BRIDGE LOAN AGREEMENT

Exhibit 10.3

 

EXECUTION COPY

 

Published CUSIP Number:             

 

 

BRIDGE LOAN AGREEMENT

 

Dated as of July 21, 2005

 

among

 

TOYS “R” US, INC .,

as the Initial Borrower,

 

TOYS “R” US-DELAWARE, INC. ,

as Borrower after the Merger and Assumption,

 

and

 

BANC OF AMERICA BRIDGE LLC,

as Administrative Agent,

 

and

 

DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH,

as Joint-Administrative Agent,

 

The Lenders Party Hereto

 

and

 

BANC OF AMERICA SECURITIES LLC ,

DEUTSCHE BANK SECURITIES INC.

and

CREDIT SUISSE ,

as Joint Lead Arrangers and Joint Bookrunning Managers,

 

and

 

CITIGROUP GLOBAL MARKETS INC. ,

as Co-Arranger

 

C AHILL G ORDON & R EINDEL LLP

80 Pine Street

New York, New York 10005

 

TABLE OF CONTENTS

 

 

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BRIDGE LOAN AGREEMENT

 

This BRIDGE LOAN AGREEMENT (this “ Agreement ”) is entered into as of July 21, 2005, by TOYS “R” US, INC., a Delaware corporation (prior to the Merger (as defined), “ Target ” and thereafter, the “ Initial Borrower ” or “ Holdings ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), BANC OF AMERICA BRIDGE LLC, as administrative agent for the Lenders (together with its permitted successors and assigns in such capacity, the “ Administrative Agent ”), DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as joint-administrative agent (together with its permitted successors and assigns in such capacity, the “ Joint-Administrative Agent ”), and BANC OF AMERICA SECURITIES LLC, DEUTSCHE BANK SECURITIES INC. and CREDIT SUISSE, as Joint Lead Arrangers and Joint Bookrunning Managers (collectively in such capacities, the “ Arrangers ” and individually, an “ Arranger ”), and CITIGROUP GLOBAL MARKETS INC., as Co-Arranger (in such capacity, the “ Co-Arranger ”).

 

WHEREAS, pursuant to the agreement and plan of merger dated as of March 17, 2005 as waived to the date hereof (the “ Acquisition Agreement ”) between Target, Global Toys Acquisition, LLC and Global Toys Acquisition Merger Sub, Inc., a Delaware corporation (“ Acquisition Sub ”), Acquisition Sub has agreed to merge (the “ Merger ”) with and into Target, with Target surviving the Merger;

 

WHEREAS, immediately after the consummation of the Merger, Toys “R” Us-Delaware, Inc., a Delaware corporation (“ Toys-DE ” and after the Merger and Assumption, the “ Borrower ”), will assume (the “ Assumption ”) all of the Initial Borrower’s rights and obligations under, and expressly agree to be bound by, the terms of this Agreement pursuant to the Assumption Agreement (as defined), at which time the Initial Borrower will be released from its obligations under this Agreement (except for such obligations pursuant to Section 7.17 hereof);

 

WHEREAS, concurrently with the consummation of the Merger, Acquisition Sub shall have received the cash proceeds of not less than $1.2 billion from a common and/or preferred equity investment (the “ Equity Contribution ”);

 

WHEREAS, concurrently herewith, the Initial Borrower will enter into that certain ABL Credit Agreement (as defined) in an aggregate amount of $2.0 billion;

 

WHEREAS, the proceeds of the initial borrowing hereunder, the initial borrowings under the ABL Credit Agreement and a portion of the Real Estate Transactions (as defined), if any, and the proceeds from the Equity Contribution will be used to finance in part the Merger and to pay fees and expenses incurred in connection with the Transactions;

 

WHEREAS, the Initial Borrower has requested that the Lenders make Loans to the Initial Borrower on the terms and conditions set forth herein; and

 

WHEREAS, the applicable Lenders have indicated their willingness to lend on the terms and subject to the conditions set forth herein.

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

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

 

“ ABL Credit Agreement ” means (a) that certain asset-based credit agreement dated as of the date hereof among the Initial Borrower, the Borrower, the lenders party thereto, Bank of America, N.A., as administrative agent, Bank of America, N.A. (acting through its Canada branch), as Canadian agent, Deutsche Bank Trust Company Americas, as collateral agent, and the other agents and arrangers party thereto, and (b) one or more other credit agreements, loan agreements, note agreements, promissory notes, indentures or other agreements or instruments evidencing or governing the terms of any indebtedness or other financial accommodation that has been incurred to extend, increase or refinance in whole or in part the indebtedness and other obligations outstanding under (x) the agreement referred to in subsection (a) or (y) any subsequent ABL Credit Agreement, unless such agreement or instrument expressly provides that it is not intended to be and is not an ABL Credit Agreement hereunder, in all cases under clauses (a) and/or (b) above, as amended, restated, supplemented, waived or modified from time to time to the extent permitted by this Agreement.

 

“ ABL Credit Agreement Documents ” means (a) the ABL Credit Agreement and (b) the other Loan Documents (as defined in the ABL Credit Agreement or any similar term used in any subsequent ABL Credit Agreement referred to in clause (b) of the definition thereof), including each mortgage and other security documents, guarantees, letter of credit documents and the notes issued thereunder, each as amended, restated, supplemented, waived or modified from time to time to the extent permitted by this Agreement.

 

“ Acquisition Agreement ” has the meaning assigned to such term in the recitals hereto.

 

“ Acquisition Documents ” means the Acquisition Agreement and all other agreements, documents, certificates and instruments executed and/or delivered in connection therewith, each as modified, amended, supplemented, waived or restated and in effect from time to time.

 

“ Acquisition Sub ” has the meaning assigned to such term in the preamble hereto.

 

“ Administrative Agent ” has the meaning assigned to such term in the preamble hereto.

 

“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

 

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

 

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“ Affiliate ” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“ Agents ” means the Administrative Agent and the Joint-Administrative Agent; and “ Agent ” shall mean any of them.

 

“ Aggregate Commitments ” means the Commitments of all the Lenders. The amount of the Aggregate Commitments is $1.9 billion.

 

“ Aggregate Real Estate Portfolio ” means, collectively, all of the Real Property that is the subject of the Real Estate Transactions.

 

“ Agreement ” has the meaning assigned to such term in the preamble hereto.

 

“ Agreement Value ” means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent in its reasonable discretion equal to:

 

(a) in the case of a Hedge Agreement documented pursuant to the ISDA Master Agreement, the amount, if any, that would be payable by any Loan Party to its counterparty to such Hedge Agreement, if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party was the sole “Affected Party” (as therein defined) and (iii) the Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of ISDA Master Agreement);

 

(b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party which is party to such Hedge Agreement, determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or

 

(c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party that is party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party exceeds (ii) the present value of the future cash flows to be received by such Loan Party, in each case pursuant to such Hedge Agreement.

 

“ Anti-Terrorism Laws ” has the meaning assigned to such term in Section 5.21 .

 

“ Applicable Law ” means as to any Person: (a) all laws, statutes, rules, regulations, orders, codes, ordinances or other requirements having the force of law; and (b) all court orders, decrees, judgments, injunctions, notices, binding agreements and/or rulings, in each case of or by any Governmental Authority which has jurisdiction over such Person, or any property of such Person.

 

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“ Applicable Maximum Rate ” shall mean an interest rate of 11% per annum in the case of Eurodollar Rate Loans and an interest rate of 10% per annum in the case of Base Rate Loans.

 

“ Applicable Rate ” means with respect to (a) any Initial Loan, 5.25% per annum, in the case of Eurodollar Rate Loans, and 4.25% per annum, in the case of Base Rate Loans and (b) any Term Loan, 5.5% per annum, in the case of Eurodollar Rate Loans, and 4.5% per annum, in the case of Base Rate Loans.

 

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

 

“ Arrangers ” has the meaning assigned to such term in the preamble hereto.

 

“ Asset Sale ” means (a) any conveyance, sale, lease (as lessor), transfer (other than in connection with granting of a Lien permitted hereunder) or other voluntary disposition (but excluding any Restricted Payment) (including by way of merger or consolidation and including any sale and leaseback transaction) of any property or assets, excluding sales of inventory in the ordinary course of business or pursuant to any going-out-of business sale, any use or dispositions of cash and Cash Equivalents by any Loan Party or any of its Subsidiaries and any casualty or property losses covered by insurance or condemnation proceeds by a Governmental Authority and (b) any sale of any Equity Interests of any Subsidiary of a Loan Party, in the case of both (a) and (b), to any Person other than (i) a Loan Party or (ii) other than for purposes of Section 7.05 , any other Subsidiary of a Loan Party; provided that sales of assets for aggregate consideration of $5.0 million or less with respect to any individual transaction or series of related transactions shall not constitute an “Asset Sale”.

 

“ Assignee Group ” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“ Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Agents, in substantially the form of Exhibit C or any other form approved by the Agents.

 

“ Assumption ” has the meaning assigned to such term in the recitals hereto.

 

“ Assumption Agreement ” means an Assumption Agreement substantially in the form of Exhibit F .

 

“ Attributable Indebtedness ” means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

 

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“ Audited Financial Statements ” means the audited consolidated balance sheet of Target and its Subsidiaries as of January 31, 2004 and January 29, 2005 and the related consolidated statements of operations, shareholders’ equity and cash flows for the three fiscal years ended January 29, 2005, including the notes thereto.

