary or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by the Borrower or any Subsidiary, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary, except Liens created under the Loan Documents or permitted by Section 6.02, except (in the case of each of clauses (a), (b)(ii), (c) and (d)) to the extent that the failure to obtain or make such consent, approval, registration, filing or action, or such violation, default or right, or imposition of Lien, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.04 Financial Condition; 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, including the notes thereto and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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, including the notes thereto.
(b) The Unaudited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all material respects the financial condition of the Persons covered thereby as of the respective dates 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.
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(c) The Borrower has heretofore furnished to the Lenders the consolidated pro forma balance sheet of the Lead Borrower and its Subsidiaries as of and for the period of twelve fiscal months of the Lead Borrower ended on or about September 30, 2021 (the “Pro Forma Financial Statements”), which have been prepared in good faith, based on assumptions believed by the Lead Borrower to be reasonable as of the date of delivery thereof, and present fairly in all material respects on a pro forma basis the estimated financial position of the Lead Borrower and its Subsidiaries as at the fiscal quarter of the Lead Borrower ended on or about September 30, 2021, assuming that the Transactions had actually occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such statement of operations).
(d) Since the Effective Date, there has been no Material Adverse Effect.
SECTION 3.05 Properties.
Each of the Borrower and its Subsidiaries has good title to, or valid interests in, all its real and personal property material to its business, if any (i) free and clear of all Liens except for Liens permitted by Section 6.02 and (ii) except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.06 Litigation and Environmental Matters.
(a) Except as set forth in Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened in writing against or affecting the Borrower or any of its Subsidiaries that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
(b) Except as set forth in Schedule 3.06, and except with respect to any other matters that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, none of the Borrower or any of its Subsidiaries (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, to the knowledge of the Borrower, become subject to any Environmental Liability, (iii) has received written notice of any claim with respect to any Environmental Liability or (iv) has, to the knowledge of the Borrower, any basis to reasonably expect that the Borrower or any of its Subsidiaries will become subject to any Environmental Liability.
SECTION 3.07 Compliance with Laws.
Each of the Borrower and its Subsidiaries is in compliance with all Requirements of Law applicable to it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.08 Investment Company Status.
None of the Loan Parties is required to register as an “investment company” under the Investment Company Act of 1940, as amended from time to time.
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SECTION 3.09 Taxes.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Borrower and each Subsidiary (a) have timely filed or caused to be filed all Tax returns and reports required to have been filed and (b) have paid or caused to be paid all Taxes levied or imposed on their properties, income or assets otherwise due and payable (whether or not shown on a Tax return), except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP. There is no proposed Tax assessment, deficiency or other claim against the Borrower or any Subsidiary that would reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 ERISA; Labor Matters.
(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.
(b) Except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) no ERISA Event has occurred during the six year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur, and (ii) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(c) Except as would not reasonably be expected, individually or in the aggregate to result in a Material Adverse Effect, (i) each employee benefit plan (as defined in Section 3(2) of ERISA) that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service; (ii) to the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status; and (iii) there are no pending or, to the knowledge of the Borrower, threatened in writing claims, actions or lawsuits, or action by any Governmental Authority, with respect to any such plan.
(d) Except as would not reasonably be expected to have a Material Adverse Effect, (i) none of the Borrower or its Subsidiaries has experienced any labor strike or work stoppage or other collective labor dispute by employees due to labor disagreements and (ii) each of the Borrower and its Subsidiaries is in compliance in all respects with any collective bargaining agreement to which it is a party.
SECTION 3.11 Disclosure.
(a) As of the Effective Date, the written reports, financial statements, certificates or other written factual information (other than projections and information of a general economic or industry specific nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered thereunder (as modified or supplemented by other information so furnished), when taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial information, the Borrower represents only that such information, when taken as a whole, was prepared in good faith based upon assumptions believed by it to be reasonable at the time delivered, it being understood that (i) any such projected financial information is merely a prediction as to future events and is not to be viewed as fact, (ii) such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower or any of its Subsidiaries and (iii) no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ significantly from the projected results and such differences may be material.
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(b) As of the Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification (if any) provided pursuant to Section 4.01(l) is true and correct in all respects.
SECTION 3.12 Subsidiaries.
As of the Effective Date, Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and each of its subsidiaries in, each subsidiary of the Lead Borrower.
SECTION 3.13 Intellectual Property; Licenses, Etc.
Except as would not reasonably be expected to have a Material Adverse Effect, to the knowledge of the Borrower, each of the Borrower and its Subsidiaries owns, licenses or possesses the right to use all Intellectual Property and Badcock Intellectual Property that is reasonably necessary for the operation of its business substantially as currently conducted. To the knowledge of the Borrower, no Intellectual Property or Badcock Intellectual Property owned by the Borrower or any Subsidiary and used in the operation of its business as currently conducted infringes upon the Intellectual Property or Badcock Intellectual Property of any Person except for such infringements that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No claim or litigation regarding any of the Intellectual Property or the Badcock Intellectual Property is pending or, to the knowledge of the Borrower, threatened in writing against the Borrower or any Subsidiary, which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.14 Solvency.
Immediately after the consummation of each of the Transactions that occurred on the Effective Date (including the execution and delivery of this Agreement, the making of the Loans and the use of proceeds of such Loans on the date hereof), the Lead Borrower and its Subsidiaries, on a consolidated basis, are Solvent.
SECTION 3.15 Federal Reserve Regulations.
None of the Borrower or any of its Subsidiaries is engaged or will engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors), or extending credit for the purpose of purchasing or carrying margin stock. No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry any margin stock or to refinance any Indebtedness originally incurred for such purpose, or for any other purpose that entails a violation (including on the part of any Lender) of the provisions of Regulations U or X of the Board of Governors.
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SECTION 3.16 Use of Proceeds.
The Borrower will use the proceeds of the Initial Term Loans made on the Effective Date to directly or indirectly finance the Transactions and to fund any original issue discount or upfront fees payable in connection therewith.
SECTION 3.17 Anti-Corruption Laws and Sanctions.
(a) The Borrower and each of its Subsidiaries will not, directly or to their knowledge indirectly, use the proceeds of the Loans to fund any activity or business with any Person, or in any country or territory that, at the time of such funding, is the subject of Sanctions, or in violation of any Anti-Corruption Laws, the USA PATRIOT Act, any sanctions administered by the Office of Foreign Assets Control of the U.S. Department of Treasury and any successor Governmental Authority, or other applicable anti-money laundering or anti-terrorism laws.
(b) The Borrower and its Subsidiaries and, to the knowledge of the Borrower, the officers, directors, employees and agents of the Borrower and its Subsidiaries are in compliance in all material respects with applicable Anti-Corruption Laws and applicable Sanctions, the USA PATRIOT Act, and other applicable anti-money laundering and anti-terrorism laws.
(c) (i) None of the Borrower or its Subsidiaries and (ii) to the knowledge of the Borrower or its Subsidiaries, none of their respective directors, officers, employees and agents that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.
(d) The Borrower has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance in all material respects by the Borrower and its Subsidiaries with applicable Anti-Corruption Laws and applicable Sanctions.
SECTION 3.18 Security Documents.
Subject to Section 5.14, the Legal Reservations and the Perfection Requirements, (a) the Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding and enforceable security interest in the Collateral described therein and proceeds and products thereof and (b) the Badcock Security Documents are effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid, binding and enforceable security interest in the Badcock Collateral described therein and proceeds and products thereof. In the case of (i) Pledged Equity Interests and Badcock Pledged Equity Interests represented by certificates, (x) if and when such certificates are delivered to the Collateral Agent or (y) when financing statements in appropriate form are filed in the appropriate filing offices, (ii) the other Collateral described in the Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Collateral Agreement have been completed and (iii) the other Badcock Collateral described in the Badcock Collateral Agreement, which can be perfected by filing a financing statement, when financing statements in appropriate form are filed in the appropriate filing offices and such other filings as are required in the Badcock Collateral Agreement have been completed, the Lien created by the Collateral Agreement or the Badcock Collateral Agreement, as applicable, shall constitute, to the extent such perfection is required by the Collateral Agreement or the Badcock Collateral Agreement, as applicable, a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral or the Badcock Collateral, as applicable, and the proceeds and products thereof, as security for the Secured Obligations.
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SECTION 3.19 Insurance.
The Borrower and each of its Subsidiaries maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) were financially sound and responsible at the time the relevant coverage was last placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business.
SECTION 3.20 Franchise Agreements.
(a) Schedule 3.20 sets forth a complete and accurate list as of the Effective Date of all Franchise Agreements to which any Loan Party or any of their Subsidiaries is a party.
(b) Except as set forth on Schedule 3.20, as of the Effective Date, to the knowledge of the Loan Parties, none of the Franchise Agreements contains any grant of exclusive rights to a territory designated therein which conflicts, or potentially conflicts, with any grant of exclusive rights to a territory granted under any other Franchise Agreement. Except as set forth in Schedule 3.20, as of the Effective Date, no current franchisee under a Franchise Agreement has given written notice to a Loan Party’s management during the six (6) month period before the Effective Date of its intention to rescind or terminate (with or without cause) any Franchise Agreement.
(c) Except as could not reasonably be expected to have a Material Adverse Effect, (i) each Loan Party has prepared and maintained each of its Franchise Disclosure Documents, in an accurate and correct manner, (ii) each Loan Party has filed all required Franchise Disclosure Documents required by law in all states and jurisdictions requiring registration and approval prior to any offers or sales of franchises in such states, and (iii) each Loan Party has filed all material changes, amendments, renewals thereto on a timely and accurate basis as required under, and required by applicable Requirements of Law. Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party’s Franchise Disclosure Documents were prepared in compliance with applicable Franchise Laws and disclosure guidelines, and there were no misrepresentations or omissions of information in any Franchise Disclosure Documents at the time such Loan Party was using such Franchise Disclosure Documents. Each Franchise Agreement complies, and the offer and sale of such Franchise Agreement complied, in each case at the time such offer and sale was made, with all Franchise Laws, except to the extent of any non-compliance therewith which could not reasonably be expected to have a Material Adverse Effect.
ARTICLE IV
Conditions
SECTION 4.01 Effective Date.
The obligation of each Lender to make Loans hereunder on the Effective Date shall be subject to satisfaction of the following conditions (or waiver thereof in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) and the Lenders shall have received from each party hereto a counterpart of this Agreement signed on behalf of such party (which may include facsimile or other electronic transmission of a signed counterpart of this Agreement).
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(b) The Administrative Agent and the Lenders shall have received a customary written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Willkie Farr & Gallagher LLP, special counsel to the Loan Parties, and such local counsel as may be reasonably requested by the Required Lenders in the jurisdictions of organization of any Loan Party, each in form and substance reasonably satisfactory to the Required Lenders. The Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent and the Lenders shall have received (i) a certificate of each Loan Party, dated the Effective Date, with appropriate insertions, or otherwise in form and substance reasonably satisfactory to the Required Lenders, executed by any Responsible Officer of such Loan Party, and including or attaching the documents referred to in paragraph (d) of this Section 4.01, and (ii) a certificate of the Lead Borrower, dated the Effective Date, substantially in the form of Exhibit H, executed by any Responsible Officer of the Lead Borrower.
(d) The Administrative Agent and the Lenders shall have received a copy of (i) each Organizational Document of each Loan Party certified, to the extent applicable, as of a recent date by the applicable Governmental Authority, (ii) with respect to each Loan Party executing the Loan Documents, an incumbency certificate identifying the name and title and bearing the signatures of the authorized signatories of such Loan Party, (iii) copies of resolutions of the Board of Directors of each Loan Party approving and authorizing the execution, delivery and performance of Loan Documents to which it is a party, certified as of the Effective Date by its secretary, an assistant secretary or a Responsible Officer as being in full force and effect without modification or amendment and (iv) a good standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation.
(e) (i) The Administrative Agent shall have received all fees required to be paid on the Effective Date pursuant to the Administrative Agent Fee Letter and reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees and expenses of a single counsel to the Administrative Agent) required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least two (2) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower) and (ii) the Lenders (or their Affiliates) shall have received all reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket fees and expenses of a single counsel to the Lenders) required to be paid on the Effective Date, to the extent invoiced (in the case of expenses) at least two (2) Business Days prior to the Effective Date (except as otherwise agreed to by the Lead Borrower); provided, that any or all such amounts referred to in this clause (e) may, at the option of the Lead Borrower, be offset against the proceeds of the initial Loans made hereunder.
(f) The Collateral and Guarantee Requirement (other than in accordance with Section 5.14) and the Badcock Collateral and Guarantee Requirement (other than in accordance with Section 5.14) shall have been satisfied and the Administrative Agent and the Lenders shall have received a completed Perfection Certificate dated the Effective Date and signed by a Responsible Officer of the Borrower, together with all attachments contemplated thereby. Notwithstanding the foregoing, no Collateral or Badcock Collateral shall be subject to any other pledges, security interest or mortgages, except for the Liens permitted under this Agreement.
(g) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the Effective Date; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
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(h) The Lenders shall have received the Audited Financial Statements, the Unaudited Financial Statements and the Pro Forma Financial Statements.
(i) No Default or Event of Default shall have occurred and be continuing or would result from the initial Borrowing hereunder.
(j) The Acquisition shall have been consummated, or substantially simultaneously with the borrowing of the Initial Term Loans on the Effective Date, shall be consummated, in all material respects in accordance with the terms of the Acquisition Agreement.
(k) The Administrative Agent and the Lenders shall have received (i) a certificate from the chief financial officer or equivalent Responsible Officer of the Lead Borrower certifying as to the solvency (as of the Effective Date) of the Lead Borrower and its Subsidiaries on a consolidated basis after giving effect to the Transactions, in substantially the form attached hereto as Exhibit G and (ii) certificates with respect to insurance policies of the Loan Parties as required under Section 5.07, all in form and substance reasonably satisfactory to the Required Lenders.
(l) (i) The Administrative Agent shall have received at least three (3) Business Days before the Effective Date all documentation and other information about the Loan Parties that the Administrative Agent reasonably determines is required by United States regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the USA PATRIOT Act, including, without limitation, a duly executed W-9 tax form (or such other applicable IRS tax form) of Borrower and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Administrative Agent and each initial Lender that requests a Beneficial Ownership Certification will have received, at least three (3) Business Days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower, in each case of clauses (i) and (ii), to the extent that the Administrative Agent has reasonably requested such items in writing delivered to the Loan Parties at least ten (10) Business Days prior to the Effective Date.
(m) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof.
(n) The Administrative Agent (or its counsel) and the Lenders shall have received from each party thereto (i) a counterpart of the ABL Intercreditor Agreement signed on behalf of such party, (ii) a counterpart of the Badcock Intercreditor Agreement signed on behalf of such party and (iii) a counterpart of the First Lien/Second Lien Intercreditor Agreement signed on behalf of such party.
(o) The Administrative Agent shall have received from Borrower a counterpart of the Administrative Agent Fee Letter signed on behalf of such party.
SECTION 4.02 Each Credit Event after the Effective Date.
After the Effective Date, the obligation of each Lender to make a Loan on the occasion of any Borrowing, is subject to the satisfaction of the following conditions:
(a) In the case of any Borrowing, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects as of such earlier date; provided further that, any representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on the date of such credit extension or on such earlier date, as the case may be.
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(b) At the time of and immediately after giving effect to such Borrowing, no Default or Event of Default shall have occurred and be continuing.
(c) The Administrative Agent shall have received a fully executed and delivered Borrowing Request in accordance with the requirements hereof with respect to such Borrowing.
Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section 4.02) shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 4.02.
ARTICLE V
Affirmative Covenants
From and after the Effective Date and until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Loan Document shall have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01 Financial Statements and Other Information.
Borrower and its Subsidiaries will furnish to the Administrative Agent, on behalf of each Lender:
(a) (i) on or before the date that is 90 days after the end of each fiscal year of the Lead Borrower, commencing with the fiscal year of the Lead Borrower ended on or about December 31, 2021, the audited consolidated balance sheet and audited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such year, and related notes thereto, setting forth in each case, in comparative form the figures for the previous fiscal year, all reported on by BDO, Deloitte or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any material qualification or exception as to the scope of such audit (other than with respect to, or resulting from, (A) an upcoming maturity date of any indebtedness for borrowed money or (B) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money)) to the effect that such consolidated financial statements present fairly in all material respects the financial condition as of the end of and for such year and results of operations and cash flows of the Lead Borrower and such Subsidiaries on a consolidated basis in accordance with GAAP consistently applied and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year;
(b) (i) on or before the date that is 30 days after the end of each of the first three fiscal quarters of each fiscal year of the Lead Borrower, commencing with the first fiscal quarter of the Lead Borrower ended after the Effective Date, the unaudited consolidated balance sheet and unaudited consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows of the Lead Borrower and its Subsidiaries as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case, in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer as presenting fairly in all material respects the financial condition as of the end of and for such fiscal quarter and such portion of the fiscal year and results of operations and cash flows of the Lead Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal quarter;
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(c) [reserved];
(d) not later than ten (10) Business Days of any delivery of financial statements under paragraph (a) above, a reasonably detailed annual budget for the Borrower and its Subsidiaries on a consolidated basis, in a form customarily prepared by the Lead Borrower or otherwise as may be reasonably agreed between the Lead Borrower and the Required Lenders (it being agreed that such annual budget shall not be provided to Public Lenders);
(e) not later than five (5) days after any delivery of financial statements under paragraph (a) or (b) above, a certificate (a “Compliance Certificate”) of a Financial Officer in the form of Exhibit E hereof (i) certifying as to whether a Default then exists and, if a Default does then exist, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations, to the extent the Financial Maintenance Covenants are then required to be tested, demonstrating compliance with the Financial Maintenance Covenants;
(f) [reserved];
(g) [reserved];
(h) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and registration statements (other than amendments to any registration statement (to the extent such registration statement, in the form it became effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statement on Form S-8) filed by the Borrower or any Subsidiary with the SEC or with any national securities exchange; and
(i) promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent on its own behalf or on behalf of any Lender may reasonably request in writing.
Notwithstanding the foregoing, the obligations in paragraphs (a) and (b) of this Section 5.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing the Form 10-K or 10-Q (or the equivalent), as applicable, of the Borrower (or a parent company thereof) filed with the SEC within the applicable time periods required by applicable law and regulations; provided that such materials are accompanied by a report and opinion of BDO, Deloitte or any other independent registered public accounting firm of nationally recognized standing, 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 the scope of such audit (other than with respect to, or resulting solely from, (i) an upcoming maturity date of any indebtedness for borrowed money or (ii) any actual or potential breach or inability to satisfy a financial covenant under any indebtedness for borrowed money).
Documents required to be delivered pursuant to Section 5.01(a), (b) or (h) (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 9.01 (or otherwise notified pursuant to Section 9.01(d)); or (ii) on which such documents are posted on the Lead Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery of or maintain paper copies of the documents referred to above, and each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
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Notwithstanding anything to the contrary herein, neither the Borrower nor any Subsidiary shall be required to deliver, disclose, permit the inspection, examination or making of copies of or excerpts from, or any discussion of, any document, information, or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent (or any Lender (or their respective representatives or contractors)) is prohibited by applicable law, (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product or (iv) with respect to which any Loan Party owes confidentiality obligations (to the extent not created in contemplation of such Loan Party’s obligations under this Section 5.01) to any third party.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Bookrunner may make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive Material Non-Public Information and who may be engaged in investment and other market-related activities with respect to the Borrower’s or its Affiliates’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Bookrunner and the Lenders to treat such Borrower Materials as not containing any Material Non-Public Information (although it may be sensitive and proprietary) (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 9.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information”; and (z) the Administrative Agent and the Bookrunner shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information”; provided that the Borrower’s failure to comply with this sentence shall not constitute a Default or an Event of Default under this Agreement or the Loan Documents. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials as “PUBLIC”. Each Loan Party hereby acknowledges and agrees that, unless the Borrower notifies the Administrative Agent in advance, all financial statements and certificates furnished pursuant to Sections 5.01(a), (b) and (e) above are hereby deemed to be suitable for distribution, and to be made available, to all Lenders and may be treated by the Administrative Agent and the Lenders as not containing any Material Non-Public Information.
SECTION 5.02 Notices of Material Events.
Promptly after any Responsible Officer of the Borrower or any Subsidiary obtains knowledge thereof, the Borrower or the applicable Subsidiary will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) written notice of the following:
(a) the occurrence of any Default or Event of Default (other than any Default resulting from any non-compliance with Section 5.01);
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(b) the occurrence of any ERISA Event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect;
(c) any litigation, or governmental investigation or proceeding pending against the Borrower or any of its Subsidiaries which, either individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect; and
(d) any other development or event that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
Each notice delivered under this Section 5.02 shall be accompanied by a written statement of a Responsible Officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
SECTION 5.03 Information Regarding Collateral.
(a) The Borrower will furnish to the Administrative Agent prompt (and in any event within thirty (30) days or such longer period as reasonably agreed to by the Administrative Agent) written notice of any change (i) in any Loan Party’s legal name (as set forth in its certificate of organization or incorporation or like document), (ii) in the jurisdiction of incorporation or organization of any Loan Party or in the form of its organization or (iii) in any Loan Party’s organizational identification number to the extent that such Loan Party is organized or owns Mortgaged Property or Badcock Mortgaged Property in a jurisdiction where an organizational identification number is required to be included in a UCC financing statement for such jurisdiction.
(b) Not later than five (5) Business Days after delivery of financial statements pursuant to Section 5.01(a), the Lead Borrower shall deliver to the Administrative Agent a certificate executed by a Responsible Officer of the Lead Borrower (i) setting forth any material changes to the information required pursuant to the Perfection Certificate or confirming that there has been no material change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section 5.03 and (ii) identifying any Wholly Owned Subsidiary that has become, or ceased to be, a Material Subsidiary or an Excluded Subsidiary during the most recently ended fiscal quarter of the Lead Borrower.
SECTION 5.04 Existence; Conduct of Business.
The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, Material Intellectual Property and Governmental Approvals used in the conduct of its business, except to the extent (other than with respect to the preservation of the existence of the Borrower) that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 or any Disposition permitted by Section 6.05.
SECTION 5.05 Payment of Taxes, etc.
The Borrower will, and will cause each of its Subsidiaries to, pay all Taxes (whether or not shown on a Tax return) imposed upon it or its income or properties or in respect of its property or assets, before the same shall become delinquent or in default, except where (a) the same are being contested in good faith by an appropriate proceeding diligently conducted by the Borrower or any of its Subsidiaries or (b) the failure to make payment would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.
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SECTION 5.06 Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries to, keep and maintain all tangible property material to the conduct of its business in good working order and condition (subject to casualty, condemnation and ordinary wear and tear), except where the failure to do so would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 5.07 Insurance.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Lead Borrower believes (in the good faith judgment of management of the Lead Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Lead Borrower believes (in the good faith judgment or the management of the Lead Borrower) are reasonable and prudent in light of the size and nature of its business, and will furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the insurance so carried. Each such general liability policy of insurance (other than directors and officers policies, workers compensation policies and business interruption insurance), to the extent covering Collateral or Badcock Collateral and to the extent that Collateral Agent can be granted an insurable interest therein, shall (i) in the case of each such general liability policy, name the Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each such casualty insurance policy, contain a loss payable clause or mortgagee endorsement that names the Collateral Agent, on behalf of the Lenders as the loss payee or mortgagee thereunder.
(b) If any portion of any Mortgaged Property or Badcock Mortgaged Property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), then the Borrower shall, or shall cause each Loan Party to (i) if required by the Flood Insurance Laws or other applicable law, maintain, or cause to be maintained, with insurance companies that the Lead Borrower believes (in the good faith judgment of the management of the Lead Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, flood insurance in an amount and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (ii) furnish to the Lenders, upon written request from the Collateral Agent, information presented in reasonable detail as to the flood insurance so carried.
SECTION 5.08 Books and Records; Inspection and Audit Rights.
(a) The Borrower will, and will cause each of its Subsidiaries to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP (or applicable local standards) consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or its Subsidiary, as the case may be. The Borrower will, and will cause each of its Subsidiaries that is a Loan Party to, permit any representatives designated by the Administrative Agent or any Lender, during normal business hours and upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that, excluding any such visits and inspections during the continuance of an Event of Default, only the Required Lenders (or any larger group of Lenders) acting jointly may exercise the visitation and inspection rights under this Section 5.08; provided, further, that the Lenders shall not exercise such rights more often than one time during any calendar year absent the existence of an Event of Default and such time shall be at the Borrower’s expense; provided, further that (a) when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice and (b) the Administrative Agent and the Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants.
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(b) The Lead Borrower will, within 30 days (or, after using commercially reasonable efforts to schedule such call at a later date agreed to by the Required Lenders at their sole discretion) after the date of the delivery (or, if later, required delivery) of the quarterly and annual financial information pursuant to Sections 5.01(a) and (b), hold a conference call or teleconference, at a time selected by the Lead Borrower and reasonably acceptable to the Required Lenders, with all of the Lenders that choose to participate, to review the financial results of the previous fiscal quarter or fiscal year of the Lead Borrower, as the case may be, of the Lead Borrower (it being understood that any such call may be combined with any similar call held for any of the Lead Borrower’s other lenders or security holders).
SECTION 5.09 Compliance with Laws.
(a) The Borrower will, and will cause each of its Subsidiaries to, comply with its Organizational Documents and all Requirements of Law (including ERISA, Environmental Laws, the USA PATRIOT Act, Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, the U.S. Foreign Corrupt Practices Act of 1977 and other anti-money laundering, anti-corruption, sanctions and anti-terrorism laws) with respect to it, its property and operations, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.
(b) The Borrower will not request any Borrowing, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing (i) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country except to the extent permissible for a Person required to comply with Sanctions, (ii) in any manner that would result in the violation of any Sanctions applicable to the Borrower and its Subsidiaries or to the knowledge of the Borrower, any other party hereto or (iii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any legislation.
SECTION 5.10 Use of Proceeds.
The Borrower will use the proceeds of the Loans for the purposes set forth in Section 3.16.
SECTION 5.11 Additional Subsidiaries.
(a) If (i) any additional Subsidiary is formed or acquired after the Effective Date (other than Badcock), (ii) any Subsidiary ceases to be an Excluded Subsidiary or (iii) the Borrower, at its option, elects to cause a Domestic Subsidiary, or to the extent reasonably acceptable to the Required Lenders, a Foreign Subsidiary that is not a Wholly Owned Subsidiary (including any consolidated Affiliate in which the Borrower and its Subsidiaries own no Equity Interest) to become a Subsidiary Loan Party, then, the Borrower will, within thirty (30) days (or such longer period as may be agreed to by the Required Lenders in their reasonable discretion) after such newly formed or acquired Subsidiary is formed or acquired or such Subsidiary ceases to be an Excluded Subsidiary or the Borrower has made such election, notify the Administrative Agent thereof, and will cause such Subsidiary (unless such Subsidiary is an Excluded Subsidiary) to satisfy the Collateral and Guarantee Requirement with respect to such Subsidiary and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party within thirty (30) days after such notice (or such longer period as the Required Lenders shall reasonably agree) and the Administrative Agent shall have received a completed Perfection Certificate (or supplement thereof) with respect to such Subsidiary signed by a Responsible Officer, together with all attachments contemplated thereby.
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(b) Within sixty (60) days (or, to the extent any new Material Subsidiary is organized or incorporated under the laws of a jurisdiction in which no existing Loan Party is organized or incorporated, within ninety (90) days) (or, in each case, such longer period as otherwise provided in this Agreement or as the Required Lenders may reasonably agree) after the Borrower identifies any new Material Subsidiary (other than Badcock) pursuant to Section 5.03(b), all actions (if any) required to be taken with respect to such Subsidiary in order to satisfy the Collateral and Guarantee Requirement shall have been taken with respect to such Subsidiary, to the extent not already satisfied pursuant to Section 5.11(a).
(c) Notwithstanding the foregoing, in the event any real property would be required to be mortgaged pursuant to this Section 5.11, the Borrower shall be required to comply with the “Collateral and Guarantee Requirement” as it relates to such real property within ninety (90) days, following the formation or acquisition of such real property or such Subsidiary or the identification of such new Material Subsidiary, or such longer time period as agreed by the Required Lenders in their reasonable discretion.
SECTION 5.12 Further Assurances.
(a) The Borrower will, and will cause each Loan Party to, 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, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law and that the Administrative Agent or the Required Lenders may reasonably request, in each case, to cause the “Collateral and Guarantee Requirement” (or the “Badcock Collateral and Guarantee Requirement” in the case of Badcock) to be and remain satisfied, all at the expense of the Loan Parties.
(b) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Material Real Property or improvements thereto or any interest therein, are acquired by the Borrower or any other Loan Party (other than Badcock) or are held by any Subsidiary on or after the time it becomes a Loan Party pursuant to Section 5.11 (other than assets constituting Collateral under a Security Document that become subject to the Lien created by such Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause the other Loan Parties to take, such actions as shall be necessary and reasonably requested by the Administrative Agent or the Required Lenders to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Collateral and Guarantee Requirement”. In the event any Material Real Property is mortgaged pursuant to this Section 5.12(b), the Borrower or such other Loan Party (other than Badcock), as applicable, shall be required to comply with the “Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Material Real Property or such longer time period as agreed by the Required Lenders in their reasonable discretion.
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(c) If, after the Effective Date, any material assets (other than Excluded Assets), including any owned (but not leased or ground-leased) Badcock Material Real Property or improvements thereto or any interest therein, are acquired by Badcock (other than assets constituting Badcock Collateral under a Badcock Security Document that become subject to the Lien created by such Badcock Security Document upon acquisition thereof or constituting Excluded Assets), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Secured Obligations and will take and cause Badcock to take, such actions as shall be necessary and reasonably requested by the Administrative Agent or the Required Lenders to grant and perfect such Liens, including actions described in paragraph (a) of this Section and as required pursuant to the “Badcock Collateral and Guarantee Requirement”, all at the expense of the Loan Parties and subject to the last paragraph of the definition of the term “Badcock Collateral and Guarantee Requirement”. In the event any Badcock Material Real Property is mortgaged pursuant to this Section 5.12(c), Badcock shall be required to comply with the “Badcock Collateral and Guarantee Requirement” and paragraph (a) of this Section 5.12 within ninety (90) days following the acquisition of such Badcock Material Real Property or such longer time period as agreed by the Required Lenders in their reasonable discretion.
SECTION 5.13 Franchise Agreements.
The Borrower will, and will cause each Loan Party to, satisfy and perform in all material respects all obligations of each such Person under each Franchise Agreement, except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.14 Certain Post-Closing Obligations.
As promptly as practicable, and in any event within the time periods after the Effective Date specified in Schedule 5.14(a) or such later date as the Required Lenders agree to in writing, including to reasonably accommodate circumstances unforeseen on the Effective Date, the Borrower and each other Loan Party shall deliver the documents or take the actions specified on Schedules 5.14(a) and 5.14(b), as applicable, that, where such actions are to be taken to reasonably accommodate circumstances unforeseen on the Effective Date, would have been required to be delivered or taken on the Effective Date, in each case except to the extent otherwise agreed by the Collateral Agent or the Required Lenders pursuant to its or their authority as set forth in the definitions of the terms “Collateral and Guarantee Requirement” and “Badcock Collateral and Guarantee Requirement”.
