AMENDED AND RESTATED CREDIT AGREEMENT

Exhibit 10.1

 

 

 

 

Execution Copy

 

 

$125.0 MILLION

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of February 25, 2005,

 

among

 

BEAR CREEK CORPORATION,

as Borrower,

 

BEAR CREEK HOLDINGS INC.

(formerly known as Pear Acquisition Inc.)

and

THE OTHER GUARANTORS PARTY HERETO,

as Guarantors,

 

THE LENDERS PARTY HERETO,

 

GMAC COMMERCIAL FINANCE LLC,

as Collateral Agent,

 

UBS SECURITIES LLC,

as Arranger,

 

UBS AG, STAMFORD BRANCH,

as Issuing Bank, Administrative Collateral Agent and Administrative Agent,

 

UBS LOAN FINANCE LLC,

as Swingline Lender, and

 

CALYON NEW YORK BRANCH

as Syndication Agent

TABLE OF CONTENTS

 

 

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AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (this “ Agreement ”) dated as of February 25, 2005 is among BEAR CREEK CORPORATION, a Delaware corporation (the “ Borrower ”), BEAR CREEK HOLDINGS INC., a Delaware corporation formerly known as Pear Acquisition Inc. (“ Holdings ”), the other Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I ), the Lenders, UBS SECURITIES LLC, as lead arranger (in such capacity, “ Arranger ”), UBS LOAN FINANCE LLC, as a Lender and as swingline lender (in such capacity, “ Swingline Lender ”), UBS AG, STAMFORD BRANCH (“ UBS AG ”), as issuing bank (in such capacity, “ Issuing Bank ”), as the administrative collateral agent (in such capacity, the “ Administrative Collateral Agent ”) and as administrative agent (in such capacity, “ Administrative Agent ”) for the Lenders and GMAC COMMERCIAL FINANCE LLC, as collateral agent (in such capacity, the “ Collateral Agent ”) for the Secured Parties and Issuing Bank.

 

WITNESSETH:

 

WHEREAS, certain of the parties hereto have entered into that certain Credit Agreement dated as of June 17, 2004 (as heretofore amended, the “ Original Credit Agreement ”) pursuant to which the Lenders agreed, pursuant to the terms and conditions set forth therein, to extend certain loans and other financial accommodations to or for the benefit of Borrower, Holdings and the Guarantors; and

 

WHEREAS, in connection with the issuance of the Borrower’s unsecured Senior Notes (as hereinafter defined), the parties hereto have agreed to amend and restated the Original Credit Agreement in its entirety;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

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

 

“ ABR Borrowing ” shall mean a Borrowing comprised of ABR Loans.

 

“ ABR Loan ” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II .

 

“ Account Debtor ” shall mean any Person who may become obligated to another Person under, with respect to, or on account of, an Account.

 

“ Accounting Changes ” shall have meaning assigned to such term in Section 1.04 .

“ Accounts ” shall mean, with respect to any Loan Party, all “accounts,” as such term is defined in the UCC as in effect on the date hereof in the State of New York, in which such Loan Party now or hereafter has rights.

 

“ Acquisition ” shall mean the acquisition by Holdings of all of the issued and outstanding common stock of the Borrower pursuant to the Acquisition Agreement.

 

“ Acquisition Agreement ” shall mean that certain Stock Purchase Agreement dated as of April 1, 2004 among Holdings, YCI, Yamanouchi Pharmaceutical Co., Ltd. and Yamanouchi U.S. Holding Inc., as amended or otherwise modified from time to time in accordance with the provisions hereof and thereof.

 

“ Acquisition Consideration ” shall mean the purchase consideration for any Permitted Acquisition and all other payments by Holdings or any of its Subsidiaries in exchange for, or as part of, or in connection with, any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Holdings or any of its Subsidiaries.

 

“ Acquisition Documents ” shall mean the collective reference to the Acquisition Agreement and all other documents, instruments and agreements executed in connection therewith or delivered pursuant thereto, in each case, by any Loan Party.

 

“ Activation Notice ” shall have the meaning assigned to such term in Section 9.01(e) .

 

“ Adjusted LIBOR Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upward, if necessary, to the next 1/100 of 1%) determined by the Administrative Agent to be equal to (a) the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period.

 

“ Administrative Agent ” shall have the meaning assigned to such term in the preamble hereto and includes each other Person appointed as the successor of the Administrative Agent pursuant to Article X .

 

“ Administrative Agent Fees ” shall have the meaning assigned to such term in Section 2.05(b)(i) .

 

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in the form of Exhibit A-1 , or such other form as may be supplied from time to time by the Administrative Agent.

 

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“ Affiliate ” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided , however , that, for purposes of Section 6.07 , the term “Affiliate” shall also include any Person that directly or indirectly owns more than 10% of any class of Equity Interests of the Person specified or that is an executive officer or director of the Person specified.

 

“ Agents ” shall mean the Arranger, Administrative Agent, the Administrative Collateral Agent, the Collateral Agent, and any syndication agent, documentation agent or other agent appointed pursuant to the provisions of Article X.

 

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

 

“ Alternate Base Rate ” shall mean, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100 of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate or the Federal Funds Effective Rate, respectively.

 

“ Anti-Terrorism Laws ” shall have the meaning assigned to such term in Section 3.27 .

 

“ Applicable Margin ” shall mean, for any day, the applicable percentage set forth in Annex I under the appropriate caption.

 

“ Arranger ” shall have the meaning assigned to such term in the preamble hereto.

 

“ Asset Sale ” shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any sale and leaseback transaction) of any Property (including stock of any Subsidiary of Holdings by the holder thereof) by Holdings, the Borrower or any of their Subsidiaries to any Person other than Borrower or any Subsidiary Guarantor (excluding (i) Inventory sold in the ordinary course of business, (ii) any sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof, (iii) disposals of obsolete, uneconomical, negligible, worn out or surplus Property in the ordinary course of business, (iv) licenses of intellectual property not intended to effect a disposition thereof and leases of Real Property not intended to effect a disposition thereof or (v) sales of Cash Equivalents and marketable securities) and (b) any issuance or sale by any Subsidiary of Holdings of its Equity Interests to any Person (other than to the Borrower or any Subsidiary Guarantor or, in the case of the Borrower, to Holdings).

 

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“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B , or such other form as shall be approved by the Administrative Agent.

 

“ Attributable Indebtedness ” shall mean, when used with respect to any sale and leaseback transaction, as at the time of determination, the present value (discounted at a rate equivalent to the then-current weighted average cost of funds for borrowed money of Holdings and all of its Domestic Subsidiaries as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such sale and leaseback transaction.