 

“ Banc of America ” means Banc of America Bridge LLC and its successors.

 

“ Bankruptcy Code ” means Title 11, U.S.C., as now or hereafter in effect, or any successor thereto.

 

“ Base Rate ” means, for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus ½ of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate.” The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’ costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“ Base Rate Loan ” means a Loan that bears interest based on the Base Rate.

 

“ Board ” 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 preamble hereto.

 

“ Borrower Materials ” has the meaning assigned to such term in Section 6.02 .

 

“ Borrowing ” means a borrowing consisting of Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period.

 

“ Borrowing or Conversion Notice ” means a notice of (a) a borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a) , which, if in writing, shall be executed by the Borrower and substantially in the form of Exhibit A-1 .

 

“ Bridge Loan ” has the meaning assigned to such term in Section 2.01(a) .

 

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

“ Capital Lease Obligations ” means, as to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified

 

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and accounted for as capital leases on a balance sheet of such Person under GAAP; for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“ Cash Equivalents ” means, as to any Person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States, Canada or any agency or instrumentality thereof ( provided that the full faith and credit of the United States or Canada is pledged in support thereof) or any state or state agency thereof having maturities of not more than one year from the date of acquisition by such Person; (b) time deposits, banker’s acceptances and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia (or Canada or any province thereof) having, capital and surplus aggregating in excess of $500.0 million with maturities of not more than one year from the date of acquisition by such Person; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in subsection (a) above (without regard to the limitation on maturity contained in such clause) and entered into with any financial institution meeting the qualifications specified in subsection (b) above or with any primary dealer, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (d) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than one year after the date of acquisition by such Person; (e) investments in money market or mutual funds substantially all of whose assets are comprised of securities of the types described in subsections (a) through (d) above; (f) in the case of Foreign Subsidiaries, Investments made locally of a type comparable to those described in subsections (a)-(e) of this definition; and (g) demand deposit accounts maintained in the ordinary course of business.

 

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq .

 

“ Certain Holdings Indebtedness ” means the Indebtedness set forth on Schedule 1.01-A hereto.

 

“ Certain Permitted Prior Payments ” has the meaning assigned to such term in Section 2.03(b) .

 

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption of any law, rule or regulation, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

 

“ Change of Control ” means

 

(a) Holdings at any time ceases to directly own 100% of the Equity Interests of the Borrower;

 

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(b) the sale, lease, transfer or other conveyance, in one or a series of related transactions, of all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, to any Person other than a Permitted Holder; provided that any sale, lease, transfer or other conveyance (or combination thereof) of the Real Property that is the subject of the Real Estate Transactions (and taken in the aggregate) shall not constitute a “Change of Control” for purposes of this Agreement;

 

(c) the Borrower becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of 50% or more of the total voting power of the Voting Stock of the Borrower or Holdings; or

 

(d) occupation of a majority of the non-vacant seats on the board of directors (or other body exercising similar management authority) of Holdings by Persons who were neither (i) nominated by the board of directors of Holdings (or prior to the consummation of a Qualifying IPO, the Sponsors) nor (ii) appointed by directors so nominated.

 

“ Charter Documents ” means (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“ Closing Date ” means the first date all conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 , which date shall be no later than October 31, 2005.

 

“ Closing Date Material Adverse Effect ” means any change, circumstance, event or effect that would be materially adverse to the assets, liabilities, business, financial condition or results of operations of Target and its Subsidiaries (other than Toys “R” Us-Japan, Ltd.) taken as a whole, other than any change, circumstance, event or effect resulting from (a) changes in the general economic conditions, (b) the announcement of the Acquisition Agreement and the transactions contemplated thereby, (c) general changes or developments in the industries in which Target and its Subsidiaries (other than Toys “R” Us-Japan, Ltd.) operate, (d) any actions required under the Acquisition Agreement to obtain any approval or authorization under applicable antitrust or competition laws for the consummation of the transactions contemplated by the Acquisition Agreement or (e) changes in any Laws or applicable accounting regulations or principles,

 

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unless, in the case of the foregoing subsections (a) and (c), such changes or developments referred to therein would reasonably be expected to have a materially disproportionate impact on the business, financial condition or results of operations of Target and its Subsidiaries (other than Toys “R” Us-Japan, Ltd.) taken as a whole relative to other industry participants.

 

“ CMBS Delaware Transaction ” means one or more commercial mortgage backed securities facilities of a Delaware Propco that are secured by the applicable Real Estate Portfolio (and any secured or unsecured borrowing facilities of one or more New Holdcos or New Holdco Non Guarantors that directly or indirectly own such Propco).

 

“ CMBS New Holdco Transaction ” means one or more commercial mortgage backed securities facilities of one or more Propcos that are Subsidiaries of one or more New Holdcos or New Holdco Non Guarantors that are secured by the applicable Real Estate Portfolio (and any secured or unsecured borrowing facilities of one or more New Holdcos or New Holdco Non Guarantors that directly or indirectly own such Propco).

 

“ Co-Arranger ” has the meaning assigned to such term in the preamble hereto.

 

“ Code ” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated thereunder, as amended from time to time.

 

“ Commitment ” means, as to each Lender, its obligation to make a Bridge Loan to the Borrower pursuant to Section 2.01(a) in the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Commitment” or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“ Consolidated ” means, when used to modify a financial term, test, statement or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

 

“ 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.

 

“ Controlled Investment Affiliate ” means, as to any Person, any other Person which directly or indirectly is in Control of, is Controlled by, or is under common Control with, such Person and is organized by such Person (or any Person Controlling such Person) primarily for making equity or debt investments in Holdings or other portfolio companies.

 

“ Conversion Date ” means the first anniversary of the Closing Date.

 

“ Debt Issuance ” means the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness after the Closing Date (other than any Excluded Debt and other than the Delaware Real Estate Transactions to the extent proceeds thereof are less than or equal to $650.0 million), without duplication of amounts applied in accordance with Section 2.03(b) .

 

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“ Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the lapse of any cure period set forth in Section 8.01 , or both, would, unless cured or waived, become an Event of Default.

 

“ Default Rate ” has the meaning assigned to such term in Section 2.06(b) .

 

“ Defaulting Lender ” means any Lender that (a) has failed to fund any portion of Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute or (c) has been deemed insolvent or become the subject of a bankruptcy, insolvency or similar proceeding.

 

“ Delaware Note ” means that certain intercompany note issued by the Borrower in favor of Holdings representing a portion of the purchase price not in excess of $700.0 million for the acquisition of certain Subsidiaries of Holdings, including the Geoffrey Entities and their assets, which note shall be (a) an unsecured and fully subordinated to the Obligations hereunder in the event of a bankruptcy, insolvency or liquidation and (b) have no amortization requirements or interest payable in cash prior to the Final Maturity Date, substantially in the form of Exhibit L hereto.

 

“ Delaware Propco ” means any direct or indirect wholly owned Subsidiary of the Borrower, the primary assets (other than cash or Cash Equivalents) of which consist of rights, title and interest (including any leasehold, mineral or other estate) in and to parcels of or interests in Real Property, whether by lease, license or other means, in each case which has no other Indebtedness other than pursuant to a Real Estate Transaction or Indebtedness of the types permitted to be incurred under Section 7.03 if such Propco were a Loan Party.

 

“ Delaware Real Estate Transactions ” means (a) the CMBS Delaware Transactions and (b) the Delaware Sale Leasebacks.

 

“ Delaware Sale Leaseback ” means any real estate financing transaction by one or more Delaware Propcos involving the applicable Real Estate Portfolio (and any secured or unsecured borrowing facilities by one or more New Holdcos or New Holdco Non Guarantors that directly or indirectly own such Propcos) and with respect to which counsel for the Borrower shall have delivered to the Agents a customary “no conflicts” opinion.

 

“ Description of Exchange Notes ” means the description of the terms and conditions of the proposed Senior Notes due 2012 of the Borrower, substantially in the form of Exhibit G , with such modifications thereto as may be agreed to by the Borrower, the Agents and the same percentage of Lenders as would be required to modify the applicable provisions if such provisions were applicable to this Agreement.

 

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“ Disclosed Matters ” means the actions, suits and proceedings and the environmental matters disclosed on Schedule 5.06 .

 

“ Disqualified Capital Stock ” means any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is six months following the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the date that is six months following the Final Maturity Date, or (c) contains any mandatory repurchase obligation which may come into effect prior to payment in full of all Obligations; provided that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of a change in control or an asset sale occurring prior to the date that is six months following the Final Maturity Date shall not constitute Disqualified Capital Stock.

 

“ Disqualified Lender ” means those Persons identified as such in that certain side letter dated as of the date hereof between Global Toys Acquisition, LLC and the Administrative Agent.

 

“ Dollar ” and “ $ ” mean lawful money of the United States.

 

“ Eligible Assignee ” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other commercial bank, insurance company or company engaged in the business of making commercial loans or a commercial finance company, which Person, together with its Affiliates, have a combined capital and surplus in excess of $1.0 billion, approved by (i) the Agents and (ii) in the case of any assignment of all or a portion of any Commitment or Loan, or both, as the case may be, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (x) any natural person, (y) any Disqualified Lender or (z) Holdings, Sponsor or any of their respective Affiliates to the extent that, after giving effect to any proposed assignment, Holdings, Sponsor and their respective Affiliates would hold more than 49% of the then outstanding Loans.