ARTICLE VI
Negative Covenants
From and after the Effective Date and until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable (other than (i) contingent amounts not yet due and (ii) Cash Management Obligations) under any Loan Document have been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01 Indebtedness; Certain Equity Securities.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness, except:
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(i) Indebtedness of the Borrower and any of the Subsidiaries under the Loan Documents (including any Indebtedness incurred pursuant to Section 2.21);
(ii) Indebtedness outstanding on the Effective Date and any Permitted Refinancing thereof; provided that any Indebtedness in excess of $6,900,000 for the most recently ended Test Period as of such time, shall only be permitted if set forth on Schedule 6.01;
(iii) Guarantees by the Borrower and its Subsidiaries in respect of Indebtedness of the Borrower or any Subsidiary otherwise permitted hereunder; provided that (A) such Guarantee is otherwise permitted by Section 6.04, (B) no Guarantee by any Subsidiary of any Junior Financing or any unsecured Indebtedness for borrowed money that constitutes Material Indebtedness shall be permitted unless such Subsidiary shall have also provided a Guarantee of the applicable Loan Document Obligations pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement, as the case may be, and (C) if the Indebtedness being guaranteed is subordinated to the Loan Document Obligations, such Guarantee shall be subordinated to the Guarantee of the Loan Document Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness;
(iv) Indebtedness of the Borrower or any Subsidiary owing to the Borrower or any Subsidiary, to the extent permitted by Section 6.04; provided that all such Indebtedness of any Loan Party owing to any Subsidiary that is not a Loan Party shall be subordinated to the Loan Document Obligations (to the extent any such Indebtedness is outstanding at any time after the date that is thirty (30) days after the Effective Date (or the date of acquisition of such Subsidiary) or such later date as the Required Lenders may reasonably agree) (but only to the extent permitted by applicable law and not giving rise to material adverse tax consequences) on terms (i) not materially less favorable, taken as a whole, to the Lenders as those set forth in the Master Intercompany Note and the Badcock Master Intercompany Note or (ii) otherwise reasonably satisfactory to the Required Lenders;
(v) (A) Indebtedness (including Capital Lease Obligations and purchase money indebtedness) incurred, issued or assumed by the Borrower or any Subsidiary to finance the acquisition, purchase, lease, construction, repair, replacement or improvement of fixed or capital property, equipment or other assets; provided that, in the case of any purchase money Indebtedness, such Indebtedness is incurred concurrently with or within 270 days after the applicable acquisition, purchase, lease, construction, repair, replacement or improvement; provided, further that, at the time of any such incurrence of Indebtedness and after giving Pro Forma Effect thereto and the use of the proceeds thereof, the aggregate principal amount of Indebtedness that is outstanding in reliance on this clause (v) (excluding any Capital Lease Obligations incurred pursuant to a sale and leaseback transaction permitted under Section 6.06) shall not exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(vi) Indebtedness in respect of Swap Agreements not incurred for speculative purposes;
(vii) [reserved];
(viii) [reserved];
(ix) [reserved];
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(x) Indebtedness in respect of Cash Management Obligations and other Indebtedness in respect of netting services, automated clearinghouse arrangements, overdraft protections and similar arrangements, in each case, in connection with deposit accounts or from the honoring of a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business;
(xi) Indebtedness consisting of obligations under deferred compensation (including indemnification obligations, obligations in respect of purchase price adjustments, Earn-Outs, incentive non-competes and other contingent obligations) or other similar arrangements incurred or assumed in connection with any Permitted Acquisition, any other Investment or any Disposition, in each case, permitted under this Agreement;
(xii) (A) Indebtedness of the Borrower or any of the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xii) shall not exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiii) (A) Indebtedness of, incurred on behalf of, or representing Guarantees of Indebtedness of, joint ventures in an aggregate outstanding principal amount not to exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xiv) Indebtedness incurred pursuant to the First Lien Credit Agreement and the other First Lien Loan Documents in an aggregate principal amount not to exceed $425,000,000 (which amount shall be reduced by any prepayments or repayments of the principal thereof); provided that, to the extent such Indebtedness is secured, the First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement;
(xv) Indebtedness consisting of (A) the financing of insurance premiums or (B) take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;
(xvi) Indebtedness supported by a letter of credit, in a principal amount not to exceed the face amount of such letter of credit;
(xvii) (A) Indebtedness arising from an agreement providing for indemnification obligations or obligations in respect of purchase price (including earn-outs) or other similar adjustments incurred in any Permitted Acquisition, any other Investment or any Disposition, in each case permitted under this Agreement, and (B) Indebtedness arising from guaranties, letters of credit, bank guaranties, surety bonds, performance bonds or similar instruments securing the performance pursuant to any such agreement described in clause (A);
(xviii) Permitted Unsecured Refinancing Debt and any Permitted Refinancing thereof;
(xix) (A) Permitted First Priority Refinancing Debt (subject to clause (xxxii) of this Section 6.01(a)) and any Permitted Refinancing thereof, (B) Permitted Parity Priority Refinancing Debt and any Permitted Refinancing thereof and (C) Permitted Junior Priority Refinancing Debt and any Permitted Refinancing thereof;
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(xx) (A)(I) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into the Borrower or any Subsidiary) after the Effective Date as a result of any Permitted Acquisition or any other Investment not prohibited by Section 6.04, or (II) Indebtedness of any Person that is assumed by the Borrower or any Subsidiary in connection with an acquisition of assets by the Borrower or such Subsidiary in any Permitted Acquisition or any other Investment not prohibited by Section 6.04; provided that such Indebtedness is not incurred in contemplation of such Permitted Acquisition or other Investment and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof); provided, further, that the aggregate principal amount of Indebtedness at any time outstanding under this clause (xx) shall not exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period as of such time of determination;
(xxi) (A) Indebtedness of any Subsidiary that is not a Loan Party; provided that the aggregate principal amount of Indebtedness of which the primary obligor or a guarantor is a Subsidiary that is not a Loan Party outstanding in reliance of this clause (xxi) shall not exceed, at the time of incurrence thereof and after giving Pro Forma Effect thereto, the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxii) Indebtedness incurred by the Borrower or any of the Subsidiaries in respect of letters of credit, bank guarantees, warehouse receipts, bankers’ acceptances or similar instruments issued or created in the ordinary course of business, including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other reimbursement-type obligations regarding workers compensation claims;
(xxiii) obligations in respect of self-insurance and obligations in respect of performance, bid, appeal and surety bonds and performance and completion guarantees and similar obligations provided by the Borrower or any Subsidiary or obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case, in the ordinary course of business or consistent with past practice;
(xxiv) (x) Indebtedness representing deferred compensation or stock-based compensation owed to employees, consultants or independent contractors of the Borrower or its Subsidiaries incurred in the ordinary course of business or consistent with past practice and (y) Indebtedness consisting of obligations of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries under deferred compensation to employees, consultants or independent contractors of the Borrower (or any direct or indirect parent thereof) or its Subsidiaries or other similar arrangements incurred by such Persons in connection with the Pre-Effective Date Investments, the Transactions, any Permitted Acquisition or any other Investment not prohibited by Section 6.04;
(xxv) Indebtedness consisting of unsecured promissory notes issued by the Borrower or any Subsidiary to future, current or former officers, directors, employees, managers and consultants or their respective estates, spouses or former spouses, successors, executors, administrators, heirs, legatees or distributees, in each case to finance the purchase or redemption of Equity Interests of the Borrower (or any direct or indirect parent thereof) to the extent permitted by Section 6.07(a);
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(xxvi) (A) letters of credit or bank guarantees (exclusive of letters of credit issued pursuant to the ABL Credit Agreement) and similar instruments incurred by the Borrower and the Subsidiaries; provided that at the time of the incurrence thereof and after giving Pro Forma Effect thereto, the aggregate principal amount of Indebtedness outstanding in reliance on this clause (xxvi) shall not exceed the greater of $18,400,000 and 5.75% of Consolidated EBITDA for the most recently ended Test Period as of such time and (B) any Permitted Refinancing of any Indebtedness set forth in the immediately preceding clause (A) (or successive Permitted Refinancings thereof);
(xxvii) Capital Lease Obligations arising under any sale and leaseback transaction permitted hereunder in reliance upon Section 6.05(f);
(xxviii) to the extent constituting Indebtedness, motor vehicle leases in the ordinary course of business;
(xxix) Indebtedness of any Loan Parties or Subsidiaries incurred in connection with any non-payment of rent by such Loan Parties or Subsidiaries caused by the COVID-19 Pandemic to the extent the landlord or other party to which such rent is due has accepted such temporary non-payment and has not declared a default under any applicable lease; provided that the aggregate outstanding amount of such Indebtedness attributable to unpaid rent shall not at any time exceed $11,500,000 for the most recently ended Test Period as of such time of determination;
(xxx) [reserved];
(xxxi) Indebtedness incurred pursuant to any ABL Credit Agreement and the other ABL Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $250,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Collateral Agent (or the Agents) the ABL Intercreditor Agreement;
(xxxii) Indebtedness (A) incurred pursuant to any FRG First Lien Credit Agreement and the other FRG First Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $1,100,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the FRG First Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement and (B) incurred pursuant to any FRG Second Lien Credit Agreement and the other FRG Second Lien Loan Documents (including incremental incurrences and increased amounts thereunder) in an aggregate principal amount not to exceed $330,000,000 and any Permitted Refinancing thereof; provided that, to the extent such Indebtedness is secured, the FRG Second Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (z) the Parity Lien Intercreditor Agreement; and
(xxxiii) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xxxii) above.
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(b) The Borrower will not, and will not permit any of its Subsidiaries to, issue any preferred Equity Interests or any Disqualified Equity Interests, except (A) in the case of the Borrower, preferred Equity Interests that are Qualified Equity Interests and (B)(x) preferred Equity Interests issued to and held by the Borrower or any Subsidiary and (y) preferred Equity Interests issued to and held by joint venture partners after the Effective Date; provided that in the case of this clause (B) (x) any such issuance of preferred Equity Interests that are not Qualified Equity Interests shall constitute incurred Indebtedness and be subject to the provisions set forth in Sections 6.01(a) and (b) (and shall only be permitted if the incurrence of such Indebtedness would have been permitted thereunder) and (y) if so incurred, any cash payments made with respect to such preferred Equity Interests shall constitute Restricted Payments and shall be subject to Section 6.07(a).
For purposes of determining compliance with any dollar denominated restriction on the incurrence of Indebtedness, the dollar equivalent principal amount of Indebtedness denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided, however, that if such Indebtedness is a Permitted Refinancing incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance such dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Permitted Refinancing does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness the Borrower or any Subsidiary may incur pursuant to this Section 6.01 shall not be deemed exceeded by fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of any extension, replacement, refunding, refinancing, renewal or defeasance of any Indebtedness.
With respect to any Indebtedness that was permitted to be incurred hereunder on the date of such incurrence, any Increased Amount of such Indebtedness shall also be permitted hereunder after the date of such incurrence.
This Agreement will not treat (1) unsecured Indebtedness as subordinated or junior to secured Indebtedness merely because it is unsecured or (2) senior Indebtedness as subordinated or junior to any other senior Indebtedness merely because it has a junior priority with respect to the same collateral.
SECTION 6.02 Liens.
The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) Liens existing on the Effective Date (provided that any Lien securing Indebtedness or other obligations in excess of $6,900,000 shall only be permitted if set forth on Schedule 6.02) and any modifications, replacements, renewals or extensions thereof; provided that (A) such modified, replacement, renewal or extension Lien does not extend to any additional property other than (1) after-acquired property that is affixed or incorporated into the property covered by such Lien and (2) proceeds and products thereof, and (B) the obligations secured or benefited by such modified, replacement, renewal or extension Lien are permitted by Section 6.01;
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(iv) Liens securing Indebtedness permitted under Section 6.01(a)(v); provided that (A) such Liens attach concurrently with or within 270 days after the acquisition, repair, replacement, construction or improvement (as applicable) of the property subject to such Liens, (B) such Liens do not at any time encumber any property other than the property financed by such Indebtedness except for replacements, additions, accessions and improvements to such property and the proceeds and the products thereof, and any lease of such property (including accessions thereto) and the proceeds and products thereof and (C) with respect to Capital Lease Obligations, such Liens do not at any time extend to or cover any assets (except for replacements, additions, accessions and improvements to or proceeds of such assets) other than the assets subject to such Capital Lease Obligations; provided further that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;
(v) (i) easements, leases, licenses, subleases or sublicenses granted to others (including licenses and sublicenses of Intellectual Property and Badcock Intellectual Property) that do not (A) interfere in any material respect with the business of the Borrower and its Subsidiaries, taken as a whole, or (B) secure any Indebtedness and (ii) any interest or title of a lessor or licensee under any lease or license entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased or licensed;
(vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(vii) Liens (A) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection, (B) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business or (C) in favor of a banking or other financial institution or entity, or electronic payment service provider, arising as a matter of law encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry;
(viii) Liens (A) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 6.04 to be applied against the purchase price for such Investment or otherwise in connection with any escrow arrangements with respect to any such Investment or any Disposition permitted under Section 6.05 (including any letter of intent or purchase agreement with respect to such Investment or Disposition), or (B) consisting of an agreement to dispose of any property in a Disposition permitted under Section 6.05, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(ix) Liens on property or other assets of any Subsidiary that is not a Loan Party, which Liens secure Indebtedness or other obligations of such Subsidiary or another Subsidiary that is not a Loan Party, in each case permitted by this Agreement;
(x) Liens granted by a Subsidiary that is not a Loan Party in favor of any Subsidiary or the Borrower and Liens granted by a Loan Party in favor of any other Loan Party;
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(xi) Liens existing on property or other assets at the time of its acquisition or existing on the property or other assets of any Person at the time such Person becomes a Subsidiary, in each case after the Effective Date and any modifications, replacements, renewals or extensions thereof; provided that (A) such Lien was not created in contemplation of such acquisition or such Person becoming a Subsidiary and (B) such Lien does not extend to or cover any other assets or property (other than the proceeds or products thereof and other than after-acquired property subject to a Lien securing Indebtedness and other obligations incurred prior to such time and which Indebtedness and other obligations are permitted hereunder that require or include, pursuant to their terms at such time, a pledge of after-acquired property, it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition);
(xii) any interest or title of a lessor or sublessor under leases or subleases (other than leases constituting Capital Lease Obligations) entered into by the Borrower or any Subsidiary in the ordinary course of business;
(xiii) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by the Borrower or any Subsidiary in the ordinary course of business;
(xiv) Liens deemed to exist in connection with Investments in repurchase agreements under clause (e) of the definition of the term “Permitted Investments”;
(xv) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(xvi) Liens that are contractual rights of setoff (A) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (B) relating to pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and its Subsidiaries or (C) relating to purchase orders and other agreements entered into with customers of the Borrower or any Subsidiary in the ordinary course of business;
(xvii) Liens securing Obligations (as defined in the ABL Credit Agreement) under the ABL Credit Agreement and the other ABL Loan Documents; provided that the ABL Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) the ABL Intercreditor Agreement;
(xviii) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(xix) Liens securing Indebtedness permitted under Section 6.01(a)(xix);
(xx) Liens on real property other than the Mortgaged Properties or the Badcock Mortgaged Properties;
(xxi) Liens securing Secured Obligations (as defined in the First Lien Credit Agreement) under the First Lien Credit Agreement and the other First Lien Loan Documents; provided that the First Lien Agent (or other applicable representative on behalf of the holders of such Indebtedness) shall have entered into with the Agents (or any of them) (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement;
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(xxii) Liens securing Indebtedness permitted under Section 6.01(a)(xii);
(xxiii) Liens on cash and Permitted Investments to secure Indebtedness permitted under Section 6.01(a)(x) or (xxvi);
(xxiv) Liens on cash and Permitted Investments used to satisfy or discharge Indebtedness; provided such satisfaction or discharge is permitted hereunder;
(xxv) Receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof;
(xxvi) Liens on Equity Interests of any joint venture (a) securing obligations of such joint venture or (b) pursuant to the relevant joint venture agreement or arrangement;
(xxvii) Liens securing Indebtedness permitted under Section 6.01(a)(xxi);
(xxviii) other Liens; provided that at the time of the granting of and after giving Pro Forma Effect to any such Lien and the obligations secured thereby (including the use of proceeds thereof) the lesser of (x) the aggregate outstanding face amount of obligations secured by Liens existing in reliance on this clause (xxviii) and (y) the fair market value of the assets securing such obligations shall not exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period;
(xxix) Liens in favor of credit card issuers and credit card processors arising in the ordinary course of business securing the obligation to pay customary fees and expenses in connection with credit card arrangements;
(xxx) Liens on motor vehicles securing Indebtedness permitted by clause (xxviii) of Section 6.01; and
(xxxi) Liens securing (A) Secured Obligations (as defined in the FRG First Lien Credit Agreement) under the FRG First Lien Credit Agreement and the other FRG First Lien Loan Documents; provided that the FRG First Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement and (y) the Badcock Intercreditor Agreement and (B) Secured Obligations (as defined in the FRG Second Lien Credit Agreement) under the FRG Second Lien Credit Agreement and the other FRG Second Lien Loan Documents; provided that the FRG Second Lien Agent shall have entered into (x) the First Lien/Second Lien Intercreditor Agreement, (y) the Badcock Intercreditor Agreement and (y) the Parity Lien Intercreditor Agreement.
With respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any Increased Amount of such Indebtedness.
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SECTION 6.03 Fundamental Changes; Lead Borrower Covenant .
(a) The Borrower will not, and will not permit any of its Subsidiaries to, merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that:
(i) (A) any Subsidiary (other than a Borrower) may merge or consolidate with a Borrower; provided that a Borrower shall be the continuing or surviving Person and (B) any Subsidiary (other than a Borrower) may merge or consolidate with one or more other Subsidiaries; provided that when any Subsidiary Loan Party is merging or consolidating with another Subsidiary the continuing or surviving Person shall be a Subsidiary Loan Party; provided further that if the continuing or surviving Person is not a Subsidiary Loan Party, as applicable, the acquisition of such Subsidiary Loan Party by such surviving non-Loan Party Subsidiary is otherwise permitted under Section 6.04;
(ii) (A) any Subsidiary that is not a Loan Party may merge or consolidate with or into any other Subsidiary that is not a Loan Party and (B) any Subsidiary may liquidate or dissolve or change its legal form if the Borrower determines in good faith that such action is in the best interests of the Borrower and its Subsidiaries and is not materially disadvantageous to the Lenders;
(iii) (x) any Borrower, other than the Lead Borrower, may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to a Borrower and (y) any Subsidiary may make a Disposition of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or another Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (A) the transferee must be a Loan Party, (B) to the extent constituting an Investment, such Investment must be a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04 or (C) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Lead Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04;
(iv) a Borrower may merge or consolidate with (or Dispose of all or substantially all of its assets to) any other Person (including another Borrower); provided that (A) a Borrower shall be the continuing or surviving Person (or, if one of the parties to such merger, consolidation or Disposal is the Lead Borrower, then the Lead Borrower shall be the continuing or surviving Person) or (B) if the Person formed by or surviving any such merger or consolidation (or, in connection with a Disposition of all or substantially all of the Borrower’s assets, if the transferee of such assets) is not a Borrower or is a Person into which the Borrower has been liquidated (any such Person, the “Successor Borrower”), (1) the Successor Borrower shall be an entity organized or existing under the laws of the United States, any State thereof or the District of Columbia, (2) the Successor Borrower shall expressly assume all the obligations of a Borrower under this Agreement and the other Loan Documents to which such Borrower is a party, pursuant to a supplement hereto or thereto in form and substance reasonably satisfactory to the Required Lenders, (3) each Loan Party other than such Borrower, unless it is the other party to such merger or consolidation, shall have reaffirmed, pursuant to an agreement in form and substance reasonably satisfactory to the Required Lenders, that its Guarantee of and grant of any Liens as security for the Secured Obligations shall apply to the Successor Borrower’s obligations under this Agreement, and (4) such Borrower shall have delivered to the Administrative Agent and the Lenders a certificate of a Responsible Officer and an opinion of counsel, each stating that such merger or consolidation complies with this Agreement; provided further that if the foregoing requirements are satisfied, the Successor Borrower will succeed to, and be substituted for, such Borrower under this Agreement and the other Loan Documents; provided further that such Borrower will use commercially reasonable efforts to provide any documentation and other information about the Successor Borrower as shall have been reasonably requested in writing by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including Title III of the USA PATRIOT Act; provided, further, that a Successor Borrower may not succeed to or be substituted for the Lead Borrower pursuant to this clause (iv);
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(v) the Borrower and its Subsidiaries may undertake or consummate any Tax Restructuring;
(vi) [Reserved];
(vii) any Subsidiary may merge, consolidate or amalgamate with any other Person in order to effect an Investment permitted pursuant to Section 6.04; provided that the continuing or surviving Person shall be a Borrower or a Subsidiary, which together with each of the Subsidiaries, shall have complied with the requirements of Sections 5.11 and 5.12; and
(viii) any Subsidiary may effect a merger, dissolution, liquidation, consolidation or amalgamation to effect a Disposition permitted pursuant to Section 6.05.
(b) Neither the Borrower, nor any Subsidiary Loan Party, shall amend or permit any amendments to such Person’s Organizational Documents after the Effective Date in any manner that (when taken as a whole) would be materially adverse to Lenders.
(c) The Lead Borrower will not conduct, transact or otherwise engage in any material business or material operations other than (i) the ownership and/or acquisition of the Equity Interests of its Subsidiaries and any other Persons engaged in a Similar Business (subject to Section 6.04), (ii) the performance of obligations under and compliance with its Organizational Documents, or other Requirement of Law (including the maintenance of its legal existence, including the ability to incur fees, costs and expenses relating to such maintenance), ordinance, regulation, rule, order, judgment, decree or permit, including as a result of or in connection with the activities of any of its Subsidiaries, and including in connection with the maintenance of its status as public company and any activities related or incidental thereto, including compliance with Requirements of Law and requirements, rules, regulations and guidance (whether or not binding) of the SEC and Nasdaq, Inc., (iii) subject to Section 6.04, repurchases of Indebtedness through open market purchases and Dutch auctions (to the extent not in violation hereof and to the extent any Loans so purchased are automatically and irrevocably cancelled after repurchase), the making of any loan to any officers, directors, managers, members of management, consultants or independent contractors and the making of any Investment in any of its Subsidiaries, (iv) participating in tax, accounting and other administrative matters related to the Lead Borrower and its Subsidiaries, (v) the entry into, and exercise of rights and performance of its obligations under and in connection with the Loan Documents and Guarantees of other Indebtedness not prohibited from being incurred under this Agreement by the Lead Borrower and its Subsidiaries, including borrowings under this Agreement, the ABL Credit Agreement, the First Lien Credit Agreement, the FRG First Lien Credit Agreement, the FRG Second Lien Credit Agreement and any other Indebtedness not prohibited from being incurred under this Agreement, (vi) any issuance or registration of its Qualified Equity Interests for sale or resale (including, for the avoidance of doubt, the making of any dividend or distribution on account of, or any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value of, any shares of any class of Qualified Equity Interests), including the costs, fees and expenses related thereto, (vii) holding of any cash and Permitted Investments, (viii) the payment of dividends or making of distributions, making of loans and contributions to the capital of its Subsidiaries and any other Persons engaged in a Similar Business and guaranteeing the obligations of its Subsidiaries and making Investments, in each case, not in violation of Article VI of this Agreement, (ix) incurring fees, costs and expenses relating to overhead and general operating expenses including professional fees for legal, tax and accounting issues and paying taxes, (x) providing indemnification for its current and former officers, directors, managers, members of management, employees, advisors, consultants or independent contractors, (xi) performing of its obligations under the Acquisition Agreement and the other documents and agreements related thereto or contemplated thereby, (xii)(1) the payment of Public Company Costs or (2) activities reasonably incidental to the consummation of a Tax Restructuring, (xiii) activities incidental to the businesses or activities described in the foregoing clauses and (xiv) any business or other activities that are identical, reasonably similar, ancillary, incidental, complementary or related to, or a reasonable extension, development or expansion of, the business and activities conducted by or proposed to be conducted by the Lead Borrower on or immediately prior to the Effective Date.
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SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions.
The Borrower will not, and will not permit any of its Subsidiaries to, make or hold any Investment, except:
(a) Permitted Investments at the time such Permitted Investment is made and purchases of assets in the ordinary course of business consistent with past practice;
(b) loans or advances to officers, members of the Board of Directors and employees of the Borrower and its Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes, (ii) in connection with such Person’s purchase of Equity Interests of the Borrower (or any direct or indirect parent thereof) (provided that the amount of such loans and advances made in cash to such Person shall be immediately contributed to the Lead Borrower in cash as common equity or Qualified Equity Interests and shall not increase the Available Equity Amount or constitute Aggregate Cure Amounts) and (iii) for purposes not described in the foregoing clauses (i) and (ii), in an aggregate principal amount outstanding at any time in reliance on this clause (iii) not to exceed $17,250,000 for the most recently ended Test Period as of such time;
(c) Investments by any Borrower or Subsidiary in any Borrower or Subsidiary; provided, that Investments by any Loan Parties in any Subsidiaries that are not a Loan Party shall not exceed an aggregate outstanding amount of the greater of $18,400,000 and 5.75% of Consolidated EBITDA for the most recently ended Test Period as of such time;
(d) Investments consisting of extensions of trade credit and accommodation guarantees in the ordinary course of business;
(e) Investments (i) existing or contemplated on the Effective Date (provided that any Investment in an amount greater than $6,900,000 shall only be permitted if set forth on Schedule 6.04(e)) and any modification, replacement, renewal, reinvestment or extension thereof and (ii) Investments existing on the Effective Date by any Borrower or any Subsidiary in any Borrower or any Subsidiary and any modification, renewal or extension thereof; provided, in each case, that the amount of the Investment as of the Effective Date (or, if later, the date of the initial making of such Investment) is not increased except by the terms of such Investment to the extent, in the event such increase is in excess of $6,900,000 for the most recently ended Test Period as of such time, set forth on Schedule 6.04(e) or as otherwise permitted by this Section 6.04;
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(f) Investments in Swap Agreements incurred in the ordinary course of business and not for speculative purposes;
(g) promissory notes and other non-cash consideration received in connection with Dispositions permitted by Section 6.05;
(h) (A) Permitted Acquisitions, (B) the Acquisition and (C) intercompany Investments required (as determined by the Lead Borrower in good faith) to consummate Permitted Acquisitions and the Acquisition;
(i) Investments in connection with the Transactions (as defined in the FRG First Lien Credit Agreement);
(j) Investments in the ordinary course of business consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers in the ordinary course of business;
(k) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(l) loans and advances to any equity holder of the Lead Borrower (or any direct or indirect parent thereof) in lieu of, and not in excess of the amount of (after giving effect to any other loans, advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made to such holder (or such parent) in accordance with Section 6.07(a);
(m) additional Investments and other acquisitions; provided that the aggregate outstanding amount of such Investment or acquisition made in reliance on this clause (m), together with the aggregate amount of all consideration paid (excluding the Net Proceeds from the issuance of such Qualified Equity Interests) in connection with all other Investments and acquisitions made in reliance on this clause (m) (including the aggregate principal amount of all Indebtedness assumed in connection with any such other Investment or acquisition previously made under this clause (m)), shall not exceed the sum of (A) (i) the greater of $46,000,000 and 14.375% of Consolidated EBITDA for the most recently ended Test Period after giving Pro Forma Effect to the making of such Investment or other acquisition; plus (ii) the Available General RP Capacity Amount at such time; plus (B) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (C) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Investment, plus (D) Investments in an aggregate outstanding amount not to exceed the portion, if any, of any unused amounts available under Section 6.07(a)(v) or 6.07(a)(xv) for Restricted Payments on the relevant date of determination that the Borrower elects to apply pursuant to this Section 6.04(m); provided that any Investment made in reliance on preceding clause (B) shall be subject to (x) no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 having occurred and be continuing or resulting therefrom and (y) before and after giving Pro Forma Effect to such Investment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.56 to 1.00 as of the end of the most recently ended Test Period as of such time;
(n) advances of payroll payments to employees in the ordinary course of business;
(o) Investments and other acquisitions to the extent that payment for such Investments is made with Qualified Equity Interests;
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(p) Investments of a Subsidiary acquired after the Effective Date or of a Person merged or consolidated with any Subsidiary in accordance with this Section 6.04 and Section 6.03 after the Effective Date or that otherwise becomes a Subsidiary (provided that if such Investment is made under Section 6.04(h), existing Investments in subsidiaries of such Subsidiary or Person shall comply with the requirements of Section 6.04(h)) to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;
(q) receivables owing to the Borrower or any Subsidiary, if created or acquired in the ordinary course of business;
(r) Investments (A) for utilities, security deposits, leases and similar prepaid expenses incurred in the ordinary course of business and (B) trade accounts created, or prepaid expenses accrued, in the ordinary course of business;
(s) Investments in the Borrower or any Subsidiary in connection with any Tax Restructuring;
(t) [reserved];
(u) Investments consisting of Indebtedness, Liens, fundamental changes, Dispositions and Restricted Payments permitted (other than by reference to this Section 6.04(u)) under Sections 6.01, 6.02, 6.03, 6.05 and 6.07, respectively;
(v) contributions to a “rabbi” trust for the benefit of employees, directors, consultants, independent contractors or other service providers or other grantor trust subject to claims of creditors in the case of a bankruptcy of the Borrower;
(w) to the extent that they constitute Investments, purchases and acquisitions of inventory, supplies, materials or equipment or purchases, acquisitions, licenses or leases of other assets, Intellectual Property, Badcock Intellectual Property, or other rights, in each case in the ordinary course of business;
(x) Investments in joint ventures (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in joint ventures) in an aggregate outstanding amount not to exceed the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period;
(y) [reserved];
(z) [reserved];
(aa) Investments in Similar Businesses (or in any Subsidiary to enable such Subsidiary to make substantially concurrent Investments in Similar Businesses) in an aggregate outstanding amount not to exceed the greater of $55,200,000 and 17.25% of Consolidated EBITDA for the most recently ended Test Period;
(bb) (i) Investments arising as a result of sale and leaseback transactions permitted by Section 6.06 hereto and (ii) to the extent constituting Investments, Investments by Badcock consisting of guarantees by Badcock of operating lease liabilities of lessees to the owners of real property sold by Badcock pursuant to and in accordance with Section 6.05(u) (solely with respect to the real property that was the subject of any such sale); and
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(cc) loans and advances to franchisees in the ordinary course of business (A) in connection with the sale of Franchise Rights or (B) to provide working capital to franchisees; provided that (i) such loans and advances in excess of $750,000 individually shall be evidenced by promissory notes and any such promissory notes shall be pledged to the Collateral Agent to the extent required by the Security Documents and (ii) the aggregate outstanding principal amount of such loans and advances made in reliance on this clause (cc) shall not exceed $11,500,000 for the most recently ended Test Period at any time.
Notwithstanding anything to the contrary in this Section 6.04, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Material Intellectual Property (except for non-exclusive leases or non-exclusive licenses with respect thereto) as of the Effective Date owned by any Loan Party or any interest in any Franchise Agreement may be contributed and/or assigned as an Investment or otherwise transferred to any non-Loan Party.
SECTION 6.05 Asset Sales.
The Borrower will not, and will not permit any of its Subsidiaries to, (i) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it or (ii) permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than issuing directors’ qualifying shares, nominal shares issued to foreign nationals to the extent required by applicable Requirements of Law and other than issuing Equity Interests to the Borrower or a Subsidiary in compliance with Section 6.04(c)) (each, a “Disposition” and the term “Dispose” as a verb has the corresponding meaning), except:
(a) Dispositions of obsolete, damaged, used, surplus or worn out property, whether now owned or hereafter acquired, in the ordinary course of business and Dispositions of property no longer used or useful, or economically practicable to maintain, in the conduct of the business of the Borrower and its Subsidiaries (including allowing any registration or application for registration of any Intellectual Property or Badcock Intellectual Property that is no longer used or useful, or economically practicable to maintain, to lapse, go abandoned, be dedicated to the public domain or be invalidated);
(b) Dispositions of inventory and other assets in the ordinary course of business and immaterial assets (considered in the aggregate) in the ordinary course of business;
(c) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) an amount equal to Net Proceeds of such Disposition are promptly applied to the purchase price of such replacement property;
(d) Dispositions of property to the Borrower or a Subsidiary; provided that if the transferor in such a transaction is a Loan Party, then (i) the transferee must be a Loan Party, (ii) to the extent constituting an Investment, such Investment must be a Permitted Investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04 or (iii) to the extent constituting a Disposition to a Subsidiary that is not a Loan Party, such Disposition is for fair market value (as determined in good faith by the Borrower) and any promissory note or other non-cash consideration received in respect thereof is a permitted investment in a Subsidiary that is not a Loan Party in accordance with Section 6.04;
(e) Dispositions permitted by Section 6.03 and Investments permitted by Section 6.04, Restricted Payments permitted by Section 6.07 and Liens permitted by Section 6.02;
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(f) Dispositions of property pursuant to sale and leaseback transactions permitted by Section 6.06 hereto;
(g) Dispositions of Permitted Investments;
(h) Dispositions of accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties);
(i) leases, subleases, service agreements, product sales, abandonments, licenses, sublicenses or other disposals (including of Intellectual Property and Badcock Intellectual Property), in each case, (A) granted in the ordinary course of business or (B) that do not materially interfere with the business of the Borrower and its Subsidiaries, taken as a whole;
(j) transfers of property subject to Casualty Events;
(k) Dispositions of property to Persons other than Subsidiaries (including the sale or issuance of Equity Interests of a Subsidiary and including the sale of real property) for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith) not otherwise permitted under this Section 6.05; provided that with respect to any Disposition pursuant to this clause (k) for a purchase price in excess of (x) with respect to any single transaction or series of related transactions, $11,500,000 or (y) with respect to all other Dispositions in any fiscal year of the Lead Borrower not excluded from the requirements of this proviso pursuant to the immediately preceding subclause (x), $23,000,000, the Borrower or any Subsidiary shall receive not less than 75% of such consideration in excess of the amounts referred to subclauses (x) and (y) in the form of cash or Permitted Investments; provided, however, that solely for the purposes of this clause (k), (A) any liabilities (as shown on the most recent balance sheet of the Borrower or such Subsidiary or in the footnotes thereto) of the Borrower or such Subsidiary, other than liabilities that are by their terms subordinated in right of payment to the Loan Document Obligations, that are assumed by the transferee with respect to the applicable Disposition and for which the Borrower and all of the Subsidiaries shall have been validly released by all applicable creditors in writing, shall be deemed to be cash, (B) any securities, notes or other obligations or assets received by the Borrower or such Subsidiary from such transferee that are converted by the Borrower or such Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments received) within one hundred and eighty (180) days following the closing of the applicable Disposition, shall be deemed to be cash, (C) Indebtedness of any Subsidiary that ceases to be a Subsidiary as a result of such Disposition (other than intercompany debt owed to the Borrower or its Subsidiaries), to the extent that the Borrower and all of the Subsidiaries (to the extent previously liable thereunder) are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Disposition, shall be deemed to be cash and (D) any Designated Non-Cash Consideration received by the Borrower or such Subsidiary in respect of such Disposition having an aggregate fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith), taken together with all other Designated Non-Cash Consideration received pursuant to this clause (k) that is at that time outstanding, not in excess of $28,750,000, with the fair market value (as determined in good faith by the Lead Borrower) of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value, shall be deemed to be cash; provided, further, that, other than in respect of the Disposition described on Schedule 6.05(k), no Event of Default shall have occurred and be continuing at the time of, and after giving effect to, any Disposition made pursuant to this clause (k);
(l) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
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(m) Dispositions or forgiveness of accounts receivable in the ordinary course of business in connection with the collection or compromise thereof;
(n) Dispositions of any assets (including Equity Interests) (A) acquired in connection with any Permitted Acquisition or other Investment not prohibited hereunder, which assets are not used or useful to the core or principal business of the Borrower and its Subsidiaries and (B) made to obtain the approval of any applicable antitrust authority in connection with a Permitted Acquisition;
(o) Dispositions of assets that are not Collateral or Badcock Collateral in an aggregate amount not to exceed the greater of $9,200,000 and 2.875% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(p) transfers of condemned property as a result of the exercise of “eminent domain” or other similar powers to the respective Governmental Authority or agency that has condemned the same (whether by deed in lieu of condemnation or otherwise), and transfers of property arising from foreclosure or similar action or that have been subject to a casualty to the respective insurer of such real property as part of an insurance settlement;
(q) any Disposition of the Equity Interests of any Immaterial Subsidiary;
(r) other Dispositions in an aggregate amount not to exceed the greater of $9,200,000 and 2.875% of Consolidated EBITDA for the most recently ended Test Period in any fiscal year of the Lead Borrower;
(s) [reserved];
(t) sales or other dispositions by any Borrower or any Subsidiary of assets in connection with the closing or sale of a retail store location (the closure of a store is not in and of itself the disposition of assets), warehouse, distribution center or corporate office of such Borrower or Subsidiary in the ordinary course of business of such Borrower or Subsidiary, which sale or disposition consists of leasehold interests in the premises of such store or distribution center, the equipment and fixtures located at such premises and the books and records relating exclusively and directly to the operations of such store or distribution center; provided, that, such sale shall be on commercially reasonable prices and terms in a bona fide arm’s length transaction; and
(u) Dispositions of Badcock Collateral for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
Notwithstanding anything to the contrary in this Section 6.05, other than by virtue of the sale of the Equity Interests of, or all or substantially all of the assets of, one or more Subsidiaries in a transaction not prohibited by this Agreement, no Loan Party shall, directly or indirectly, sell or otherwise transfer (except for non-exclusive leases or non-exclusive licenses with respect thereto) any Material Intellectual Property as of the Effective Date or any interest in any Franchise Agreement to any non-Loan Party.