 

“ Base Rate ” shall mean, for any day, a rate per annum that is equal to the corporate base rate of interest established by the Administrative Agent from time to time; each change in the Base Rate shall be effective on the date such change is publicly announced as being effective. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers.

 

“ BCO ” shall mean Bear Creek Operations, Inc., a Delaware corporation.

 

“ Blocked Accounts ” shall have the meaning assigned to such term in Section 9.01(d) .

 

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

 

“ Borrower ” shall have the meaning assigned to such term in the preamble hereto.

 

“ Borrowing ” shall mean (a) a Revolving Loan or (b) a Swingline Loan .

 

“ Borrowing Base ” shall mean at any time, subject to adjustment as provided in Section 2.19 , an amount equal to the sum of, without duplication:

 

(a)        the book value of Eligible Accounts of Borrower and the Subsidiary Guarantors multiplied by the advance rate of 80%, plus

 

(b)        the lesser of (i) the sum of (A) during the months of January through and including September in each calendar year, the advance rate of 55%, (B) at all other times, the advance rate of 75%, in each case, of the Cost of Eligible Inventory of Borrower and the Subsidiary Guarantors, and (C) at all times, the lesser of (1) the advance rate of 25% of the Cost of Eligible Shipping and Packing Supplies of the Borrower and the Subsidiary Guarantors and (2) $4,500,000, and (ii) the advance rate of 85% of the product of (A) the product of (1) net book value (after reserves as determined in accordance with GAAP) of Inventory of Borrower and the Subsidiary Guarantors and (2) the Inventory Eligibility Factor and (B) the Net Orderly Liquidation Percentage, plus

 

(c)        during the Fixed Asset Loan Period of each fiscal year, the Fixed Asset Loan Value of Borrower and the Subsidiary Guarantors; provided , that the Fixed Asset Loan Value of Borrower and the Subsidiary Guarantors shall in no event exceed $40.0 million, plus

 

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(d)        for the time period beginning on the first Monday after Labor Day of each calendar year through and including the first Monday after Christmas of each calendar year, the book value of Eligible Credit Card Receivables of Borrower and the Subsidiary Guarantors multiplied by the advance rate of 80%, minus

 

(e)        the Hedging Reserve, minus

 

(f)        effective immediately upon notification thereof to Borrower by the Collateral Agent, any Reserves established from time to time by the Collateral Agent in the exercise of its reasonable credit judgment; provided , that the failure to provide such notice shall not affect the application of such Reserves;

 

The Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate theretofore delivered to the Collateral Agent and the Administrative Agent with such adjustments as Administrative Agent and Collateral Agent deem appropriate in their collective reasonable credit judgment to assure that the Borrowing Base is calculated in accordance with the terms of this Agreement.

 

“ Borrowing Base Certificate ” shall mean an Officer’s Certificate from Borrower, substantially in the form of, and containing the information prescribed by, Exhibit N , delivered to the Administrative Agent and the Collateral Agent setting forth the calculation of the Borrowing Base with respect to the Borrower and all Subsidiary Guarantors.

 

“ Borrowing Request ” shall mean a request by Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C , or such other form as shall be approved by the Administrative Agent.

 

“ Breakage Prepayment Account ” shall have the meaning assigned to such term in Section 2.10(j) .

 

“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to close; provided , however , that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

 

“ Capital Expenditures ” shall mean, with respect to any Person, for any period, the aggregate amount of all expenditures by such Person and its Subsidiaries during that period for fixed or capital assets that, in accordance with GAAP, are or should be classified as capital expenditures in the consolidated balance sheet of such Person and its Consolidated Subsidiaries, including, without limitation, expenditures made for and in connection with any acquisition of any Person the primary purpose of which is to acquire fixed or capital assets of such Person (to the extent of the purchase price attributed to such fixed or capital assets), but excluding any portion of such expenditures attributable solely to acquisitions of fixed or capital assets pursuant to any other Permitted Acquisition.

 

“ Capital Lease Obligations ” of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) Property, or a combination thereof, which obligations are required to be classified and accounted

 

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

 

“ Cash Collateral Account ” shall have the meaning assigned to such term in Section 9.04 .

 

“ Cash Dominion Trigger Event ” shall mean the occurrence of any one of the following events: (i) the aggregate outstanding principal balance of the Revolving Loans shall exceed $0 on the first Business Day after December 25th of any calendar year or (ii) an Event of Default shall occur and be continuing; provided , that , to the extent that the Cash Dominion Trigger Event has occurred due to clause (i) of this definition, if Excess Availability shall be equal to or greater than $30.0 million at the end of the period specified in Section 2.10(i) , the Cash Dominion Trigger Event shall be deemed to be over. At any time that a Cash Dominion Trigger Event shall be deemed to be over or otherwise cease to exist, the Agents shall take such actions, including delivering such notices and directions to depositary institutions at which Blocked Accounts are established, to terminate the cash sweeps and other transfers existing pursuant to Section 9.01(e) as a result of any Activation Notice or other notices or directions given by any Agent during the existence of such Cash Dominion Trigger Event.

 

“ Cash Equivalents ” shall mean, as to any Person: (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof ( provided , that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such Person; (b) securities issued, or directly, unconditionally and fully guaranteed or insured, by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors Services, Inc.; (c) time deposits and certificates of deposit or bankers’ acceptances 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 having, capital and surplus aggregating in excess of $500.0 million and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such Person; (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) or (b) above entered into with any bank meeting the qualifications specified in clause (c) above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (e) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by Standard & Poor’s Rating Service or at least P-1 or the equivalent thereof by Moody’s Investors Service, Inc., and in each case maturing not more than one year after the date of acquisition by such Person; (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above; and (g) demand deposit accounts maintained in the ordinary course of business.

 

“ Casualty Event ” shall mean, with respect to any Property (including Real Property) of any Person, any loss of title with respect to such Property or any loss of or damage to or

 

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destruction of, or any condemnation or other taking (including by any Governmental Authority) of, such Property for which such Person or any of its Subsidiaries receives insurance proceeds or proceeds of a condemnation award or other compensation. “Casualty Event” shall include but not be limited to any taking of all or any part of any Real Property of any Person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any Person or any part thereof by any Governmental Authority, civil or military.