 

“ Embargoed Person ” has the meaning assigned to such term in Section 7.15 .

 

“ Employee Benefit Plan ” means an employee benefit plan (as defined in Section 3(3) of ERISA) that is maintained or contributed to by a Loan Party or any ERISA Affiliate or with respect to which a Loan Party or a Subsidiary thereof could incur liability.

 

“ Environmental Laws ” means all Applicable Laws issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the protection of human health or the environment, to the handling, treatment, storage, disposal of Hazardous Materials or to the assessment or remediation of any Release or threatened Release of any Hazardous Material to the environment.

 

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“ Environmental Liability ” means any liability, contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“ Equity Contribution ” has the meaning assigned to such term in the recitals hereto.

 

“ Equity Interest ” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.

 

“ Equity Issuance ” means, without duplication, (a) any issuance or sale by any Loan Party after the Closing Date of any Equity Interests of such Loan Party (including any Equity Interests issued upon exercise of any warrant or option) or any warrants or options to purchase Equity Interests or (b) any contribution to the capital of any Loan Party (other than, in each case, any Excluded Equity Issuance); provided that “Equity Issuance” shall not include the Equity Contribution.

 

“ Equity Security Units ” means those certain units consisting of (a) equity security interests issued pursuant to that certain Purchase Contract Agreement dated as of May 28, 2002 between Toys “R” Us, Inc. and The Bank of New York, as purchase contract agent and (b) senior notes due 2007 issued pursuant to that certain Indenture, as amended as of May 28, 2002, between Toys “R” Us, Inc. and The Bank of New York, as trustee.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

 

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ ERISA Event ” means (a) with respect to the Borrower and its domestic Subsidiaries, any “reportable event,” as defined in Section 4043 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);

 

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(b) with respect to the Borrower and its domestic Subsidiaries, the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA) in excess of $100.0 million (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower 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; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability in excess of $100.0 million (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability in excess of $100.0 million (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“ Eurodollar Base Rate ” means, for such Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“ BBA LIBOR ”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for deposits in dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Base Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted by Banc of America and with a term equivalent to such Interest Period would be offered by Banc of America’s London Branch to major banks in the London interbank eurocurrency market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period..

 

“ Eurodollar Rate ” means for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by the Administrative Agent pursuant to the following formula:

 

 

“ Eurodollar Rate Loan ” means a Loan that bears interest at a rate based on the Eurodollar Rate.

 

“ Eurodollar Reserve Percentage ” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, applicable to the Administrative Agent, under regulations issued from time to time by the

 

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FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurodollar funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

 

“ Event of Default ” has the meaning assigned to such term in Section 8.01 .

 

“ Excess Amount ” has the meaning assigned to such term in Section 2.03(g) .

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Exchange Date ” has the meaning assigned to such term in Section 2.01(c)(ii) .

 

“ Exchange Note Indenture ” means the indenture to be entered into relating to the Exchange Notes, and containing, among other things, the covenants and other provisions set forth in the Description of Exchange Notes (with such changes to cure any ambiguity, omission, defect or inconsistency as the Agents and the Borrower shall approve).

 

“ Exchange Notes ” has the meaning assigned to such term in Section 2.01(c) .

 

“ Exchange Notice ” has the meaning assigned to such term in Section 2.01(c)(ii) .

 

“ Exchange Trigger Event ” means (a) on and after the first anniversary of the Conversion Date, the first receipt by the Administrative Agent of one or more Exchange Notices representing at least 51% of the aggregate amount of all outstanding Term Loans held by Lenders not affiliated with the Borrower or its Affiliates, the Sponsors, Sponsor Affiliates or Sponsor Associates (such event, the “ Initial Exchange Trigger Event ”), and (b) at any time after the Initial Exchange Trigger Event, any receipt by the Administrative Agent of one or more Exchange Notices representing the lesser of (i) $10.0 million aggregate principal amount of Term Loans and (ii) the remainder of the then outstanding Term Loans.

 

“ Excluded Debt ” means, collectively, any Indebtedness permitted by Section 7.03 (other than any refinancing Indebtedness permitted pursuant to Section 7.03(a) , any Indebtedness in excess of $325.0 million incurred pursuant to Section 7.03(k) thereof and any Indebtedness in excess of $650.0 million incurred pursuant to Section 7.03(n) ).

 

“ Excluded Equity Issuances ” means the issuance or sale of Equity Interests of, or any capital contribution to, any Loan Party, directly or indirectly, after the Closing Date to or by any Permitted Holder or any of its co-investors or Affiliates of such co-investors or Holdings or any Affiliate of Holdings.

 

“ Excluded Taxes ” means, with respect to the Agents, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office

 

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is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the recipient’s principal office or applicable lending office is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13 ), (i) any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a) or (ii) is attributable to such Foreign Lender’s failure to comply with Section 3.01(e) .

 

“ Executive Order ” has the meaning assigned to such term in Section 5.21 .

 

“ Extension Spread ” means zero basis points during the three month period commencing on the Conversion Date plus an increase of an additional 50 basis points at the beginning of each subsequent three-month period that the Term Loans remain outstanding.

 

“ Extraordinary Receipts ” means any receipt by any Loan Party or any of its Subsidiaries of any casualty or property insurance proceeds or condemnation awards 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; provided that any casualty or property insurance proceeds or condemnation awards of $5.0 million or less with respect to any individual event or series of related events shall not constitute “Extraordinary Receipts.”

 

“ Federal Funds Rate ” means, for any day, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of one percent (1%)) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of one percent (1%)) of the quotations for such day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent.

 

“ Fee Letter ” means the fee letter dated March 17, 2005, as amended through the date hereof, among Banc of America Bridge LLC, Banc of America Securities LLC, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc. and Holdings.

 

“ Final Maturity Date ” means July 21, 2012.

 

“ Financial Officer ” means, with respect to any Loan Party, the chief financial officer, treasurer, assistant treasurer, controller or assistant controller of such Loan Party.

 

“ Fiscal Month ” means any fiscal month of any Fiscal Year, which month shall generally end on the last Saturday of each calendar month in accordance with the fiscal accounting calendar of the Borrower.

 

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“ Fiscal Quarter ” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on the last Saturday of each April, July, October or January of such Fiscal Year in accordance with the fiscal accounting calendar of the Borrower.

 

“ Fiscal Year ” means any period of twelve consecutive months ending on the Saturday closest to January 31 of any calendar year.

 

“ Foreign Lender ” means any Lender that is not a U.S. Person within the meaning of Section 7701(a)(30) of the Code.

 

“ Foreign Subsidiary ” means any direct or indirect Subsidiary of a Loan Party which is not organized under the laws of the United States, any State thereof or the District of Columbia.

 

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

 

“ Fund ” means any Person (other than a natural person) that is (or will be) engaged in investing in commercial loans and similar extensions of credit in the ordinary course of its business.

 

“ GAAP ” means principles which are consistent with those promulgated or adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made; provided that with respect to Foreign Subsidiaries of Borrower organized under the laws of Canada, “GAAP” shall mean principles which are consistent with those promulgated or adopted by the Canadian Institute of Chartered Accountants and its predecessors (or successors) in effect and applicable to the accounting period in respect of which reference to GAAP is being made.

 

“ Geoffrey Entities ” means collectively (a) Geoffrey Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Borrower, and (b) each of its domestic subsidiaries, including Geoffrey, Inc., a Delaware corporation, which own the intellectual property related to the Borrower’s business and operations.

 

“ Geoffrey Release Date ” has the meaning assigned to such term in Section 9.10 .

 

“ Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational bodies such as the European Union or the European Central Bank).

 

“ Granting Lender ” has the meaning assigned to such term in Section 10.06(g) .

 

“ Guarantee ” means, collectively, the guarantee made by the Subsidiary Guarantors and Wayne Real Estate Holding Company, LLC in favor of the Administrative Agent, substantially in the form of Exhibit D , the Proceeds Sharing Agreement and any Residual Interest Instrument, together with each other guarantee and guarantee supplement delivered pursuant to Section 6.10 .

 

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“ Guarantors ” means, collectively, (a) the Limited Guarantor, (b) the Subsidiary Guarantors, (c) Wayne Real Estate Holding Company, LLC, until such time as its Guarantee is replaced with a Residual Interest Instrument, and (d) and any Person required to execute a Guarantee pursuant to Section 6.10 ; provided that (i) on and after the Conversion Date, subject to the exchange of Bridge Loans for Term Loans pursuant to Section 2.01(d) , the Limited Guarantor shall no longer be a Guarantor of the Obligations under this Agreement, (ii) MPO Holdings LLC shall not be required to be a Guarantor, and (iii) on and after the Geoffrey Release Date, pursuant to the conditions set forth in Section 9.10(b) , the Geoffrey Entities shall no longer be Subsidiary Guarantors of the Obligations under this Agreement.

 

“ Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, mold, fungi or similar bacteria, and all other substances or wastes of any nature regulated pursuant to any Environmental Law because of their dangerous or deleterious properties, including any material listed as a hazardous substance under Section 101(14) of CERCLA.

 

“ Hedge Agreement ” means any derivative agreement, any interest rate protection agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement designed to hedge against fluctuations in interest rates or foreign exchange rates or commodity prices.