SECTION 6.06 Sale and Leaseback Transactions.
The Borrower will not, and will not permit any of its Subsidiaries to, enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for (i) sale and leaseback transactions in an aggregate amount not to exceed the greater of $18,400,000 and 5.75% of Consolidated EBITDA, (ii) any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair market value (as determined in good faith by the Lead Borrower) of such fixed or capital asset and is consummated within 270 days after the Borrower or such Subsidiary, as applicable, acquires or completes the construction of such fixed or capital asset and (iii) any sale and leaseback transactions of Badcock Collateral so long as such sale is for fair market value (as determined by a Responsible Officer of the Lead Borrower in good faith).
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SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except:
(i) each Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary; provided that (x) Restricted Payments by Badcock pursuant to this clause (i) shall not, as of any date of determination, exceed in the aggregate the sum of (A) $28,750,000 plus (B) the aggregate amount of proceeds of Equity Interests issued by the Lead Borrower that have been contributed to Badcock after the Effective Date as of such date and (y) in the case of any such Restricted Payment by a Subsidiary that is not a Wholly Owned Subsidiary of the Borrower, such Restricted Payment is made to the Borrower and/or any Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(ii) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Equity Interests of such Person;
(iii) Restricted Payments by Badcock to the Borrower to the extent consisting of proceeds of Dispositions which proceeds are used by the Borrower to repay the Term Loans (as defined in the First Lien Credit Agreement) under Section 2.11(c) of the First Lien Credit Agreement and the Term Loans under Section 2.11(c);
(iv) repurchases of Equity Interests in the Borrower or any Subsidiary deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or withholding taxes payable in connection with the exercise of such options or warrants or other incentive interests;
(v) Restricted Payments used to redeem, acquire, retire, repurchase or settle the Borrower’s Equity Interests (or any options, warrants, restricted stock or stock appreciation rights or similar securities issued with respect to any such Equity Interests) held directly or indirectly by current or former officers, managers, consultants, members of the Board of Directors, employees or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Lead Borrower (or any direct or indirect parent thereof), and its Subsidiaries (in each case, other than the executive management (i.e., the CEO, the CFO, any executive vice presidents and any similar executive management positions)), upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock option or stock appreciation rights plan, any management, director and/or employee stock ownership or incentive plan, stock subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement in an aggregate amount after the Effective Date not to exceed $11,500,000 in any fiscal year of the Lead Borrower with unused amounts in any fiscal year being carried over solely to the next succeeding fiscal years; provided that such amount in any fiscal year may be increased by (1) an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower or the Subsidiaries after the Effective Date, or (2) the amount of any bona fide cash bonuses otherwise payable to members of the Board of Directors, consultants, officers, employees, managers or independent contractors the Borrower or any Subsidiary that are foregone in return for the receipt of Equity Interests, the fair market value of which is equal to or less than the amount of such cash bonuses, which, if not used in any year, may be carried forward solely to the next subsequent fiscal year; provided further that cancellation of Indebtedness owning to the Borrower or any Subsidiary from members of the Board of Directors, consultants, officers, employees, managers or independent contractors (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) of the Borrower or any Subsidiary in connection with a repurchase of Equity Interests of the Borrower will not be deemed to constitute a Restricted Payment for purposes of this Section 6.07 or any other provisions of this Agreement.
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(vi) [reserved];
(vii) in addition to the foregoing Restricted Payments, the Borrower may make additional Restricted Payments, in an aggregate amount, when taken together with the aggregate amount of loans and advances previously made pursuant to Section 6.04(m) in lieu of Restricted Payments permitted by this clause (vii), not to exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such Restricted Payment; provided that any Restricted Payment made in reliance on preceding clause (A) shall be subject to, (x) no Event of Default having occurred and be continuing or resulting therefrom (tested at the time of declaration of such Restricted Payment) and (y) before and after giving Pro Forma Effect to such Restricted Payment, on a Pro Forma Basis, the Total Net Leverage Ratio being less than or equal to 3.21 to 1.00 as of the end of the most recently ended Test Period (tested at the time of declaration of such Restricted Payment);
(viii) redemptions in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions;
(ix) payments made or expected to be made in respect of withholding or similar Taxes payable by any future, present or former employee, director, manager or consultant and any repurchases of Equity Interests in consideration of such payments including deemed repurchases in connection with the exercise of stock options and the vesting of restricted stock and restricted stock units;
(x) Restricted Payments to pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Acquisition (or other similar Investment) and (b) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
(xi) payments made or expected to be made by the Borrower or any Subsidiary in respect of withholding or similar Taxes payable upon exercise of Equity Interests by any future, present or former employee, director, officer, manager or consultant (or their respective controlled Affiliates or permitted transferees) and any repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants or required withholding or similar taxes;
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(xii) [Reserved];
(xiii) [Reserved];
(xiv) [Reserved];
(xv) additional Restricted Payments in an amount not to exceed $138,000,000; provided that after giving effect to such Restricted Payment no Event of Default exists or would result therefrom;
(xvi) [Reserved]; and
(xvii) additional Restricted Payments (other than Restricted Payments of Equity Interests of any Wholly Owned Subsidiary); provided that after giving effect to such Restricted Payment (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.96 to 1.00 and (B) no Event of Default exists or would result therefrom.
(b) The Borrower will not, and will not permit any of its Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, in each case, except:
(i) payment of regularly scheduled interest and principal payments, mandatory offers to repay, repurchase or redeem, mandatory prepayments of principal, premium and interest, and payment of fees, expenses and indemnification obligations, with respect to such Junior Financing, other than payments in respect of any Junior Financing prohibited by the subordination provisions thereof;
(ii) refinancings of Indebtedness to the extent permitted by Section 6.01;
(iii) (1) the conversion of any Junior Financing to Equity Interests (other than Disqualified Equity Interests) of the Borrower and (2) any payment that is intended to prevent any Junior Financing from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code;
(iv) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that after giving effect to such prepayments, redemptions, purchases, defeasances or other payments (A) on a Pro Forma Basis, the Total Net Leverage Ratio is equal to or less than 2.96 to 1.00 and (B) no Event of Default exists or would result therefrom;
(v) [reserved];
(vi) (A) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing in an aggregate amount not to exceed the greater of $92,000,000 and 28.75% of Consolidated EBITDA on a Pro Forma Basis for the most recently ended Test Period plus (B) the amount of Restricted Payments that may be made pursuant to Section 6.07(a)(xv) at such time;
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(vii) additional prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing; provided that the aggregate amount of such prepayments, redemptions, purchases, defeasances and other payments made in reliance on this clause (vii), shall not exceed the sum of (A) the Available Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments, plus (B) the Available Equity Amount that is Not Otherwise Applied as in effect immediately prior to the time of making of such prepayments, redemptions, purchases, defeasances and other payments; provided that any prepayments, redemptions, purchases, defeasances and other payments made in reliance on preceding clause (A) shall be subject to, before and after giving Pro Forma Effect to such prepayments, redemptions, purchases, defeasances and other payments, the Total Net Leverage Ratio being less than or equal to 3.21 to 1.00 as of the end of the most recently ended Test Period (tested at the time of distribution or delivery of any irrevocable notice of prepayment, redemption, repurchase or defeasance, as applicable, in respect thereof);
(viii) the prepayment of any Junior Financing owed to the Borrower or a Subsidiary or the prepayment of any Permitted Refinancing of such Indebtedness with the proceeds of any other Junior Financing; provided that no Loan Party shall make any prepayment of any Junior Financing owed to any Subsidiary that is not a Loan Party pursuant to this clause (viii); and
(ix) prepayments, redemptions, purchases, defeasances and other payments in respect of any Junior Financing within one year of the scheduled maturity of such Junior Financing; provided, that after giving effect to such prepayments, redemptions, purchases, defeasances and other payments, no Event of Default under paragraph (a), (b), (h) or (i) of Section 7.01 exists or would result therefrom.
SECTION 6.08 Transactions with Affiliates.
The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) (A) transactions between or among any Borrower or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction and (B) transactions involving aggregate payment or consideration of less than the greater of $27,600,000 and 8.625% of Consolidated EBITDA for the most recently ended Test Period as of such time, (ii) on terms not materially less favorable to the Borrower or such Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate (as determined by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith), (iii) the payment of Transaction Costs, fees and expenses related to the Transactions, (iv) Dispositions in the form of a sale of furniture and assignment of lease agreements to franchisees in the ordinary course of business consistent with past practices, so long as the sale thereof is approved by disinterred members of the Board of Directors (or any committee thereof), (v) issuances of Equity Interests of the Borrower and the Subsidiaries to the extent otherwise permitted by this Agreement, (vi) employment and severance arrangements and other compensation arrangements between the Borrower and its Subsidiaries and their respective officers and employees in the ordinary course of business or otherwise in connection with the Transactions (as defined in the FRG First Lien Credit Agreement) (including loans and advances pursuant to Sections 6.04(b) and 6.04(n)), (vii) investments by Affiliates in Indebtedness and preferred Equity Interests of the Borrower and the Subsidiaries, (viii) the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, members of the Board of Directors, officers and employees of the Lead Borrower (or any direct or indirect parent thereof) and the Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of the Lead Borrower and its Subsidiaries, (ix) transactions pursuant to agreements in existence or contemplated on the Effective Date and set forth on Schedule 6.08 or any amendment thereto to the extent such an amendment is not adverse to the Lenders in any material respect, (x) Restricted Payments permitted under Section 6.07 and loans and advances in lieu thereof pursuant to Section 6.04(l), (xi) payments to or from, and transactions with, any joint venture in the ordinary course of business (including any cash management activities related thereto), (xii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and which are fair to the Borrower and the Subsidiaries, in the reasonable determination of the Lead Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, (xiii) [reserved], (xiv) customary payments by the Borrower and any Subsidiaries to any Investors made for any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings), which payments are approved by the majority of the members of the Board of Directors (or any committee thereof) or a majority of the disinterested members of the Board of Directors (or any committee thereof) of the Lead Borrower in good faith and (xv) payments by the Borrower and any Subsidiaries to reimburse any Investors and other Affiliates for any indemnities and reasonable out-of-pocket costs and expenses incurred in connection with the provision of any financial advisory, consulting, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions, divestitures or financings) by such Investor to Borrower and any Subsidiaries.
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SECTION 6.09 Restrictive Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to enter into any agreement, instrument, deed or lease that prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, for the benefit of the Secured Parties with respect to the Secured Obligations or under the Loan Documents; provided that the foregoing shall not apply to:
(a) restrictions and conditions imposed by (1) Requirements of Law, (2) any Loan Document, (3) [reserved], (4) any documentation governing Permitted Unsecured Refinancing Debt, Permitted Junior Priority Refinancing Debt, Permitted Parity Priority Refinancing Debt or Permitted First Priority Refinancing Debt; provided that none of such documentation shall prohibit or limit the Lien in favor of the Collateral Agent for the benefit of the Secured Parties with respect to the Secured Obligations as in effect on the Effective Date, (5) any documentation governing Indebtedness incurred pursuant to Section 6.01(a)(xxi) or Section 6.01(a)(xxvi), (6) the ABL Loan Documents, the First Lien Loan Documents, the FRG First Lien Loan Documents or the FRG Second Lien Loan Documents or (7) any documentation governing any Permitted Refinancing incurred to refinance any such Indebtedness referenced in clauses (1) through (6) above;
(b) customary restrictions and conditions in any agreements, instruments, deeds or leases existing on the Effective Date and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(c) restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale; provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder;
(d) customary provisions in leases, licenses, sublicenses and other contracts restricting the assignment thereof;
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(e) restrictions imposed by any agreement relating to secured Indebtedness permitted by this Agreement to the extent such restriction applies only to the property securing such Indebtedness;
(f) any restrictions or conditions set forth in any agreement in effect at any time any Person becomes a Subsidiary (but not any modification or amendment expanding the scope of any such restriction or condition); provided that such agreement was not entered into in contemplation of such Person becoming a Subsidiary and the restriction or condition set forth in such agreement does not apply to the Lead Borrower or any other Subsidiary;
(g) restrictions or conditions in any Indebtedness permitted pursuant to Section 6.01 that is incurred or assumed by Subsidiaries that are not Loan Parties to the extent such restrictions or conditions are no more restrictive in any material respect than the restrictions and conditions in the Loan Documents or, in the case of any Junior Financing, are market terms at the time of issuance and are imposed solely on such Subsidiary and its Subsidiaries;
(h) restrictions on cash (or Permitted Investments) or other deposits imposed by agreements entered into in the ordinary course of business (or other restrictions on cash or deposits constituting Permitted Encumbrances);
(i) restrictions set forth on Schedule 6.09 and any extension, renewal, amendment, modification or replacement thereof, except to the extent any such amendment, modification or replacement expands the scope of any such restriction or condition;
(j) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 6.04;
(k) customary restrictions contained in leases, subleases, licenses, sublicenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate only to the assets subject thereto;
(l) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary; and
(m) customary provisions related to creditworthiness of the tenant contained in real property leases entered into by Subsidiaries, so long as the Borrower has determined in good faith that such creditworthiness provisions could not reasonably be expected to impair the ability of the Borrower and its Subsidiaries to meet their ongoing obligations.
SECTION 6.10 Financial Maintenance Covenants.
(a) Maximum Total Net Leverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Total Net Leverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, to be greater than (a) for each fiscal quarter (commencing with the first full fiscal quarter ending after the Effective Date) prior to the fiscal quarter ending on or about December 31, 2022, 4.40 to 1.00 and (b) for each fiscal quarter thereafter (beginning with the fiscal quarter ending on or about December 31, 2022), 3.90 to 1.00.
(b) Minimum Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of the Lead Borrower (commencing with the first full fiscal quarter ending after the Effective Date), the Lead Borrower will not permit the Fixed Charge Coverage Ratio of the Lead Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, on a consolidated basis to be less than 1.50 to 1.00.
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SECTION 6.11 Changes in Fiscal Periods.
The Lead Borrower will not make any change in its fiscal year; provided, however, that the Lead Borrower may, upon written notice to the Administrative Agent (which the Administrative Agent shall promptly deliver to the Lenders), change its fiscal year to any other fiscal year reasonably acceptable to the Required Lenders, in which case, the Lead Borrower and the Required Lenders will, and are hereby authorized by the Lenders and the Administrative Agent to, make any adjustments to this Agreement that are necessary to reflect such change in fiscal year, without any requirement of consent by any other Lender or other Person (notwithstanding anything to the contrary in Section 9.02).
SECTION 6.12 Amendment of Financing Documents.
The Borrower will not, and will not permit any of its Subsidiaries to, amend, modify, waive, terminate or release any ABL Loan Document, any First Lien Loan Document, any FRG First Lien Loan Document, any FRG Second Lien Loan Document or the documentation governing any other Junior Financing, in each case, in a manner restricted by the terms of any applicable intercreditor or subordination agreement.
SECTION 6.13 Franchise Agreements.
The Borrower will not, and will not permit any of its Subsidiaries to, maintain or distribute any Franchise Disclosure Documents, or enter into any Franchise Agreements, in violation of Section 3.20(c).
SECTION 6.14 Anti-Layering.
The Borrower will not, and will not permit any of its Subsidiaries to, create or incur any Indebtedness which is contractually subordinated or contractually junior in right of payment or security to the Indebtedness incurred under the First Lien Loan Documents, unless such Indebtedness is contractually pari passu or contractually junior in right of payment or security, as applicable, to the Loan Document Obligations, in each case, other than the creation or incurrence of Indebtedness under the ABL Loan Documents.
SECTION 6.15 Badcock.
In addition to the restrictions set forth in Sections 6.1 through 6.14, the Borrower will not permit Badcock to:
(a) create, incur, assume or permit to exist any Indebtedness, except Indebtedness permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) and (a)(xxxiii) (solely as it relates to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv), (a)(x), (a)(xiv), (a)(xv), (a)(xvi), (a)(xxii), (a)(xxiii), (a)(xxiv), (a)(xxv), (a)(xxvii), (a)(xxviii), (a)(xxix), (a)(xxxii) of Section 6.01) of Section 6.01;
(b) issue any preferred Equity Interests or any Disqualified Equity Interests;
(c) create, incur, assume or permit to exist any Lien on any property or asset now owned (but not leased or ground-leased) or hereafter acquired (but not leased or ground-leased) by it, except Liens permitted by clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (xii), (xiii), (xv), (xvi), (xviii), (xx), (xxi), (xxiii) (solely in respect of Section 6.01(a)(x)), (xxv), (xxix), (xxx) and (xxxi) of Section 6.02;
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(d) merge into or consolidate with any other Person (including pursuant to a division), or permit any other Person to merge into or consolidate with it, or liquidate or dissolve;
(e) make or hold any Investment, except Investments permitted by clauses (a), (d), (e), (g), (j), (k), (n), (q), (r), (s), (v), (w) and (bb) of Section 6.04;
(f) sell, transfer, lease or otherwise dispose (including pursuant to a division) of any asset, including any Equity Interest owned by it, except Dispositions permitted by clauses (a), (b), (c), (d), (f), (g), (h), (i), (j), (m), (p), (t) and (u) of Section 6.05; provided that any Disposition by Badcock pursuant to Section 6.05(f) or Section 6.05(u) shall only be permitted hereunder to the extent the Net Proceeds of such Disposition are used to repay Indebtedness in accordance with the terms of the First Lien Credit Agreement and this Agreement;
(g) allow to be effective any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any tangible property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except to the extent permitted by Section 6.06(iii); or
(h) declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except Restricted Payments permitted by clauses (a)(i), (a)(ii), (a)(iii), (a)(ix), (a)(x) and (a)(xi) of Section 6.07.
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default.
If any of the following events (any such event, an “Event of Default”) shall occur:
(a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Loan Party shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Section 7.01) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any of the Subsidiaries in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect (or all respects to the extent already qualified by materiality) when made or deemed made, and such incorrect representation or warranty (if curable) shall remain incorrect for a period of thirty (30) days after notice thereof from the Administrative Agent or the Required Lenders to the Borrower;
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(d) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in Sections 5.02(a), 5.04 (with respect to the existence of the Borrower), 5.10, 5.14 or in Article VI; provided that any Event of Default due to failure to comply with the Financial Maintenance Covenants is subject to cure as provided in Section 7.02 and an Event of Default with respect to such Section shall not occur until the Cure Expiration Date for the applicable fiscal quarter of the Lead Borrower;
(e) the Borrower or any of the Subsidiaries shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Section 7.01) and such failure shall continue unremedied for a period of thirty (30) days after written notice thereof from the Administrative Agent or the Required Lenders to the Borrower;
(f) any Lien purported to be created under any Badcock Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Badcock Collateral, with the priority required by the applicable Badcock Security Documents, except (i) as a result of the sale or other disposition of the applicable Badcock Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of any Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Badcock Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Badcock Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of any Agent or any Secured Party;
(g) any event or condition occurs that results in any Material Indebtedness, Indebtedness under the ABL Loan Documents, Indebtedness under the First Lien Credit Agreement, Indebtedness under the FRG First Lien Credit Agreement and/or Indebtedness under the FRG Second Lien Credit Agreement becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired) the holder or holders of any such Indebtedness or any trustee or agent on its or their behalf to cause any such Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement) or (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness, other than on account of failure to make a payment required as a result of such termination or similar events; provided, further, that an event or condition with respect to the First Lien Credit Agreement that would otherwise constitute an Event of Default pursuant to this paragraph (g) shall not be an Event of Default (A) unless such event or condition constitutes a payment “Event of Default” under (and as defined in) the First Lien Credit Agreement or (B) otherwise, until the earlier of (x) the date on which the Indebtedness under the First Lien Credit Agreement has been accelerated as a result of such event or condition and (y) the first date on which such event or condition shall have continued unremedied for a period of 30 days after the initial date of such event or condition (during which the applicable “Event of Default” under (and as defined in) the First Lien Credit Agreement is not waived or cured);
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, reorganization or other relief in respect of the Borrower or any Material Subsidiary or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
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(i) the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section 7.01, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a material part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more final, non-appealable, enforceable judgments for the payment of money in an aggregate amount in excess of $57,500,000 (to the extent not covered by insurance (including self-insurance) as to which the insurer has been notified of such judgment or order and has not denied coverage) shall be rendered against the Borrower and any of the Material Subsidiaries or any combination thereof and the same shall remain undischarged for a period of sixty (60) consecutive days during which execution shall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such Loan Party that are material to the businesses and operations of the Borrower and its Subsidiaries, taken as a whole, to enforce any such judgment;
(k) an ERISA Event occurs that has resulted or would reasonably be expected to result in a Material Adverse Effect;
(l) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any material portion of the Collateral, with the priority required by the applicable Security Documents, except (i) as a result of the sale or other disposition of the applicable Collateral to a Person that is not a Loan Party in a transaction permitted under the Loan Documents, (ii) as a result of the Collateral Agent’s (or any agent acting on its behalf pursuant to any applicable Intercreditor Agreement) failure to (A) maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Security Documents or (B) file Uniform Commercial Code continuation statements, (iii) as to Collateral consisting of real property to the extent that (x) such losses are covered by a lender’s title insurance policy and such insurer has not denied coverage or (y) such deficiency arose through no fault of Borrower or its Subsidiaries, and such deficiency is corrected with reasonable diligence upon obtaining actual knowledge thereof, or (iv) as a result of acts or omissions of the Collateral Agent or any Secured Party;
(m) any material provision of any Loan Document or any material Guarantee of the Loan Document Obligations shall for any reason be asserted in writing by any Loan Party not to be a legal, valid and binding obligation of any Loan Party thereto other than as expressly permitted hereunder or thereunder;
(n) any material Guarantee of the Loan Document Obligations by any Loan Party pursuant to the Guarantee Agreement or the Badcock Guarantee Agreement shall cease to be in full force and effect (other than in accordance with the terms of the Loan Documents); or
(o) a Change of Control shall occur;
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then, and in every such event (other than an event with respect to the Borrower described in paragraph (h) or (i) of this Section 7.01), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Lead Borrower described in paragraph (h) or (i) of this Section 7.01, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
SECTION 7.02 Right to Cure.
(a) Notwithstanding anything to the contrary contained in Section 7.01, in the event that the Borrower and its Subsidiaries fail to comply with the requirements of the Financial Maintenance Covenants as of the last day of any applicable fiscal quarter of the Lead Borrower, at any time after the end of such fiscal quarter until the expiration of the fifteenth (15th) Business Day subsequent to the date on which the financial statements with respect to such fiscal quarter of the Lead Borrower (or the fiscal year of the Lead Borrower ended on the last day of such fiscal quarter of the Lead Borrower) are required to be delivered pursuant to Sections 5.01(a) or (b), as applicable (such date, the “Cure Expiration Date”), the Lead Borrower shall have the right to issue Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Required Lenders) for cash or otherwise receive cash contributions to the capital of the Lead Borrower as cash common equity or other Qualified Equity Interests (or other Equity Interests reasonably acceptable to the Required Lenders) (collectively, the “Cure Right”). Upon the receipt by the Borrower of the Net Proceeds of such issuance (the “Cure Amount”, and together with the First Lien Cure Amount (as defined below), without duplication, the “Aggregate Cure Amount”) and/or upon the receipt by the Borrower of any Cure Amount (as defined in the First Lien Credit Agreement) (the “First Lien Cure Amount”) pursuant to the First Lien Credit Agreement, the Financial Maintenance Covenants shall be recalculated giving effect to the following pro forma adjustment:
(i) Consolidated EBITDA shall be increased with respect to such applicable fiscal quarter and any four fiscal quarter period that contains such fiscal quarter, solely for the purpose of measuring the Financial Maintenance Covenants and not for any other purpose under this Agreement, by an amount equal to the Aggregate Cure Amount; and
(ii) if, after giving effect to the foregoing pro forma adjustment (without giving pro forma effect to any repayment of any Indebtedness with any portion of the Aggregate Cure Amount and without netting against the calculation of Consolidated Total Indebtedness any portion of the Aggregate Cure Amount on the balance sheet of the Lead Borrower and its Subsidiaries, in each case, with respect to such fiscal quarter only), the Lead Borrower and its Subsidiaries shall then be in compliance with the requirements of the Financial Maintenance Covenants, the Borrower and its Subsidiaries shall be deemed to have satisfied the requirements of the Financial Maintenance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith (if any) at such date, and, if applicable, the applicable breach or default of the Financial Maintenance Covenants (if any) that had occurred shall be deemed cured for the purposes of this Agreement;
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provided that the Borrower shall have notified the Administrative Agent of the exercise of such Cure Right within five (5) Business Days of the issuance of the relevant Qualified Equity Interests for cash or the receipt of the cash contributions by the Borrower (or any other receipt of cash in respect of its Cure Rights).
(b) Notwithstanding anything herein to the contrary, (i) in each four consecutive fiscal quarter period of the Lead Borrower there shall be no more than two (2) fiscal quarters in which the Cure Right is exercised, (ii) during the term of this Agreement, the Cure Right shall not be exercised more than five (5) times and (iii) for purposes of this Section 7.02, the Cure Amount shall be no greater than the amount required for purposes of complying with the Financial Maintenance Covenants and any amounts in excess thereof shall not be deemed to be a Cure Amount. Notwithstanding any other provision in this Agreement to the contrary, the Aggregate Cure Amount received pursuant to any exercise of the Cure Right or the Cure Right (as defined in the First Lien Credit Agreement) shall be disregarded for purposes of determining any financial ratio based conditions and/or available basket under Article VI of this Agreement (and the Aggregate Cure Amount shall not be credited as an addition to any basket (including the Available Amount or the Available Equity Amount) or for any other calculation). For the avoidance of doubt, no Aggregate Cure Amounts shall be applied to reduce the Indebtedness of the Borrower and its Subsidiaries on a Pro Forma Basis (whether by “cash netting” or otherwise) for purposes of determining compliance with the Financial Maintenance Covenants for the fiscal quarter with respect to which such Cure Right or Cure Right (as defined in the First Lien Credit Agreement) was exercised.
(c) [Reserved].
(d) Notwithstanding anything herein to the contrary, neither the Administrative Agent nor any Lender shall exercise the right to accelerate the Loans under the Term Facility or terminate the Commitments and none of the Administrative Agent, any Lender or any other Secured Party shall exercise any right to foreclose on or take possession of the Collateral or the Badcock Collateral or exercise any remedy solely on the basis of an Event of Default having occurred and being continuing with respect to the Financial Maintenance Covenants, in each case, unless such Event of Default is not cured pursuant to the exercise of the applicable Cure Right on or prior to the applicable Cure Expiration Date (except to the extent that the Lead Borrower has confirmed in writing that it does not intend to provide the Cure Amount).
SECTION 7.03 Application of Proceeds.
(a) Subject to the terms of any applicable Intercreditor Agreement contemplated by this Agreement, in connection with the exercise of remedies provided for in Section 7.01, any amounts received on account of the Secured Obligations (including in respect of any sale of, collection from or other realization upon all or any part of the Collateral or the Badcock Collateral (including any Collateral or Badcock Collateral consisting of cash) or the Guarantees) shall be applied by the Administrative Agent and/or the Collateral Agent, as applicable, to the payment of the Secured Obligations as follows:
(i) first, to the payment of all reasonable and documented or invoiced out of pocket costs and expenses incurred by the Collateral Agent in connection with such sale, collection, other realization or otherwise and to the payment of all other amounts owing to each of the Administrative Agent, and the Collateral Agent in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all reasonable and documented or invoiced out of pocket court costs and the fees and expenses of its agents, the repayment of all advances made by it under any Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy under any Loan Document, in each case, if and to the extent payable pursuant to the terms of the Loan Documents;
(ii) second, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among such Secured Parties pro rata in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution) in accordance with this Agreement;
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(iii) third, to any agent of any other junior secured debt, in accordance with any applicable Intercreditor Agreement; and
(iv) fourth, to the Borrower, its successors or assigns, or as a court of competent jurisdiction may otherwise direct.
The Administrative Agent and/or the Collateral Agent, as applicable, shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. In the event that application of payments, Collateral proceeds or Badcock Collateral proceeds is to be made after any bankruptcy or insolvency proceeding has been commenced, references in this Section 7.03(a) with respect to (i) interest shall include interest accruing after the commencement of such bankruptcy or insolvency proceeding whether or not such interest is an allowed claim in such bankruptcy or insolvency proceeding, and (ii) any other amounts shall only include amounts that are allowed claims in such bankruptcy or insolvency proceeding.
ARTICLE VIII
Administrative Agent
SECTION 8.01 Appointment and Authority.
(a) Each of the Lenders hereby irrevocably (i) appoints (A) Alter Domus to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and (B) Alter Domus to act on its behalf as Collateral Agent hereunder and under the other Loan Documents and (ii) authorizes the Administrative Agent and the Collateral Agent (in their capacities as such), as applicable, to take such actions on such Lender’s behalf and to exercise such powers as are delegated to the Administrative Agent and the Collateral Agent, as applicable, by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints Alter Domus to act on its behalf as Collateral Agent under the Security Documents and the Badcock Security Documents and authorizes Alter Domus (in its capacity as Collateral Agent) to take such actions on such Secured Party’s behalf and to exercise such powers as are delegated to the Collateral Agent by the terms hereof or thereof together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Collateral Agent and the Lenders, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent or the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirements of Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
(b) Each of the Lenders and each Secured Party that is not a party hereto, by accepting the benefits of the Security Documents and the Badcock Security Documents, hereby irrevocably appoints and authorizes the Collateral Agent, as applicable, to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral and Badcock Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Collateral Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent and/or the Collateral Agent pursuant to Section 8.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents and any Lien on the Badcock Collateral (or any portion thereof) granted under the Badcock Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article VIII and Article IX (including Section 9.03 as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
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SECTION 8.02 Rights as a Lender.
Any Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, own securities of, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lenders.
SECTION 8.03 Exculpatory Provisions.
No Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, each Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that such Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law;
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as such Agent or any of its Affiliates in any capacity;
(d) shall in no event be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, any act or provision of any present or future law or regulation or governmental authority; acts of God; earthquakes; fires; floods; wars; terrorism; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority or governmental actions;
(e) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 9.02 and in the last paragraph of Section 7.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable judgment; provided, that the taking or not taking of any action by any Agent in accordance with the direction of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances) shall not be deemed to constitute gross negligence or willful misconduct of such Agent.
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(f) shall be deemed not to have knowledge of any Default unless and until written notice describing such Default and clearly labeled as a “Default” or “Event of Default” is given to such Agent by the Borrower or a Lender;
(g) shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Documents or the Badcock Security Documents, (v) the value or the sufficiency of any Collateral or Badcock Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent; and
(h) shall not be responsible for nor have any duty to monitor the performance or any action of the Borrower or other Loan Party, or any of their directors, members, officers, agents, affiliates or employees, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party, and may assume performance by all such Persons of their respective obligations and shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other Person.
SECTION 8.04 Reliance by Agents.
Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. As to any matters not expressly provided for in this Agreement and in the other Loan Documents (including enforcement or collection), the Administrative Agent and/or the Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender. Upon request by the Administrative Agent and/or the Collateral Agent, as the case may be, the Required Lenders shall confirm in writing the Administrative Agent’s authority and/or the Collateral Agent’s authority, as the case may be, to take any action in accordance with the terms of the Loan Documents and this Section 8.04 and may refrain from acting until such confirmation has been provided.
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Notwithstanding anything else to the contrary herein, whenever reference is made in this Agreement, or any other Loan Document, to any discretionary action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or the Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent or the Collateral Agent, it is understood that in all cases the Administrative Agent or such Collateral Agent shall be fully justified in failing or refusing to take any such action if it shall not have received written instruction, advice or concurrence from (i) in the case of the Administrative Agent, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in any other Loan Document) or (ii) in the case of the Collateral Agent, the Administrative Agent. The Administrative Agent and Collateral Agent shall have no liability for any failure or delay in taking any actions contemplated above as a result of a failure or delay on the part of the Required Lenders (or Administrative Agent in the case of the Collateral Agent) to provide such instruction, advice or concurrence. This provision is intended solely for the benefit of each of the Administrative Agent and the Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto.
Except for any action expressly required of the Administrative Agent or the Collateral Agent hereunder or other Loan Document to which it is a party, it shall in all cases be fully justified in failing or refusing to act unless it shall receive further assurances to its reasonable satisfaction, including indemnification, from the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. No provision of this Agreement or any Loan Document shall require the Administrative Agent or the Collateral Agent to take any action that it reasonably believes to be contrary to applicable law or to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties thereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
SECTION 8.05 Delegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Any Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of any Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Facility as well as activities as such Agent. No Agent shall be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that such Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
SECTION 8.06 Resignation of Administrative Agent; Mergers.
Each Agent may resign upon thirty (30) days’ notice to the Lenders and the Lead Borrower, whether or not a successor Agent has been appointed. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed) unless an Event of Default under Sections 7.01(a), (b), (h) or (i) has occurred and is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then the retiring Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Agent, which shall be an Approved Bank with an office in New York, New York, or an Affiliate of any such Approved Bank (the date upon which the retiring Agent is replaced, the “Resignation Effective Date”); provided that if the retiring Agent shall notify the Lead Borrower and the Lenders that no qualifying Person accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice.
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If the Person serving as an Agent is a Defaulting Lender, the Required Lenders and the Lead Borrower may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Agent and, with the consent of the Lead Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except (i) that in the case of any collateral security held by the Collateral Agent on behalf of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed and (ii) with respect to any outstanding payment obligations of such retiring or removed Agent) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall (to the extent not already discharged as provided above) be discharged from all of its duties and obligations hereunder and under the other Loan Documents as set forth in this Section. The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article VIII and Section 9.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.
Any corporation or association into which an Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which an Agent is a party, will be and become the successor Agent under this Agreement and related Loan Documents and will have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.
SECTION 8.07 Non-Reliance on Agents and Lenders.
Each Lender acknowledges that it has, independently and without reliance upon any Agent, the Lead Arranger or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent, the Lead Arranger or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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Each Lender, by delivering its signature page to this Agreement and funding its Loans on the Effective Date, or delivering its signature page to an Assignment and Assumption or Refinancing Amendment pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Agents and/or the Lenders on the Effective Date.
No Lender and no other Secured Party shall have any right individually to realize upon any of the Collateral or the Badcock Collateral or to enforce any Guarantee of the Secured Obligations or the Badcock Guarantee of the Secured Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent and the Collateral Agent on behalf of the Lenders and the other Secured Parties in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent or the Collateral Agent on any of the Collateral or the Badcock Collateral pursuant to a public or private sale or other disposition, the Administrative Agent, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral or such Badcock Collateral at any such sale or other disposition, and the Administrative Agent or such Collateral Agent, as agent for and representative of the Lenders and the other Secured Parties (but not any Lender, Lenders, Secured Party or Secured Parties in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral or the Badcock Collateral sold at any such public sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent or the Collateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral, the Badcock Collateral, the Guarantees of the Secured Obligations and the Badcock Guarantee of the Secured Obligations, to have agreed to the foregoing provisions.
SECTION 8.08 No Other Duties, Etc.
Anything herein to the contrary notwithstanding, neither the Bookrunner nor the Lead Arranger shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity as a Lender hereunder.
SECTION 8.09 Administrative Agent May File Proofs of Claim.
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, and any Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and such Agent and their respective agents and counsel and all other amounts due the Lenders and each Agent under Sections 2.12 and 9.03) allowed in such judicial proceeding; and
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(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and, by its acceptance of the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of any Agent and its agents and counsel, and any other amounts due such Agent under Sections 2.12 and 9.03.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any Secured Party that is not a party hereto any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender or any Secured Party that is not a party hereto to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
SECTION 8.10 No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or any Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Article VII for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) any Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 9.08 (subject to the terms of Section 2.18), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided further that if at any time there is no Person acting as an Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to such Agent pursuant to Article VII and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.18, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
SECTION 8.11 Withholding Taxes.
To the extent required by any applicable Requirements of Law (as determined in good faith by the Administrative Agent), the Administrative Agent may deduct or withhold from any payment to any Lender an amount equivalent to any applicable withholding Tax. If the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender for any reason (including because the appropriate form was not delivered or not property executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective), such Lender shall indemnify and hold harmless the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by the Loan Parties pursuant to Section 2.17 and without limiting any obligation of the Loan Parties to do so pursuant to such Section) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this Section 8.11. The agreements in this Section 8.11 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of this Agreement and the repayment, satisfaction or discharge of all other obligations under any Loan Document.
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SECTION 8.12 Credit Bidding.
The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Secured Obligations (including by accepting some or all of the Collateral and/or the Badcock Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral and/or the Badcock Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Loan Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid, (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles, (ii) each of the Secured Parties’ ratable interests in the Secured Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.02 of this Agreement), (iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Secured Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (v) to the extent that Secured Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral and/or Badcock Collateral for any reason (as a result of another bid being higher or better, because the amount of Secured Obligations assigned to the acquisition vehicle exceeds the amount of Secured Obligations credit bid by the acquisition vehicle or otherwise), such Secured Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Secured Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that the ratable portion of the Secured Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
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SECTION 8.13 Erroneous Payments.
(a) Each Lender hereby agrees that (i) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Lender (whether or not known to such Lender) (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect and (ii) to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including, without limitation, waiver of any defense based on “discharge for value” or any similar theory or doctrine. A notice of the Administrative Agent to any Lender under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting the immediately preceding clause (a), each Lender hereby further agrees that if it receives a payment from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent, (y) that was not preceded or accompanied by notice of payment, or (z) that such Lender otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each case, if an error has been made each such Lender is deemed to have knowledge of such error at the time of receipt of such Erroneous Payment, and to the extent permitted by applicable law, such Lender shall not assert any right or claim to the Erroneous Payment and hereby waives any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar theory or doctrine. Each Lender agrees that, in each such case, it shall promptly (and, in all events, within one Business Day of its knowledge (or deemed knowledge) of such error) notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in all events no later than one Business Day thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
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(c) The Borrower and each other Loan Party hereby agrees that (x) in the event an Erroneous Payment (or portion thereof) is not recovered from any Lender that has received such Erroneous Payment (or portion thereof) for any reason (and without limiting the Administrative Agent’s rights and remedies under this Section 8.13), the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Secured Obligations owed by the Borrower or any other Loan Party.
(d) In addition to any rights and remedies of the Administrative Agent provided by law, the Administrative Agent shall have the right, without prior notice to any Lender, any such notice being expressly waived by such Lender to the extent permitted by applicable law, with respect to any Erroneous Payment for which a demand has been made in accordance with this Section 8.13 and which has not been returned to the Administrative Agent, to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final but excluding trust accounts), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or any of its Affiliates, branches or agencies thereof to or for the credit or the account of such Lender. The Administrative Agent agrees promptly to notify the Lender after any such setoff and application made by the Administrative Agent; provided, that the failure to give such notice shall not affect the validity of such setoff and application.
(e) Each party’s obligations under this Section 8.13 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and the repayment, satisfaction or discharge of all Secured Obligations (or any portion thereof) under any Loan Document.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by telephone, 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 fax or other electronic transmission, as follows:
(i) if to the Borrower, the Administrative Agent or the Collateral Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 9.01; and
(ii) if to any other Lender, to it at its address (or fax number, telephone number or e-mail address) set forth in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain Material Non-Public Information relating to the Borrower).
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Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax or other electronic transmission 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 and other communications 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 Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures reasonably approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not 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 (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) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction in a final and non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address, electronic mail address, fax or telephone number for notices and other communications or website hereunder by notice to the other parties hereto. Each other Lender may change its address, fax or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.
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(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower 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. The Borrower shall indemnify the Administrative Agent, each Lender and the Related Parties 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 Borrower in the absence of gross negligence or willful misconduct as determined in a final and non-appealable judgment by a court of competent jurisdiction. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent and each of the parties hereto hereby consents to such recording.
SECTION 9.02 Waivers; Amendments.
(a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power under this Agreement or any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 9.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
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(b) Except as provided in Section 2.14, Section 2.21 with respect to any Refinancing Amendment or Section 2.24 with respect to any Permitted Amendment, neither this Agreement, any Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Lead Borrower, the Administrative Agent (to the extent that such waiver, amendment or modification does not affect the rights, duties, privileges or obligations of the Administrative Agent under this Agreement, the Administrative Agent shall execute such waiver, amendment or other modification to the extent approved by the Required Lenders) and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent or the Collateral Agent, as the case may be, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender or change any ratable sharing or payment provision that directly and adversely affects any Lender (with only such Lenders whose entitlement to a payment under such provisions is reduced being “directly and adversely affected”) without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 4.02 or the waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension or increase of any Commitment of any Lender), (ii) reduce the principal amount of any Loan (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute a reduction or forgiveness of principal) or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly and adversely affected thereby, provided that only the consent of the Required Lenders shall be necessary to waive any obligation of the Borrower to pay default interest pursuant to Section 2.13(c), (iii) postpone the maturity of any Loan, or the date of any scheduled amortization payment of the principal amount of any Term Loan under Section 2.10 or the applicable Refinancing Amendment, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment (it being understood that a waiver of any Default, Event of Default, mandatory prepayment or mandatory reduction of the Commitments shall not constitute an extension of any maturity date, any scheduled amortization payment or the date for payment of any interest or fees), without the written consent of each Lender directly and adversely affected thereby, (iv) change any of the provisions of this Section without the written consent of each Lender directly and adversely affected thereby; provided that any such change which is in favor of a Class of Lenders holding Loans maturing after the maturity of other Classes of Lenders (and only takes effect after the maturity of such other Classes of Loans or Commitments) will require the written consent of the Required Lenders with respect to each Class directly and adversely affected thereby, (v) change the percentage set forth in the definition of “Required Lenders”, “Majority in Interest” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) subordinate (or have the effect of subordinating) Liens securing any material portion of the Collateral or the Badcock Collateral (other than in connection with debtor-in-possession financing or use of cash collateral in accordance with the terms of the applicable Intercreditor Agreements), without the written consent of each Lender directly and adversely affected thereby, (vii) release (or have the effect of releasing) all or substantially all or any material portion of the value of the Guarantees under the Guarantee Agreement or the Badcock Guarantee Agreement (except as expressly provided in the Loan Documents) without the written consent of each Lender (other than a Defaulting Lender), (viii) release (or have the effect of releasing) all or substantially all or any material portion of the Collateral from the Liens of the Security Documents or the Badcock Collateral from the Liens of the Badcock Security Documents, without the written consent of each Lender (other than a Defaulting Lender) except as expressly provided in the Loan Documents, (ix) change any pro rata sharing and/or payment provisions or any payment “waterfall” herein or in any other Loan Document, without the written consent of each Lender directly and adversely affected thereby, or (x) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of the Required Lenders with respect to any Class directly and adversely affected thereby; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Collateral Agent without the prior written consent of the Administrative Agent or the Collateral Agent, as applicable, (B) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Lead Borrower and the Required Lenders (consent of the Required Lenders not to be unreasonably withheld, conditioned or delayed) in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Required Lenders, or (iii) to add any provisions to any Loan Documents that, in the reasonable judgment of the Required Lenders, are more favorable to the Lenders (or to the applicable subset thereof), (C) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders holding Loans or Commitments of a particular Class (but not the Lenders holding Loans or Commitments of any other Class) may be effected by an agreement or agreements in writing entered into by the Lead Borrower and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time and (D) no Lenders other than the Lenders holding a Majority in Interest of the applicable Class shall be required to waive, amend, supplement or modify the conditions precedent to any Borrowings of Loans of such Class. Notwithstanding the foregoing, (a) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Lead Borrower (i) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents and (ii) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders on substantially the same basis as the Lenders prior to such inclusion and (b) guarantees, Security Documents, Badcock Security Documents and related documents in connection with this Agreement may be, together with this Agreement and the other Loan Documents, amended and waived with the consent of the Required Lenders (such consent not to be unreasonably withheld, conditioned or delayed) at the request of the Lead Borrower without the need to obtain the consent of any other Lender or the Administrative Agent if such amendment or waiver is delivered in order (i) to comply with local law or advice of local counsel, (ii) to cure any (1) ambiguity, omission, defect or inconsistency or technical or obvious error or (2) mistake, the cure of which mistake would not be adverse to the Lenders, in the good faith determination of the Lead Borrower and the Required Lenders, (iii) to cause such guarantee, collateral security document or other document to be consistent with this Agreement and the other Loan Documents or (iv) to integrate any Credit Agreement Refinancing Indebtedness in a manner consistent with this Agreement and the other Loan Documents, including the relevant Intercreditor Agreement(s). Notwithstanding any other language to the contrary contained herein, with respect to any amendment, waiver or modification to which neither the Administrative Agent’s nor the Collateral Agent’s consent is required, the parties thereto agree to deliver to the Administrative Agent a copy of each such amendment, waiver or modification; provided that, (i) no party shall be liable for its failure to comply with this sentence and (ii) the Administrative Agent shall not be bound by any such amendment unless and until it has received a copy thereof.
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(c) In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders or all directly and adversely affected Lenders, if the consent of the Required Lenders (and, to the extent any Proposed Change requires the consent of Lenders holding Loans of any Class pursuant to clause (iv), (v) or (ix) of paragraph (b) of this Section 9.02, the consent of a Majority in Interest of the outstanding Loans and unused Commitments of such Class) to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section 9.02 being referred to as a “Non-Consenting Lender”), then the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, (i) if no Event of Default under Sections 7.01(a), (b), (h) or (i) exists, permanently prepay all of the Loans of any Class owing by it to, and terminate any Commitments of, such Non-Consenting Lender or (ii) require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent to the extent such consent would be required under Section 9.04(b) for an assignment of Loans or Commitments, as applicable, which consent shall not unreasonably be withheld, conditioned or delayed, (b) such Non-Consenting Lender shall have received payment of an amount equal to the outstanding par principal amount of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including pursuant to Section 2.11(a)(i)) from the Eligible Assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (c) unless waived, the Borrower or such Eligible Assignee shall have paid to the Administrative Agent the processing and recordation fee specified in Section 9.04(b).
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(d) Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, Term Loans of any Lender that is at the time a Defaulting Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of a Class), all affected Lenders (or all affected Lenders of a Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to this Section 9.02); provided that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.
SECTION 9.03 Expenses; Indemnity; Damage Waiver.
(a) The Borrower, jointly and severally, shall pay, if the Effective Date occurs and the Transactions have been consummated, (i) all reasonable and documented out-of-pocket costs and expenses incurred by the Lenders and the Agent (limited, in the case of legal fees and expenses, to the reasonable and documented fees, disbursements and other charges of Sheppard Mullin Richter & Hampton LLP and Holland & Knight LLP and, if reasonably necessary, of a single firm of local counsel to the Lenders and Agents in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) and of such other counsel retained with the Lead Borrower’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), in each case incurred in connection with the Term Facility, and the preparation, execution, delivery and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof) and (ii) all reasonable and documented out-of-pocket expenses incurred by each Agent or any Lender, including the fees, charges and disbursements of counsel for such Agent and of counsel for the Lenders, in connection with the preservation, enforcement or protection of any rights or remedies (A) in connection with the Loan Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Laws), including its rights under this Section 9.03 or (B) in connection with the Loans made hereunder, including all such out-of-pocket costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that such counsel with respect to this clause (ii) shall be limited to one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) for the Agents, taken as a whole, and one lead counsel and one local counsel in each applicable jurisdiction (exclusive of any reasonably necessary special counsel) for the Lenders, taken as a whole (and, in the case of a conflict of interest, where each Agent or any Lender affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel, one additional counsel) and such other counsel as may be retained with the Lead Borrower’s consent (such consent not to be unreasonably withheld or delayed). Notwithstanding the foregoing, the expenses of counsel shall not include any allocated costs of in-house counsel.
(b) The Borrower, jointly and severally, shall indemnify the Bookrunner, each Agent and each Related Party of any of the foregoing Persons (each such Person being called an “Agent Indemnitee”) and the Lead Arranger, the Bookrunner, and each Lender and each Related Party of any of the foregoing Persons (but excluding any such Person to the extent such Person is acting as a financial advisor to the Investors in connection with the Transactions (any such Person to the extent acting in such capacity, an “Excluded Party”)) (each such Person being called a “Lender Indemnitee”; together with the Agent Indemnitees, each, an “Indemnitee”) against, and hold each Indemnitee harmless from (without duplication), any and all losses, claims, damages, liabilities and reasonable and documented out-of-pocket fees and expenses (limited, in the case of legal fees and expenses, to the reasonable and documented fees, charges and disbursements of (A) one counsel for all Agent Indemnitees, to the extent reasonably necessary, and a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Agent Indemnitees, taken as a whole and (B) one counsel for all Lender Indemnitees, to the extent reasonably necessary, and a single firm of local counsel in each relevant material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for all such Lender Indemnitees, taken as a whole (and solely in the case of an actual or potential conflict of interest, where the Indemnitee affected by such conflict notifies the Lead Borrower of the existence of such conflict and thereafter retains its own counsel after receipt of consent from the Lead Borrower (not to be unreasonably withheld or delayed), of one additional firm of counsel for the affected Indemnitees, and, if reasonably necessary, one additional firm of local counsel in each appropriate material jurisdiction (which may include a single special counsel acting in multiple jurisdictions) for such affected Indemnitees, taken as a whole)), incurred by or asserted against any Indemnitee by any third party or by the Borrower or any Subsidiary arising out of, in connection with, or as a result of any claim, litigation, investigation or proceeding (including any inquiry or investigation), regardless of whether any such Indemnitee is a party thereto, whether based on contract, tort or any other theory, relating to (i) the execution or delivery of this Agreement, any Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder, the consummation of the Transactions or any other transactions contemplated thereby, the syndication of the Term Facility or the enforcement of any obligations of a Loan Party hereunder or under any other Loan Document, (ii) any Loan or the use of the proceeds therefrom or (iii) to the extent in any way arising from or relating to any of the foregoing, any actual or alleged presence or Release or threat of Release of Hazardous Materials on, at, to or from any Mortgaged Property, any Badcock Mortgaged Property or any other property currently or formerly owned or operated by the Borrower or any Subsidiary, or any other Environmental Liability related in any way to the Borrower or any Subsidiary; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities, costs or related expenses (w) resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitee (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment), (x) other than with respect to any indemnity with respect to an Agent Indemnitee, resulted from a material breach of the Loan Documents by such Indemnitee or its Related Parties acting on behalf of, or at the direction of, the Indemnitees (in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgment) or (y) arise from disputes between or among Indemnitees (other than disputes involving claims against the Agents, the Lead Arranger or the Bookrunner, in each case, in their respective capacities) that does not arise from an act or omission by the Borrower or any Subsidiary. This Section 9.03 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
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(c) Each Lender shall indemnify and hold harmless the Agent Indemnitees (to the extent not indefeasibly and timely indemnified by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), based on and to the extent of such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), from and against any and all losses, claims, damages, liabilities and related expenses (including reasonable and documented or invoiced out-of-pocket fees and expenses of one counsel for the Agent Indemnitees, taken as a whole (in addition to, in the event of an actual conflict of interest that arises, one additional counsel (plus one local counsel in each relevant material jurisdiction) for the conflicted Agent Indemnitees, taken as a whole), and excluding any allocated costs of in-house legal counsel and any other third parties and consultants) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any Agent Indemnitee in any way relating to or arising out of or in connection with this Agreement or any other Loan Document or any action taken or omitted to be taken by the Agent Indemnitees. Without limiting the foregoing, each Lender shall promptly following written demand therefor, pay or reimburse the Administrative Agent and the Collateral Agent based on and to the extent of such Lender’s pro rata share of all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of any rights or remedies under this Agreement or the other Loan Documents (including all such out-of-pocket costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Law, and including all respective fees, charges and disbursements of one counsel and a single firm of local counsel for the Agent Indemnitees, to the extent that the Agent Indemnitees are not timely reimbursed for such expenses by or on behalf of the Borrower (solely to the extent, in each case, that the Borrower is required to so indemnify and hold harmless the Agent Indemnitees pursuant to (and subject to the limitations of) paragraph (a) and/or (b) of this Section 9.03). For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the outstanding Loans and unused Commitments at such time (or if such indemnity payment is sought after the date on which the Loans have been paid in full and the Commitments are terminated in accordance with such Lender’s pro rata share immediately prior to the date on which the Loans are paid in full and the Commitments are terminated).
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(d) To the extent permitted by applicable law, (i) the Borrower shall not assert, and each hereby waives, any claim against any Indemnitee for any direct or actual damages arising from the use by unintended recipients of information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems (including the Internet) in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such direct or actual damages are determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from (A) the gross negligence, bad faith or willful misconduct of such Indemnitee or its Related Parties or (B) other than with respect to any indemnity with respect to an Agent Indemnitee, a material breach of the Loan Documents by such Indemnitee or its Related Parties and (ii) no Loan Party (or any Affiliate thereof), Investor (or any Affiliate thereof), or Indemnitee shall be liable for any special, indirect, consequential, incidental, exemplary 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 or thereby, the Financing Transactions, any Loan or the use of the proceeds thereof; provided that nothing in this paragraph shall limit any Loan Party’s (or any Affiliate thereof) or Investor’s (or any Affiliate thereof) indemnity and reimbursement obligations to the extent that such indirect, special, punitive or consequential damages are included in any claim by a third party unaffiliated with the applicable Indemnitee with respect to which the applicable Indemnitee is entitled to indemnification as set forth in this Section 9.03.
(e) All amounts due under this Section 9.03 shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, that any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 9.03.
SECTION 9.04 Successors and Assigns.
(a) 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 (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and the acknowledgement of the Administrative Agent (and any attempted assignment or transfer by the Borrower without such consent shall be null and void), (ii) no assignment shall be made to any Defaulting Lender or any of its Subsidiaries, or any Persons who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (ii) and (iii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 9.04. 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 paragraph (c) of this Section 9.04), the Indemnitees and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent (except with respect to assignments to competitors of the Borrower) not to be unreasonably withheld, conditioned or delayed) of (A) the Lead Borrower; provided that no consent of the Lead Borrower shall be required for an assignment (x) by a Term Lender to any other Lender, any Affiliate of a Lender or any Approved Fund, or (y) if an Event of Default under Sections 7.01(a), (b), (h) or (i) with respect to the Lead Borrower has occurred and is continuing (other than in respect of a proposed assignment to a Disqualified Lender); provided further that no assignee contemplated by the immediately preceding proviso shall be entitled to receive any greater payment under Section 2.15 or Section 2.17 than the applicable assignor would have been entitled to receive with respect to the assignment made to such assignee, unless the assignment to such assignee is made with the Lead Borrower’s prior written consent; provided further that the Lead Borrower shall have the right to withhold its consent to any assignment if in order for such assignment to comply with applicable law, the Lead Borrower or any Subsidiary would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan or Term Commitment to (x) a Lender, an Affiliate of a Lender or an Approved Fund or (y) subject to Section 9.04(g), the Borrower or any of its Subsidiaries. Notwithstanding anything in this Section 9.04 to the contrary, if the Lead Borrower has not given the Administrative Agent written notice of its objection to an assignment of Term Loans within five (5) Business Days after written notice of such assignment, the Lead Borrower shall be deemed to have consented to such assignment (other than in respect of a proposed assignment to a Disqualified Lender).
(ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date set forth in the Assignment and Assumption delivered to the Administrative Agent with respect to such assignment) shall not be less than $2,500,000 (and integral multiples of $500,000 in excess thereof), unless the Administrative Agent otherwise consents (such consent not to be unreasonably withheld, conditioned or delayed), (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption via an electronic settlement system acceptable to the Administrative Agent or, if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Assumption, and, in each case, together with a processing and recordation fee of $3,500; provided that the Administrative Agent, in its sole discretion, may elect to waive or reduce such processing and recordation fee; provided further that any such Assignment and Assumption shall include a representation by the assignee that the assignee is not a Disqualified Lender or an Affiliate of a Disqualified Lender; provided further that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Lead Borrower and the Administrative Agent any tax forms required by Section 2.17(e), all documentation and other information reasonably determined by the Administrative Agent to be required by applicable regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, and an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain Material Non-Public Information about the Borrower, the other Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section 9.04, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.15, 2.16, 2.17 and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section 9.04.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal and interest amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior written notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, any “know your customer” information requested by the Administrative Agent, the assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(e) (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(vi) 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.
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(c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other Persons (other than to a Person that is not an Eligible Assignee) (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and any other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement and any other Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that directly and adversely affects such Participant. Subject to paragraph (c)(iii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the obligations and limitations thereof and Section 2.19, it being understood that any tax forms required by Section 2.17(e) shall be provided solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 9.04. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.
(ii) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and related stated interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and the parties hereto shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of its Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or other obligations under the Loan Documents) except to the extent that the relevant parties, acting reasonably and in good faith, determine that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any Loan or other obligation under the Loan Documents is in registered form under Section 5f.103-1(c) and proposed Section 1.163-5(b) of the United States Treasury regulations. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining the Participant Register.
(iii) A Participant shall not be entitled to receive any greater payment under Section 2.15, 2.16 or 2.17 than the applicable 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 Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed).
(d) Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other “central” bank, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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(e) In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Lead Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(f) [Reserved].
(g) Any Lender may, at any time, assign all or a portion of its Term Loans to the Borrower or any of its Subsidiaries, through (x) Dutch auctions or other offers to purchase open to all Lenders on a pro rata basis in accordance with procedures of the type described in Section 2.11(a)(ii) or other customary procedures acceptable to the Administrative Agent and/or (y) open market purchases on a non-pro rata basis, provided that (i) no proceeds from any loans under any revolving credit facilities will be used to fund such assignments, (ii) any Term Loans that are so assigned will be automatically and irrevocably cancelled and the aggregate principal amount of the tranches and installments of the relevant Term Loans then outstanding shall be reduced by an amount equal to the principal amount of such Term Loans, (iii) no Event of Default shall have occurred and be continuing and (iv) each Lender making such assignment to the Borrower or any of its Subsidiaries acknowledges and agrees that in connection with such assignment, (1) the Borrower or its Subsidiaries then may have, and later may come into possession of Material Non-Public Information, (2) such Lender has independently and, without reliance on the Borrower, any of its Subsidiaries, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the Material Non-Public Information and (3) none of the Borrower, its Subsidiaries, the Administrative Agent, or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Requirements of Law, any claims such Lender may have against the Borrower, its Subsidiaries, the Administrative Agent, and their respective Affiliates, under applicable laws or otherwise, with respect to the nondisclosure of the Material Non-Public Information. Each Lender entering into such an assignment further acknowledges that the Material Non-Public Information may not be available to the Administrative Agent or the other Lenders. Except as otherwise set forth in this Agreement, cancellation of Term Loans in connection with this clause (g) shall not constitute a voluntary or mandatory prepayment of Term Loans.
(h) Notwithstanding the foregoing, no assignment may be made or participation sold to a Disqualified Lender without the prior written consent of the Lead Borrower. Upon inquiry by any Lender to the Administrative Agent as to whether a specified potential assignee or prospective participant is on the list of Disqualified Lenders, the Administrative Agent shall be permitted to make the list of Disqualified Lenders available to such Lender for inspection. Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, if any Lender was a Disqualified Lender at the time of the assignment of any Loans or Commitments to such Lender, following written notice from the Lead Borrower to such Lender and the Administrative Agent: (1) such Lender shall promptly assign all Loans and Commitments held by such Lender to an Eligible Assignee; provided that (A) the Administrative Agent shall not have any obligation to the Borrower, such Lender or any other Person to find such a replacement Lender, (B) the Borrower shall not have any obligation to such Disqualified Lender or any other Person to find such a replacement Lender or accept or consent to any such assignment to itself or any other Person subject to the Lead Borrower’s consent in accordance with Section 9.04(b)(i) and (C) the assignment of such Loans and/or Commitments, as the case may be, shall be at par plus accrued and unpaid interest and fees; (2) such Lender shall not have any voting or approval rights under the Loan Documents and shall be excluded in determining whether all Lenders (or all Lenders of any Class), all affected Lenders (or all affected Lenders of any Class), a Majority in Interest of Lenders of any Class or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02); provided that (x) the Commitment of any Disqualified Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that affects any Disqualified Lender adversely and in a manner that is disproportionate to other affected Lenders shall require the consent of such Disqualified Lender; and (3) no Disqualified Lender is entitled to receive information provided solely to Lenders by the Administrative Agent or any Lender or will be permitted to attend or participate in meetings attended solely by the Lenders and the Administrative Agent, other than the right to receive notices or Borrowings, notices or prepayments and other administrative notices in respect of its Loans or Commitments required to be delivered to Lenders pursuant to Article II.
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SECTION 9.05 Survival.
All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and all other amounts payable hereunder, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of any Agent.
SECTION 9.06 Counterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the Lenders or the syndication of the Loans 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 Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent (whether on its own behalf or on behalf of any Lender), any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Loan Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the Administrative Agent, any Lender or any Affiliates or Related Parties of any of the foregoing for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising as a result of the failure of any Loan Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
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SECTION 9.07 Severability.
Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 9.07, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent then such provisions shall be deemed to be in effect only to the extent not so limited.
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SECTION 9.08 Right of Setoff.
If an Event of Default under Sections 7.01(a), (b), (h) or (i) shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower then due and owing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such Indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.22 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The applicable Lender shall notify the Borrower and the Administrative Agent of such setoff and application; provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender may have.
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 or, to the extent permitted by law, in such Federal court. Each of the 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 any Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or its properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
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(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
SECTION 9.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY 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 ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
SECTION 9.11 Headings.
Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
SECTION 9.12 Confidentiality.