 

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

 

A “ Change in Control ” shall be deemed to have occurred if: (a) Holdings at any time ceases to own 100% of the capital stock of Borrower; (b) at any time a change of control occurs under and as defined in any documentation relating to any Material Indebtedness; (c) prior to an IPO, (i) the Permitted Holders cease to own, or to have the power to vote or direct the voting of, Voting Stock representing a majority of the voting power of the total outstanding Voting Stock of Holdings or (ii) the Permitted Holders cease to own Equity Interests representing a majority of the total economic interests of the Equity Interests of Holdings; (d) following an IPO, (i) the Permitted Holders shall fail to own, or to have the power to vote or direct the voting of, Voting Stock representing more than 35% of the voting power of the total outstanding Voting Stock of Holdings, (ii) the Permitted Holders cease to own Equity Interests representing more than 35% of the total economic interests of the Equity Interests of Holdings or (iii) any “Person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such Person or group shall be deemed to have “beneficial ownership” of all securities that any such Person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing more than 25% of the voting power of the total outstanding Voting Stock of Holdings; or (e) following an IPO, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Holdings (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of 51% of the directors of Holdings then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Holdings.

 

“ Change in Law ” shall mean (a) the adoption of any law, treaty, order, rule or regulation after the date of this Agreement, (b) any change in any law, treaty, order, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or for purposes of Section 2.12(b) , by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

 

“ Charges ” shall have the meaning assigned to such term in Section 11.13 .

 

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“ Chattel Paper ” shall mean all “chattel paper,” as such term is defined in the UCC as in effect on the date hereof in the State of New York, in which any Person now or hereafter has rights.

 

“ Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Swingline Commitment or LC Commitment.

 

“ Closing Date ” shall mean February 25, 2005.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

“ Collateral ” shall mean, collectively, all of the Security Agreement Collateral, the Mortgaged Real Property and all other Property of whatever kind and nature pledged as collateral under any Security Document.

 

“ Collateral Agent ” shall have the meaning assigned to such term in the preamble hereto and includes each other Person appointed as a successor Collateral Agent pursuant to Article X .

 

“ Collateral Agent Fee ” shall have the meaning ascribed to such term in Section 2.05(b)(ii) .

 

“ Collection Account ” shall have the meaning assigned to such term in Section 9.01(e) .

 

“ Commercial Letter of Credit ” shall mean any letter of credit or similar instrument issued for the account of the Borrower for the benefit of Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries, for the purpose of providing the primary payment mechanism in connection with the purchase of materials, goods or services by Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries in the ordinary course of their businesses.

 

“ Commitment ” shall mean, with respect to any Lender, such Lender’s Revolving Commitment, LC Commitment or Swingline Commitment.

 

“ Commitment Fee ” shall have the meaning assigned to such term in Section 2.05(a) .

 

“ Commitments ” shall mean the aggregate sum of each Lender’s Commitment.

 

“ Companies ” shall mean Holdings and its Subsidiaries; and “ Company ” shall mean any one of them.

 

“ Compliance Certificate ” shall mean a certificate of a Financial Officer substantially in the form of Exhibit A-2 .

 

“ Concentration Account ” shall have the meaning assigned to such term in Section 9.01(e) .

 

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“ Consolidated Companies ” shall mean Holdings and its Consolidated Subsidiaries.

 

“ Consolidated Current Assets ” shall mean, with respect to any Person as at any date of determination, the total assets of such Person and its Consolidated Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of such Person and its Consolidated Subsidiaries in accordance with GAAP.

 

“ Consolidated Current Liabilities ” shall mean, with respect to any Person as at any date of determination, the total liabilities of such Person and its Consolidated Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Loans) on a consolidated balance sheet of such Person and its Consolidated Subsidiaries in accordance with GAAP.

 

“ Consolidated EBITDA ” shall mean, for any applicable measurement period, Consolidated Net Income for such period, as adjusted by adding thereto to the extent deducted in calculating Consolidated Net Income during such measurement period (a) any provision for (or less any benefit from) income and franchise taxes, (b) the amount of Consolidated Interest Expense, (c) amortization and depreciation, (d) losses (or less gains) from Asset Dispositions (excluding sales expenses or losses related to current assets), (e) non-recurring charges and expenses in an amount, when combined with any such charges relating to any prior measurement period, not to exceed $2.0 million in the aggregate, (f) the amount of severance paid by Borrower and Subsidiary Guarantors during fiscal years 2005 and 2006 in an amount not to exceed $10.0 million, (g) the amount of expenses associated with the closing of retail stores of Borrower or any of its Subsidiaries in an amount not to exceed $1.5 million in the aggregate in any fiscal year, (h) non-cash charges (or less gains) relating to the marked to market provision for, the termination of, or terminated, Hedging Agreements, (i) an amount (not to exceed $500,000 in the aggregate) representing the write down of Inventory of the Companies relating to roses Inventory damaged or destroyed by herbicide in fiscal year 2005 or 2006 and (j) any amount paid to Wasserstein & Co., LP pursuant to the Management Services Agreement.

 

“ Consolidated Fixed Charge Coverage Ratio ” shall mean, for any Test Period, the ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated Fixed Charges for such Test Period.

 

“ Consolidated Fixed Charges ” shall mean, for any period, the sum, without duplication, of (a) Consolidated Interest Expense for such period; (b) the amount of all Capital Expenditures made by Holdings and its Subsidiaries during such period; (c) all cash payments in respect of income taxes made during such period (net of any cash refund in respect of income taxes actually received during such period); (d) the scheduled principal amount of all amortization payments on all Indebtedness (including the principal component of all Capital Lease Obligations) of Holdings and its Subsidiaries for such period (as determined on the first day of the respective period); (e) the product of (i) all dividend payments on any series of Disqualified Capital Stock of Holdings during such period multiplied by (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of Holdings, expressed as a decimal; and (f) the product of (i) all cash dividend payments on any Preferred Stock (other than Disqualified Capital Stock) of Holdings during such period, multiplied by (ii) a fraction, the numerator of which is one and the denominator of

 

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which is one minus the then current combined federal, state and local statutory tax rate of Holdings, expressed as a decimal.

 

“ Consolidated Indebtedness ” shall mean, as at any date of determination, without duplication, the aggregate amount of all Indebtedness (but including in any event the then outstanding principal amount of all Loans, all Capital Lease Obligations and all LC Exposure) of Holdings and its Consolidated Subsidiaries on a consolidated basis as determined in accordance with GAAP.

 

“ Consolidated Interest Coverage Ratio ” shall mean, for any Test Period, the ratio of (x) Consolidated EBITDA for such Test Period to (y) Consolidated Interest Expense for such Test Period.