 

“ Holdings ” has the meaning assigned to such term in the preamble hereto.

 

“ Holdings Restricted Payment ” means any (a) dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests of Holdings or (b) 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 of Holdings.

 

“ Holdings 2006 Notes ” means the $250.0 million aggregate principal amount of 6.875% Notes due 2006.

 

“ Indebtedness ” means, as to any Person at a particular time, the following (without duplication):

 

(a) all obligations of such Person for borrowed money (including any obligations which are without recourse to the credit of such Person); provided that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

 

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(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments;

 

(c) all direct or contingent obligations of such Person arising under letters of credit as an account party (including standby and commercial), letters of guarantee, bankers’ acceptances and bank guarantees;

 

(d) the Agreement Value of all Swap Contracts;

 

(e) all obligations of such Person to pay the deferred purchase price of property or services (excluding accrued expenses and accounts payable incurred in the ordinary course of business);

 

(f) Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; provided that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

 

(g) Capital Lease Obligations; provided that all such obligations and liabilities which are limited in recourse to such property shall be included in Indebtedness only to the extent of the lesser of the fair market value of such property and the then outstanding amount of such Indebtedness;

 

(h) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified Capital Stock in such Person or any other Person (except any obligation to purchase, redeem, retire or otherwise acquire for value any Equity Interests of any Loan Party from present or former officers, directors or employees of such Loan Party or any Subsidiary thereof upon the death, disability, retirement or termination of employment or service of such officer, director or employee, or otherwise under any stock option or employee stock ownership plan approved by the board of directors of such Loan Party), valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

 

(i) the principal and interest portions of all rental obligations of such Person under any Synthetic Lease, tax retention operating lease, off-balance-sheet loan or similar off-balance-sheet financing where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP; and

 

(j) all guarantees of such Person in respect of Indebtedness of others.

 

Indebtedness shall not include (A) any sale-leaseback transactions to the extent the lease or sublease thereunder is not required to be recorded under GAAP as a capital lease, (B) any obligations relating to overdraft protection and netting services, or (C) any preferred stock required to be included as Indebtedness in accordance with GAAP and FAS 150.

 

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For all purposes hereof, 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 any Capital Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“ Indemnified Taxes ” means all Taxes other than Excluded Taxes.

 

“ Indemnitee ” has the meaning assigned to such term in Section 10.04(b) .

 

“ Indemnity Letter ” means that certain letter agreement dated as of July 19, 2005 by and between the Administrative Agent and the Initial Borrower.

 

“ Indentures ” means each of (i) the Indenture, dated as of July 24, 2001, originally between Holdings and The Bank of New York, as trustee, with respect to 6.875% Notes due 2006, (ii) the Indenture, dated as of July 24, 2001, originally between Holdings and The Bank of New York, as trustee, with respect to 7.625% Notes due 2011, (iii) the Indenture dated as of May 28, 2002 originally between Holdings and The Bank of New York, as trustee, with respect to 7.875% Notes due 2013, (iv) the Indenture dated as of May 28, 2002 originally between Holdings and The Bank of New York, as trustee, with respect to 7.375% Notes due 2018, and (iv) the Indenture dated as of August 29, 1991 originally between Holdings and Bank of New York, as successor trustee, with respect to Debentures due 2021, each as modified, amended, supplemented or restated and in effect from time to time.

 

“ Information ” has the meaning assigned to such term in Section 10.07 .

 

“ Initial Borrower ” has the meaning assigned to such term in the preamble hereto.

 

“ Initial Loans ” means the Bridge Loans.

 

“ Intellectual Property ” has the meaning assigned to such term in Section 5.18 .

 

“ Interest Payment Date ” means (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Eurodollar Rate Loan and (i) the Conversion Date (in the case of Initial Loans) or (ii) the Final Maturity Date (in the case of Term Loans); and (b) as to any Base Rate Loan, the last day of each March, June, September and December and (i) the Conversion Date (in the case of Initial Loans) or (ii) the Final Maturity Date (in the case of Term Loans).

 

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“ Interest Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date three months thereafter, as selected by the Borrower in its Borrowing or Conversion Notice; provided that:

 

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(iii) no Interest Period shall extend beyond (i) the Conversion Date (in the case of Initial Loans) or (ii) the Final Maturity Date (in the case of Term Loans).

 

“ Investment ” means, as to any Person, any direct or indirect (a) purchase or other acquisition of capital stock or other securities, including any option, warrant or right to acquire the same, of another Person, (b) loan, advance or capital contribution to, extension of credit (except for current trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business), guarantee of Indebtedness of a Non-Loan Party or assumption of obligations of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor guarantees Indebtedness of such other Person, or (c) purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the assets of another Person or any merger or consolidation of such Person with any other Person, in each case in any transaction or group of transactions which are part of a common plan. For purposes of covenant compliance, the amount of any Investment shall be the aggregate Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends or distributions) received by such Person and less all liabilities expressly assumed by another Person in connection with the sale of such Investment.

 

“ ISDA Master Agreement ” means the form entitled “2002 ISDA Master Agreement” or such other replacement form then currently published by the International Swap and Derivatives Association, Inc. or any successor thereto.

 

“ Joint-Administrative Agent ” has the meaning assigned to such term in the preamble hereto.

 

“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

 

“ Lender ” has the meaning assigned to such term in the preamble hereto, together with any Person that subsequently becomes a Lender by way of assignment in accordance with the terms of Section 10.06 , together with their respective successors, other than any Person that ceases to be a Lender as a result of an assignment in accordance with Section 10.06 or an amendment of this Agreement.

 

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“ Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

“ Letter Agreement ” means that letter agreement dated as of May 5, 2005, by and among Bank of America, N.A., Banc of America Securities LLC, Banc of America Bridge LLC, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit Suisse First Boston and Global Toys Acquisition LLC.

 

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

 

“ Limited Guarantor ” means Holdings.

 

“ Loan Documents ” means this Agreement, the Assumption Agreement, each Note, the Guarantees and the Fee Letter.

 

“ Loan Parties ” means, collectively, until the Assumption, the Initial Borrower, and upon and after the Assumption, the Borrower, and each Subsidiary Guarantor.

 

“ Loans ” means the Initial Loans and the Term Loans.

 

“ Management Agreement ” means that certain management agreement dated as of the date hereof by and among Holdings, Bain Capital Partners, LLC, Bain Capital, Ltd., Toybox Holdings, LLC and Vornado Truck LLC, as amended, modified and supplemented from time to time; provided that no such amendment, modification or supplement may effect any increase in fees payable thereunder.

 

“ Margin Stock ” has the meaning assigned to such term in Regulation U.

 

“ Marketable Securities ” means any security that is listed or recorded on a United States national securities exchange, quoted on Nasdaq (or any other successors thereto), on the Nasdaq National Market (or any successors thereto) or any United States national automated interdealer quotation system, with a seven-day average public float of at least $500.0 million.

 

“ Master Lease ” means each of the Master Leases to be entered into by any Loan Party with a Propco, and any and all modifications thereto, substitutions therefor and replacements thereof.

 

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“ Material Adverse Effect ” means any event, facts, or circumstances, which, after the Closing Date, has a material adverse effect on (a) the business, assets, financial condition or income of the Loan Parties taken as a whole or (b) the validity or enforceability of this Agreement or the other Loan Documents in any material respect or any of the material rights or remedies of the Lenders or the Agents hereunder or thereunder; provided that no event, fact or circumstance existing on the Closing Date of which the Agents have knowledge (based on information disclosed to the Agents prior to the Closing Date or set forth in SEC publicly filed documents regarding Holdings prior to the Closing Date) shall be deemed to be the basis for a Material Adverse Effect.

 

“ Material Indebtedness ” means any Indebtedness (other than the Obligations) of the Loan Parties individually having an aggregate principal amount of $40.0 million or more.

 

“ Material Subsidiary ” means, as to any Person, a Subsidiary of such Person that had, as of the end of the most recent Fiscal Quarter for which annual financial statements or quarterly financial statements (whichever are more recent) are available prior to the date of determination, total assets of the Borrower and its domestic Subsidiaries (as determined in accordance with GAAP) of more than $50.0 million or any Subsidiary designated by the Borrower as a Material Subsidiary. Notwithstanding the foregoing, Material Subsidiaries shall include each Subsidiary, that together with its subsidiaries, account for no less than 95% of total assets of the Borrower and its domestic Subsidiaries, determined on a quarterly basis simultaneously with the delivery of the financial statements required to be delivered by Section 6.01(b) . For the avoidance of doubt, the designation of a Subsidiary as a “Material Subsidiary” shall be permanent notwithstanding any subsequent reduction in such Subsidiary’s net tangible assets, unless otherwise consented to by the Administrative Agent. Notwithstanding the foregoing, the Geoffrey Entities and each other Subsidiary of the Borrower that is a Loan Party on the Closing Date (in each case so long as they are a subsidiary of a Loan Party) shall at all times be deemed a Material Subsidiary. As of the Closing Date, the Subsidiaries listed on Schedule 1.02 are not Material Subsidiaries.

 

“ Maximum Rate ” has the meaning assigned to such term in Section 10.09 .

 

“ Merger ” has the meaning assigned to such term in the recitals hereto.