(a) Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its and its Affiliates’ directors, officers, employees, trustees and agents, including accountants, legal counsel and other agents and advisors, and actual and potential financing sources, in each case, who need to know such Information in connection with the Transactions (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 and any failure of such Persons acting on behalf of the Administrative Agent or the relevant Lender to comply with this Section 9.12 shall constitute a breach of this Section 9.12 by the Administrative Agent or the relevant Lender, as applicable), (ii) to the extent requested by any governmental authority or self-regulatory authority having jurisdiction over the Administrative Agent, any Lender or any Affiliates of any of the foregoing, as applicable, or, based on reasonable advice of counsel, to the extent required by (A) an order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, (B) applicable law or by any subpoena or similar compulsory legal process or (C) in connection with the exercise of remedies or enforcement of rights hereunder in any suit, action or proceeding relating to this Agreement; provided that (x) solely to the extent permitted by law and other than in connection with routine audits and reviews by bank accountants or governmental or self-regulatory authorities exercising examination or regulatory authority, each Lender and the Administrative Agent shall notify the Lead Borrower as promptly as practicable of any such requested or required disclosure and (y) in the case of clause (ii) only, each Lender and the Administrative Agent shall use commercially reasonable efforts to ensure that such Information is kept confidential in connection with the exercise of such remedies, and provided further that in no event shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Borrower or any of its Subsidiaries, (iii) to any other party to this Agreement, (iv) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (B) any direct or indirect contractual counterparty to any Swap Agreement or derivative transaction relating to any Loan Party or its Subsidiaries and its obligations under the Loan Documents or (C) any pledgee referred to in Section 9.04(d), (v) if required by any rating agency in connection with obtaining a rating; provided that prior to any such disclosure, such rating agency shall have agreed in writing to maintain the confidentiality of such Information, (vi) to service providers (including any numbering, administration or settlement service providers) providing administrative and ministerial services solely in connection with the syndication and administration of the Loan Documents and the Term Facility (e.g., identity of the party providing such information to such service provider, maturity dates, interest rates, etc.) on a confidential basis, (vii) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 9.12 or otherwise by reason of improper disclosure by the Administrative Agent any Lender or any Affiliates or Related Parties of any of the foregoing (including the Persons referred to in clauses (i) above) in violation of any confidentiality obligations owing to the Loan Parties or any Subsidiaries, Affiliates or Related Parties of any of the foregoing or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower or any Subsidiary, which source is not known by the recipient of such information to be subject to a confidentiality obligation, or (viii) to the extent that such information was already in the possession of the Administrative Agent or any Lender prior to any duty or other undertaking of confidentiality or is independently developed by the Administrative Agent or any Lender without the use of such information and without otherwise violating the terms of this Section 9.12. For the purposes hereof, “Information” means all information received from or on behalf of the Borrower or any of its Subsidiaries relating to the Borrower, any of its Subsidiaries or their business. Any Person required to maintain the confidentiality of Information as provided in this Section 9.12 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. Notwithstanding the foregoing, other than as set forth in the proviso below, (x) no such information shall be disclosed to a Disqualified Lender or Excluded Party that constitutes a Disqualified Lender or Excluded Party, as applicable, at the time of such disclosure without the Lead Borrower’s prior written consent and (y) in connection with any proposed assignment of Loans and/or Commitments in accordance with Section 9.04, upon request by the applicable potential assignee therefor, the applicable potential assigning Lender may disclose the list of Disqualified Lenders to such potential assignee solely for purposes of enabling such assignee to make a representation in its applicable Assignment and Assumption that such prospective assignee is an Eligible Assignee, provided, however, that, subject to an agreement containing confidentiality undertakings substantially similar to those of this Section 9.12, the list of Disqualified Lenders may be disclosed to any bona fide potential assignee or Participant, so that such potential assignee or Participant can represent and warrant that it is neither a Disqualified Lender nor an Affiliate of a Disqualified Lender.
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(b) EACH LENDER ACKNOWLEDGES THAT INFORMATION (AS DEFINED IN THIS SECTION 9.12) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT, WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER, THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
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SECTION 9.13 USA PATRIOT Act.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT 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 such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the USA PATRIOT Act.
SECTION 9.14 Release of Liens and Guarantees.
(a) A Subsidiary Loan Party shall automatically be released from its obligations under the Loan Documents (including its Guarantee or Badcock Guarantee, as the case may be, of the Secured Obligations) and all security interests created by the Security Documents in Collateral or by the Badcock Security Documents in Badcock Collateral, as the case may be, owned by such Subsidiary Loan Party shall be automatically released, (1) upon the consummation of any transaction or designation permitted by this Agreement as a result of which such Subsidiary Loan Party ceases to be a Subsidiary (including pursuant to a permitted merger with a Subsidiary that is not a Loan Party) or becomes an Excluded Subsidiary (other than solely as a result of such Subsidiary Loan Party ceasing to be a Wholly Owned Subsidiary) or (2) upon the request of the Lead Borrower, in connection with a transaction permitted under this Agreement (but only a transaction (x) in which such Subsidiary Loan Party becomes a bona fide joint venture and the other Person taking an equity interest in such Subsidiary Loan Party takes such equity interest for fair market value (as determined in good faith by the Lead Borrower) and is not an Affiliate of the Borrower (other than as a result of such joint venture), (y) in which such Subsidiary Loan Party does not own or have an exclusive license of any Material Intellectual Property or own any Equity Interests of any Person that owns or is the exclusive licensee of any Material Intellectual Property and (z) the primary purpose (as determined by the Lead Borrower in good faith) of which is not the release of any Guarantee of or Lien on the assets of such Subsidiary Loan Party) as a result of which such Subsidiary Loan Party ceases to be a Wholly Owned Subsidiary. Upon any sale or other transfer by any Loan Party (other than to the Borrower or any Subsidiary Loan Party) of any Collateral and/or Badcock Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interest created under any Security Document in any Collateral and/or under any Badcock Security Document in any Badcock Collateral, the security interests in such Collateral created by the Security Documents and/or such Badcock Collateral created by the Badcock Security Documents, as the case may be, shall be automatically released. Upon the release of any Subsidiary Loan Party from its Guarantee or Badcock Guarantee, as the case may be, in compliance with this Agreement, the security interest in any Collateral or Badcock Collateral owned by such Subsidiary created by the Security Documents or the Badcock Security Documents, as the case may be, shall be automatically released. Upon termination of the aggregate Commitments and payment in full of all Secured Obligations (other than contingent indemnification obligations), all obligations under the Loan Documents and all security interests created by the Security Documents and the Badcock Security Documents shall be automatically released. In connection with any termination or release pursuant to this Section 9.14, the Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release so long as the Borrower or applicable Loan Party shall have provided the Administrative Agent or that Collateral Agent, as the case may be, such certifications or documents as the Administrative Agent or that Collateral Agent, as the case may be, shall reasonably request in order to demonstrate compliance with this Agreement.
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(b) The Administrative Agent or the Collateral Agent (acting at the direction of the Administrative Agent), as the case may be, will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to subordinate its Lien on any property granted to or held by the Administrative Agent or the Collateral Agent, as the case may be, under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.02(iv).
(c) Each of the Lenders, and by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, irrevocably authorizes the Administrative Agent or the Collateral Agent, as the case may be, to provide any release or evidence of release, termination or subordination contemplated by this Section 9.14. Upon request by the Administrative Agent or the Collateral Agent, as the case may be, at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority or that Collateral Agent’s authority, as the case may be, to release or subordinate its interest in particular types or items of property, or to release any Loan Party from its obligations under any Loan Document, in each case in accordance with the terms of the Loan Documents and this Section 9.14.
SECTION 9.15 No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary for the Borrower, any of its Affiliates or any other Person and (B) none of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders has any obligation to the Borrower 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; and (iii) the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and none of the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders has any obligation to disclose any of such interests to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, the Lead Arranger, the Bookrunner and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
SECTION 9.16 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 Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the obligations hereunder.
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SECTION 9.17 Intercreditor Agreements. Each of the Lenders and, by accepting the benefits of the Security Documents and the Badcock Security Documents, each Secured Party that is not a party hereto, hereby agrees that the Administrative Agent and/or the Collateral Agent may enter into any intercreditor agreement and/or subordination agreement pursuant to, or contemplated by, the terms of this Agreement (including with respect to Indebtedness permitted pursuant to Section 6.01 and defined terms referenced therein) on its behalf and agrees to be bound by the terms thereof and, in each case, consents and agrees to the appointment of the Administrative Agent and/or the Collateral Agent (and/or their affiliated designees, representatives or agents) on its behalf as collateral agent, respectively, thereunder. In the event of any conflict between the provisions of this Agreement or any other Loan Document (other than any Intercreditor Agreement) and the provisions of any Intercreditor Agreement, the provisions of such Intercreditor Agreement shall govern and control.
SECTION 9.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with the normal banking procedures the Lenders could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrowers in respect of any such sum due from them to the Lenders hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the relevant Lender of any sum adjudged to be so due in the Judgment Currency, the relevant Lender may in accordance with the normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or such Lender from the Borrowers in the Agreement Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent, or the Person to whom such obligation was owing against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or such Lender in such currency, the Administrative Agent or such Lender agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
SECTION 9.19 Acknowledgement and Consent to Bail-In of Affected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
| 1. | the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and |
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| 2. | the effects of any Bail-In Action on any such liability, including, if applicable: |
i. a reduction in full or in part or cancellation of any such liability;
| ii. | a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or |
| iii. | the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. |
SECTION 9.20 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
[Remainder of Page Intentionally Left Blank]
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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.
FRANCHISE GROUP, INC., as a Borrower and Lead Borrower
By: /s/ Eric Seeton_____________________
Name: Eric Seeton
Title: Chief Financial Officer
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
valor acquisition, llc, each as a Borrower
By: /s/ Eric Seeton_____________________
Name: Eric Seeton
Title: Chief Financial Officer
[Signature Page to Second Lien Credit Agreement (Badcock)]
ALTER DOMUS (US) LLC,
solely in its capacities as Administrative Agent and Collateral Agent and not in its individual capacity
By: /s/ Matthew Trybula_________________
Name: Matthew Trybula
Title: Associate Counsel
[Signature Page to Second Lien Credit Agreement (Badcock)]
JPMORGAN CHASE BANK, N.A., as a Lender
By: /s/ James A. Knight
Name: James A. Knight
Title: Authorized Person
[Signature Page to Second Lien Credit Agreement (Badcock)]
Exhibit 10.15
Execution Version
SECOND LIEN COLLATERAL AGREEMENT
dated as of
November 22, 2021,
among
franchise group, inc.,
FRANCHISE GROUP NEWCO PSP, LLC,
VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
THE OTHER GRANTORS PARTY HERETO
and
ALTER DOMUS (US) LLC,
as Collateral Agent
TABLE OF CONTENTS
| Article I. Definitions | 1 | |||
| Section 1.01. Defined Terms | 1 | |||
| Section 1.02. Other Defined Terms | 1 | |||
| Article II. Pledge of Securities | 4 | |||
| Section 2.01. Pledge | 4 | |||
| Section 2.02. Delivery of the Pledged Collateral | 5 | |||
| Section 2.03. Representations, Warranties and Covenants | 6 | |||
| Section 2.04. Registration in Nominee Name; Denominations | 8 | |||
| Section 2.05. Voting Rights; Dividends and Interest | 8 | |||
| Section 2.06. Article 8 Opt-In | 10 | |||
| Article III. Security Interests in Personal Property | 10 | |||
| Section 3.01. Security Interest | 10 | |||
| Section 3.02. Representations and Warranties | 12 | |||
| Section 3.03. Covenants | 14 | |||
| Section 3.04. Other Actions | 15 | |||
| Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral | 16 | |||
| Article IV. Remedies | 17 | |||
| Section 4.01. Remedies upon Default | 17 | |||
| Section 4.02. Application of Proceeds | 19 | |||
| Section 4.03. Securities Act | 19 | |||
| Section 4.04. Grant of License to Use Intellectual Property | 20 | |||
| Article V. Miscellaneous | 21 | |||
| Section 5.01. Notices | 21 | |||
| Section 5.02. Waivers; Amendment | 21 | |||
| Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification | 21 | |||
| Section 5.04. Successors and Assigns | 22 | |||
| Section 5.05. Survival of Agreement | 22 | |||
| Section 5.06. Counterparts; Effectiveness; Several Agreement | 22 | |||
| Section 5.07. Severability | 23 | |||
| Section 5.08. Right of Set-off | 23 | |||
| Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 23 | |||
| Section 5.10. Waiver of jury trial | 24 | |||
| Section 5.11. Headings | 24 | |||
| Section 5.12. Security Interest Absolute | 24 | |||
| Section 5.13. Termination or Release | 25 |
| Section 5.14. Additional Subsidiaries | 25 | |||
| Section 5.15. Collateral Agent Appointed Attorney-in-Fact | 26 |
Schedules
| Schedule I | Grantors | |
| Schedule II | Pledged Equity Interests; Pledged Debt Securities | |
| Schedule III | Intellectual Property | |
| Schedule IV | Commercial Tort Claims |
Exhibits
| Exhibit I | Form of Supplement | |
| Exhibit II | Form of Second Lien Copyright Security Agreement | |
| Exhibit III | Form of Second Lien Patent Security Agreement | |
| Exhibit IV | Form of Second Lien Trademark Security Agreement |
ii
SECOND LIEN COLLATERAL AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“NewCo AF”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”, and together with Lead Borrower, Valor and NewCo AF, individually and collectively, the “Borrower”), the other GRANTORS from time to time party hereto and ALTER DOMUS (US) LLC, as collateral agent (in such capacity, together with its permitted successors and assigns in such capacity, the “Collateral Agent”).
Reference is made to that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among each Borrower, the Lenders party thereto from time to time, the Administrative Agent, and the Collateral Agent. Certain Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Grantors (other than the Borrower) are Affiliates of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
Article I.
Definitions
Section 1.01. Defined Terms. (a) Capitalized terms used in this Agreement (including in the preamble and introductory paragraph hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement; provided that each term defined in the New York UCC (as defined herein) and not defined in this Agreement or the Credit Agreement shall have the meaning specified in the New York UCC. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
Section 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Account Debtor” means any Person that is or may become obligated to any Grantor under, with respect to or on account of an Account, Chattel Paper or General Intangible.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.
“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Collateral” means Article 9 Collateral and Pledged Collateral.
“Collateral Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Copyright License” means any written agreement or license now or hereafter in effect, granting to or from any Person any use right under any Copyright now or hereafter owned by any other Person or that such other Person otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Copyright Security Agreement” means each Second Lien Copyright Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit II hereto.
“Copyrights” means (a) all copyright rights in any work arising under the copyright laws of the United States or any other jurisdiction, whether as author, assignee, transferee or otherwise, (b) all registrations and applications for registration of any such copyright, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office, and including, in the case of any Grantor, the United States copyright registrations and applications set forth next to its name on Schedule III hereto and (c) all extensions, renewals, and restorations thereof.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Federal Securities Laws” has the meaning assigned to such term in Section 4.03.
“FG Newco PSP” has the meaning assigned to such term in the preamble to this Agreement.
“NewCo AF” has the meaning assigned to such term in the preamble to this Agreement.
“Second Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Liens not prohibited by Section 6.02 of the Credit Agreement.
“Grantors” means (a) each Borrower, (b) each Subsidiary of the Lead Borrower identified on Schedule I hereto and (c) each Subsidiary of the Lead Borrower that becomes a party to this Agreement as a Grantor after the Effective Date.
“Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in Software, all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, and Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“License” means any Patent License, Trademark License or Copyright License.
“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Patent License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to manufacture, use or sell any invention claimed in a Patent, now or hereafter owned by any other Person or that any other Person now or hereafter otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Patent Security Agreement” means each Second Lien Patent Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit III hereto.
“Patents” means (a) all patents and patent applications, for letters patent of the United States or any other jurisdiction, including issued patents and pending patent applications in the United States Patent and Trademark Office, including those listed on Schedule III hereto and (b) all reissues, substitutes, divisionals, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof.
“Perfection Certificate” means that certain Perfection Certificate dated as of the Effective Date delivered to the Collateral Agent pursuant to Section 4.01(f) of the Credit Agreement.
“Pledged Collateral” has the meaning assigned to such term in Section 2.01.
“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.
“Pledged Equity Interests” has the meaning assigned to such term in Section 2.01.
“Pledged Securities” means Pledged Equity Interests and Pledged Debt Securities.
“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon and distributions or payments with respect thereto.
“Quarterly Update Date” means the latest of (a) the date of delivery of the Compliance Certificate pursuant to Section 5.01(e) of the Credit Agreement, (b) ninety (90) days after the acquisition of the applicable after-acquired Collateral or occurrence of the applicable change, and (c) any later date agreed by the Collateral Agent in its reasonable discretion.
“Secured Parties” has the meaning assigned to such term in the Credit Agreement.
“Security Interest” has the meaning assigned to such term in Section 3.01(a).
“Software” means computer programs, object code, source code and supporting documentation, including, without limitation, “software” as such term is defined in the UCC and computer programs that may be construed as included in the definition of “goods” in the UCC, including any licensed rights thereto.
“Supplement” means an instrument in the form of Exhibit I hereto, or any other form approved by the Collateral Agent, and in each case reasonably satisfactory to the Collateral Agent.
“Trade Secrets” means any trade secrets or other proprietary and confidential information, including unpatented inventions, invention disclosures, engineering or other technical data, financial data, procedures, know-how, designs, supplier lists, customer lists, business, production or marketing plans, formulae, methods (whether or not patentable), processes, compositions, schematics, algorithms, techniques, analyses, source code, object code and data collections.
“Trademark License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to use any Trademark now or hereafter owned by any other Person or that any other Person otherwise has the right to license and all rights of any such Person under any such agreement or license.
“Trademark Security Agreement” means each Second Lien Trademark Security Agreement executed by one or more Grantors and the Collateral Agent, substantially in the form of Exhibit IV hereto.
“Trademarks” means (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, logos, domain names and other source identifiers, in each case whether arising under the trademark laws of the United States or any other jurisdiction, (b) all registrations and applications for the registration thereof, including all registrations and applications for registration filed in the United States Patent and Trademark Office, including, in the case of any Grantor, any of the United States trademark registrations or applications set forth next to its name on Schedule III hereto and (c) all of the goodwill of the applicable business connected with the use of and symbolized by any of the foregoing.
“UCC” means the New York UCC; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
“Valor” has the meaning assigned to such term in the preamble to this Agreement.
Article II.
Pledge of Securities
Section 2.01. Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants, assigns and pledges to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under any and all of the following assets, now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located:
(a) (i) Equity Interests owned by such Grantor, including those listed opposite the name of such Grantor on Schedule II hereto, (ii) any other Equity Interests obtained in the future by such Grantor and (iii) the certificates or other instruments representing all such Equity Interests (if any) together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank (collectively, the “Pledged Equity Interests”); provided that Pledged Equity Interests shall not include any Excluded Assets;
(b) (i) the debt securities owned by such Grantor, including those listed opposite the name of such Grantor on Schedule II hereto, (ii) any debt securities in the future issued to or otherwise acquired by such Grantor and (iii) the promissory notes and any other instruments evidencing all such debt securities referred to in subclauses (i) and (ii) of this paragraph (b) (collectively, the “Pledged Debt Securities”); provided that Pledged Debt Securities shall not include any Excluded Assets;
(c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 2.01 and Section 2.02;
(d) subject to Section 2.05, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, any Pledged Equity Interests or any Pledged Debt Securities;
(e) subject to Section 2.05, all rights and privileges of such Grantor with respect to the securities and other property referred to in paragraphs (a) through (d) above; and
(f) all Proceeds of any of the foregoing unless such Proceeds constitute an Excluded Asset (the items referred to in paragraphs (a) through (e) above being collectively referred to as the “Pledged Collateral”).
Notwithstanding the foregoing, in no event shall the Pledged Collateral include any Excluded Asset.
Section 2.02. Delivery of the Pledged Collateral. (a) Subject to the Intercreditor Agreements, each Grantor agrees to deliver or cause to be delivered to the Collateral Agent (limited, with respect to certificates not constituting “certificated securities” within the meaning of the UCC, to use of commercially reasonable efforts to deliver or cause to be delivered such certificates) (A) on the date such Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) owned by such Grantor on such date and (B) on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) acquired by such Grantor after the date such Grantor becomes party to this Agreement.
(b) Except as otherwise addressed in Section 3.03(b) herein, subject to the Intercreditor Agreements, (i) on the date such Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion) and (ii) on or before the next Quarterly Update Date occurring after the receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), each Grantor will deliver or cause to be delivered to the Collateral Agent any promissory notes evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to such Grantor by any Person in a principal amount of $5,000,000 or more (other than Excluded Assets); provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by all Loan Parties as payees and all such obligors as payors in the form of the Master Intercompany Note.
(c) Upon delivery to the Collateral Agent, (i) any certificate or promissory note representing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer duly executed in blank and reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by undated proper instruments of assignment duly executed in blank by the applicable Grantor and such other instruments and documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be deemed attached to, and shall supplement, Schedule II hereto and be made a part hereof; provided that failure to provide any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
Section 2.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant (solely with respect to clause (c)(iii) and (iv), and (g) below) to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) as of the Effective Date, Schedule II hereto sets forth a true and complete list, with respect to each Grantor, of (A) all the Pledged Equity Interests owned by such Grantor in any Subsidiary and the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity Interests owned by such Grantor and (B) all the Pledged Debt Securities owned by such Grantor evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to such Grantor by any Person in a principal amount of $5,000,000 or more;
(b) (i) the Pledged Equity Interests have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable (to the extent such concept is applicable in the relevant jurisdiction, and other than any assessment of the equity holders imposed as a matter of law) and (ii) the Pledged Debt Securities owned by any Grantor are legal, valid and binding obligations of the issuers thereof, except to the extent that enforceability of such obligations may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditor’s rights generally; provided that the foregoing representations, insofar as they relate to the Pledged Collateral issued by a Person other than the Borrower or any Subsidiary, are made to the knowledge of the Grantors;
(c) except for the security interests granted hereunder and under any other Loan Documents, each of the Grantors (i) is and, subject to any transfers not prohibited by the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities owned by such Grantor, (ii) holds the same free and clear of all Liens, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, (iii) will make no further assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, and (iv) will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than Liens not prohibited by Section 6.02 of the Credit Agreement), however arising, of all Persons whomsoever;
(d) except for restrictions and limitations not prohibited by the Loan Documents (including any non-consensual Liens not prohibited by Section 6.02 of the Credit Agreement) or securities laws generally, to the extent issued by the Borrower or any Subsidiary, the Pledged Equity Interests and the Pledged Debt Securities are and will continue to be freely transferable and assignable, and, to the extent issued by the Borrower or any Subsidiary, none of the Pledged Equity Interests or the Pledged Debt Securities are or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law or other organizational document provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner adverse to the Secured Parties in any material respect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;
(f) by virtue of the execution and delivery by the Grantors of this Agreement, when and if any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement and upon the filing of the UCC financing statements described in Section 3.02(b), the Collateral Agent will obtain a legal, valid and perfected Second Priority lien upon and security interest in such Pledged Securities, free of any adverse claims (other than Liens not prohibited by Section 6.02 of the Credit Agreement), under the UCC, to the extent such lien and security interest may be created and perfected under the New York UCC, as security for the payment and performance of the Secured Obligations; and
(g) subject to the terms of this Agreement and to the extent permitted by applicable law, each Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with the instructions of the Collateral Agent with respect to the Equity Interests in such Grantor that constitute Pledged Equity Interests hereunder without further consent by the applicable owner or holder of such Equity Interests.
Section 2.04. Registration in Nominee Name; Denominations. If an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantors two (2) Business Days’ prior written notice of its intent to exercise such rights (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to (a) hold the Pledged Securities in the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent or in its own name as pledgee or in the name of its nominee (as pledgee or as sub-agent), and each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of such Grantor, and (b) exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any reasonable purpose consistent with this Agreement.
Section 2.05. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantors not less than two (2) Business Days’ prior written notice that the rights of the Grantors under this Section 2.05 are being suspended (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration):
(i) each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents;
(ii) the Collateral Agent shall promptly execute and deliver to each Grantor, or cause to be promptly executed and delivered to such Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section; and
(iii) each Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and are otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity Interests or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests in the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by any Grantor, shall, subject to the Intercreditor Agreements, be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent), in each case, to the extent required pursuant to Section 2.02 or Section 2.06.
(b) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantors with written notice (to the extent required under clause (a) of this Section 2.05), all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to clause (a)(iii) of this Section 2.05 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. Subject to the Intercreditor Agreements, all dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 2.05 shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties and shall be forthwith promptly delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and, to the extent so received, shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Lead Borrower has delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, the Collateral Agent shall promptly repay to each Grantor all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of clause (a)(iii) of this Section 2.05 and that remain in such account.
(c) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantors with written notice (to the extent required under clause (a) of this Section 2.05), all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section 2.05, and the obligations of the Collateral Agent under clause (a)(ii) of this Section 2.05, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers. After all Events of Default have been cured or waived and the Lead Borrower shall have delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, all rights vested in the Collateral Agent pursuant to this paragraph (c) shall cease, and the Grantors shall have the exclusive right to exercise the voting and consensual rights and powers they would otherwise be entitled to exercise pursuant to clause (a)(i) of this Section 2.05.
(d) Any notice given by the Collateral Agent to the Grantors suspending their rights under paragraph (a) of this Section 2.05 (i) shall be given in writing, (ii) may be given with respect to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under clause (a)(i) or clause (a)(iii) of this Section 2.05 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
(e) In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request.
Section 2.06. Article 8 Opt-In.
(a) No Grantor shall take any action to cause any membership interest, partnership interest, or other equity interest of any limited liability company or limited partnership owned or controlled by any Grantor comprising Collateral to be or become a “security” within the meaning of, or to be governed by, Article 8 of the UCC as in effect under the laws of any state having jurisdiction and shall not cause or permit any such limited liability company or limited partnership to “opt in” or to take any other action seeking to establish any membership interest, partnership interest or other equity interest of such limited liability company or limited partnership comprising the Collateral as a “security” or to become certificated, in each case, without certificating such interest and delivering all certificates evidencing such interest to the Collateral Agent in accordance with and as required by the provisions of Section 2.02.
Article III.
Security Interests in Personal Property
Section 3.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Secured Obligations, each Grantor hereby grants to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in all of such Grantor’s right, title and interest in, to and under any and all of the following assets now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located (but in all cases excluding any Excluded Assets):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles, including all Intellectual Property;
(vii) all Instruments and Promissory notes;
(viii) all Inventory;
(ix) all other Goods;
(x) all Investment Property;
(xi) all Letter-of-Credit Rights;
(xii) all cash and Moneys;
(xiii) all Securities Accounts;
(xiv) all Commercial Tort Claims specifically described on Schedule IV hereto, as such schedule may be supplemented from time to time pursuant to Section 3.04(c);
(xv) all books and records pertaining to the Article 9 Collateral; and
(xvi) to the extent not otherwise included, all Proceeds, substitutions, replacements and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing (all of the above in this Section 3.01, the “Article 9 Collateral”).
It is understood that the term “Article 9 Collateral” shall not include any Excluded Asset; provided, however, that Article 9 Collateral shall include any Proceeds, substitutions or replacements of any of the foregoing (unless such Proceeds, substitutions or replacements would constitute an Excluded Asset).
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant U.S. jurisdiction any financing statements with respect to the Collateral or any part thereof and amendments thereto that (i) describe the collateral covered thereby in any manner that the Collateral Agent reasonably determines is necessary or advisable to ensure the perfection of the security interest in the Collateral granted under this Agreement, including indicating the Collateral as “all assets” of such Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the UCC for the filing of any financing statement or amendment, including whether such Grantor is an organization, the type of organization and, if required, any organizational identification number issued to such Grantor. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.
The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) any Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable, as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks or United States Copyrights granted by each Grantor and naming any Grantor or Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest and the security interest granted pursuant to Article II are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.
Section 3.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Collateral Agent, for the benefit of the Secured Parties, that:
(a) Each Grantor has good title to or valid rights in (except, in each case, as otherwise permitted by the Loan Documents) the Article 9 Collateral, (i) other than Liens not prohibited by Section 6.02 of the Credit Agreement and (ii) except for defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to have such good title or valid rights would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Grantor has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, the Security Interest in such Grantor’s Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and except to the extent that failure to obtain or make such consent or approval, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name and jurisdiction of organization of each Grantor, is correct and complete in all material respects as of the Effective Date. The Uniform Commercial Code financing statements or other appropriate filings, recordings or registrations prepared by the Collateral Agent based upon the information provided to the Collateral Agent (or otherwise approved by the Collateral Agent) for filing in the appropriate governmental, municipal or other office (or specified by notice from the Lead Borrower to the Collateral Agent after the Effective Date in the case of filings, recordings or registrations required by Section 5.12 of the Credit Agreement) are all the filings, recordings and registrations (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, United States Trademarks and United States Copyrights to the extent that such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office) that are necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States, and as of the date hereof no further or subsequent filing, refiling, recording, rerecording, registration or reregistration (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, Trademarks and Copyrights) is necessary, except as provided under applicable law with respect to the filing of continuation statements (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by a Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office). The Grantors represent and warrant that a fully executed Patent Security Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as applicable, in each case containing a list of the Article 9 Collateral consisting of United States issued Patents, United States registered Trademarks and United States registered Copyrights (and applications for any of the foregoing), as applicable, and executed by each Grantor owning any such Article 9 Collateral, have been delivered to the Collateral Agent in a form suitable for recording with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of registered and applied for Patents, Trademarks and Copyrights in which a security interest may be filed, recorded or registered, in each case, in the United States. No further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by a Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office).
(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the applicable jurisdiction in the United States pursuant to the Uniform Commercial Code and (iii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of a Patent Security Agreement, a Trademark Security Agreement and/or a Copyright Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement.
(d) As of the Effective Date, Schedule III hereto sets forth a true and complete list, with respect to each Grantor, of (i) all of such Grantor’s Patents and Trademarks applied for or issued or registered with the United States Patent and Trademark Office, including the name of the registered owner or applicant and the registration, application, or patent number, as applicable, of each such Patent or Trademark and (ii) all of such Grantor’s Copyrights applied for or registered with the United States Copyright Office, including the name of the registered owner and the registration number of each such Copyright.
(e) As of the Effective Date, Schedule IV hereto sets forth a true and complete list, with respect to each Grantor, of all of such Grantor’s Commercial Tort Claims (in respect of which a complaint or counterclaim has been filed by or on behalf of such Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith).
Section 3.03. Covenants. (a) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral (other than Intellectual Property, which is governed by Section 3.05) against all Persons, except with respect to Article 9 Collateral that such Grantor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of such Grantor’s business, and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien prohibited by Section 6.02 of the Credit Agreement, subject to the rights of such Grantor under Section 9.14 of the Credit Agreement and corresponding provisions of the Security Documents to obtain a release of the Liens created under the Security Documents.
(b) Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any reasonable and documented or invoiced out-of-pocket fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith, in each case, subject to and in accordance with the terms of this Agreement and of the Credit Agreement. Subject to the Intercreditor Agreements, except to the extent otherwise provided in Article II, if any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note (which may be a global note) or other instrument (other than any promissory note or other instrument in a principal amount of less than $5,000,000 owed to the applicable Grantor by any Person), such note or instrument shall be delivered (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) to the Collateral Agent, for the benefit of the Secured Parties, together with an undated instrument of transfer duly executed in blank and in a manner reasonably satisfactory to the Collateral Agent.
(c) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and prohibited by Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the tangible Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement, this Agreement or any other Loan Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and each Grantor jointly and severally agrees to reimburse the Collateral Agent, within thirty (30) days after demand, for any reasonable payment made or any reasonable and documented or invoiced out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization in accordance with Section 5.03(a); provided that nothing in this paragraph shall be interpreted as imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.
(d) The exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under each contract, agreement or instrument relating to the Article 9 Collateral unless the Collateral Agent has expressly in writing assumed such duties and obligations and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the other Secured Parties from and against any and all liability for such performance, except to the extent resulting from the gross negligence, bad faith or willful misconduct of the Collateral Agent, any other Secured Party or any of their respective controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgement.
(e) Notwithstanding anything herein to the contrary, it is understood that no Grantor shall be required by this Agreement to better assure, preserve, protect or perfect the security interest created hereunder by any means other than (i) filings of financing statements pursuant to the Uniform Commercial Code, (ii) filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of any Copyright Security Agreements, Patent Security Agreements and Trademark Security Agreements, as applicable, in respect of registered, issued or applied for United States Copyrights, United States Patents or United States Trademarks, respectively, (iii) in the case of Collateral that constitutes Instruments, Tangible Chattel Paper or Negotiable Documents (other than those Negotiable Documents held in the ordinary course of business), delivery thereof to the Collateral Agent in accordance with the terms hereof (including the delivery thresholds set forth herein) (together with, where applicable, undated stock or note powers or other undated proper instruments of assignment) and (iv) other actions to the extent required by Section 3.04 or Article II hereunder or otherwise expressly provided under this Agreement. No Grantor shall be required to complete any filings or other action with respect to the better assurance, preservation, protection or perfection of the security interests created hereby in any jurisdiction outside of the United States.
Section 3.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, each Grantor agrees, in each case at such Grantor’s own expense and subject to the Intercreditor Agreements, to take the following actions with respect to the following Article 9 Collateral:
(a) Instruments. Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any Instruments constituting Collateral (other than Instruments with an individual face amount of less than $5,000,000 and other than checks to be deposited in the ordinary course of business), such Grantor shall (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(b) Investment Property. Except to the extent otherwise provided in Article II, if any Grantor shall at any time hold or acquire any certificates representing or evidencing Investment Property constituting Collateral (other than (i) Investment Property with an individual value of less than $5,000,000, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of such Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)), such Grantor shall, on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(c) Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim (in respect of which a complaint or counterclaim has been filed by or on behalf of such Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith), such Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor, including a summary description of such claim, and Schedule IV hereto shall be deemed to be supplemented to include such description of such Commercial Tort Claim as set forth in such writing.