 

“ Consolidated Interest Expense ” shall mean, subject to the proviso set forth in the definition of “Test Period”, for any period, without duplication, the total consolidated interest expense of Holdings and its Consolidated Subsidiaries for such period (calculated without regard to any limitations on the payment thereof and including, capitalized interest, commitment fees, letter of credit fees and net amounts payable under Interest Rate Protection Agreements, but excluding any interest paid in kind) determined in accordance with GAAP plus , without duplication, (a) the portion of Capital Lease Obligations of Holdings and its Consolidated Subsidiaries representing the interest factor for such period, (b) imputed interest on Attributable Indebtedness, (c) cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than Holdings or a Wholly Owned Subsidiary) in connection with Indebtedness incurred by such plan or trust, (d) the product of (i) all dividend payments on any series of any Preferred Stock of any Subsidiary of Holdings (other than any Preferred Stock held by Holdings or a Wholly Owned Subsidiary), multiplied by (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of Holding and its Subsidiaries, expressed as a decimal and (e) all interest on any Indebtedness of the type described in clause (e) or (j) of the definition of “Indebtedness” with respect to Holdings or any of its Subsidiaries. Notwithstanding the foregoing, for any period, Consolidated Interest Expense shall be calculated without regard to interest on the NOL Loan for such period and without regard to the $4.7 million of Consolidated Interest Expense arising as a result of the prepayment in full of the obligations under the Second Lien Loan Documents on the Closing Date.

 

“ Consolidated Net Income ” shall mean, for any period, the consolidated net income of Holdings and its Consolidated Subsidiaries determined in accordance with GAAP, but excluding in any event (a) after-tax extraordinary gains or extraordinary losses; (b) after-tax gains or losses realized from (i) the acquisition of any securities, or the extinguishment or conversion of any Indebtedness or Equity Interest, of Holdings or any of its Subsidiaries or (ii) any sales of assets (other than Inventory in the ordinary course of business); (c) net earnings or losses of any other Person (other than a Subsidiary of Holdings) in which Holdings or any Consolidated Subsidiary has an ownership interest, except (in the case of any such net earnings) to the extent such net earnings shall have actually been received by Holdings or such Consolidated Subsidiary (subject to the limitation in clause (d) below) in the form of cash dividends or distributions; (d) the net income of any Consolidated Subsidiary to the extent that the declaration or payment of dividends

 

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or similar distributions by such Consolidated Subsidiary of its net income is not at the time of determination permitted without approval under applicable law or regulation or under such Consolidated Subsidiary’s organizational documents or any agreement or instrument applicable to such Consolidated Subsidiary or its stockholders which approval has not been obtained; (e) gains or losses from the cumulative effect of any change in accounting principles; (f) earnings resulting from any reappraisal, revaluation or write-up of assets; and (g) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Holdings or any Consolidated Subsidiary or is merged into or consolidated with Holdings or any Consolidated Subsidiary or that Person’s assets are acquired by Holdings or such Consolidated Subsidiary (other than pursuant to the Acquisition).

 

“ Consolidated Subsidiary ” shall mean, as to any Person, all Subsidiaries of such Person which are consolidated with such Person for financial reporting purposes in accordance with GAAP.

 

“ Contested Collateral Lien Conditions ” shall mean, with respect to any Permitted Lien of the type described in paragraphs (a) and (f) of Section 6.02 , the following conditions:

 

(a)        Loan Party shall be contesting such Lien in good faith;

 

(b)        to the extent such Lien is in an amount in excess of $250,000, in the aggregate with all other such Liens, the Collateral Agent shall have established a Reserve (to the extent of such Lien on Eligible Accounts, Eligible Inventory, Eligible Equipment or Eligible Real Property) with respect thereto or obtained a bond in an amount sufficient to pay and discharge such Lien and the Administrative Agent’s reasonable estimate of all interest and penalties related thereto and the Administrative Agent shall endeavor to provide the Borrower with no less than 2 Business Days prior notice of any such Reserve; provided , that the failure to provide such notice shall not affect the application of such Reserve; and

 

(c)        such Lien shall in all respects be subject and subordinate in priority to the Lien and security interest created and evidenced by the Security Documents, except if and to the extent that the law or regulation creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Lien and security interest created and evidenced by the Security Documents.

 

“ Contingent Obligation ” shall mean, as to any Person, any obligation, agreement, understanding or arrangement of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“ primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any Property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) guaranteeing bankers’ acceptances and

 

11

letters of credit, until a reimbursement obligation arises; or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided , however , that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable, whether severally or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

“ Control ” shall mean 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 ownership of voting securities, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

 

“ Control Agreement ” shall have the meaning assigned to such term in the Security Agreement.

 

“ Cost ” shall mean, as determined by the Collateral Agent in good faith, with respect to Inventory, the lower of (a) landed cost computed on first-in a first-out basis in accordance with GAAP or (b) market value; provided , that for purposes of the calculation of the Borrowing Base, (i) the Cost of the Inventory shall not include: (A) the portion of the cost of Inventory equal to the profit earned by any Affiliate on the sale thereof to Borrower or the Subsidiary Guarantors or (B) write-ups or write-downs in cost with respect to currency exchange rates, and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent Inventory Appraisal which has been approved by Collateral Agent in its reasonable credit judgment.

 

“ Credit Card Receivables ” means amounts due to any Loan Party from any major credit card company acceptable to the Collateral Agent in its reasonable credit judgment, and subject to such terms and conditions as may be acceptable to the Collateral Agent in its reasonable credit judgment.

 

“ Credit Card Receivables Control Agreement ” means an agreement in form and substance reasonably satisfactory to the Collateral Agent among the Collateral Agent, Borrower or a Subsidiary Guarantor to which any Credit Card Receivable is owing, and the credit card company obligated on such Credit Card Receivable, which agreement provides, among other things, that (a) such credit card company shall comply with instructions originated by the Collateral Agent directing the payment of such Credit Card Receivables and (b) such credit card company shall agree that it shall have no Lien on, or right of setoff against, such Credit Card Receivable other than as may be reasonably acceptable to the Collateral Agent.

 

“ Credit Extension ” shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the amendment, extension or renewal of

 

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any existing Letter of Credit, by the Issuing Bank; provided , that “Credit Extensions” shall not include conversions and continuations of outstanding Loans.

 

“ Debt Issuance ” shall mean the incurrence by Holdings, Borrower or any of their Subsidiaries of any Indebtedness after the Closing Date (other than as permitted by Section 6.01 ).