 

“ Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

 

“ Multiemployer Plan ” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“ Net Cash Proceeds ” means:

 

(a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the cash proceeds received by any Loan Party or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by such Loan Party or any of its Subsidiaries) in respect of non-cash consideration initially received), other than proceeds of Collateral (as defined in the ABL Credit Agreement) if and for so long as the obligations under the ABL Credit Agreement remain outstanding, net of (i) selling and/or liquidation expenses (including reasonable brokers’ fees or commissions, legal,

 

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accounting and other professional and transactional fees, appraisal and title expenses, recording, transfer and similar taxes and the Loan Party’s good faith estimate of other taxes paid or payable in connection with such sale); (ii) amounts reasonably and in good faith provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by such Loan Party or any of its Subsidiaries associated with the properties sold in such Asset Sale ( provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) such Loan Party’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 90 days of such Asset Sale ( provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); (iv) in the case of a sale or other disposition (including casualty or condemnation) of an asset, the amount of all payments required to be made by any Loan Party or any of its Subsidiaries as a result of such event to repay (or to establish any required escrow for the repayment of) any Indebtedness secured by such asset or otherwise subject to mandatory prepayment under the ABL Credit Agreement as a result of such event; (v) cash reserves required by the financing source in connection with the Propco Sale Leaseback in an aggregate amount not to exceed the equivalent of six months of lease payments relating to such Propco Sale Leaseback; (vi) other reasonable fees and expenses actually incurred in connection therewith; and (vii) capital gains or other income taxes paid or payable as a result of any such sale or disposition (after taking into account available tax credits or deductions);

 

(b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or sale of Equity Interests by any Person or any of its Subsidiaries, the cash proceeds thereof, net of reasonable fees, commissions, costs and other expenses incurred in connection therewith; and

 

(c) (i) with respect to any Extraordinary Receipts, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, other than proceeds of Collateral (as defined in the ABL Credit Agreement) if and for so long as the obligations under the ABL Credit Agreement remain outstanding, net of all reasonable fees, costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Extraordinary Receipts and net of any portion of such proceeds, awards or compensation constituting reimbursement or compensation for amounts previously paid by the Loan Parties or their Subsidiaries in respect of the theft, loss, destruction, damage or other similar event relating to such Extraordinary Receipts, (ii) in the case of a sale or other disposition of an asset pursuant to a casualty or condemnation, the amount of all payments required to be made by any Loan Party or any of their respective Subsidiaries as a result of such event to repay (or to establish an escrow for the repayment of) any Indebtedness secured by such asset or otherwise subject to mandatory prepayment under the ABL Credit Agreement as a result of such event, and (iii) capital gains or other income taxes paid or payable as a result of any such sale or disposition (after taking into account any available tax credits or deductions).

 

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“ New Holdco ” means a Non-Loan Party that (a) is a domestic Subsidiary of Holdings (other than Toys “R” Us Europe LLC), (b) has no operations and whose primary assets (other than cash and Cash Equivalents) are, either (x) directly or indirectly, the stock or other equity interests of a Subsidiary that is a Propco and the Real Estate Portfolio that is the subject of a Real Estate Transaction or (y) a Real Estate Transaction Note and (c) is not a borrower or a guarantor of a Real Estate Transaction.

 

“ New Holdco Non Guarantor ” means any Non Loan Party that (a) is a domestic Subsidiary of Holdings (other than Toys “R” Us Europe LLC), (b) has no operations and whose primary assets (other than cash and Cash Equivalents) are, directly or indirectly, the stock or other equity interests of a Subsidiary that is a Propco and the Real Estate Portfolio that is the subject of a Real Estate Transaction and (c) is a borrower or a guarantor (or other credit provider (including providing a pledge of equity interests)) in respect of a Real Estate Transaction.

 

“ New Holdco Real Estate Transactions ” means (a) the CMBS New Holdco Transaction and (b) the New Holdco Sale Leasebacks.

 

“ New Holdco Sale Leaseback ” means any real estate financing transaction by one or more Propcos that are Subsidiaries of a New Holdco or New Holdco Non Guarantors (and any secured or unsecured borrowing facilities by one or more New Holdcos or New Holdco Non Guarantors that directly or indirectly own such Propcos) involving the applicable Real Estate Portfolio and with respect to which counsel for the Borrower shall have delivered to the Agents a customary “no conflicts” opinion.

 

“ Non-Guarantor Subsidiary ” means any Subsidiary of a Loan Party that is not a Guarantor.

 

“ Non-Loan Party ” means any direct or indirect Subsidiary of Holdings that is not otherwise a Loan Party.

 

“ Note ” means a promissory note made by the Borrower in favor of a Lender or its registered assigns, in substantially the form of Exhibit B-1 (in the case notes evidencing Bridge Loans) or Exhibit B-2 (in the case of notes evidencing Term Loans) hereto, evidencing Loans made by such Lender to the Borrower.

 

“ Obligations ” means (a) obligations of the Borrower and the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, 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, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise, of the Borrower and the other Loan Parties under this Agreement and the other Loan Documents and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower and the other Loan Parties under or pursuant to this Agreement and the other Loan Documents.

 

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“ OFAC ” has the meaning assigned to such term in Section 5.21 .

 

“ on ” when used with respect to the Property or any property adjacent to the Property, means “on, in, under, above or about.”

 

“ Other Taxes ” means any and all current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies 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.

 

“ Participant ” has the meaning assigned to such term in Section 10.06(d) .

 

“ Patriot Act ” has the meaning assigned to such term in Section 10.16 .

 

“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

“ Permitted Holders ” means (a) the Sponsors and (b) their respective Permitted Transferees.

 

“ Permitted Holdings Expenses ” means expenses of Holdings consisting of (a) franchise taxes and other costs required to maintain the legal existence of Holdings, (b) corporate overhead expenses incurred in the ordinary course of business, (c) audit costs, professional fees and expenses and other costs incurred by Holdings in connection with reporting obligations under or otherwise incurred in connection with compliance with Applicable Law (including applicable rules or regulations of any governmental, regulatory or self-regulatory body or stock exchange, including in respect of any reports filed with respect to the Securities Act, the Exchange Act or the respective rules and regulations promulgated thereunder), (d) obligations of Holdings under or in respect of director and officer insurance policies or indemnification obligations to directors or officers and directors’ fees and expenses, (e) reimbursement of indemnities and actual expenses and, so long as no Specified Default has occurred and is continuing or would result therefrom, fees, in each case, payable pursuant to the Management Agreement; provided that such fees not paid shall accrue and be paid when the applicable Specified Default has been cured or waived and no additional Specified Default has occurred and is continuing or would arise as a result of such payment and (f) trade payables and other operating expenses incurred in the ordinary course of business and attributable to the operations of the Borrower and its Subsidiaries and which are reasonably expected to be, and appropriately should be payable by, the Borrower and its Subsidiaries.

 

“ Permitted Liens ” has the meaning assigned to such term in Section 7.01 .

 

“ Permitted Tax Distributions ” means payments, dividends or distributions by any Loan Party to Holdings in order to pay consolidated or combined federal, state or local income or franchise taxes attributable to the income of Holdings, the Loan Parties or any of their Subsidiaries, to the extent such taxes are not payable directly by the Loan Parties or any of their Subsidiaries, which payments, dividends and distributions by such Loan Party (less any such taxes payable directly by the Borrower or its Subsidiaries) shall not be in excess of the applicable income or franchise tax liabilities that would have been payable by Holdings, the Loan Parties and the Loan Parties’ Subsidiaries on a stand-alone basis.

 

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“ Permitted Transferees ” means (a) any Controlled Investment Affiliate of the Sponsors (collectively, “ Sponsor Affiliates ”), (b) any managing director, general partner, limited partner, director, officer or employee of the Sponsors or any Sponsor Affiliate (collectively, the “ Sponsor Associates ”), (c) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any Sponsor Associate and (d) any trust, the beneficiaries of which, or a corporation or partnership, the stockholders or partners of which, include only a Sponsor Associate, his or her spouse, parents, siblings, members of his or her immediate family (including adopted children) and/or direct lineal descendants.

 

“ Permitted Use ” in respect of any Net Cash Proceeds of either (x) any Asset Sale or (y) any Debt Issuance or any issuance by a Loan Party of Disqualified Capital Stock, means, without duplication, and without duplication of any such amounts paid by any other Person, the actual application of such proceeds by:

 

(a) any Loan Party to (i) fund its current operations; provided that Excess Availability (as defined under the ABL Credit Agreement as in effect on the date hereof) under the ABL Credit Agreement is less than $300.0 million, or (ii) make unsubordinated loans to a Non-Loan Party to fund such Non-Loan Party’s current operations; provided that (A) prior to and after giving effect to any such unsubordinated loan, there is at least $300.0 million of Excess Availability (as defined under the ABL Credit Agreement as in effect on the date hereof) under the ABL Credit Agreement and (B) the amount necessary to fund current operations shall exclude any dividends or distributions otherwise made by such Non-Loan Party to its equity holder(s) (other than any such dividends or distributions that are or were used, to pay Permitted Holdings Expenses, Permitted Tax Distributions, Permitted Uses or trade payables and other operating expenses attributable to the operations of such Non-Loan Party or its Subsidiaries); and

 

(b) any Loan Party in an amount necessary to (i) make Permitted Tax Distributions, (ii) pay Permitted Holdings Expenses and (iii) make unsubordinated loans to Holdings to fund (A) interest payments when due in respect of Certain Holdings Indebtedness or any refinancings thereof and in respect of Indebtedness incurred by Holdings to refinance the Loans, (B) principal payments of the Holdings 2006 Notes and (C) obligations owing in respect of any Specified Holdings Indebtedness; and

 

(c) any Loan Party to repay borrowings under the ABL Credit Agreement incurred to finance the repurchase the Equity Stock Units.