(d) Deposit Accounts and Securities Accounts. Prior to the ABL Obligations Payment Date (as defined in the ABL Intercreditor Agreement) and to the extent similar requirements exist in the ABL Credit Agreement or the ABL Security Documents (as defined in the ABL Intercreditor Agreement), for each Deposit Account or Securities Account (in each case, other than the Excluded Accounts), the respective Grantor shall use commercially reasonable efforts to cause the bank or institution with which the Deposit Account or Securities Account is maintained to execute and deliver to the Collateral Agent, a “control agreement” in a form reasonably acceptable to the Collateral Agent, at the time it enters in a control agreement pursuant to the ABL Credit Agreement or ABL Security Documents. Following the ABL Obligations Payment Date (as defined in the ABL Intercreditor Agreement), no Grantor shall terminate any existing “control agreement” or other control arrangements to which the Collateral Agent is a party with respect to any Deposit Account or Securities Account unless (a) such Deposit Account or Securities Account has become an Excluded Account or has otherwise become excluded from the Collateral in accordance with the Loan Documents, (b) the Collateral Agent has consented to such termination or (c) required by the First Lien/Second Lien Intercreditor Agreement.
Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Except as otherwise determined in such Grantor’s reasonable business judgment, with respect to registration or pending application of each item of its Intellectual Property for which such Grantor has standing and ability to do so, each Grantor agrees to take commercially reasonable efforts to (i) maintain the validity and enforceability of any registered Intellectual Property (or applications therefor) and to maintain such registrations and applications of Intellectual Property in full force and effect and (ii) pursue the registration and maintenance of each Patent, Trademark or Copyright registration or application, in each case, except for any failure to do any of the foregoing that would not reasonably be expected to have a Material Adverse Effect. Except as otherwise determined in such Grantor’s reasonable business judgment, each Grantor shall take commercially reasonable steps to defend title to and ownership of its Intellectual Property, except for any failure to do so that would not reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, nothing in this Section 3.05 shall prevent any Grantor from disposing of, discontinuing the use or maintenance of, abandoning, failing to pursue or enforce or otherwise allowing to lapse, terminate, be invalidated or put into the public domain any of its registered or applied for Intellectual Property that is no longer used, useful, or economically practicable to maintain, or if such Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.
(b) Each Grantor agrees that, should it obtain an ownership or other interest in any Intellectual Property after the Effective Date, should it file an application for the registration or issuance of any Intellectual Property after the Effective Date, and should it file with and have accepted by the United States Patent and Trademark Office a “Statement of Use” or an “Amendment to Allege Use” with respect to any “intent-to-use” Trademark application owned by it after the Effective Date, subject to the immediately succeeding sentence, (i) the provisions of this Agreement shall automatically apply thereto and (ii) any such Intellectual Property shall automatically become subject to the terms and conditions of this Agreement, except to the extent such Intellectual Property is obtained under a license or sublicense from a third party under which a security interest would not be permitted. For the avoidance of doubt, a security interest shall not be granted in any Intellectual Property that constitutes an Excluded Asset.
(c) Each Grantor, either itself or through any agent, employee, licensee or designee, shall (i) whenever a certificate is delivered or required to be delivered pursuant to Section 5.03(b) of the Credit Agreement, deliver to the Collateral Agent a schedule setting forth all of such Grantor’s Patents, Trademarks and Copyrights, as applicable, that are issued by, registered in, or applied for in the United States Patent and Trademark Office or the United States Copyright Office (including, for the avoidance of doubt, “intent-to-use” Trademark applications for which a “Statement of Use” or an “Amendment to Allege Use” has been filed with and accepted by the United States Patent and Trademark Office) and that are not listed on Schedule III hereto or on a schedule previously provided to the Collateral Agent pursuant to this Section 3.05(c) and (ii) within a reasonable time following the request of the Collateral Agent, and in any event on or prior to the next Quarterly Update Date following such request of the Collateral Agent (or such later date which the Collateral Agent may agree to in its reasonable discretion), execute and deliver a Patent Security Agreement, Trademark Security Agreement or Copyright Security Agreement, as applicable, in respect of such Patents, Trademarks and/or Copyrights; provided, that this clause (ii) shall not apply to any Intellectual Property constituting Excluded Assets.
Article IV.
Remedies
Section 4.01. Remedies upon Default. Subject to the Intercreditor Agreements, if an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) and all rights under any other applicable law or in equity. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver, on demand, each item of Collateral to the Collateral Agent or any Person designated by the Collateral Agent, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) subject to Section 4.04, with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantors to the Collateral Agent, for the benefit of the Secured Parties, or to license or sublicense, whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained) in connection with exercise of its remedies hereunder, and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and the Pledged Collateral and to enter onto and occupy any premises owned or, to the extent lawful and permitted, leased by any of the Grantors where the Collateral or any part thereof is assembled or located without any obligation to pay rent for a reasonable period in order to effectuate its rights and remedies hereunder or under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, each Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law and the notice requirements described below, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
To the extent notice of sale shall be required by law, the Collateral Agent shall give the applicable Grantors no less than ten (10) days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration). Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent and the other Secured Parties shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, the Collateral Agent on behalf of any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price (which shall decrease the Secured Obligations owed to such Secured Party by such amount used as a credit against the purchase price), and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercial reasonableness standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral and the Collateral Agent may specifically disclaim or modify any warranties of title or the like. The Collateral Agent shall have no obligation to marshal any of the Collateral.
Section 4.02. Application of Proceeds. Subject to the terms of the Intercreditor Agreements, the Collateral Agent shall apply the proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral (including any Collateral consisting of cash) or the Guarantees, pursuant to the exercise by the Collateral Agent (in accordance with the terms of the Loan Documents) of its remedies, in each case, in accordance with Section 7.03 of the Credit Agreement. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations.
Section 4.03. Securities Act. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable blue sky or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws to the extent the Collateral Agent has determined that such a registration is not required by any Requirements of Law and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent and the other Secured Parties shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 4.03 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.
Section 4.04. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement upon the occurrence and during the continuance of an Event of Default, at such time as, and to the extent that, the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use or sublicense (to its contractors, agents or representatives, or otherwise exercising its remedies hereunder) any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, to the extent that such non-exclusive license (a) does not violate the express terms of any agreement between a Grantor and a third party governing such Intellectual Property (and shall be subject to any such licenses), or gives such third party any right of acceleration, modification, termination or cancellation therein and (b) is not prohibited by any Requirements of Law; provided that such license and sublicenses with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks. The use of such license by the Collateral Agent may be exercised solely during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance with the provisions of this Agreement shall be binding upon the Grantors, notwithstanding any subsequent cure of an Event of Default.
Article V.
Miscellaneous
Section 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Grantor shall be given to it in care of the Lead Borrower as provided in Section 9.01 of the Credit Agreement.
Section 5.02. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default hereunder, regardless of whether the Collateral Agent, Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Collateral Agent may, without the consent of any other Secured Party, consent to a departure by any Grantor from any covenant of such Grantor set forth herein to the extent such departure is consistent with the authority of the Collateral Agent set forth in the definition of the term “Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) Each Grantor, jointly with the other Grantors and severally, agrees to reimburse the Collateral Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement; provided that each reference therein to “the Borrower” shall be deemed to be a reference to “each Grantor” or the “Grantors” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
(b) Each Grantor, jointly with the other Grantors and severally, agrees to indemnify the Collateral Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement; provided that each reference therein to the “Borrower” shall be deemed to be a reference to “each Grantor” or the “Grantors” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
(c) To the fullest extent permitted by applicable law, no Grantor shall assert, and each Grantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, each reference therein to “the Borrower” shall be deemed to be a reference to “each Grantor” or the “Grantors” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
Section 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
Section 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Collateral Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full in cash.
Section 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, modified, supplemented, waived or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.
Section 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 5.08. Right of Set-off. Each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Collateral Agent, the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Grantor or its respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 5.10. Waiver of jury trial. EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
Section 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 5.12. Security Interest Absolute; Reinstatement. (a) All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Secured Obligations or this Agreement.
(b) If any Secured Party repays, refunds, restores, or returns, in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such Secured Party in full or partial satisfaction of any Secured Obligation, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such Secured Party elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such Secured Party elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and, subject to Section 9.03(a) of the Credit Agreement, as to all reasonable costs, expenses, and external attorneys’ fees of such Secured Party related thereto, (i) the liability of the Grantors with respect to the amount or property repaid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist, and (ii) the Collateral Agent’s Security Interest and other security interests granted to the Collateral Agent in the Collateral securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) the Collateral Agent’s Security Interest or any other security interest of the Collateral Agent on any Collateral to secure the Secured Obligations shall have been released or terminated, or (B) this Agreement shall have been terminated or cancelled, the Collateral Agent’s Security Interest or such other security interest of the Collateral Agent, or this Agreement, as applicable, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Grantor in respect of such liability or any Collateral securing such liability.
Section 5.13. Termination or Release. Subject to Section 5.12(b), (a) this Agreement, the Security Interest and all other security interests granted hereby shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full in cash.
(b) The Security Interest and all other security interests granted hereby shall also automatically terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Collateral Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or releases in form and substance reasonably satisfactory to the Collateral Agent so long as the applicable Loan Party shall have provided the Collateral Agent such certifications or documents as the Collateral Agent shall reasonably request in order to demonstrate compliance with this Section 5.13. Any execution and delivery of documents by the Collateral Agent pursuant to this Section 5.13 shall be without recourse or warranty by the Collateral Agent or any other Secured Party.
Section 5.14. Additional Subsidiaries. Additional Persons shall become Grantors hereunder as required under the Credit Agreement upon execution and delivery to the Collateral Agent of (a) a Supplement and (b) a supplement to the Perfection Certificate with respect to such Person, and any such Person shall become a Grantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.
Section 5.15. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, the Collateral Agent shall have the right, but only upon the occurrence and during the continuance of an Event of Default and written notice by the Collateral Agent to the Lead Borrower of its intent to exercise such rights (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, indorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of accounts receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes, and (i) to make, settle and adjust claims in respect of Article 9 Collateral under policies of insurance, indorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith or willful misconduct or that of any of their controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgement.
Section 5.16. Intercreditor Provisions.
(a) Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement and (ii) the exercise of any right or remedy by the Collateral Agent hereunder or the application of proceeds (including insurance and condemnation proceeds) of any Collateral, in each case, are subject to the limitations and provisions of any applicable Intercreditor Agreement to the extent provided therein. In the event of any conflict between the terms of such applicable Intercreditor Agreement and the terms of this Agreement, the terms of such applicable Intercreditor Agreement shall govern.
(b) Notwithstanding anything contained in this Agreement or any other Security Document, to the extent that the provisions of this Agreement (or any other Security Document) require the delivery of, or granting of control over, or giving notice with respect to, any Collateral in respect of which any other lenders or other secured parties (or representatives thereof) have a security interest therein that is senior priority relative to the security interest of the Collateral Agent pursuant to any Intercreditor Agreement, then until the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) shall have been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) shall have been terminated, delivery of such Collateral (or control or notice with respect thereto) may instead be made to the applicable lender or other secured party (or representative thereof), to be held in accordance with the applicable Intercreditor Agreements, and any Grantor’s obligations hereunder with respect to such delivery, control or notice shall be deemed satisfied by such delivery to such lender or other secured party (or representative thereof). Furthermore, at all times prior to the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) having been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) having been terminated, the Collateral Agent is authorized by the parties hereto to effect transfers of such Collateral at any time in its possession (and any “control” or similar agreements with respect to such Collateral) to the applicable lender or other secured party or representative thereof in accordance with the applicable Intercreditor Agreements.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOP FLORIDA, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole Member
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.
VALOR ACQUISITION, LLC
[Signature Page to Second Lien Collateral Agreement (FRG)]
FRANCHISE GROUP INTERMEDIATE SL, LLC,
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
Name: Will Powell
Title: President
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
Name: Will Powell
Title: Chief Executive Officer and President
[Signature Page to Second Lien Collateral Agreement (FRG)]
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
[Signature Page to Second Lien Collateral Agreement (FRG)]
ALTER DOMUS (US) LLC, solely in its capacity as Collateral Agent and not in its individual capacity.
By: /s/ Matthew Trybula___________________
Name: Matthew Trybula
Title: Associate Counsel
[Signature Page to Second Lien Collateral Agreement (FRG)]
Exhibit 10.16
Execution Version
SECOND LIEN COLLATERAL AGREEMENT
dated as of
November 22, 2021,
between
W.S. BADCOCK CORPORATION
and
ALTER DOMUS (US) LLC,
as Collateral Agent
TABLE OF CONTENTS
| Article I. Definitions | 1 |
| Section 1.01. Defined Terms | 1 |
| Section 1.02. Other Defined Terms | 1 |
| Article II. Pledge of Securities | 4 |
| Section 2.01. Pledge | 4 |
| Section 2.02. Delivery of the Pledged Collateral | 5 |
| Section 2.03. Representations, Warranties and Covenants | 6 |
| Section 2.04. Registration in Nominee Name; Denominations | 8 |
| Section 2.05. Voting Rights; Dividends and Interest | 8 |
| Section 2.06. Article 8 Opt-In | 10 |
| Article III. Security Interests in Personal Property | 10 |
| Section 3.01. Security Interest | 10 |
| Section 3.02. Representations and Warranties | 12 |
| Section 3.03. Covenants | 14 |
| Section 3.04. Other Actions | 15 |
| Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral | 16 |
| Article IV. Remedies | 17 |
| Section 4.01. Remedies upon Default | 17 |
| Section 4.02. Application of Proceeds | 19 |
| Section 4.03. Securities Act | 19 |
| Section 4.04. Grant of License to Use Intellectual Property | 20 |
| Article V. Miscellaneous | 20 |
| Section 5.01. Notices | 20 |
| Section 5.02. Waivers; Amendment | 20 |
| Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification | 21 |
| Section 5.04. Successors and Assigns | 22 |
| Section 5.05. Survival of Agreement | 22 |
| Section 5.06. Counterparts; Effectiveness; Several Agreement | 22 |
| Section 5.07. Severability | 22 |
| Section 5.08. Right of Set-off | 23 |
| Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 23 |
| Section 5.10. Waiver of jury trial | 23 |
| Section 5.11. Headings | 24 |
| Section 5.12. Security Interest Absolute | 24 |
| Section 5.13. Termination or Release | 24 |
| Section 5.14. Additional Subsidiaries | 25 |
| Section 5.15. Collateral Agent Appointed Attorney-in-Fact | 25 |
Schedules
| Schedule I | Grantor | |
| Schedule II | Pledged Equity Interests; Pledged Debt Securities | |
| Schedule III | Intellectual Property | |
| Schedule IV | Commercial Tort Claims |
Exhibits
| Exhibit I | Form of Supplement | |
| Exhibit II | Form of Second Lien Copyright Security Agreement | |
| Exhibit III | Form of Second Lien Patent Security Agreement | |
| Exhibit IV | Form of Second Lien Trademark Security Agreement |
ii
SECOND LIEN COLLATERAL AGREEMENT, dated as of November 22, 2021 (this “Agreement”), between W.S. BADCOCK CORPORATION, a Florida corporation (the “Grantor”), and ALTER DOMUS (US) LLC, as collateral agent (in such capacity, together with its permitted successors and assigns in such capacity, the “Collateral Agent”).
Reference is made to that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Franchise Group, Inc., a Delaware corporation (“Lead Borrower”), Valor Acquisition, LLC, a Delaware limited liability company (“Valor”), Franchise Group NewCo Intermediate AF, LLC, a Delaware limited liability company (“Newco AF”), Franchise Group Newco PSP, LLC, a Delaware limited liability company (“FG NewCo PSP”, and together with Lead Borrower, Valor and NewCo AF, individually and collectively, the “Borrower”), the Lenders party thereto from time to time, ALTER DOMUS (US) LLC, as Administrative Agent, and the Collateral Agent. Certain Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Grantor is an Affiliate of the Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
Article I.
Definitions
Section 1.01. Defined Terms. (a) Capitalized terms used in this Agreement (including in the preamble and introductory paragraph hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement; provided that each term defined in the New York UCC (as defined herein) and not defined in this Agreement or the Credit Agreement shall have the meaning specified in the New York UCC. The term “instrument” shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Sections 1.03 and 1.04 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
Section 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Account Debtor” means any Person that is or may become obligated to Grantor under, with respect to or on account of an Account, Chattel Paper or General Intangible.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Article 9 Collateral” has the meaning assigned to such term in Section 3.01.
“Borrower” has the meaning assigned to such term in the preamble to this agreement.
“Collateral” means Article 9 Collateral and Pledged Collateral.
“Collateral Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Copyright License” means any written agreement or license now or hereafter in effect, granting to or from any Person any use right under any Copyright now or hereafter owned by any other Person or that such other Person otherwise has the right to license, and all rights of any such Person under any such agreement or license.
“Copyright Security Agreement” means each Second Lien Copyright Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit II hereto.
“Copyrights” means (a) all copyright rights in any work arising under the copyright laws of the United States or any other jurisdiction, whether as author, assignee, transferee or otherwise, (b) all registrations and applications for registration of any such copyright, including registrations, supplemental registrations and pending applications for registration in the United States Copyright Office, and including, in the case of Grantor, the United States copyright registrations and applications set forth next to its name on Schedule III hereto and (c) all extensions, renewals, and restorations thereof.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Federal Securities Laws” has the meaning assigned to such term in Section 4.03.
“Grantor” has the meaning assigned to such term in the preamble to this Agreement.
“Intellectual Property” means all intellectual property rights of every kind and nature, including rights in inventions, Patents, Copyrights, Licenses, Trademarks, rights in Trade Secrets, and rights in Software, all rights to sue or otherwise recover for any past, present and future infringement, dilution, misappropriation, or other violation or impairment thereof, and Proceeds of the foregoing, including, without limitation, license fees, royalties, income, payments, claims, damages and proceeds of suit now or hereafter due and/or payable with respect thereto, and all other rights of any kind accruing thereunder or pertaining thereto throughout the world.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“License” means any Patent License, Trademark License or Copyright License.
“New York UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.
“Patent License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to manufacture, use or sell any invention claimed in a Patent, now or hereafter owned by any other Person or that any other Person now or hereafter otherwise has the right to license, and all rights of any such Person under any such agreement or license.
2
“Patent Security Agreement” means each Second Lien Patent Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit III hereto.
“Patents” means (a) all patents and patent applications, for letters patent of the United States or any other jurisdiction, including issued patents and pending patent applications in the United States Patent and Trademark Office, including those listed on Schedule III hereto and (b) all reissues, substitutes, divisionals, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof.
“Perfection Certificate” means that certain Perfection Certificate dated as of the Effective Date delivered to the Collateral Agent pursuant to Section 4.01(f) of the Credit Agreement.
“Pledged Collateral” has the meaning assigned to such term in Section 2.01.
“Pledged Debt Securities” has the meaning assigned to such term in Section 2.01.
“Pledged Equity Interests” has the meaning assigned to such term in Section 2.01.
“Pledged Securities” means Pledged Equity Interests and Pledged Debt Securities.
“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon and distributions or payments with respect thereto.
“Quarterly Update Date” means the latest of (a) the date of delivery of the Compliance Certificate pursuant to Section 5.01(e) of the Credit Agreement, (b) ninety (90) days after the acquisition of the applicable after-acquired Collateral or occurrence of the applicable change, and (c) any later date agreed by the Collateral Agent in its reasonable discretion.
“Second Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Liens not prohibited by Section 6.02 of the Credit Agreement.
“Secured Parties” has the meaning assigned to such term in the Credit Agreement.
“Security Interest” has the meaning assigned to such term in Section 3.01(a).
“Software” means computer programs, object code, source code and supporting documentation, including, without limitation, “software” as such term is defined in the UCC and computer programs that may be construed as included in the definition of “goods” in the UCC, including any licensed rights thereto.
“Supplement” means an instrument in the form of Exhibit I hereto, or any other form approved by the Collateral Agent, and in each case reasonably satisfactory to the Collateral Agent.
“Trade Secrets” means any trade secrets or other proprietary and confidential information, including unpatented inventions, invention disclosures, engineering or other technical data, financial data, procedures, know-how, designs, supplier lists, customer lists, business, production or marketing plans, formulae, methods (whether or not patentable), processes, compositions, schematics, algorithms, techniques, analyses, source code, object code and data collections.
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“Trademark License” means any written agreement or license now or hereafter in effect, granting to or from any Person any right to use any Trademark now or hereafter owned by any other Person or that any other Person otherwise has the right to license and all rights of any such Person under any such agreement or license.
“Trademark Security Agreement” means each Second Lien Trademark Security Agreement executed by Grantor and the Collateral Agent, substantially in the form of Exhibit IV hereto.
“Trademarks” means (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade dress, logos, domain names and other source identifiers, in each case whether arising under the trademark laws of the United States or any other jurisdiction, (b) all registrations and applications for the registration thereof, including all registrations and applications for registration filed in the United States Patent and Trademark Office, including, in the case of Grantor, any of the United States trademark registrations or applications set forth next to its name on Schedule III hereto and (c) all of the goodwill of the applicable business connected with the use of and symbolized by any of the foregoing.
“UCC” means the New York UCC; provided, however, that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Collateral Agent’s and the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.
Article II.
Pledge of Securities
Section 2.01. Pledge. As security for the payment or performance, as the case may be, in full of the Secured Obligations, Grantor hereby grants, assigns and pledges to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest in, all of Grantor’s right, title and interest in, to and under any and all of the following assets, now owned or at any time hereafter acquired by Grantor or in which Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located:
(a) (i) Equity Interests owned by Grantor, including those listed opposite the name of Grantor on Schedule II hereto, (ii) any other Equity Interests obtained in the future by Grantor and (iii) the certificates or other instruments representing all such Equity Interests (if any) together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank (collectively, the “Pledged Equity Interests”); provided that Pledged Equity Interests shall not include any Excluded Assets;
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(b) (i) the debt securities owned by Grantor, including those listed opposite the name of Grantor on Schedule II hereto, (ii) any debt securities in the future issued to or otherwise acquired by Grantor and (iii) the promissory notes and any other instruments evidencing all such debt securities referred to in subclauses (i) and (ii) of this paragraph (b) (collectively, the “Pledged Debt Securities”); provided that Pledged Debt Securities shall not include any Excluded Assets;
(c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 2.01 and Section 2.02;
(d) subject to Section 2.05, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, any Pledged Equity Interests or any Pledged Debt Securities;
(e) subject to Section 2.05, all rights and privileges of Grantor with respect to the securities and other property referred to in paragraphs (a) through (d) above; and
(f) all Proceeds of any of the foregoing unless such Proceeds constitute an Excluded Asset (the items referred to in paragraphs (a) through (e) above being collectively referred to as the “Pledged Collateral”).
Notwithstanding the foregoing, in no event shall the Pledged Collateral include any Excluded Asset.
Section 2.02. Delivery of the Pledged Collateral. (a) Subject to the Intercreditor Agreements, Grantor agrees to deliver or cause to be delivered to the Collateral Agent (limited, with respect to certificates not constituting “certificated securities” within the meaning of the UCC, to use of commercially reasonable efforts to deliver or cause to be delivered such certificates) (A) on the date Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) owned by Grantor on such date and (B) on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), any certificates representing or evidencing Pledged Securities (other than to the extent constituting (i) Excluded Assets, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)) acquired by Grantor after the date Grantor becomes party to this Agreement.
(b) Except as otherwise addressed in Section 3.03(b) herein, subject to the Intercreditor Agreements, (i) on the date Grantor becomes party to this Agreement (or such later date permitted by Sections 4.01(f) or 5.14 of the Credit Agreement or to which the Collateral Agent may otherwise agree in its reasonable discretion) and (ii) on or before the next Quarterly Update Date occurring after the receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), Grantor will deliver or cause to be delivered to the Collateral Agent any promissory notes evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to Grantor by any Person in a principal amount of $5,000,000 or more (other than Excluded Assets); provided, however, that the foregoing delivery requirement with respect to any intercompany indebtedness may be satisfied by delivery of an omnibus or global intercompany note executed by Grantor as payee and all Loan Parties as payors in the form of the Master Intercompany Note.
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(c) Upon delivery to the Collateral Agent, (i) any certificate or promissory note representing Pledged Securities shall be accompanied by undated stock or note powers, as applicable, duly executed in blank or other undated instruments of transfer duly executed in blank and reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral shall be accompanied by undated proper instruments of assignment duly executed in blank by Grantor and such other instruments and documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities shall be accompanied by a schedule describing such Pledged Securities, which schedule shall be deemed attached to, and shall supplement, Schedule II hereto and be made a part hereof; provided that failure to provide any such schedule hereto shall not affect the validity of such pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
Section 2.03. Representations, Warranties and Covenants. Grantor represents, warrants and covenants (solely with respect to clause (c)(iii) and (iv), and (g) below) to and with the Collateral Agent, for the benefit of the Secured Parties, that:
(a) as of the Effective Date, Schedule II hereto sets forth a true and complete list, with respect to Grantor, of (A) all the Pledged Equity Interests owned by Grantor in any Subsidiary and the percentage of the issued and outstanding units of each class of the Equity Interests of the issuer thereof represented by the Pledged Equity Interests owned by Grantor and (B) all the Pledged Debt Securities owned by Grantor evidencing Indebtedness for borrowed money (including in respect of cash management arrangements) that is owed to Grantor by any Person in a principal amount of $5,000,000 or more;
(b) (i) the Pledged Equity Interests have been duly and validly authorized and issued by the issuers thereof and are fully paid and nonassessable (to the extent such concept is applicable in the relevant jurisdiction, and other than any assessment of the equity holders imposed as a matter of law) and (ii) the Pledged Debt Securities owned by Grantor are legal, valid and binding obligations of the issuers thereof, except to the extent that enforceability of such obligations may be limited by applicable bankruptcy, insolvency, and other similar laws affecting creditor’s rights generally; provided that the foregoing representations, insofar as they relate to the Pledged Collateral issued by a Person other than the Borrower or any Subsidiary, are made to the knowledge of Grantor;
(c) except for the security interests granted hereunder and under any other Loan Documents, Grantor (i) is and, subject to any transfers not prohibited by the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities owned by Grantor, (ii) holds the same free and clear of all Liens, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, (iii) will make no further assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement and transfers not prohibited by the Credit Agreement, and (iv) will use commercially reasonable efforts to defend its title or interest thereto or therein against any and all Liens (other than Liens not prohibited by Section 6.02 of the Credit Agreement), however arising, of all Persons whomsoever;
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(d) except for restrictions and limitations not prohibited by the Loan Documents (including any non-consensual Liens not prohibited by Section 6.02 of the Credit Agreement) or securities laws generally, to the extent issued by the Borrower or any Subsidiary, the Pledged Equity Interests and the Pledged Debt Securities are and will continue to be freely transferable and assignable, and, to the extent issued by the Borrower or any Subsidiary, none of the Pledged Equity Interests or the Pledged Debt Securities are or will be subject to any option, right of first refusal, shareholders agreement, charter, by-law or other organizational document provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect in any manner adverse to the Secured Parties in any material respect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;
(e) Grantor has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated;
(f) by virtue of the execution and delivery by the Grantor of this Agreement, when and if any Pledged Securities are delivered to the Collateral Agent in accordance with this Agreement and upon the filing of the UCC financing statements described in Section 3.02(b), the Collateral Agent will obtain a legal, valid and perfected Second Priority lien upon and security interest in such Pledged Securities, free of any adverse claims (other than Liens not prohibited by Section 6.02 of the Credit Agreement), under the UCC, to the extent such lien and security interest may be created and perfected under the New York UCC, as security for the payment and performance of the Secured Obligations; and
(g) subject to the terms of this Agreement and to the extent permitted by applicable law, Grantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, it will comply with the instructions of the Collateral Agent with respect to the Equity Interests in Grantor that constitute Pledged Equity Interests hereunder without further consent by the applicable owner or holder of such Equity Interests.
Section 2.04. Registration in Nominee Name; Denominations. If an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantor two (2) Business Days’ prior written notice of its intent to exercise such rights (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to (a) hold the Pledged Securities in the name of Grantor, endorsed or assigned in blank or in favor of the Collateral Agent or in its own name as pledgee or in the name of its nominee (as pledgee or as sub-agent), and Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities registered in the name of Grantor, and (b) exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any reasonable purpose consistent with this Agreement.
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Section 2.05. Voting Rights; Dividends and Interest. (a) Unless and until an Event of Default shall have occurred and is continuing and the Collateral Agent shall have provided the Grantor not less than two (2) Business Days’ prior written notice that the rights of the Grantor under this Section 2.05 are being suspended (provided that such prior written notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration):
(i) Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents;
(ii) the Collateral Agent shall promptly execute and deliver to Grantor, or cause to be promptly executed and delivered to Grantor, all such proxies, powers of attorney and other instruments as Grantor may reasonably request for the purpose of enabling Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section; and
(iii) Grantor shall be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and are otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable laws; provided that any noncash dividends, interest, principal or other distributions that would constitute Pledged Equity Interests or Pledged Debt Securities, whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests in the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral and, if received by Grantor, shall, subject to the Intercreditor Agreements, be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent), in each case, to the extent required pursuant to Section 2.02 or Section 2.06.
(b) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantor with written notice (to the extent required under clause (a) of this Section 2.05), all rights of Grantor to dividends, interest, principal or other distributions that Grantor is authorized to receive pursuant to clause (a)(iii) of this Section 2.05 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. Subject to the Intercreditor Agreements, all dividends, interest, principal or other distributions received by Grantor contrary to the provisions of this Section 2.05 shall be held in trust for the benefit of the Collateral Agent and the other Secured Parties and shall be forthwith promptly delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsements, stock or note powers and other instruments of transfer reasonably requested by the Collateral Agent). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and, to the extent so received, shall be applied in accordance with the provisions of Section 4.02. After all Events of Default have been cured or waived and the Lead Borrower has delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, the Collateral Agent shall promptly repay to Grantor all dividends, interest, principal or other distributions that Grantor would otherwise be permitted to retain pursuant to the terms of clause (a)(iii) of this Section 2.05 and that remain in such account.
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(c) Subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent shall have provided the Grantor with written notice (to the extent required under clause (a) of this Section 2.05), all rights of Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to clause (a)(i) of this Section 2.05, and the obligations of the Collateral Agent under clause (a)(ii) of this Section 2.05, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers. After all Events of Default have been cured or waived and the Lead Borrower shall have delivered to the Collateral Agent a certificate of a Responsible Officer of the Lead Borrower to that effect, all rights vested in the Collateral Agent pursuant to this paragraph (c) shall cease, and the Grantor shall have the exclusive right to exercise the voting and consensual rights and powers it would otherwise be entitled to exercise pursuant to clause (a)(i) of this Section 2.05.
(d) Any notice given by the Collateral Agent to the Grantor suspending its rights under paragraph (a) of this Section 2.05 (i) shall be given in writing, (ii) [reserved] and (iii) may suspend the rights of the Grantor under clause (a)(i) or clause (a)(iii) of this Section 2.05 in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.
(e) In order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder, Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request.
Section 2.06. Article 8 Opt-In.
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(a) Grantor shall not take any action to cause any membership interest, partnership interest, or other equity interest of any limited liability company or limited partnership owned or controlled by Grantor comprising Collateral to be or become a “security” within the meaning of, or to be governed by, Article 8 of the UCC as in effect under the laws of any state having jurisdiction and shall not cause or permit any such limited liability company or limited partnership to “opt in” or to take any other action seeking to establish any membership interest, partnership interest or other equity interest of such limited liability company or limited partnership comprising the Collateral as a “security” or to become certificated, in each case, without certificating such interest and delivering all certificates evidencing such interest to the Collateral Agent in accordance with and as required by the provisions of Section 2.02.
Article III.
Security Interests in Personal Property
Section 3.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Secured Obligations, Grantor hereby grants to the Collateral Agent, together with its permitted successors and assigns, for the benefit of the Secured Parties, a security interest (the “Security Interest”) in all of Grantor’s right, title and interest in, to and under any and all of the following assets now owned or at any time hereafter acquired by Grantor or in which Grantor now has or at any time in the future may acquire any right, title or interest, regardless of where located (but in all cases excluding any Excluded Assets):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles, including all Intellectual Property;
(vii) all Instruments and Promissory notes;
(viii) all Inventory;
(ix) all other Goods;
(x) all Investment Property;
(xi) all Letter-of-Credit Rights;
(xii) all cash and Moneys;
(xiii) all Securities Accounts;
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(xiv) all Commercial Tort Claims specifically described on Schedule IV hereto, as such schedule may be supplemented from time to time pursuant to Section 3.04(c);
(xv) all books and records pertaining to the Article 9 Collateral; and
(xvi) to the extent not otherwise included, all Proceeds, substitutions, replacements and products of any and all of the foregoing and all Supporting Obligations, collateral security and guarantees given by any Person with respect to any of the foregoing (all of the above in this Section 3.01, the “Article 9 Collateral”).
It is understood that the term “Article 9 Collateral” shall not include any Excluded Asset; provided, however, that Article 9 Collateral shall include any Proceeds, substitutions or replacements of any of the foregoing (unless such Proceeds, substitutions or replacements would constitute an Excluded Asset).