 

“ Default ” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

 

“ Default Allocation Percentage ” as to any Lender shall mean the quotient (determined as a percentage) determined as of the date of an Event of Default, whose numerator equals the principal, interest, fees and other Obligations owing to such Lender (including all advances made by such Lender following such Event of Default) plus , without duplication, the amount of such Lender’s (and such Lender’s Affiliate’s) marked-to-market exposure under Hedging Agreements as of such date and all obligations in respect of overdrafts and related liabilities owed to such Lender (and such Lender’s Affiliates) arising from treasury, depositary and cash management services, or in connection with any automated clearinghouse transfers of funds (subject in each case to the limitations on such obligations set forth in the definition of “Obligations”) and whose denominator equals the principal, interest, fees and other Obligations owing to all Lenders (including all advances made by the Lenders following such Event of Default) plus, without duplication, the amount of all Lenders’ (and such Lenders’ Affiliates) marked-to-market exposure under Hedging Agreements as of such date and all obligations in respect of overdrafts and related liabilities owed to such Lenders (and such Lenders’ Affiliates) arising from treasury, depositary and cash management services, or in connection with any automated clearinghouse transfers of funds (subject in each case to the limitations on such obligations set forth in the definition of “Obligations”).

 

“ Deposit Account Control Agreement” shall have the meaning assigned to such term in the Security Agreement.

 

“ Disqualified Capital Stock ” shall mean 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 first anniversary of 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 prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations.

 

“ Dividend ” with respect to any Person shall mean that such Person has declared or paid a dividend or returned any equity capital to its equityholders or authorized or made any other distribution, payment or delivery of Property (other than Equity Interests or warrants or options having customary terms to acquire common stock or other Equity Interests of such Person) or cash to its equityholders as such, or redeemed, retired, purchased or otherwise acquired, directly

 

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or indirectly, for a consideration any shares of any class of its Equity Interests outstanding (or any options or warrants issued by such Person with respect to its capital stock), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the Equity Interests of such Person outstanding (or any options or warrants issued by such Person with respect to its Equity Interests). Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes.

 

“ Documents ” shall mean all “documents,” as such term is defined in the UCC as in effect on the date hereof in the State of New York, in which any Person now or hereafter has rights.

 

“ Dollars ” or “ $ ” shall mean lawful money of the United States.

 

“ Eligible Accounts ” shall have the meaning assigned to such term in Section 2.19(a) .

 

“ Eligible Credit Card Receivables ” shall means all Credit Card Receivables other than any of the following: (i) any Credit Card Receivable in which the Collateral Agent, on behalf of the Secured Parties, does not have a first priority and perfected Lien subject to Permitted Liens described in Sections 6.02(a) , (b) , and (e) ; (ii) any Credit Card Receivable with respect to which a Credit Card Receivables Control Agreement is not in full force and effect; (iii) any Credit Card Receivable that is not owned by Borrower or a Subsidiary Guarantor; (iv) any Credit Card Receivable that is payable in any currency other than Dollars; (v) any Credit Card Receivable that does not comply in all material respects with all applicable legal requirements, including, without limitation, all laws, rules, regulations and orders of any Governmental Authority; (vi) any Credit Card Receivable (A) upon which Borrower’s or a Subsidiary Guarantor’s, as applicable, right to receive payment is not absolute or is contingent upon the fulfillment of any condition whatsoever unless such condition is satisfied or (B) as to which Borrower or a Subsidiary Guarantor, as applicable, is not able to bring suit or otherwise enforce its remedies against the obligor on such Credit Card Receivable through judicial or administrative; (vii) to the extent that any defense, counterclaim, chargeback, setoff or dispute is asserted as to such Credit Card Receivable, it being understood that the remaining balance of the Credit Card Receivable shall be eligible; (viii) any Credit Card Receivable that is in default; provided , that, without limiting the generality of the foregoing, a Credit Card Receivable shall be deemed in default upon the occurrence of any of the following: (A) the Person obligated upon such Credit Card Receivable suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due; or (B) a petition is filed by or against any Person obligated upon such Credit Card Receivable under any bankruptcy law or any other federal, state or foreign (including any provincial) receivership, insolvency relief or other law or laws for the relief of debtors; and (ix) any Credit Card Receivable as to which any of the representations or warranties in the Loan Documents are untrue in any material respect (without duplication of any materiality qualifier contained therein).

 

“ Eligible Equipment ” shall mean any Equipment owned by Borrower or a Subsidiary Guarantor which is acceptable to Collateral Agent in its reasonable credit judgment for lending

 

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purposes and which, without limiting Collateral Agent’s discretion, meets, and so long as it continues to meet, the following requirements:

 

(a)        is located at one of the business locations in the United States of such Persons set forth on Schedule 1.01(d) (except that Equipment used in the Companies’ “outside pack” operations with a fair market value not to exceed $500,000 in the aggregate may be located at locations other than those set forth on Schedule 1.01(d) ),

 

(b)        is subject to a valid and perfected first priority lien in favor of Collateral Agent subject to the Liens permitted under Sections 6.02(a) , (b) and (e) ,

 

(c)        is owned by Borrower or Subsidiary Guarantor free and clear of all liens and rights of any other Person, except the valid and perfected first priority Lien in favor of Collateral Agent and Permitted Liens, if any, which are subordinated to the Lien of Collateral Agent or are described in paragraph (b) above,

 

(d)        does not breach any of the representations or warranties pertaining to such Equipment set forth in this Agreement or the other Loan Documents in any material respect (without duplication of any materiality qualifier contained therein),

 

(e)        is covered by insurance reasonably acceptable to Collateral Agent,

 

(f)        is appraised by an independent appraisal or audit firm designated by Collateral Agent and reasonably acceptable to Borrower, and

 

(g)        is not ineligible by virtue of one or more of the criteria set forth below; provided , however, that such criteria may be revised from time to time by Collateral Agent in its reasonable credit judgment to address the results of any audit or appraisal performed by Collateral Agent from time to time after the date hereof.

 

An item of Equipment shall be excluded from Eligible Equipment if:

 

(i)        Borrower or Subsidiary Guarantor does not have good, valid, and marketable title thereto;

 

(ii)        except provided in clause (a) above, or otherwise agreed to by the Collateral Agent, it is located on Real Property leased by Borrower or a Subsidiary Guarantor, unless it is subject to a Landlord Lien Waiver and Access Agreement executed by the lessor, or other third party, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of other Persons, if any, stored on the premises;

 

(iii)        it is damaged, defective or obsolete, or it constitutes furnishings or parts or fixtures affixed to Real Property, unless such Equipment is affixed to the Mortgaged Real Property listed on Schedule 1.01(d) ;

 

(iv)        Collateral Agent has not received evidence of the property or casualty insurance required by this Agreement with respect to such Equipment;

 

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(v)        it is subject to a lease with any Person (other than Borrower or a Subsidiary Guarantor, unless a Lien on and security interest in the related lease shall be granted to the Collateral Agent and Collateral Agent shall have received all control agreements and instruments and all actions shall be taken as reasonably requested by the Collateral Agent to perfect the Collateral Agent’s security interest in such lease); or

 

(vi)        it is located at an owned location subject to a mortgage in favor of a lender other than the Collateral Agent (unless a reasonably satisfactory mortgagee waiver has been delivered to the Collateral Agent) or the removal of which is subject to restrictions relating to financing arrangement, including any industrial revenue bond financing.