 

; provided that no such use shall be considered a “Permitted Use” to the extent of the amount of Cash Equivalents held by MPO Holdings LLC and permitted to be dividended, distributed or otherwise transferred out of MPO Holdings LLC pursuant to and in accordance with the terms of the CMBS New Holdco Transaction and applicable law that are not applied towards the items described above.

 

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“ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“ Plan ” means any employee pension benefit plan (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 the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“ Platform ” has the meaning assigned to such term in Section 6.02 .

 

“ Pro Rata Share ” means, with respect to each Lender, (i) at or prior to the funding on the Closing Date, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Commitment of such Lender and the denominator of which is the amount of the Aggregate Commitments and (ii) thereafter, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the principal amount of the Loans of such Lender and the denominator of which is the aggregate principal amount of the Loans of all Lenders.

 

“ Proceeds Sharing Agreement ” means a sharing agreement by the Limited Guarantor in favor of Administrative Agent substantially in the form of Exhibit I .

 

“ Propco ” means (a) a Delaware Propco and/or (b) any other direct or indirect domestic Subsidiary of Holdings (other than Toys “R” Us Europe LLC so long as it holds no domestic Real Property), the primary assets (other than cash or Cash Equivalents) of which consist of rights, title and interest (including any leasehold, mineral or other estate) in and to parcels of or interests in Real Property, whether by lease, license or other means, in each case which has no other Indebtedness other than pursuant to a Real Estate Transaction or Indebtedness of the types permitted to be incurred under Section 7.03 if such Propco were a Loan Party.

 

“ Propco Sale Leaseback ” means (a) a Delaware Sale Leaseback and/or (b) a New Holdco Sale Leaseback.

 

“ Qualified Capital Stock ” means, of any Person, any Equity Interests of such Person that are not Disqualified Capital Stock.

 

“ Qualifying IPO ” means an equity issuance by Holdings consisting of an underwritten primary public offering (other than a public offering pursuant to a registration statement on Form S-8) of its common stock (a) pursuant to an effective registration statement filed with the SEC in accordance with the Securities Act (whether alone or in connection with a secondary public offering) and (b) resulting in gross proceeds to Holdings of at least $100.0 million.

 

“ Real Estate Portfolio ” means (a) with respect to a CMBS Delaware Transaction, all of the Real Property that is transferred to a Delaware Propco in connection with a CMBS Delaware Transaction, (b) with respect to a Delaware Sale Leaseback, all or any portion of the remaining Real Property owned before such Delaware Sale Leaseback by the Loan Parties (and which is not otherwise the subject of clause (a) above or (c) below), and (c) with respect to a New Holdco

 

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Real Estate Transaction, all or any portion of the remaining Real Property owned before such New Holdco Real Estate Transaction by (i) the Loan Parties (and which is not otherwise the subject of clause (a) or (b) above), (ii) certain Subsidiaries of Holdings, consisting of Stores or other Real Property that has been designated for closure within twelve (12) months of such transfer and that (x) was or is dividended to Holdings and then contributed by Holdings to a Loan Party or a Guarantor or Residual Interest Provider or (y) was or is sold to a New Holdco or New Holdco Non Guarantor in exchange for a Real Estate Transaction Note and/or cash or Cash Equivalents (in either case, either by dividend and contribution or sale of such Real Property or by dividend and contribution or sale of a Subsidiary that directly or indirectly owns such Real Property), (iii) certain Subsidiaries of Holdings which own the headquarters facility located in Wayne, New Jersey and (iv) the Real Property of certain domestic Subsidiaries of Holdings, the operations of which are to be transferred to the Borrower on the Closing Date.

 

“ Real Estate Transaction Note ” means an unsubordinated note issued by a New Holdco or a New Holdco Non Guarantor in favor of a Loan Party in an amount equal to the difference between (x) the fair market value of the Real Estate Portfolio transferred to the New Holdco or New Holdco Non Guarantors that is the issuer of such Real Estate Transaction Note or any of its Subsidiaries pursuant to Section 7.05(e)(ii) or (iii) and (y) the amount of cash and Cash Equivalents paid to such Loan Party in connection with such transfer, with shall include such relevant provisions as are comparable to the provisions of Exhibit K hereto.

 

“ Real Estate Transactions ” means (a) the Delaware Real Estate Transactions and (b) the New Holdco Real Estate Transactions.

 

“ Real Estate Transactions Documents ” means all agreements, documents, certificates and instruments executed and/or delivered in connection with the applicable Real Estate Transaction, therewith, including any Residual Interest Instrument, each as may be modified, amended, supplemented or restated, and in effect from time to time, pursuant to Section 7.12 .

 

“ Real Property ” means, collectively, all right, title and interest (including any leasehold, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all buildings, structures, parking areas and improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.

 

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

 

“ Registration Rights Agreement ” shall mean the registration rights agreement to be entered into in respect of the Exchange Notes, in substantially the form of Exhibit J hereto, with such modifications thereto as may be agreed to by the Borrower and the Required Lenders.

 

“ Regulation U ” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

“ Regulation X ” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

 

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“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

 

“ Release ” has the meaning provided in Section 101(22) of CERCLA.

 

“ Required ABL Prepayment Amount ” means, as of any date of determination, the amount necessary to be repaid under the ABL Credit Agreement to result in Excess Availability (as defined in the ABL Credit Agreement) immediately following such repayment of at least $300.0 million.

 

“ Required Lenders ” means, as of any date of determination, Lenders having more than 50% of all Loans and Commitments outstanding.

 

“ Requirements of Law ” means, collectively, any and all requirements of any Governmental Authority including any and all laws, judgments, orders, decrees, ordinances, rules, regulations, statutes or case law.

 

“ Residual Interest Instrument ” means (a) an instrument issued by a New Holdco or New Holdco Non Guarantors in favor of the Lenders substantially in the form of Exhibit K hereto or (b) a Real Estate Transaction Note.

 

“ Residual Interest Provider ” means Wayne Real Estate Holding Company, LLC and any other Person issuing or otherwise providing a Residual Interest Instrument (until such Residual Interest Instrument is released in accordance with its terms) as required pursuant to the terms hereof; provided , that MPO Holdings LLC shall not be required to provide a Residual Interest Instrument.

 

“ Responsible Officer ” of any Person shall mean any executive officer or financial officer of such Person and any other officer or similar official thereof with responsibility for the administration of the obligations of such Person in respect of this Agreement.

 

“ Restricted Payment ” means any (a) dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests of a Loan Party or any of its Subsidiaries, (b) 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 of any Loan Party or any of its Subsidiaries or (c) payment on or in respect of any Indebtedness of Holdings other than with respect to the 8.75% Debentures due 2021, interest payments when due in respect of Certain Holdings Indebtedness, principal payment on the Holdings 2006 Notes and payments in respect of Specified Holdings Indebtedness; provided that “Restricted Payments” shall not include any dividends payable solely in Equity Interests (other than Disqualified Capital Stock) of a Loan Party or any of its Subsidiaries to its direct parent.

 

“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

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“ SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Significant Subsidiary ” means any Subsidiary of a Loan Party that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof.

 

“ Solvent ” means, with respect to any Person on a particular date, that on such date (a) at fair valuation on a going concern basis, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets of such Person on a going concern basis is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and generally pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to generally pay as such debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged.

 

“ SPC ” has the meaning assigned to such term in Section 10.06(g) .

 

“ Specified Default ” means the occurrence of any Event of Default specified in Section 8.01(a) , or 8.01(d) .

 

“ Specified Holdings Indebtedness ” means the Indebtedness set forth on Schedule 1.01-B hereto.

 

“ Sponsors ” means Bain Capital (TRU) VIII, L.P., a Delaware limited partnership, Bain Capital (TRU) VIII-E, L.P., a Delaware limited partnership, Bain Capital (TRU) VIII Coinvestment, L.P., a Delaware limited partnership, Bain Capital Integral Investors, LLC, a Delaware limited liability company, and BCIP TCV, LLC, a Delaware limited liability company, Kohlberg Kravis Roberts & Co., Toybox Holdings, LLC, Vornado Realty Trust and Vornado Truck, LLC, and their respective affiliates.

 

“ Store ” means any retail store (which includes any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party or a Subsidiary thereof.

 

“ Subordinated Indebtedness ” means Indebtedness of the Borrower or any other Loan Party that is by its terms subordinated in right of payment to the Obligations (other than intercompany Loans made pursuant to Section 7.03(l) ).

 

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“ Subsidiary ” means, of a Person, a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless the context otherwise requires, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party, and Subsidiaries of any Person shall include Persons that will become Subsidiaries of such Person as a result of the Merger.