(b) Grantor hereby irrevocably authorizes the Collateral Agent for the benefit of the Secured Parties at any time and from time to time to file in any relevant U.S. jurisdiction any financing statements with respect to the Collateral or any part thereof and amendments thereto that (i) describe the collateral covered thereby in any manner that the Collateral Agent reasonably determines is necessary or advisable to ensure the perfection of the security interest in the Collateral granted under this Agreement, including indicating the Collateral as “all assets” of Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the UCC for the filing of any financing statement or amendment, including whether Grantor is an organization, the type of organization and, if required, any organizational identification number issued to Grantor. Grantor agrees to provide such information to the Collateral Agent promptly upon request.
The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) any Copyright Security Agreement, Patent Security Agreement or Trademark Security Agreement, as applicable, as may be reasonably necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest in Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks or United States Copyrights granted by Grantor and naming Grantor as debtor and the Collateral Agent as secured party.
(c) The Security Interest and the security interest granted pursuant to Article II are granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of Grantor with respect to or arising out of the Collateral.
Section 3.02. Representations and Warranties. The Grantor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, that:
(a) Grantor has good title to or valid rights in (except, in each case, as otherwise permitted by the Loan Documents) the Article 9 Collateral, (i) other than Liens not prohibited by Section 6.02 of the Credit Agreement and (ii) except for defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their intended purposes, in each case, except where the failure to have such good title or valid rights would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Grantor has full power and authority to grant to the Collateral Agent, for the benefit of the Secured Parties, the Security Interest in Grantor’s Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval that has been obtained and except to the extent that failure to obtain or make such consent or approval, as the case may be, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
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(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein, including the exact legal name and jurisdiction of organization of Grantor, is correct and complete in all material respects as of the Effective Date. The Uniform Commercial Code financing statements or other appropriate filings, recordings or registrations prepared by the Collateral Agent based upon the information provided to the Collateral Agent (or otherwise approved by the Collateral Agent) for filing in the appropriate governmental, municipal or other office (or specified by notice from the Lead Borrower to the Collateral Agent after the Effective Date in the case of filings, recordings or registrations required by Section 5.12 of the Credit Agreement) are all the filings, recordings and registrations (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, United States Trademarks and United States Copyrights to the extent that such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office) that are necessary to establish a legal, valid and perfected security interest in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral in which the Security Interest may be perfected by filing, recording or registration in the United States, and as of the date hereof no further or subsequent filing, refiling, recording, rerecording, registration or reregistration (other than filings, if any, which shall be made in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to record the Security Interest in Article 9 Collateral consisting of registered or applied-for United States Patents, Trademarks and Copyrights) is necessary, except as provided under applicable law with respect to the filing of continuation statements (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office). The Grantor represents and warrants that a fully executed Patent Security Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as applicable, in each case containing a list of the Article 9 Collateral consisting of United States issued Patents, United States registered Trademarks and United States registered Copyrights (and applications for any of the foregoing), as applicable, and executed by Grantor owning any such Article 9 Collateral, have been delivered to the Collateral Agent in a form suitable for recording with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in favor of the Collateral Agent, for the benefit of the Secured Parties, in respect of all Article 9 Collateral consisting of registered and applied for Patents, Trademarks and Copyrights in which a security interest may be filed, recorded or registered, in each case, in the United States. No further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than such actions as are necessary to perfect the Security Interest with respect to any Article 9 Collateral consisting of issued, registered or applied for United States Patents, United States Trademarks and United States Copyrights acquired or developed by Grantor, or for which a “Statement of Use” or an “Amendment to Allege Use” is filed with the United States Patent and Trademark Office with respect to any “intent-to-use” Trademark application, after the date hereof, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office).
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(c) The Security Interest constitutes (i) a legal and valid security interest in all the Article 9 Collateral securing the payment and performance of the Secured Obligations, (ii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the applicable jurisdiction in the United States pursuant to the Uniform Commercial Code and (iii) subject to the filings described in paragraph (b) of this Section 3.02, a perfected security interest in all Article 9 Collateral in which a security interest may be perfected upon the receipt and recording of a Patent Security Agreement, a Trademark Security Agreement and/or a Copyright Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, to the extent such security interest may be perfected by filing in the United States Patent and Trademark Office or the United States Copyright Office. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens not prohibited by Section 6.02 of the Credit Agreement.
(d) As of the Effective Date, Schedule III hereto sets forth a true and complete list, with respect to Grantor, of (i) all of Grantor’s Patents and Trademarks applied for or issued or registered with the United States Patent and Trademark Office, including the name of the registered owner or applicant and the registration, application, or patent number, as applicable, of each such Patent or Trademark and (ii) all of Grantor’s Copyrights applied for or registered with the United States Copyright Office, including the name of the registered owner and the registration number of each such Copyright.
(e) As of the Effective Date, Schedule IV hereto sets forth a true and complete list, with respect to Grantor, of all of Grantor’s Commercial Tort Claims (in respect of which a complaint or counterclaim has been filed by or on behalf of Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith).
Section 3.03. Covenants. (a) Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral (other than Intellectual Property, which is governed by Section 3.05) against all Persons, except with respect to Article 9 Collateral that Grantor determines in its reasonable business judgment is no longer necessary or beneficial to the conduct of Grantor’s business, and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and the priority thereof against any Lien prohibited by Section 6.02 of the Credit Agreement, subject to the rights of Grantor under Section 9.14 of the Credit Agreement and corresponding provisions of the Security Documents to obtain a release of the Liens created under the Security Documents.
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(b) Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any reasonable and documented or invoiced out-of-pocket fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing statements or other documents in connection herewith or therewith, in each case, subject to and in accordance with the terms of this Agreement and of the Credit Agreement. Subject to the Intercreditor Agreements, except to the extent otherwise provided in Article II, if any amount payable under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note (which may be a global note) or other instrument (other than any promissory note or other instrument in a principal amount of less than $5,000,000 owed to Grantor by any Person), such note or instrument shall be delivered (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) to the Collateral Agent, for the benefit of the Secured Parties, together with an undated instrument of transfer duly executed in blank and in a manner reasonably satisfactory to the Collateral Agent.
(c) At its option, the Collateral Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and prohibited by Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the tangible Article 9 Collateral to the extent Grantor fails to do so as required by the Credit Agreement, this Agreement or any other Loan Document and within a reasonable period of time after the Collateral Agent has requested that it do so, and Grantor jointly and severally agrees to reimburse the Collateral Agent, within thirty (30) days after demand, for any reasonable payment made or any reasonable and documented or invoiced out-of-pocket expense incurred by the Collateral Agent pursuant to the foregoing authorization in accordance with Section 5.03(a); provided that nothing in this paragraph shall be interpreted as imposing any obligation on the Collateral Agent or any Secured Party to cure or perform, any covenants or other promises of Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.
(d) The exercise by the Collateral Agent of any of its rights hereunder shall not release Grantor from any of its duties or obligations under each contract, agreement or instrument relating to the Article 9 Collateral unless the Collateral Agent has expressly in writing assumed such duties and obligations and Grantor agrees to indemnify and hold harmless the Collateral Agent and the other Secured Parties from and against any and all liability for such performance, except to the extent resulting from the gross negligence, bad faith or willful misconduct of the Collateral Agent, any other Secured Party or any of their respective controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case as determined by a court of competent jurisdiction in a final and non-appealable judgment.
(e) Notwithstanding anything herein to the contrary, it is understood that Grantor shall not be required by this Agreement to better assure, preserve, protect or perfect the security interest created hereunder by any means other than (i) filings of financing statements pursuant to the Uniform Commercial Code, (ii) filings with the United States Patent and Trademark Office or United States Copyright Office (or any successor office) of any Copyright Security Agreements, Patent Security Agreements and Trademark Security Agreements, as applicable, in respect of registered, issued or applied for United States Copyrights, United States Patents or United States Trademarks, respectively, (iii) in the case of Collateral that constitutes Instruments, Tangible Chattel Paper or Negotiable Documents (other than those Negotiable Documents held in the ordinary course of business), delivery thereof to the Collateral Agent in accordance with the terms hereof (including the delivery thresholds set forth herein) (together with, where applicable, undated stock or note powers or other undated proper instruments of assignment) and (iv) other actions to the extent required by Section 3.04 or Article II hereunder or otherwise expressly provided under this Agreement. Grantor shall not be required to complete any filings or other action with respect to the better assurance, preservation, protection or perfection of the security interests created hereby in any jurisdiction outside of the United States.
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Section 3.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest, Grantor agrees, in each case at Grantor’s own expense and subject to the Intercreditor Agreements, to take the following actions with respect to the following Article 9 Collateral:
(a) Instruments. Except to the extent otherwise provided in Article II, if Grantor shall at any time hold or acquire any Instruments constituting Collateral (other than Instruments with an individual face amount of less than $5,000,000 and other than checks to be deposited in the ordinary course of business), Grantor shall (on or before the next Quarterly Update Date occurring after receipt thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion)) endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(b) Investment Property. Except to the extent otherwise provided in Article II, if Grantor shall at any time hold or acquire any certificates representing or evidencing Investment Property constituting Collateral (other than (i) Investment Property with an individual value of less than $5,000,000, (ii) Equity Interests in any Immaterial Subsidiaries, (iii) Equity Interests in any Person that is not a Subsidiary of Grantor and (iv) Equity Interests in any Foreign Subsidiary (other than to the extent constituting “securities” within the meaning of the UCC)), Grantor shall, on or before the next Quarterly Update Date occurring after the acquisition thereof (or such later date which the Collateral Agent may agree to in its reasonable discretion), endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time reasonably request.
(c) Commercial Tort Claims. If Grantor shall at any time hold or acquire a Commercial Tort Claim (in respect of which a complaint or counterclaim has been filed by or on behalf of Grantor) seeking damages in an amount reasonably estimated to exceed $5,000,000 (as determined by the Lead Borrower in good faith), Grantor shall promptly notify the Collateral Agent thereof in a writing signed by Grantor, including a summary description of such claim, and Schedule IV hereto shall be deemed to be supplemented to include such description of such Commercial Tort Claim as set forth in such writing.
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Section 3.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Except as otherwise determined in Grantor’s reasonable business judgment, with respect to registration or pending application of each item of its Intellectual Property for which Grantor has standing and ability to do so, Grantor agrees to take commercially reasonable efforts to (i) maintain the validity and enforceability of any registered Intellectual Property (or applications therefor) and to maintain such registrations and applications of Intellectual Property in full force and effect and (ii) pursue the registration and maintenance of each Patent, Trademark or Copyright registration or application, in each case, except for any failure to do any of the foregoing that would not reasonably be expected to have a Material Adverse Effect. Except as otherwise determined in Grantor’s reasonable business judgment, Grantor shall take commercially reasonable steps to defend title to and ownership of its Intellectual Property, except for any failure to do so that would not reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, nothing in this Section 3.05 shall prevent Grantor from disposing of, discontinuing the use or maintenance of, abandoning, failing to pursue or enforce or otherwise allowing to lapse, terminate, be invalidated or put into the public domain any of its registered or applied for Intellectual Property that is no longer used, useful, or economically practicable to maintain, or if Grantor determines in its reasonable business judgment that such discontinuance is desirable in the conduct of its business.
(b) Grantor agrees that, should it obtain an ownership or other interest in any Intellectual Property after the Effective Date, should it file an application for the registration or issuance of any Intellectual Property after the Effective Date, and should it file with and have accepted by the United States Patent and Trademark Office a “Statement of Use” or an “Amendment to Allege Use” with respect to any “intent-to-use” Trademark application owned by it after the Effective Date, subject to the immediately succeeding sentence, (i) the provisions of this Agreement shall automatically apply thereto and (ii) any such Intellectual Property shall automatically become subject to the terms and conditions of this Agreement, except to the extent such Intellectual Property is obtained under a license or sublicense from a third party under which a security interest would not be permitted. For the avoidance of doubt, a security interest shall not be granted in any Intellectual Property that constitutes an Excluded Asset.
(c) Grantor, either itself or through any agent, employee, licensee or designee, shall (i) whenever a certificate is delivered or required to be delivered pursuant to Section 5.03(b) of the Credit Agreement, deliver to the Collateral Agent a schedule setting forth all of Grantor’s Patents, Trademarks and Copyrights, as applicable, that are issued by, registered in, or applied for in the United States Patent and Trademark Office or the United States Copyright Office (including, for the avoidance of doubt, “intent-to-use” Trademark applications for which a “Statement of Use” or an “Amendment to Allege Use” has been filed with and accepted by the United States Patent and Trademark Office) and that are not listed on Schedule III hereto or on a schedule previously provided to the Collateral Agent pursuant to this Section 3.05(c) and (ii) within a reasonable time following the request of the Collateral Agent, and in any event on or prior to the next Quarterly Update Date following such request of the Collateral Agent (or such later date which the Collateral Agent may agree to in its reasonable discretion), execute and deliver a Patent Security Agreement, Trademark Security Agreement or Copyright Security Agreement, as applicable, in respect of such Patents, Trademarks and/or Copyrights; provided, that this clause (ii) shall not apply to any Intellectual Property constituting Excluded Assets.
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Article IV.
Remedies
Section 4.01. Remedies upon Default. Subject to the Intercreditor Agreements, if an Event of Default shall occur and be continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to them in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) and all rights under any other applicable law or in equity. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, upon the occurrence and during the continuance of an Event of Default, Grantor agrees to deliver, on demand, each item of Collateral to the Collateral Agent or any Person designated by the Collateral Agent, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) subject to Section 4.04, with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by Grantor to the Collateral Agent, for the benefit of the Secured Parties, or to license or sublicense, whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then existing licensing arrangements to the extent that waivers cannot be obtained) in connection with exercise of its remedies hereunder, and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and the Pledged Collateral and to enter onto and occupy any premises owned or, to the extent lawful and permitted, leased by Grantor where the Collateral or any part thereof is assembled or located without any obligation to pay rent for a reasonable period in order to effectuate its rights and remedies hereunder or under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, Grantor agrees that the Collateral Agent shall have the right, subject to the mandatory requirements of applicable law and the notice requirements described below, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale of securities (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each purchaser at any sale of Collateral shall hold the property sold absolutely free from any claim or right on the part of Grantor, and Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal that Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.
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To the extent notice of sale shall be required by law, the Collateral Agent shall give Grantor no less than ten (10) days’ written notice (which Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration). Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent and the other Secured Parties shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, the Collateral Agent on behalf of any Secured Party may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of Grantor (all said rights being also hereby waived and released to the extent permitted by law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from Grantor as a credit against the purchase price (which shall decrease the Secured Obligations owed to such Secured Party by such amount used as a credit against the purchase price), and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and Grantor shall not be entitled to the return of the Collateral or any portion thereof subject thereto. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 4.01 shall be deemed to conform to the commercial reasonableness standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions. The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral and the Collateral Agent may specifically disclaim or modify any warranties of title or the like. The Collateral Agent shall have no obligation to marshal any of the Collateral.
Section 4.02. Application of Proceeds. Subject to the terms of the Intercreditor Agreements, the Collateral Agent shall apply the proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral (including any Collateral consisting of cash) or the Guarantees, pursuant to the exercise by the Collateral Agent (in accordance with the terms of the Loan Documents) of its remedies, in each case, in accordance with Section 7.03 of the Credit Agreement. The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof. The Collateral Agent shall have no liability to any of the Secured Parties for actions taken in reliance on information supplied to it as to the amounts of unpaid principal and interest and other amounts outstanding with respect to the Secured Obligations.
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Section 4.03. Securities Act. In view of the position of the Grantor in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable blue sky or other state securities laws or similar laws analogous in purpose or effect. Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof. Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion, (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws to the extent the Collateral Agent has determined that such a registration is not required by any Requirements of Law and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent and the other Secured Parties shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 4.03 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.
Section 4.04. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement upon the occurrence and during the continuance of an Event of Default, at such time as, and to the extent that, the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to Grantor) to use or sublicense (to its contractors, agents or representatives, or otherwise exercising its remedies hereunder) any Intellectual Property now owned or hereafter acquired by Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, to the extent that such non-exclusive license (a) does not violate the express terms of any agreement between Grantor and a third party governing such Intellectual Property (and shall be subject to any such licenses), or gives such third party any right of acceleration, modification, termination or cancellation therein and (b) is not prohibited by any Requirements of Law; provided that such license and sublicenses with respect to Trademarks shall be subject to the maintenance of quality standards with respect to the goods and services on which such Trademarks are used sufficient to preserve the validity of such Trademarks. The use of such license by the Collateral Agent may be exercised solely during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Collateral Agent in accordance with the provisions of this Agreement shall be binding upon Grantor, notwithstanding any subsequent cure of an Event of Default.
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Article V.
Miscellaneous
Section 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to Grantor shall be given to it in care of the Lead Borrower as provided in Section 9.01 of the Credit Agreement.
Section 5.02. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default hereunder, regardless of whether the Collateral Agent, Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
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(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and Grantor with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement; provided that the Collateral Agent may, without the consent of any other Secured Party, consent to a departure by Grantor from any covenant of Grantor set forth herein to the extent such departure is consistent with the authority of the Collateral Agent set forth in the definition of the term “Collateral and Guarantee Requirement” or elsewhere in the Credit Agreement.
Section 5.03. Collateral Agent’s Fees and Expenses; Indemnification. (a) Grantor agrees to reimburse the Collateral Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) Grantor agrees to indemnify the Collateral Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(c) To the fullest extent permitted by applicable law, Grantor shall not assert, and Grantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of paragraphs (a) and (b) above and this paragraph (c), each reference therein to “the Borrower” shall be deemed to be a reference to “Grantor” and each reference therein to the “Administrative Agent” shall be deemed to be a reference to the “Collateral Agent.”
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
Section 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.
Section 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Collateral Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document, and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full in cash.
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Section 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to Grantor when a counterpart hereof executed on behalf of Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon Grantor and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of Grantor, the Collateral Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood that Grantor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement.
Section 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 5.08. Right of Set-off. Each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Lender as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
Section 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Collateral Agent, the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against Grantor or its properties in the courts of any jurisdiction.
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(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in any Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
Section 5.10. Waiver of jury trial. EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
Section 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
Section 5.12. Security Interest Absolute; Reinstatement. (a) All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Secured Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any other Loan Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee securing or guaranteeing all or any of the Secured Obligations or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Grantor in respect of the Secured Obligations or this Agreement.
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(b) If any Secured Party repays, refunds, restores, or returns, in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such Secured Party in full or partial satisfaction of any Secured Obligation, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such Secured Party elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such Secured Party elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and, subject to Section 9.03(a) of the Credit Agreement, as to all reasonable costs, expenses, and external attorneys’ fees of such Secured Party related thereto, (i) the liability of the Grantor with respect to the amount or property repaid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist, and (ii) the Collateral Agent’s Security Interest and other security interests granted to the Collateral Agent in the Collateral securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made. If, prior to any of the foregoing, (A) the Collateral Agent’s Security Interest or any other security interest of the Collateral Agent on any Collateral to secure the Secured Obligations shall have been released or terminated, or (B) this Agreement shall have been terminated or cancelled, the Collateral Agent’s Security Interest or such other security interest of the Collateral Agent, or this Agreement, as applicable, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of Grantor in respect of such liability or any Collateral securing such liability.
Section 5.13. Termination or Release. Subject to Section 5.12(b), (a) this Agreement, the Security Interest and all other security interests granted hereby shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document, shall have been paid in full in cash.
(b) The Security Interest and all other security interests granted hereby shall also automatically terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Collateral Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or releases in form and substance reasonably satisfactory to the Collateral Agent so long as the applicable Loan Party shall have provided the Collateral Agent such certifications or documents as the Collateral Agent shall reasonably request in order to demonstrate compliance with this Section 5.13. Any execution and delivery of documents by the Collateral Agent pursuant to this Section 5.13 shall be without recourse or warranty by the Collateral Agent or any other Secured Party.
Section 5.14. [Reserved].
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Section 5.15. Collateral Agent Appointed Attorney-in-Fact. Grantor hereby makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) the attorney-in-fact of Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof at any time after and during the continuance of an Event of Default, which appointment is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, subject to the Intercreditor Agreements, the Collateral Agent shall have the right, but only upon the occurrence and during the continuance of an Event of Default and written notice by the Collateral Agent to the Lead Borrower of its intent to exercise such rights (provided that such notice is not required if (x) an Event of Default under Section 7.01(h) or (i) of the Credit Agreement shall have occurred and is continuing or (y) payment of the Loans shall be due by acceleration), with full power of substitution either in the Collateral Agent’s name or in the name of Grantor (a) to receive, indorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of accounts receivable to any Account Debtor; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require Grantor to notify, Account Debtors to make payment directly to the Collateral Agent; (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes, and (i) to make, settle and adjust claims in respect of Article 9 Collateral under policies of insurance, indorsing the name of Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto; provided that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to Grantor for any act or failure to act hereunder, except for their own gross negligence, bad faith or willful misconduct or that of any of their controlled Affiliates, directors, officers, employees, counsel, agents or attorneys-in-fact, in each case, as determined by a court of competent jurisdiction in a final and non-appealable judgement.
Section 5.16. Intercreditor Provisions.
(a) Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to this Agreement and (ii) the exercise of any right or remedy by the Collateral Agent hereunder or the application of proceeds (including insurance and condemnation proceeds) of any Collateral, in each case, are subject to the limitations and provisions of any applicable Intercreditor Agreement to the extent provided therein. In the event of any conflict between the terms of such applicable Intercreditor Agreement and the terms of this Agreement, the terms of such applicable Intercreditor Agreement shall govern.
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(b) Notwithstanding anything contained in this Agreement or any other Security Document, to the extent that the provisions of this Agreement (or any other Security Document) require the delivery of, or granting of control over, or giving notice with respect to, any Collateral in respect of which any other lenders or other secured parties (or representatives thereof) have a security interest therein that is senior priority relative to the security interest of the Collateral Agent pursuant to any Intercreditor Agreement, then until the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) shall have been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) shall have been terminated, delivery of such Collateral (or control or notice with respect thereto) may instead be made to the applicable lender or other secured party (or representative thereof), to be held in accordance with the applicable Intercreditor Agreements, and Grantor’s obligations hereunder with respect to such delivery, control or notice shall be deemed satisfied by such delivery to such lender or other secured party (or representative thereof). Furthermore, at all times prior to the obligations to such lenders or other secured parties (or representatives thereof) secured by such security interests (excluding contingent obligations as to which no claim has been made or which are otherwise not due) having been paid in full in cash and all commitments of such lenders or other secured parties (or representatives thereof) having been terminated, the Collateral Agent is authorized by the parties hereto to effect transfers of such Collateral at any time in its possession (and any “control” or similar agreements with respect to such Collateral) to the applicable lender or other secured party or representative thereof in accordance with the applicable Intercreditor Agreements.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
W.S. BADCOCK CORPORATION, as a Grantor
By /s/ Brian Kahn________________________
Name: Brian Kahn
Title: Senior Vice President
[Signature Page to Second Lien Collateral Agreement (Badcock)]
ALTER DOMUS (US) LLC, solely in its capacity as Collateral Agent and not in its individual capacity
By /s/ Matthew Trybula___________________
Name: Matthew Trybula
Title: Associate Counsel
[Signature Page to Second Lien Collateral Agreement (Badcock)]
Exhibit 10.17
Execution Version
SECOND LIEN GUARANTEE AGREEMENT
dated as of
November 22, 2021,
among
franchise group, inc.,
VALOR ACQUISITION, LLC,
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC,
FRANCHISE GROUP NEWCO PSP, LLC,
THE OTHER GUARANTORS FROM TIME TO TIME PARTY HERETO
and
ALTER DOMUS (US) LLC,
as Administrative Agent
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TABLE OF CONTENTS
Page
| ARTICLE I | DEFINITIONS | 1 |
| SECTION 1.01. | Credit Agreement | 1 |
| SECTION 1.02. | Other Defined Terms | 1 |
| ARTICLE II | THE GUARANTEES | 2 |
| SECTION 2.01. | Guarantee | 2 |
| SECTION 2.02. | Guarantee of Payment; Continuing Guarantee | 3 |
| SECTION 2.03. | No Limitations | 3 |
| SECTION 2.04. | Reinstatement | 5 |
| SECTION 2.05. | Agreement to Pay; Subrogation | 5 |
| SECTION 2.06. | Information | 5 |
| SECTION 2.07. | Payments | 5 |
| ARTICLE III | INDEMNITY, SUBROGATION AND SUBORDINATION | 6 |
| SECTION 3.01. | Indemnity and Subrogation | 6 |
| SECTION 3.02. | Contribution and Subrogation | 6 |
| SECTION 3.03. | Subordination | 6 |
| ARTICLE IV | REPRESENTATIONS AND WARRANTIES | 7 |
| ARTICLE V | MISCELLANEOUS | 7 |
| SECTION 5.01. | Notices | 7 |
| SECTION 5.02. | Waivers; Amendment | 8 |
| SECTION 5.03. | Administrative Agent’s Fees and Expenses; Indemnification | 8 |
| SECTION 5.04. | Successors and Assigns | 9 |
| SECTION 5.05. | Survival of Agreement | 9 |
| SECTION 5.06. | Counterparts; Effectiveness; Several Agreement | 9 |
| SECTION 5.07. | Severability | 10 |
| SECTION 5.08. | Right of Set-Off | 10 |
| SECTION 5.09. | Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 10 |
| SECTION 5.10. | WAIVER OF JURY TRIAL | 11 |
| SECTION 5.11. | Headings | 11 |
| SECTION 5.12. | Termination or Release | 11 |
| SECTION 5.13. | Additional Guarantors | 11 |
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SECOND LIEN GUARANTEE AGREEMENT, dated as of November 22, 2021 (this “Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“NewCo AF”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”, and together with Lead Borrower, Valor and NewCo AF individually and collectively, the “Borrower”), the other GUARANTORS from time to time party hereto and ALTER DOMUS (US) LLC, as administrative agent on behalf of itself and the other Secured Parties (in such capacity, together with its permitted successors and assigns in such capacity, the “Administrative Agent”).
Reference is made to (i) that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among each Borrower, the Lenders party thereto from time to time, ALTER DOMUS (US) LLC, as Administrative Agent, and the Collateral Agent and (ii) that certain Second Lien Collateral Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Collateral Agreement”), among each Borrower, the other Grantors (as defined therein) from time to time party thereto and the Collateral Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Subsidiary Guarantors (as defined below) are affiliates of each Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and are willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement (including in the introductory paragraphs hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement.
(b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Administrative Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
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“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Claiming Party” has the meaning assigned to such term in Section 3.02.
“Contributing Party” has the meaning assigned to such term in Section 3.02.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“FG Newco PSP” has the meaning assigned to such term in the preamble to this Agreement.
“Guarantors” means each Borrower (except with respect to obligations of such Borrower) and the Subsidiary Guarantors.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Subsidiary Guarantors” means the Subsidiaries of Lead Borrower identified as such on Schedule I hereto and each other Subsidiary of Lead Borrower that becomes a party to this Agreement as a Subsidiary Guarantor after the Effective Date pursuant to Section 5.13; provided that if a Subsidiary is released from its obligations as a Subsidiary Guarantor hereunder as provided in Section 5.12(b), such Subsidiary shall cease to be a Subsidiary Guarantor hereunder effective upon such release. For the avoidance of doubt, (i) FG Newco PSP is not a Subsidiary Guarantor and (ii) Subsidiary Guarantors are referred to as “Subsidiary Loan Parties” in the Credit Agreement.
“Supplement” means an instrument in the form of Exhibit A hereto, or any other form reasonably satisfactory to the Administrative Agent.
ARTICLE
II
THE GUARANTEES
SECTION 2.01. Guarantee. Each Guarantor absolutely, irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to each of the Secured Parties, jointly with the other Guarantors and severally, the due and punctual payment and performance of the Secured Obligations. Each Guarantor further agrees that the Secured Obligations may be increased, extended or renewed, in whole or in part, or amended or modified, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such increase, extension or renewal, or amendment or modification, of any of the Secured Obligations. Each Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Secured Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment, notice of dishonor, default and nonpayment. Notwithstanding anything to the contrary contained herein, the obligations of each Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable provisions of any other applicable law.
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SECTION 2.02. Guarantee of Payment; Continuing Guarantee. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Secured Obligations or operated as a discharge thereof) and not merely of collection, and waives diligence, marshaling, and any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of any of the Secured Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Borrower, any other Loan Party or any other Person. Each Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all of the Secured Obligations, whether currently existing or hereafter incurred.
SECTION 2.03. No Limitations. (a) Except for (x) the termination or release of a Guarantor’s obligations hereunder as expressly provided in Section 5.12, (y) the limitations set forth in Section 2.01 and (z) the limitations, if any, specified in a Supplement with respect to any Subsidiary that becomes a party hereto pursuant to Section 5.13, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise of any of the Secured Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Secured Obligations, any impossibility in the performance of any of the Secured Obligations or otherwise. Without limiting the generality of the foregoing, except for (x) the termination or release of a Guarantor’s obligations hereunder as expressly provided in Section 5.12, (y) the limitations set forth in Section 2.01 and (z) the limitations, if any, specified in a Supplement with respect to any Subsidiary that becomes a party hereto pursuant to Section 5.13, if applicable, the obligations of each Guarantor hereunder, to the fullest extent permitted by applicable Requirements of Law, shall not be discharged or impaired or otherwise affected by:
(i) the failure of any Secured Party or any other Person to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise;
(ii) any rescission, waiver, amendment, supplement, restatement or modification of, or any release or departure from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement;
(iii) the release of, or any impairment of or failure to perfect any Lien on, any security held by any Secured Party for any of the Secured Obligations;
(iv) any default, failure or delay, willful or otherwise, in the performance of any of the Secured Obligations;
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(v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(vi) any illegality, lack of validity or lack of enforceability of any of the Credit Agreement, any other Loan Document, or the Secured Obligations;
(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any of the Secured Obligations (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(viii) the existence of any claim, set-off or other rights that any Guarantor may have at any time against the Borrower, any other Guarantor, the Administrative Agent, any other Secured Party or any other Person, whether in connection with the Credit Agreement, the other Loan Documents or any unrelated transaction;
(ix) this Agreement having been determined (on whatsoever grounds) to be invalid, non-binding or unenforceable against any other Guarantor ab initio or at any time after the Effective Date;
(x) the fact that any Person that, pursuant to the Loan Documents, was required to become a party hereto may not have executed or is not effectually bound by this Agreement, whether or not this fact is known to the Secured Parties;
(xi) any action permitted or authorized hereunder;
(xii) any other circumstance (including any statute of limitations), or any existence of or reliance on any representation by the Administrative Agent, any other Secured Party or any other Person, that might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower, any other Guarantor or any other guarantor or surety (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due)); or
(xiii) any renewal, extension or acceleration of, or any increase in the amount of the Secured Obligations.
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(b) Each Guarantor expressly authorizes the Secured Parties to take and hold security in accordance with the terms of the Loan Documents for the payment and performance of the Secured Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Secured Obligations, all without affecting the obligations of any Guarantor hereunder.
(c) To the fullest extent permitted by applicable Requirements of Law, each Guarantor hereby waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Secured Obligations and/or the termination or release of such Guarantor’s obligations hereunder as expressly provided under Section 5.12. The Administrative Agent and the other Secured Parties may, at their election and in accordance with the terms of the Loan Documents, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Secured Obligations have been paid in full in cash and/or such Guarantor has been subject to the termination or release of such Guarantor’s obligations hereunder as expressly provided in Section 5.12. To the fullest extent permitted by applicable law, each Guarantor 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 Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.
SECTION 2.04. Reinstatement. Each Guarantor agrees that, unless released pursuant to Section 5.12(b), its guarantee hereunder shall continue to be effective or automatically and immediately be reinstated, as the case may be, if at any time payment, or any part thereof, of any Secured Obligations is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization (or any analogous proceeding in any jurisdiction) of the Borrower, any other Loan Party or otherwise.
SECTION 2.05. Agreement to Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at applicable law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Secured Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties, in cash the amount of such unpaid Secured Obligation. Upon payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of such Guarantor against the Borrower or 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 subject to Article III.
SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Secured Parties will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.
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SECTION 2.07. Payments. Any and all payments by or on account of any obligation of any Guarantor hereunder or under any other Loan Document shall be made without setoff or counterclaim and free and clear of and without deduction for any Indemnified Taxes or Other Taxes, except as required by applicable Requirements of Law, on the same terms and to the same extent that payments by the Borrower are required to be so made pursuant to the terms of Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall apply to each Guarantor, mutatis mutandis.
ARTICLE
III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 3.03) in respect of any payment hereunder, each Borrower agrees that (a) in the event a payment in respect of any obligation of any Borrower shall be made by any Guarantor (other than a Borrower in respect of its own obligations) under this Agreement, the Borrowers shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor (other than a Borrower in respect of its own obligations) shall be sold pursuant to any Security Document to satisfy in whole or in part any Secured Obligations owed to any Secured Party, the Borrowers shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
SECTION 3.02. Contribution and Subrogation. Each Guarantor (a “Contributing Party”) agrees (subject to Section 3.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Secured Obligations (other than payments made by a Borrower with respect to its own obligations) or assets of any other Guarantor (other than a Borrower in satisfaction of its own obligations) shall be sold pursuant to any Security Document to satisfy any Secured Obligation owed to any Secured Party and such other Guarantor (the “Claiming Party”) shall not have been fully indemnified as provided in Section 3.01, the Contributing Party shall indemnify the Claiming Party in an amount equal to the amount of such payment or the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Party on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 5.13, the date of the Supplement executed and delivered by such Guarantor) and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 5.13, such other date). Any Contributing Party making any payment to a Claiming Party pursuant to this Section 3.02 shall be subrogated to the rights of such Claiming Party under Section 3.01 to the extent of such payment.