 

“ Eligible Inventory ” shall mean, subject to adjustment as set forth in Section 2.19(b) , items of Inventory of the Borrower and the Subsidiary Guarantors.

 

“Eligible Real Property ” shall mean the Real Properties which (a) are set forth on Schedule 1.01(c) , or (b) are owned by Borrower or a Subsidiary Guarantor and designated from time to time by the Collateral Agent as being Eligible Real Property, provided , that with respect to each such parcel of Eligible Real Property, each of the material improvements thereon is acceptable to the Collateral Agent in its reasonable credit judgment for lending purposes and each of which, without limiting such reasonable credit judgment, meets, or continues to meet, the following requirements: (i) it is subject to a first priority mortgage or leasehold mortgage and lien in favor of Collateral Agent, (ii) it is owned by the Borrower or the applicable Subsidiary Guarantor free and clear of all liens and rights of any other Person, except the mortgage or leasehold mortgage and lien in favor of Collateral Agent and Permitted Liens permitted under Sections 6.02(a) , (b) , (d) , (e) , (g) , (p) , (r) and (v) , (iii) it does not breach any of the representations or warranties pertaining to such property set forth in this Agreement or any other Loan Documents in any material respect (without duplication of any materiality qualifier contained therein), (iv) it is covered by title insurance with respect to the Lien of Collateral Agent and casualty and property insurance reasonably acceptable to the Collateral Agent, (v) it is appraised by an independent appraisal or audit firm designated by Collateral Agent and reasonably acceptable to Borrower and (vi) it is the subject of an environmental report reasonably requested by, and reasonably acceptable to, the Collateral Agent.

 

“ Eligible Shipping and Packing Supplies” means packing and shipping materials, which but for the requirements of Section 2.19(b)(vii) , would constitute “Eligible Inventory.”

 

“ Environment ” shall mean ambient air, surface water and groundwater (including, without limitation, potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, the workplace or as such term is otherwise defined in any Environmental Law.

 

“ Environmental Claim ” shall mean any claim, notice, demand, order, action, suit, proceeding or other communication in each case alleging liability for investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, Property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation of Environmental Law, and shall include, without limitation, any

 

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claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Materials or alleged injury or threat of injury to health, safety, or the Environment.

 

“ Environmental Law ” shall mean any and all applicable present and future treaties, laws, statutes, ordinances, regulations, rules, decrees, orders, judgments, consent orders, consent decrees or other binding requirements, and the common law, relating to protection of public health or the Environment, the Release or threatened Release of Hazardous Materials, natural resources or natural resource damages, or occupational safety or health.

 

“Environmental Liabilities” shall mean, all liabilities, obligations, responsibilities, Responses, losses, damages, costs and expenses, fines, penalties, sanctions arising under any Environmental Law, Environmental Permit, order or agreement with any Governmental Authority relating to any Release or threatened Release and resulting from the operation of the Companies.

 

“ Environmental Permit ” shall mean any permit, license, approval, consent or other authorization required by or from a Governmental Authority under Environmental Law.

 

“ Equipment ” shall have the meaning assigned such term in the Security Agreement.

 

“ Equity Financing ” shall mean the $82.6 million cash equity investment (the “ Cash Equity Financing ”) invested in Holdings by the Permitted Holders and their designees on or about the Original Closing Date as the same has been further invested, directly or indirectly, together with $13.9 million in NOL Loan proceeds, by Holdings in cash equity in Borrower made on or prior to the Original Closing Date in an aggregate amount equal to $96.5 million.

 

“ Equity Interest ” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), 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 assets 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 ” shall mean, without duplication, any issuance or sale by Holdings or Borrower (other than to Holdings) after the Closing Date of (a) any Equity Interests (including any Equity Interests issued upon exercise of any warrant or option) or any warrants or options to purchase Equity Interests or (b) any other security or instrument representing an Equity Interest (or the right to obtain any Equity Interest) in the issuing or selling Person.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

 

“ ERISA Affiliate ” shall mean any trade or business (whether or not incorporated) that, together with 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.

 

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“ ERISA Event ” shall mean (a) any “reportable event,” as such term is defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived by regulation); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (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 any Company 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 any Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) the incurrence by any Company or any of its ERISA Affiliates of any liability with respect to the withdrawal from any Plan or Multiemployer Plan; (g) the receipt by any Company or its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability 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; (h) the making of any amendment to any Plan which could result in the imposition of a lien or the posting of a bond or other security; and (i) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could result in liability to any Company.

 

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

 

“ Eurodollar Loan ” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II .

 

“ Event of Default ” shall have the meaning assigned to such term in Article VIII .

 

“ Excess Availability ” shall mean (a) the lesser of (i) the Revolving Commitments of all of the Lenders and (ii) the Borrowing Base on the date of determination less (b) all outstanding Loans and LC Exposure less (c) in the Collateral Agent’s reasonable credit judgment, the aggregate amount of all the outstanding and unpaid trade payables and other obligations of Borrower or any Subsidiary Guarantor which are not paid within 60 days past the due date according to their original terms of sale, in each case as of such date of determination less (d) in the Collateral Agent’s reasonable credit judgment, the amount of checks issued by Borrower or any Subsidiary Guarantor to pay trade payables and other obligations which are not paid within 60 days past the due date according to their original terms of sale, in each case as of such date of determination, but which checks either have not yet been sent or are subject to other arrangements which are expected to delay the prompt presentation of such checks for payment.