 

“ Subsidiary Guarantors ” means, collectively, each existing and future direct and indirect Material Subsidiary of the Borrower, other than (a) any Foreign Subsidiary, (b) any Propco, (c) any New Holdco, (d) any New Holdco Non Guarantor, (e) Geoffrey International LLC, (f) Toys “R” Us Service, Inc. and (g) TRU of Puerto Rico, Inc.

 

“ Target ” has the meaning assigned to such term in the preamble hereto.

 

“ Taxes ” means any and all current or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

 

“ Term Loan ” has the meaning assigned to such term in Section 2.01(b) .

 

“ Toys-MA ” means Toys “R” Us-Mass, Inc., a Massachusetts corporation.

 

“ Toys-OH ” means Toys “R” Us-Ohio, Inc., a Delaware corporation.

 

“ Toys-PA ” means Toys “R” Us-Penn, Inc., a Pennsylvania corporation.

 

“ Transaction Documents ” means the Acquisition Documents, documents governing the Equity Contribution, the ABL Credit Agreement Documents, the Loan Documents and the Real Estate Transaction Documents, in each case, entered into on the Closing Date.

 

“ Transactions ” means, collectively, (a) the consummation of the Merger, (b) the Equity Contribution, (c) the funding of the Initial Loans, (d) the initial funding of the loans under the ABL Credit Agreement and the effectiveness of the ABL Credit Agreement Documents, (e) the CMBS Delaware Transaction and CMBS New Holdco Transaction entered into on the Closing Date, and (f) the payment of the fees and expenses incurred in connection with any of the foregoing.

 

“ Trustee ” has the meaning assigned to such term in Section 6.12(a) .

 

“ Type ” means the character of a Loan as a Base Rate Loan or a Eurodollar Rate Loan.

 

“ UCC ” means the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

 

“ United States ” and “ U.S. ” mean the United States of America.

 

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“ Voting Stock ” means, with respect to any Person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors 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.

 

“ Yen Loan ” means the $159,963,437 Secured Dollar Loan Agreement, dated as of March 19, 2002, by and among Toys R Us-Service, Inc. and Geoffrey International, Inc., as borrowers, ST Funding Company, as lender, and Citibank, N.A., Tokyo Branch, as paying and collateral agent, as amended, restated, supplemented, waived or modified from time to time to the extent permitted by this Agreement.

 

1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Charter Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s permitted successors and assigns, (iii) the words “herein,” “hereof,” “hereto” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) all Schedules to this Agreement shall relate solely to the Loan Parties after giving effect to the release of the Initial Borrower, (vi) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and including.”

 

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(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03 Accounting Terms. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time.

 

1.04 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

1.05 Resolution of Drafting Ambiguities. The Borrower acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents, that it and its counsel reviewed and participated in the preparation and negotiation of the Loan Documents and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Loan Documents.

 

ARTICLE II

 

THE COMMITMENTS AND BORROWING OF LOANS

 

2.01 Loans.

 

(a) Bridge Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make a loan (each such loan, a “ Bridge Loan ”) to the Initial Borrower on the Closing Date, in the amount of such Lender’s Commitment as set forth on Schedule 2.01 . Amounts borrowed as Bridge Loans under this Section 2.01(a) and subsequently repaid or prepaid may not be reborrowed. Bridge Loans on the Closing Date will be made as Eurodollar Rate Loans.

 

(b) Term Loans . Subject to satisfaction of the conditions set forth in Section 2.01(d) and in reliance upon the representations and warranties of the Borrower herein set forth, the Borrower and each Lender severally agrees that if the Bridge Loans have not been repaid in full, the then outstanding principal amount of each Lender’s Bridge Loans shall automatically be converted into a loan (individually, a “ Term Loan ” and collectively, the “ Term Loans ”) by the Borrower on the Conversion Date in an aggregate principal amount equal to the then outstanding principal amount of such Lender’s Bridge Loans. Upon the conversion of a Lender’s Bridge Loans into Term Loans, such Lender shall cancel on its records a principal amount of the Bridge Loans held by such Lender corresponding to the principal amount of Term Loans made by such Lender.

 

(c) Exchange Notes . (i) Subject to satisfaction of the provisions of this Section 2.01(c) and Section 2.01(d) below and in reliance upon the representations and warranties of the Borrower herein set forth, on and after the one-year anniversary of the Conversion Date, each Lender will have the option to notify (an “ Exchange Notice ”) the Administrative Agent in writing of its request for exchange notes (individually, an “ Exchange Note ” and collectively, the

 

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“ Exchange Notes ”) in exchange for Term Loans. Each Lender’s Exchange Notice shall indicate the aggregate principal amount of Loans that such Lender desires to exchange for Exchange Notes pursuant to this Section 2.01(c) , which shall be in integral multiples of $1,000 and, if such Lender holds Notes, be accompanied by the Notes to be exchanged for Exchange Notes. No Exchange Notices shall be accepted by the Administrative Agent more than thirty days prior to the one year anniversary of the Conversion Date.

 

(ii) Notwithstanding the foregoing, such Lender’s Term Loans shall only be exchanged for Exchange Notes hereunder upon the occurrence of an Exchange Trigger Event, notice of which shall be provided to the Borrower and all such Lenders by the Administrative Agent. Thereafter, the Borrower shall a set a date (the “ Exchange Date ”) for the exchange of Term Loans for Exchange Notes, which date shall be no less than five days and no more than ten days after such Exchange Trigger Event; provided that the first Exchange Date shall not occur prior to the one year anniversary of the Conversion Date. On such Exchange Date, the Borrower shall execute and deliver to each Lender that exchanges Term Loans, an Exchange Note in the principal amount equal to 100% of the aggregate principal amount (including any accrued and unpaid interest not required to be paid in cash) of such Term Loan (or portion thereof) for which each such Exchange Note is being exchanged. The Exchange Notes shall be governed by the Exchange Note Indenture. Upon issuance of the Exchange Notes, any Notes delivered hereunder shall be canceled by Borrower and the corresponding amount of the Loans deemed repaid. If a Default (but not an Event of Default) shall have occurred and be continuing on the date of such exchange, any notices given or cure periods commenced while the Term Loan was outstanding shall be deemed given or commenced (as of the actual dates thereof) for all purposes with respect to the Exchange Notes (with the same effect as if the Exchange Notes had been outstanding as of the actual dates thereof).

 

(iii) The Borrower shall have appointed a trustee reasonably acceptable to the holders of the Exchange Notes and entered into the Exchange Note Indenture and the Registration Rights Agreement, and in each case shall comply with the terms and conditions in each such agreement.

 

(d) Conditions to Term Loans . On the Conversion Date, the conversion of Bridge Loans to Term Loans shall be subject to the following conditions:

 

(i) no Specified Default shall have occurred and be continuing;

 

(ii) all fees then due to the Arrangers and the Lenders and presented for payment shall have been paid in full;

 

(iii) the applicable Lenders shall have received promissory notes evidencing the Term Loans (if requested); and

 

(iv) no order, decree, injunction or judgment enjoining any such refinancing shall be in effect.

 

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2.02 Borrowings, Conversions and Continuations of Loans.

 

(a) The borrowing of Initial Loans, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent. Such notices may be provided by telephone; provided that each such telephone notice (x) in respect of Base Rate Loans must be received by no later than 3:00 p.m. on the Business Day prior to the date of such Borrowing and (y) is thereafter confirmed in writing and received by the Administrative Agent not later than (i) 2:00 p.m., two Business Days prior to the requested date of any borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans and (ii) 12:00 noon, on the requested date of any borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Borrowing or Conversion Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each conversion to or continuation of Eurodollar Rate Loans shall be in an amount equal to $1.0 million or a whole multiple of $1.0 million in excess thereof. Each conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Borrowing or Conversion Notice (whether telephonic or written) shall specify (i) in the case of a conversion or continuation, whether the Borrower is requesting a conversion of Loans from one Type to the other or a continuation of Eurodollar Rate Loans, (ii) the requested date of the borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued and (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted. If the Borrower fails to specify a Type of Loan in a Borrowing or Conversion Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans.

 

(b) Following receipt of a Borrowing or Conversion Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Pro Rata Share of Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation described in Section 2.02(a) . In the case of the borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in Dollars in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Borrowing or Conversion Notice. Upon satisfaction of the applicable conditions set forth in Section 4.01 , the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

 

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan unless the Borrower pays breakage costs incurred in connection with such conversion and required to be paid pursuant to Section 3.05 of which it has been notified. During the existence of a Specified Default, no Loans may be converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

 

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(d) The Administrative Agent shall promptly notify the Borrower and the applicable Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in the Administrative Agent’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

2.03 Prepayments. Subsections (a), (g) and (h) of this Section 2.03 shall remain in effect through and including the Final Maturity Date. Subsections (b), (c), (d), (e) and (f) shall be in effect until the Conversion Date, on which date such subsections shall be modified as set forth in Article XI .

 

(a) Optional . The Borrower may, upon notice to the Administrative Agent, at any time, voluntarily prepay Loans in whole or in part; provided that (A) such notice shall be given in accordance with Section 2.03(h) ; (B) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $1.0 million or a whole multiple of $1.0 million in excess thereof or, if less, the entire principal amount thereof then outstanding; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. Each such notice shall be in the form of Exhibit A-2 and shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall be committed to make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, unless otherwise revoked prior to the date of such prepayment in accordance with Section 2.03(h) . Any prepayment of a Eurodollar Rate Loan shall be accompanied by any additional amounts required pursuant to Section 3.05 .