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SECTION 3.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 3.01 and 3.02 and all other rights of the Guarantors of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of all the Secured Obligations. No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 3.01 and 3.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.
(b) Each Guarantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, all Indebtedness and other monetary obligations owed by it to, or to it by, any other Guarantor or any other Subsidiary shall be fully subordinated to the payment in full in cash of all the Secured Obligations, and any such Indebtedness collected or received by such Guarantor after an Event of Default has occurred and continuing shall be held in trust for the Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Secured Obligations, but without affecting, impairing or limiting in any manner the liability of such Guarantor under any other provision hereof.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
Each Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that (a) this Agreement has been duly executed and delivered by such Guarantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law and (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in a legal opinion, and (b) all representations and warranties (limited, on the Effective Date, to the Specified Representations) set forth in the Credit Agreement as to such Guarantor are true and correct in all material respects; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date; provided further that, in each case, any such representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language is true and correct in all respects.
ARTICLE
V
MISCELLANEOUS
SECTION 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Guarantor shall be given to it in care of Lead Borrower as provided in Section 9.01 of the Credit Agreement.
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SECTION 5.02. Waivers; Amendment. (a) No failure or delay by the Administrative Agent, any Lender or any other Secured Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Lenders and any other Secured Parties hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended, restated, amended and restated or otherwise modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Guarantor or Guarantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 5.03. Administrative Agent’s Fees and Expenses; Indemnification. (a) Each Guarantor, jointly with the other Guarantors and severally, agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement; provided that each reference therein to “the Borrower” shall be deemed to be a reference to “each Guarantor” or the “Guarantors”.
(b) Each Guarantor, jointly with the other Guarantors and severally, agrees to indemnify the Administrative Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement; provided that each reference therein to “the Borrower” shall be deemed to be a reference to “each Guarantor” or the “Guarantors”.
(c) To the fullest extent permitted by applicable law, no Guarantor shall assert, and each Guarantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that each reference therein to “the Borrower” shall be deemed to be a reference to “each Guarantor” or the “Guarantors”.
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
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SECTION 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of any Guarantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.
SECTION 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full in cash.
SECTION 5.06. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to any Guarantor when a counterpart hereof executed on behalf of such Guarantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Guarantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Guarantor, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood and agreed that no Guarantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Guarantor and may be amended, restated, amended and restated, modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and without affecting the obligations of any other Guarantor hereunder.
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SECTION 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 5.08. Right of Set-Off. Each Lender and each other Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Person as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
SECTION 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement (and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement) shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement or any other Loan Document or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Administrative Agent, any Lender or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against any Guarantor or its respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement will affect the right of any party to this Agreement or any other Loan Document to serve process in any other manner permitted by law.
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(e) Each Guarantor hereby irrevocably designates, appoints and empowers the Lead Borrower as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents that may be served in any such action or proceeding and the Lead Borrower hereby accepts such designation and appointment.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
SECTION 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 5.12. Termination or Release. (a) Subject to Section 2.04, this Agreement and the Guarantees made herein shall automatically terminate when (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full.
(b) The guarantees made herein shall also terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence or effect such termination or release so long as the applicable Loan Party shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 5.12. Any execution and delivery of documents by the Administrative Agent pursuant to this Section 5.12 shall be without recourse or warranty by the Administrative Agent or any other Secured Party.
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SECTION 5.13. Additional Guarantors. Additional Persons may become Guarantors after the date hereof as contemplated by the Credit Agreement. Upon execution and delivery by the Administrative Agent and a Person of a Supplement, any such Person shall become a Guarantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any Person as a party to this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
VITAMIN SHOPPE INDUSTRIES LLC
VITAMIN SHOPPE FRANCHISING, LLC
By: /s/ Laura Coffey
Name: Laura Coffey
Title: Chief Financial Officer
AMERICAN FREIGHT MANAGEMENT COMPANY, LLC
AMERICAN FREIGHT GROUP, LLC
AMERICAN FREIGHT HOLDINGS, LLC
AMERICAN FREIGHT, LLC
FRANCHISE GROUP ACQUISITION TM, LLC
FRANCHISE GROUP INTERMEDIATE B, LLC
FRANCHISE GROUP INTERMEDIATE HOLDCO, LLC
FRANCHISE GROUP INTERMEDIATE PSP, LLC
FRANCHISE GROUP INTERMEDIATE S, LLC
FRANCHISE GROUP INTERMEDIATE V, LLC
FRANCHISE GROUP NEW HOLDCO, LLC
FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC
FRANCHISE GROUP NEWCO PSP, LLC
FRANCHISE GROUP NEWCO S, LLC
FRANCHISE GROUP NEWCO V, LLC
FRANCHISE GROUP, INC.,
VALOR ACQUISITION, LLC
FRANCHISE GROUP INTERMEDIATE SL, LLC
FRANCHISE GROUP NEWCO SL, LLC
FRANCHISE GROUP INTERMEDIATE BHF, LLC
FRANCHISE GROUP NEWCO BHF, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: President and Chief Executive Officer
[Signature Page to Second Lien Guarantee Agreement]
BETANCOURT SPORTS NUTRITION, LLC
VITAMIN SHOPPE FLORIDA, LLC
VITAMIN SHOPPE MARINER, LLC
VITAMIN SHOPPE GLOBAL, LLC
VITAMIN SHOPPE PROCUREMENT SERVICES, LLC
By: Vitamin Shoppe Industries LLC, its sole member
By: /s/ Laura Coffey
| Name: | Laura Coffey |
| Title: | Chief Financial Officer |
AMERICAN FREIGHT OUTLET STORES, LLC
OUTLET MERCHANDISE, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | President |
AMERICAN FREIGHT FRANCHISING, LLC
AMERICAN FREIGHT FRANCHISOR, LLC
AMERICAN FREIGHT FFO, LLC
By: /s/ Will Powell
| Name: | Will Powell |
| Title: | Chief Executive Officer and President |
PET SUPPLIES “PLUS”, LLC
PSP MIDCO, LLC
PSP SERVICE NEWCO, LLC
PSP STORES, LLC
PSP SUBCO, LLC
PSP GROUP, LLC
PSP FRANCHISING, LLC
PSP DISTRIBUTION, LLC
EDUCATE CORPORATE CENTERS HOLDINGS, LLC
EDUCATE DIGITAL, LLC
EDUCATE OPERATING COMPANY, LLC
[Signature Page to Second Lien Guarantee Agreement]
EDUCATE, INC.
LEARNING PARTNERSHIPS, LLC
LEARNING SYSTEM OF THE FUTURE, LLC
MARYLAND LEARNING CENTERS, LLC
OMEGA LEARNING CENTERS, LLC
SYLVAN IN-HOME, LLC
SYLVAN LEARNING CENTERS, LLC
SYLVAN LEARNING, LLC
By: /s/ Brian Kahn
Name: Brian Kahn
Title: Vice President
BUDDY'S NEWCO, LLC
BUDDY'S FRANCHISING AND LICENSING LLC
By: /s/ Michael Bennett
Name: Michael Bennett
Title: Chief Executive Officer
[Signature Page to Second Lien Guarantee Agreement]
ALTER DOMUS (US) LLC, solely in its
capacity as Administrative
Agent on behalf of
itself and the other Secured Parties and not in
its individual capacity
By /s/ Matthew Trybula___________________
Name: Matthew Trybula
Title: Associate Counsel
[Signature Page to Second Lien Guarantee Agreement]
Exhibit 10.18
Execution Version
SECOND LIEN GUARANTEE AGREEMENT
dated as of
November 22, 2021,
between
W.S. BADCOCK CORPORATION
and
ALTER DOMUS (US) LLC,
as Administrative Agent
TABLE OF CONTENTS
Page
| ARTICLE I | DEFINITIONS | 1 |
| SECTION 1.01. | Credit Agreement | 1 |
| SECTION 1.02. | Other Defined Terms | 1 |
| ARTICLE II | THE GUARANTEES | 3 |
| SECTION 2.01. | Guarantee | 3 |
| SECTION 2.02. | Guarantee of Payment; Continuing Guarantee | 3 |
| SECTION 2.03. | No Limitations | 3 |
| SECTION 2.04. | Reinstatement | 5 |
| SECTION 2.05. | Agreement to Pay; Subrogation | 6 |
| SECTION 2.06. | Information | 6 |
| SECTION 2.07. | Payments | 6 |
| SECTION 2.08. | [Reserved] | 6 |
| SECTION 2.09. | [Reserved] | 6 |
| ARTICLE III | INDEMNITY, SUBROGATION AND SUBORDINATION | 9 |
| SECTION 3.01. | Indemnity and Subrogation | 9 |
| SECTION 3.02. | [Reserved] | 9 |
| SECTION 3.03. | Subordination | 9 |
| ARTICLE IV | REPRESENTATIONS AND WARRANTIES | 10 |
| ARTICLE V | MISCELLANEOUS | 10 |
| SECTION 5.01. | Notices | 10 |
| SECTION 5.02. | Waivers; Amendment | 10 |
| SECTION 5.03. | Administrative Agent’s Fees and Expenses; Indemnification | 11 |
| SECTION 5.04. | Successors and Assigns | 12 |
| SECTION 5.05. | Survival of Agreement | 12 |
| SECTION 5.06. | Counterparts; Effectiveness | 12 |
| SECTION 5.07. | Severability | 13 |
| SECTION 5.08. | Right of Set-Off | 13 |
| SECTION 5.09. | Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent | 13 |
| SECTION 5.10. | WAIVER OF JURY TRIAL | 14 |
| SECTION 5.11. | Headings | 14 |
| SECTION 5.12. | Termination or Release | 14 |
SECOND LIEN GUARANTEE AGREEMENT, dated as of November 22, 2021 (this “Agreement”), between W.S. BADCOCK CORPORATION, a Florida corporation (“Badcock” or the “Guarantor”, as applicable) and ALTER DOMUS (US) LLC, as Administrative Agent on behalf of itself and the other Secured Parties (in such capacity, together with its permitted successors and assigns in such capacity, the “Administrative Agent”).
Reference is made to (i) that certain Second Lien Credit Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among FRANCHISE GROUP, INC., a Delaware corporation (“Lead Borrower”), VALOR ACQUISITION, LLC, a Delaware limited liability company (“Valor”), FRANCHISE GROUP NEWCO INTERMEDIATE AF, LLC, a Delaware limited liability company (“NewCo AF”), FRANCHISE GROUP NEWCO PSP, LLC, a Delaware limited liability company (“FG Newco PSP”, and together with Lead Borrower, Valor and NewCo AF individually and collectively, the “Borrower”), the lenders from time to time party thereto, the Administrative Agent, and the Collateral Agent and (ii) that certain Second Lien Collateral Agreement, dated as of the date hereof (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Collateral Agreement”), between Badcock and the Collateral Agent. The Lenders have agreed to extend credit to the Borrower subject to the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to extend such credit are conditioned upon, among other things, the execution and delivery of this Agreement. The Guarantor is an affiliate of each Borrower, will derive substantial benefits from the extension of credit to the Borrower pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement (including in the introductory paragraphs hereto) and not otherwise defined herein have the meanings specified in the Credit Agreement.
(b) The rules of construction specified in Section 1.03 of the Credit Agreement also apply to this Agreement, mutatis mutandis.
SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“Administrative Agent” has the meaning assigned to such term in the preamble to this Agreement.
“Agreement” has the meaning assigned to such term in the preamble to this Agreement.
“Badcock” has the meaning assigned to such term in the preamble to this Agreement.
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“Borrower” has the meaning assigned to such term in the preamble to this Agreement.
“Credit Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement.
“Guarantor” has the meaning assigned to such term in the preamble to this Agreement.
“Lead Borrower” has the meaning assigned to such term in the preamble to this Agreement.
ARTICLE
II
THE GUARANTEE
SECTION 2.01. Guarantee. The Guarantor absolutely, irrevocably and unconditionally guarantees, as primary obligor and not merely as surety, to each of the Secured Parties, the due and punctual payment and performance of the Secured Obligations. The Guarantor further agrees that the Secured Obligations may be increased, extended or renewed, in whole or in part, or amended or modified, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such increase, extension or renewal, or amendment or modification, of any of the Secured Obligations. The Guarantor waives presentment to, demand of payment from and protest to the Borrower or any other Loan Party of any of the Secured Obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment, notice of dishonor, default and nonpayment. Notwithstanding anything to the contrary contained herein, the obligations of the Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any comparable provisions of any other applicable law.
SECTION 2.02. Guarantee of Payment; Continuing Guarantee. The Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual of collection of any of the Secured Obligations or operated as a discharge thereof) and not merely of collection, and waives diligence, marshaling, and any right to require that any resort be had by the Administrative Agent or any other Secured Party to any security held for the payment of any of the Secured Obligations or to any balance of any deposit account or credit on the books of the Administrative Agent or any other Secured Party in favor of any Borrower, any other Loan Party or any other Person. The Guarantor agrees that its guarantee hereunder is continuing in nature and applies to all of the Secured Obligations, whether currently existing or hereafter incurred.
SECTION 2.03. No Limitations. (a) Except for (x) the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12 and (y) the limitations set forth in Section 2.01, the obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise of any of the Secured Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Secured Obligations, any impossibility in the performance of any of the Secured Obligations or otherwise. Without limiting the generality of the foregoing, except for (x) the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12 and (y) the limitations set forth in Section 2.01, the obligations of the Guarantor hereunder, to the fullest extent permitted by applicable Requirements of Law, shall not be discharged or impaired or otherwise affected by:
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(i) the failure of any Secured Party or any other Person to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise;
(ii) any rescission, waiver, amendment, supplement, restatement or modification of, or any release or departure from any of the terms or provisions of, any Loan Document or any other agreement;
(iii) the release of, or any impairment of or failure to perfect any Lien on, any security held by any Secured Party for any of the Secured Obligations;
(iv) any default, failure or delay, willful or otherwise, in the performance of any of the Secured Obligations;
(v) any other act or omission that may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a discharge of the Guarantor as a matter of law or equity (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(vi) any illegality, lack of validity or lack of enforceability of any of the Credit Agreement, any other Loan Document, or the Secured Obligations;
(vii) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any of the Secured Obligations (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due));
(viii) the existence of any claim, set-off or other rights that the Guarantor may have at any time against the Borrower, any other guarantor, the Administrative Agent, any other Secured Party or any other Person, whether in connection with the Credit Agreement, the other Loan Documents or any unrelated transaction;
(ix) [reserved];
(x) [reserved];
(xi) any action permitted or authorized hereunder;
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(xii) any other circumstance (including any statute of limitations), or any existence of or reliance on any representation by the Administrative Agent, any other Secured Party or any other Person, that might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower or any other guarantor or surety (other than the payment in full in cash of all the Secured Obligations (excluding contingent obligations as to which no claim has been made or which are otherwise not due)); or
(xiii) any renewal, extension or acceleration of, or any increase in the amount of the Secured Obligations.
(b) The Guarantor expressly authorizes the Secured Parties to take and hold security in accordance with the terms of the Loan Documents for the payment and performance of the Secured Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in their sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Secured Obligations, all without affecting the obligations of the Guarantor hereunder.
(c) To the fullest extent permitted by applicable Requirements of Law, the Guarantor hereby waives any defense based on or arising out of any defense of the Borrower or any other Loan Party or the unenforceability of the Secured Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Borrower or any other Loan Party, other than the payment in full in cash of all the Secured Obligations and/or the termination or release of the Guarantor’s obligations hereunder as expressly provided under Section 5.12. The Administrative Agent and the other Secured Parties may, at their election and in accordance with the terms of the Loan Documents foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Secured Obligations, make any other accommodation with the Borrower or any other Loan Party or exercise any other right or remedy available to them against the Borrower or any other Loan Party, without affecting or impairing in any way the liability of the Guarantor hereunder except to the extent the Secured Obligations have been paid in full in cash and/or the Guarantor has been subject to the termination or release of the Guarantor’s obligations hereunder as expressly provided in Section 5.12. To the fullest extent permitted by applicable law, the Guarantor 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 the Guarantor against the Borrower or any other Loan Party, as the case may be, or any security.
SECTION 2.04. Reinstatement. The Guarantor agrees that, unless released pursuant to Section 5.12(b), its guarantee hereunder shall continue to be effective or automatically and immediately be reinstated, as the case may be, if at any time payment, or any part thereof, of any Secured Obligations is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization (or any analogous proceeding in any jurisdiction) of the Borrower, any other Loan Party or otherwise.
SECTION 2.05. Agreement to Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Administrative Agent or any other Secured Party has at
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applicable law or in equity against the Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan Party to pay any Secured Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the applicable Secured Parties, in cash the amount of such unpaid Secured Obligation. Upon payment by the Guarantor of any sums to the Administrative Agent as provided above, all rights of the Guarantor against the Borrower or 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 subject to Article III.
SECTION 2.06. Information. The Guarantor assumes all responsibility for being and keeping itself informed of the Borrower’s and each other Loan Party’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Secured Obligations and the nature, scope and extent of the risks that the Guarantor assumes and incurs hereunder, and agrees that none of the Secured Parties will have any duty to advise the Guarantor of information known to it or any of them regarding such circumstances or risks.
SECTION 2.07. Payments. Any and all payments by or on account of any obligation of the Guarantor hereunder or under any other Loan Document shall be made without setoff or counterclaim and free and clear of and without deduction for any Indemnified Taxes or Other Taxes, except as required by applicable Requirements of Law, on the same terms and to the same extent that payments by the Borrower are required to be so made pursuant to the terms of Section 2.17 of the Credit Agreement. The provisions of Section 2.17 of the Credit Agreement shall apply to the Guarantor, mutatis mutandis.
ARTICLE
III
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 3.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantor may have under applicable law (but subject to Section 3.03) in respect of any payment hereunder, each Borrower agrees that (a) in the event a payment in respect of any obligation of any Borrower shall be made by the Guarantor under this Agreement, the Borrowers shall indemnify the Guarantor for the full amount of such payment and the Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of the Guarantor shall be sold pursuant to any Security Document to satisfy in whole or in part any Secured Obligations owed to any Secured Party, the Borrowers shall indemnify the Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.
SECTION 3.02. [Reserved].
SECTION 3.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantor under Section 3.01 and all other rights of the Guarantor of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the payment in full in cash of all the Secured Obligations. No failure on the part of the Borrower make the payments required by Section 3.01 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of the Guarantor with respect to its obligations hereunder, and the Guarantor shall remain liable for the full amount of the obligations of the Guarantor hereunder.
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(b) The Guarantor hereby agrees that upon the occurrence and during the continuance of an Event of Default, all Indebtedness and other monetary obligations owed by it to, or to it by, any other Guarantor shall be fully subordinated to the payment in full in cash of all the Secured Obligations, and any such Indebtedness collected or received by the Guarantor after an Event of Default has occurred and continuing shall be held in trust for the Administrative Agent on behalf of the Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of the Secured Parties to be credited and applied against the Secured Obligations, but without affecting, impairing or limiting in any manner the liability of the Guarantor under any other provision hereof.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that (a) this Agreement has been duly executed and delivered by the Guarantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law, and similar concepts under applicable law and (iii) any other matters which are set out as qualifications or reservations as to matters of law or general application in a legal opinion, and (b) all representations and warranties set forth in the Credit Agreement as to the Guarantor are true and correct in all material respects; provided that, in each case, to the extent that such representations and warranties specifically refer to an earlier date, they are true and correct in all material respects as of such earlier date; provided further that, in each case, any such representation and warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language is true and correct in all respects.
ARTICLE
V
MISCELLANEOUS
SECTION 5.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to the Guarantor shall be given to it in care of Lead Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 5.02. Waivers; Amendment. (a) No failure or delay by the Administrative Agent, any Lender or any other Secured Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise
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of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Lenders and any other Secured Parties hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 5.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of such Default at the time. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended, restated, amended and restated or otherwise modified except pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Guarantor, subject to any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 5.03. Administrative Agent’s Fees and Expenses; Indemnification. (a) The Guarantor agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket fees and expenses incurred hereunder as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(b) The Guarantor agrees to indemnify the Administrative Agent and the other Indemnitees as provided in, and subject to the limitations set forth in, Section 9.03 of the Credit Agreement.
(c) To the fullest extent permitted by applicable law, the Guarantor shall not assert, and the Guarantor hereby waives, any claim against any Indemnitee as provided in Section 9.03(d) of the Credit Agreement; provided that, in each of clauses (a) and (b) above and this clause (c), each reference therein to “the Borrower” shall be deemed to be a reference to “the Guarantor”.
(d) The provisions of this Section 5.03 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of any Secured Party. All amounts due under this Section shall be payable not later than thirty (30) Business Days after written demand therefor; provided, however, any Indemnitee shall promptly refund an indemnification payment received hereunder to the extent that there is a final judicial determination that such Indemnitee was not entitled to indemnification with respect to such payment pursuant to this Section 5.03. Any such amounts payable as provided hereunder shall be additional Secured Obligations.
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SECTION 5.04. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party, and all covenants, promises and agreements by or on behalf of the Guarantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective permitted successors and assigns.
SECTION 5.05. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in this Agreement or any other Loan Document and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document, shall be considered to have been relied upon by the Secured Parties and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by or on behalf of any Secured Party and notwithstanding that the Administrative Agent, any Lender or any other Secured Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended under the Credit Agreement or any other Loan Document and shall continue in full force and effect until such time as (a) the Commitments shall have expired or been terminated and (b) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full in cash.
SECTION 5.06. Counterparts; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. This Agreement shall become effective as to the Guarantor when a counterpart hereof executed on behalf of the Guarantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon the Guarantor and the Administrative Agent and their respective permitted successors and assigns, and shall inure to the benefit of the Guarantor, the Administrative Agent and the other Secured Parties and their respective permitted successors and assigns, it being understood and agreed that the Guarantor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein (and any such assignment or transfer shall be void) except as expressly provided in this Agreement or the Credit Agreement.
SECTION 5.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 5.08. Right of Set-Off. Each Lender and each other Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by 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 such Person as provided in (and subject to all of the limitations set forth in) Section 9.08 of the Credit Agreement.
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SECTION 5.09. Governing Law; Jurisdiction; Consent to Service of Process; Appointment of Service of Process Agent. (a) This Agreement (and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement) shall be construed in accordance with and governed by the laws of the State of New York.
(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court 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 Agreement or any other Loan Document or for recognition or enforcement of any judgment, and each of the parties hereto hereby 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 extent permitted by law, in such Federal court. Each of the 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 shall affect any right that the Administrative Agent, any Lender or any other Secured Party may otherwise have to bring any action or proceeding relating to this Agreement against the Guarantor or its respective properties in the courts of any jurisdiction.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 5.01. Nothing in this Agreement will affect the right of any party to this Agreement or any other Loan Document to serve process in any other manner permitted by law.
(e) The Guarantor hereby irrevocably designates, appoints and empowers the Lead Borrower as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its property, service of any and all legal process, summons, notices and documents that may be served in any such action or proceeding.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY 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 PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.
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SECTION 5.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 5.12. Termination or Release. (a) Subject to Section 2.04, this Agreement and the Guarantee made herein shall automatically terminate when (i) the Commitments shall have expired or been terminated and (ii) all Secured Obligations, including the principal of and interest on each Loan and all fees, expenses and other amounts (excluding contingent obligations as to which no claim has been made or which are otherwise not due) payable under any Loan Document shall have been paid in full.
(b) The guarantee made herein shall also terminate and be released at the time or times and in the manner set forth in Section 9.14 of the Credit Agreement.
(c) In connection with any termination or release pursuant to paragraph (a) or (b) of this Section, the Administrative Agent shall execute and deliver to the Guarantor, at the Guarantor’s expense, all documents that the Guarantor shall reasonably request to evidence or effect such termination or release so long as the Guarantor shall have provided the Administrative Agent such certifications or documents as the Administrative Agent shall reasonably request in order to demonstrate compliance with this Section 5.12. Any execution and delivery of documents by the Administrative Agent pursuant to this Section 5.12 shall be without recourse or warranty by the Administrative Agent or any other Secured Party.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
W.S. BADCOCK CORPORATION, as a Guarantor
By /s/ Brian Kahn________________________
Name: Brian Kahn
Title: Senior Vice President
[Signature Page to Second Lien Guarantee Agreement (Badcock)]
ALTER DOMUS (US) LLC,, as Administrative Agent on behalf of itself and the other Secured Parties
By /s/ Matthew Trybula___________________
Name: Matthew Trybula
Title: Associate Counsel
[Signature Page to Second Lien Guarantee Agreement (Badcock)]
EXHIBIT 99.1
Franchise Group, Inc. Acquires W.S. Badcock Corporation
DELAWARE, Ohio, Nov. 22, 2021 (GLOBE NEWSWIRE) -- Franchise Group, Inc. (NASDAQ: FRG) (“Franchise Group,” “FRG” or the “Company”) today announced that it has completed the acquisition of W.S. Badcock Corporation (“Badcock”), a leading home furnishings company in the Southeast U.S., in an all cash transaction valued at approximately $580 million (the “Transaction”).
Founded in 1904, W.S. Badcock Corporation operates 383 stores in eight southeastern states comprised of 68 corporate locations and 315 independent dealer owned stores. The stores are branded “Badcock Home Furniture & more” and carry a complete line of furniture, appliances, bedding, electronics, home office equipment, accessories and seasonal items.
“Protecting the legacy of our 117-year old family-owned business, which has been grown through five generations, our relationships with customers, vendors, dealers, employees, and our deep ties to the local communities in which we operate, have always been of utmost important to us,” said Bill Pou, Jr., Chairman of the Board of W.S. Badcock Corporation. Mr. Pou further commented, “We wanted to find a buyer who would respect our company’s long and storied history and, in Franchise Group, we immediately recognized a management group and a company that shared our values and will help W.S. Badcock build upon the legacy created by the current family and those who preceded us. We are confident that we are leaving our treasured company in good hands and that this decision will help to produce a winning combination for our customers, vendors, dealers and employees.”
Brian Kahn, President & CEO of Franchise Group, said, “A sincere thank you to the Badcock family for entrusting their 117-year legacy to Franchise Group. We are very excited to welcome the Badcock management team, employees, dealers and customers to Franchise Group. Besides potential significant standalone earnings accretion for the Company, the addition of Badcock adds scale to, and anticipated synergies with our existing home furnishings franchise concepts, which we are confident will specifically benefit American Freight and Buddy’s franchisees and customers. Over its long history, Badcock has allocated capital among three discrete business lines: a retail footprint consisting of 383 locations; a real estate portfolio consisting of three distribution centers, 38 retail locations, and 27 corporate and certain other locations; and a consumer credit business that currently includes approximately $550 million of gross receivables. We look forward to partnering with Badcock’s management team in assessing their highest and best uses of capital and evaluating alternatives for certain non-core assets to rapidly de-lever Franchise Group back to our target net leverage ratio of 2-3x adjusted EBITDA. We also look forward to evaluating and implementing programs that may offer Badcock customers more options and greater flexibility, which we think will lead to higher revenue and profitability for Badcock dealers, similar to the process that led to improved unit economics for our Buddy’s and American Freight brands.”
For Badcock’s fiscal year end June 30, 2021, Badcock generated consolidated revenue of approximately $901.9 million and Adjusted EBITDA of approximately $139.5 million. Revenue and Adjusted EBITDA include financial results from all three discrete Badcock businesses. It is important to note that Franchise Group believes that Badcock’s consolidated Adjusted EBITDA for its last fiscal year, benefited indirectly by up to $50 million due to its customers receiving COVID-19 related government stimulus payments in 2021. Badcock will be included in Franchise Group’s financial results for about one month of fiscal year 2021 and will not have a material impact on fiscal year 2021 results. For fiscal year 2022, Franchise Group expects the Transaction will be at least $0.50 accretive to Non-GAAP EPS. Franchise Group is completing its 2022 budgeting process and will provide its 2022 financial outlook, as well as additional details regarding Badcock in the first half of December 2021.
J.P. Morgan arranged for $575 million in new term loans to finance the Transaction (the “Financing”).
Willkie Farr & Gallagher LLP, Troutman Pepper Hamilton Sanders LLP and DLA Piper LLP served as legal counsel to Franchise Group. Mann, Armistead & Epperson, Ltd. served as financial advisor and Trenam Law served as legal counsel to W.S. Badcock Corporation.
Conference
Call & Webcast Information
Franchise Group will conduct a conference call on
November 22nd at 9:00 A.M. ET to discuss the Transaction and the Financing. A
real-time webcast of the conference call with slides will be available on the Events page
of Franchise Group’s website at www.franchisegrp.com which will remain available under
the “Past Events” portion of the Events page following the conference call. The
conference call can also be accessed live via telephone at (877) 784-1793. The passcode is
4190579. Please dial in 5-10 minutes prior to the scheduled start time.
About
Franchise Group
Franchise Group is an owner and operator of franchised and franchisable
businesses that continually looks to grow its portfolio of brands while utilizing its operating
and capital allocation philosophy to generate strong cash flow for its shareholders. Franchise
Group’s business lines include Pet Supplies Plus, American Freight, The Vitamin Shoppe,
Badcock Home Furniture & more, Buddy’s Home Furnishings and Sylvan Learning. On
a combined basis, Franchise Group currently operates over 3,000 locations predominantly located
in the U.S. that are either Company-run or operated pursuant to franchising and dealer agreements.
Forward-Looking
Statements
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, as amended, including, without limitation,
those that contain, or are identified by, words such as “outlook”, “guidance”,
“believes”, “expects”, “potential”, “continues”,
“may”, “will”, “should”, “predicts”, “intends”,
“plans”, “estimates”, “anticipates”, “could”
or the negative version of these words or other comparable words. Forward-looking statements
include, without limitation, projections, predictions, expectations, or beliefs about future
events or results and are not statements of historical fact, including the Company’s
expectations regarding its financial condition, statements relating to the Transaction and
the Financing, anticipated benefits resulting from the Transaction, estimates regarding Badcock’s
systemwide revenue, Badcock’s revenue and Adjusted EBITDA and expectations of Badcock’s
revenue and Adjusted EBITDA in the future, the performance of Badcock and the success of
Badcock’s strategic growth plans, which are subject to various significant risks and
uncertainties, many of which are outside of the control of the Company and the effects of
the coronavirus (COVID-19) pandemic and/or supply chain disruptions on economic conditions
and the industry in general, and the financial position and operating results of the Company.
Such forward-looking statements are based on various assumptions as of the time they are
made, and are inherently subject to known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking
statements. Forward-looking statements are often accompanied by words that convey projected
future events or outcomes such as “expect,” “believe,” “estimate,”
“plan,” “project,” “anticipate,” “intend,”
“will,” “may,” “view,” “opportunity,” “potential,”
or words of similar meaning or other statements concerning opinions or judgment of the Company
or its management about future events. Although the Company believes that its expectations
with respect to forward-looking statements are based upon reasonable assumptions within the
bounds of its existing knowledge of its business and operations, there can be no assurance
that actual results, performance, or achievements of the Company will not differ materially
from any projected future results, performance or achievements expressed or implied by such
forward-looking statements. Actual future results, performance or achievements may differ
materially from historical results or those anticipated depending on a variety of factors,
many of which are beyond the control of the Company. Additional factors that could cause
actual results to differ materially from forward-looking statements include, among others,
the effect of the announcement of the Transaction and/or the Financing on the ability of
the Company and Badcock to retain and hire key personnel and maintain relationships with
their franchisees, dealers, customers, suppliers, partners and others with whom they do business,
or on their respective operating results and business generally; risks associated with the
diversion of management’s attention from ongoing business operations due to the Transaction
and/or the Financing; legal proceedings related to the Transaction and/or the Financing;
costs, charges or expenses resulting from the Transaction and/or the Financing; growth of
the dealer base at Badcock; the strength of the economy; changes in the overall level of
consumer spending; the performance of the products and services of the Company and Badcock
within the prevailing retail or other business environments; implementation of the strategy
of the Company and Badcock; maintaining appropriate levels of inventory; or changes in tax
policy. We refer you to the “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” sections of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 26, 2020, and comparable sections
of the Company’s Quarterly Reports on Form 10-Q and other filings, which have been
filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the
forward-looking statements made in this press release are expressly qualified by the cautionary
statements contained or referred to herein. The actual results or developments anticipated
may not be realized or, even if substantially realized, they may not have the expected consequences
to or effects on the Company or its business or operations. Readers are cautioned not to
rely on the forward-looking statements contained in this press release. Forward-looking statements
speak only as of the date they are made and the Company does not undertake any obligation
to update, revise or clarify these forward-looking statements, whether as a result of new
information, future events or otherwise.
Franchise
Group Investor Relations Contact:
Andrew F. Kaminsky
EVP & Chief Administrative
Officer
Franchise Group, Inc.
akaminsky@franchisegrp.com
(914) 939-5161
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