 

“ Excess Cash Flow ” shall mean, for any fiscal year of Borrower, the sum, without duplication, of

 

(a)        Consolidated EBITDA for such fiscal year, plus

 

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(b)        cash gains excluded from Consolidated Net Income (other than any such gains in connection with a sale permitted by Section 6.05(m) ), plus

 

(c)        reductions to non-cash working capital of Borrower and its Consolidated Subsidiaries for such fiscal year ( i.e., the decrease, if any, in noncash Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such fiscal year), minus

 

(d)        the amount of any cash income taxes paid or payable by Holdings and its consolidated Subsidiaries with respect to such fiscal year, net of any cash tax refunds received or receivable by Holdings or any of its Subsidiaries in such fiscal year, minus

 

(e)        cash interest paid by Holdings and its Consolidated Subsidiaries during such fiscal year, minus

 

(f)        Capital Expenditures made in cash in accordance with Section 6.08(d) during such fiscal year, to the extent funded from internally generated funds, minus

 

(g)        other than repayments and prepayments of the Senior Notes made with the proceeds of a Qualified Equity Offering as permitted by Section 6.09(ii)(B) or pursuant to Section 6.09(ii)(C) , permanent repayments and prepayments of Indebtedness made by Holdings and its Consolidated Subsidiaries during such fiscal year, but only to the extent such repayments do not occur in connection with a refinancing of all or any portion of the Loans, minus

 

(h)        extraordinary cash losses from the sale of assets during such fiscal year and not included in Consolidated Net Income, minus

 

(i)        additions to noncash working capital for such fiscal year ( i.e . , the increase, if any, in noncash Consolidated Current Assets minus Consolidated Current Liabilities from the beginning to the end of such fiscal year); minus

 

(j)        Dividends paid by Holdings or any of its Subsidiaries (other than any such Dividends permitted pursuant to Section 6.06(e) ).

 

provided , that, to the extent otherwise included therein, the Net Cash Proceeds of Asset Sales and Casualty Events shall be excluded from the calculation of Excess Cash Flow.

 

From and after any sale permitted by Section 6.05(m) , the determination of “ Excess Cash Flow ” shall be made excluding any amounts set forth above related to the entities or assets so sold, except to the extent that such Excess Cash Flow has been otherwise paid to the Borrower and not returned to such sold entities.

 

“ Excess Cash Flow Prepayment Amount ” means an amount equal to (i) 50% of Excess Cash Flow for each full fiscal year of the Borrower ending after the Closing Date and for which the Borrower has delivered the annual financial statements required by Section 5.01(a) , and computed on a cumulative consolidated basis, less (ii) the amount of all repayments or redemptions of Senior Notes made in reliance on the provisions of Section 6.09(ii)(C) .

 

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

 

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States, or by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or carries on business (other than as a result of a connection arising solely from the Lender, Issuing Bank or Administrative Agent having executed, delivered or performed its obligations or received a payment under this Agreement or any other Loan Document) or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits tax imposed by the United States or any similar tax imposed by any other jurisdiction in which such lending office is located, and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by Borrower under Section 2.16 ), withholding tax that is imposed on amounts payable to such Foreign Lender (x) at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or (y) that is attributable to such Foreign Lender’s failure or inability to deliver or furnish to Borrower the documentation specified in Section 2.15(e) where the provision of such documentation would have resulted in such Foreign Lender’s entitlement to an exemption from or reduction of withholding tax, except to the extent that such Foreign Lender (or its assignor or seller of a participation interest, if any) was entitled, at the time of designation of a new lending office (or in the case of an assignment or sale of a participation interest, at the time of assignment or acquisition of such participation interest), to receive additional amounts from Borrower with respect to such withholding tax pursuant to Section 2.15(a) (it being understood and agreed, for the avoidance of doubt, that any withholding tax imposed on a Foreign Lender as a result of a Change in Law or regulation or interpretation thereof occurring after the time such Foreign Lender became a party to this Agreement shall not be an Excluded Tax).

 

“ Existing Debt Obligations ” means the “Obligations” outstanding as of the Closing Date under the Original Credit Agreement.

 

“ Federal Funds Effective Rate ” shall mean, for any day, the weighted average 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 of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

 

“ Fee Letter ” shall mean that certain amended and restated letter agreement dated as of February 25, 2005 among Holdings, UBS Loan Finance LLC and UBS Securities LLC.

 

“ Fees ” shall mean the Commitment Fee, the Administrative Agent Fee, the Collateral Agent Fee, the LC Participation Fee and the Fronting Fee.

 

“ Final Maturity Date ” shall mean February 25, 2010.

 

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“ Financial Officer ” of any Person shall mean the Chief Financial Officer, Treasurer or Controller of such Person.

 

“ FIRREA ” shall mean the Federal Institutions Reform, Recovery and Enforcement Act of 1989.

 

“ Fixed Asset Loan Period” shall mean, in any fiscal year, the five fiscal month period beginning with the first day of the fiscal month of the Borrower commencing closest to July 31 of such fiscal year.

 

“ Fixed Asset Loan Value ” shall mean an amount equal to the sum of (a) the advance rate of 50% of the appraised net orderly liquidation value of the Eligible Equipment plus (b) the advance rate of 50% of the appraised fair market value of the Eligible Real Property. The appraised net orderly liquidation value of Eligible Equipment and the appraised fair market value of Eligible Real Property are set forth on Schedule 1.01(c) , as Schedule 1.01(c) may be amended from time to time as provided herein. The aggregate Fixed Asset Loan Value of Borrower and the Subsidiary Guarantors as of the Closing Date is $48.4 million. If any Eligible Equipment or Eligible Real Property listed on Schedule 1.01(c) is sold, liquidated or otherwise ceases to be Eligible Equipment or Eligible Real Property, the Fixed Asset Loan Value shall be determined without giving effect to the appraised net orderly liquidation value of such Eligible Equipment or the appraised fair market value of such Eligible Real Property and such Eligible Equipment and Eligible Real Property shall be deleted from Schedule 1.01(c) and the Collateral Agent shall correspondingly amend Schedule 1.01(c) without any further action of any party hereto. The Collateral Agent may also amend Schedule 1.01(c) in its reasonable credit judgment upon the receipt of any updated appraisal that is receives pursuant to Section 9.03.

 

“ Foreign Lender ” shall mean any Lender or any Issuing Bank that is not, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation or partnership or entity treated as a corporation or partnership created or organized in or under the laws of the United States, or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States Persons have the authority to control all substantial decisions of such trust.

 

“ Foreign Subsidiary ” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

 

“ Fronting Fee ” shall have the meaning assigned to such term in Section 2.05(c) .

 

“ FSA ” shall mean the Food Security Act of 1985 (codified in 7 U.S.C. § 1631).

 

“ GAAP ” shall mean generally accepted accounting principles in the United States applied on a consistent basis.

 

“ Governmental Authority ” shall mean any federal, state, local or foreign court, central bank or governmental agency, authority, instrumentality or regulatory body.

 

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“ Governmental Real Property Disclosure Requirements ” shall mean any Requirement of Law of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, facility, establishment or business, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including, without limitation, any transfer of control) of any Real Property, facility, establishment or business, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Materials on, at, under or near the Real Property, facility, establishment or business to be sold, leased, mortgaged, assigned or transferred.