 

(b) Asset Sales . Promptly following the receipt of any Net Cash Proceeds of any Asset Sale after the Closing Date, the Borrower shall prepay Loans in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that no such prepayment shall be required under this Section 2.03(b) with respect to:

 

(A) any Asset Sale permitted by Section 7.05(a) , (b) , (c) , (d) , (f) , (g) , (h) (other than any Lease that is required to be capitalized on the lessor’s financial statements prepared in accordance with GAAP), (j) , (k) , (l) , (p) or (q) ;

 

(B) Net Cash Proceeds used for a Permitted Use;

 

(C) amounts not in excess of the Required ABL Prepayment Amount on such date plus the amount by which the gross principal amount of proceeds generated by the Delaware Real Estate Transaction is less than $850.0 million that are applied to repay amounts outstanding under the ABL Credit Agreement;

 

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(D) an aggregate amount not to exceed the lesser of (i) $253.0 million plus accrued interest and (ii) an amount equal to the principal amount plus accrued interest of the Holdings 2006 Notes outstanding at the time of the receipt of such Net Cash Proceeds that is used to pay the Holdings 2006 Notes (and which amount may, pending such final application, be applied to repay borrowings under the ABL Credit Agreement), in either case less the aggregate proceeds from one or more Real Estate Transactions consummated prior to the Closing Date in excess of $850.0 million;

 

(E) the disposition of property which constitutes Extraordinary Receipts;

 

(F) Net Cash Proceeds which are to make payments in respect of the 8.75% Debentures due 2021 (or to repay amounts drawn under the ABL Credit Agreement which were used to make payments in respect of such debentures);

 

(G) Net Cash Proceeds (1) resulting from the Real Estate Transactions to the extent applied to (i) repay amounts outstanding under the ABL Credit Agreement and/or intercompany loans from a Non-Loan Party in an aggregate amount not to exceed the principal amount of (x) borrowings under the ABL Credit Agreement and (y) intercompany loans from such Non-Loan Parties, in each case, that were used to repay the Delaware Note, in whole or in part, and/or (ii) repay the Delaware Note or otherwise make a Restricted Payment to Holdings to reimburse Non-Loan Parties for amounts dividended or loaned to Holdings in connection with the contribution by Holdings to the applicable New Holdco or New Holdco Non-Guarantor of an equivalent amount; and (2) from an Asset Sale of Inventory (as defined in the ABL Credit Agreement), to the extent such Net Cash Proceeds are applied to repay amounts outstanding under the ABL Credit Agreement;

 

(H) Net Cash Proceeds from the sale of Real Property that is the subject of a Delaware Real Estate Transaction, other than to the extent such proceeds are dividended, loaned or otherwise transferred to a Loan Party;

 

(I) Net Cash Proceeds from an Asset Sale by (1) a Foreign Subsidiary of the Borrower (unless, and to the extent that, any such proceeds are repatriated to the United States) or (2) Geoffrey International LLC unless and to the extent that such proceeds are dividended, loaned or otherwise transferred to a Loan Party;

 

provided that any Net Cash Proceeds from Asset Sales constituting the sale or disposition of an Investment pursuant to Section 7.05(n) applied pursuant hereto shall be limited to 50% of the cumulative net gain (after giving effect to 100% of all losses) on all Investments made pursuant to such Section so sold or disposed of since the Closing Date. The foregoing clauses (B), (C), (D) and (F) are referred to herein as “ Certain Permitted Prior Payments .”

 

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(c) Debt Issuance or Disqualified Capital Stock Issuance . Promptly following the receipt of any Net Cash Proceeds of any Debt Issuance after the Closing Date or any issuance by any Loan Party of Disqualified Capital Stock after the Closing Date, the Borrower shall prepay Loans in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that no such prepayment shall be required under this Section 2.03(c) with respect to (A) Certain Permitted Prior Payments, (B) the proceeds of subordinated loans from Holdings or any Non-Loan Party to Loan Parties, (C) the proceeds of any intercompany loans permitted pursuant to Section 2.03(b)(G)(1) or Section 7.03(l) or (D) Net Cash Proceeds from an Asset Sale by a Foreign Subsidiary of the Borrower (unless, and to the extent that, any such proceeds are repatriated to the United States).

 

(d) Equity Issuance . Promptly following the receipt of any Net Cash Proceeds of any Equity Issuance after the Closing Date, the Borrower shall prepay Loans in an aggregate amount equal to 100% of such Net Cash Proceeds.

 

(e) Extraordinary Receipts . Promptly following the receipt of any Net Cash Proceeds from any Extraordinary Receipts, the Borrower shall prepay Loans in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

 

(i) such proceeds shall not be required to be so applied on such date to the extent that the Borrower shall have delivered a certificate to the Administrative Agent on or prior to such date stating that an amount equal to such Net Cash Proceeds is expected to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to reinvest in other fixed or capital assets no later than 270 days following the date of receipt of such proceeds; and

 

(ii) if any portion of such Net Cash Proceeds shall not be so applied within such 270-day period, an amount equal to such unused portion shall be applied on the last day of such period as a mandatory prepayment as provided in this Section 2.03(e) .

 

(f) Change of Control . In addition to the scheduled repayments provided for in this Section 2.03 , the Borrower shall make an offer to repay all Loans in full (including any accrued and unpaid interest to the date of prepayment) promptly upon the occurrence of any Change of Control.

 

(g) Application of Prepayments . Amounts to be applied pursuant to this Section 2.03 to the prepayment of Loans shall be applied first to reduce outstanding Base Rate Loans. Any amounts remaining after each such application shall be applied to prepay Eurodollar Rate Loans. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.03 shall be in excess of the amount of the Base Rate Loans at the time outstanding (an “ Excess Amount ”), only the portion of the amount of such prepayment as is equal to the amount of such outstanding Base Rate Loans shall be immediately prepaid and, at the election of the Borrower, the Excess Amount shall be either (A) deposited in an escrow account on terms reasonably satisfactory to the Administrative Agent and the Borrower and applied to the prepayment of

 

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Eurodollar Rate Loans on the last day of the then next-expiring Interest Period for Eurodollar Rate Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount (and any returns on investment relating thereto) shall have been used in full to repay such Loans and (ii) at any time while an Event of Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 3.05 .

 

(h) Notice of Prepayment . The Borrower shall notify the Administrative Agent by written notice of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Rate Loan, not later than 12:00 noon, two Business Days before the date of prepayment and (ii) in the case of prepayment of a Base Rate Loan, not later than 12:00 noon, one Business Day before the date of prepayment. Each such notice shall be in the form of Exhibit A-2 and shall specify the prepayment date, 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. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice of prepayment shall be revocable on any Business Day prior to the date of repayment, provided that, within 5 Business Days of receiving a written demand for such reimbursement which sets forth the calculation of breakage costs incurred and payable pursuant to Section 3.05 in reasonable detail, the Borrower shall reimburse the Lenders for such breakage costs associated with the revocation of any notice of prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.03 . Prepayments shall be accompanied by accrued interest as required by Section 2.06 .

 

2.04 Termination of Commitments. The Commitments of each Lender shall automatically terminate on the Closing Date upon the borrowing of the Loans on such date.

 

2.05 Repayment of Loans.

 

(a) The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Conversion Date the aggregate principal amount of all Bridge Loans outstanding on such date, unless such Loans have been converted to Term Loans in accordance with Section 2.01(b) or Exchange Notes in accordance with Section 2.01(c) .

 

(b) The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Final Maturity Date the aggregate principal amount of all Term Loans outstanding on such date.

 

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2.06 Interest.

 

(a) Subject to the provisions of subsection (b) below:

 

(i) each Initial Loan that is a

 

(A) Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the lesser of (x) the Eurodollar Rate for such Interest Period plus the Applicable Rate and (y) the Applicable Maximum Rate; and

 

(B) Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the lesser of (x) the Base Rate plus the Applicable Rate and (y) the Applicable Maximum Rate.

 

(ii) Term Loans shall bear interest for the period from and including the Conversion Date to, but excluding, the Final Maturity Date or date of exchange for an Exchange Note on the outstanding principal amount thereof at a rate per annum equal to

 

(A) in the case of Eurodollar Rate Loans, the lesser of (x) the Eurodollar Rate for each Interest Period plus the Applicable Rate plus the Extension Spread and (y) the Applicable Maximum Rate; and

 

(B) in the case of Base Rate Loans, the lesser of (x) the Base Rate plus the Applicable Rate plus the Extension Spread and (y) the Applicable Maximum Rate.

 

(b) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due (without regard to any applicable grace periods), whether at stated maturity, upon acceleration or otherwise, such overdue amount shall, to the extent permitted by applicable law, bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal or interest on any Loan, 2% plus the rate otherwise applicable to such Loan as provided in Section 2.06(a) or (ii) in the case of any other overdue amount, 2% plus the rate applicable to Base Rate Loans as provided in Section 2.06(a)(i)(B) (in either case, the “ Default Rate ”).

 

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto; provided that (i) interest accrued pursuant to Section 2.06(b) 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. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

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2.07 Fees.

 

(a) The Borrower shall pay to the Arrangers and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever, except as provided in the Fee Letter.

 

(b) The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.

 

2.08 Computation of Interest and Fees. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of AmericaR