 

“ Guaranteed Obligations ” shall have the meaning assigned to such term in Section 7.01 .

 

“ Guarantees ” shall mean the guarantees issued pursuant to Article VII by the Guarantors.

 

“ Guarantors ” shall mean Holdings and each Subsidiary Guarantor.

 

“ Hazardous Materials ” shall mean the following: hazardous substances; hazardous wastes; polychlorinated biphenyls (“ PCBs ”) or any substance or compound containing PCBs; asbestos or any asbestos-containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by-product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant or hazardous, toxic or dangerous chemicals, wastes, materials, compounds, constituents or substances, as all such terms are used in their broadest sense and defined by or under any Environmental Laws.

 

“ Hedging Agreement ” shall mean any Interest Rate Protection Agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

 

“Hedging Reserve” shall mean a reserve determined by the Administrative Agent in its reasonable credit judgment and giving effect to the aggregate amount owing to Loan Parties by a counterparty to a Hedging Agreement, less the amount the applicable Loan Party owes such counterparty thereunder, less the aggregate amount of Property pledged to cash collateralize such obligation (other than the Collateral granted under the Loan Documents), in each case valued on a mark-to-market basis as of the last Business Day of the month (or if not available, the nearest prior Business Day for which such evaluation is available). The Administrative Agent shall endeavor to provide the Borrower with no less than 2 Business Days prior notice of any such Hedging Reserve; provided , that the failure to provide such notice shall not affect the application of such Hedging Reserve.

 

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

 

“ Indebtedness ” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person; (d) all obligations of such Person issued or assumed as the deferred purchase price of Property or

 

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services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days); (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed; (f) the principal portion of all Capital Lease Obligations, Purchase Money Obligations and synthetic lease obligations of such Person; (g) all obligations of such Person in respect of Hedging Agreements to the extent required to be reflected on a balance sheet of such Person; (h) all Attributable Indebtedness of such Person; (i) all obligations for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; and (j) all Contingent Obligations of such Person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. 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 that terms of such Indebtedness provide that such Person is not liable therefor.

 

“ Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

 

“ Indemnitee ” shall have the meaning assigned to such term in Section 11.03(b) .

 

“ Information ” shall have the meaning assigned to such term in Section 11.12 .

 

“ Instruments ” shall mean all “instruments,” as such term is defined in the UCC as in effect on the date hereof in the State of New York, in which any Person now or hereafter has rights.

 

“ Intellectual Property ” shall have the meaning assigned to such term in Section 3.05(c) .

 

“Intercompany Note” shall mean a subordinated promissory note substantially in the form of Exhibit L .

 

“ Interest Election Request ” shall mean a request by Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08(b) , substantially in the form of Exhibit D .

 

“ Interest Payment Date ” shall mean (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December to occur during the period that such Loan is outstanding and the Final Maturity Date, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

 

“ Interest Period ” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as Borrower may elect; provided , that (a) if any Interest Period would end on a day other than a Business Day, such

 

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Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing; provided , however , that an Interest Period shall be limited to two weeks to the extent required under Section 2.03(e) .

 

“ Interest Rate Protection Agreement ” shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or similar agreement or arrangement designed to protect Holdings, Borrower or any of their Subsidiaries against fluctuations in interest rates and not entered into for speculation.

 

“ Inventory ” shall mean all “inventory,” as such term is defined in the UCC as in effect on the date hereof in the State of New York, wherever located, in which any Person now or hereafter has rights.

 

“ Inventory Appraisal ” shall mean (a) on the Closing Date, the audit prepared by Hilco Appraisal Services, LLC dated May 21, 2004 and (b) thereafter, the most recent inventory appraisal approved by the Collateral Agent (by written notice to the Borrower as soon as practicable after the Collateral Agent’s receipt thereof) in its reasonable credit judgment.

 

“ Inventory Eligibility Factor ” shall mean, (a) until the Collateral Agent, in its reasonable credit judgment, approves an Inventory Appraisal after the Closing Date, (i) during the months of January through and including September in each calendar year, 81.38% and (ii) at all other times, 79.45% and (b) thereafter, as of any date of determination, the percentage set forth in the most recent Inventory Appraisal.

 

“ Investments ” shall have the meaning assigned to such term in Section 6.04 .

 

“ IPO ” shall mean the first underwritten public offering of Equity Interests of Holdings after the Closing Date pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act.

 

“ Issuing Bank ” shall mean, as the context may require, (a) UBS AG, Stamford Branch, with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to Section 2.18(k) , with respect to Letters of Credit issued by such Lender; or (c) collectively, all of the foregoing.

 

“ Joinder Agreement ” shall mean that certain joinder agreement substantially in the form of Exhibit E .

 

“ Landlord Lien Waiver and Access Agreement ” shall mean the Landlord Lien Waiver and Access Agreement, substantially in the form of Exhibit F , with such modifications thereto as

 

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shall be acceptable to the Collateral Agent and the Administrative Agent, in their reasonable credit judgment.

 

“ LC Commitment ” shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18 .

 

“ LC Disbursement ” shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit.

 

“ LC Exposure ” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all LC Disbursements that have not yet been reimbursed at such time. The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.

 

“ LC Participation Fee ” shall have the meaning assigned to such term in Section 2.05(c) .

 

“ LC Request ” shall mean a request by Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit A-3 , or such other form as shall be approved by the Administrative Agent.

 

“ Leases ” shall mean any and all leases, subleases, tenancies, lease options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, granting to another the right to use or possess all or any portion of any Real Property.

 

“ Lender Addendum ” shall mean with respect to any Lender on the Closing Date, a lender addendum in the form of Exhibit A-4 ¸ to be executed and delivered by such Lender on the Closing Date as provided in Section 11.14 .

 

“ Lender Affiliate ” shall mean with respect to any Lender that is a fund or similar investment vehicle that makes or invests in bank loans or other commercial loans, any other fund or similar investment vehicle that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such advisor.

 

“ Lenders ” shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum (other than any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance. Unless the context clearly indicates otherwise, the term “Lenders” shall include the Swingline Lender.

 

“ Letter of Credit ” shall mean any (i) Standby Letter of Credit and (ii) Commercial Letter of Credit, in each case, issued or to be issued by an Issuing Bank for the account of Borrower pursuant to Section 2.18 .

 

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“ Letter of Credit Expiration Date ” shall mean the date which is three Business Days prior to the Final Maturity Date.

 

“ Leverage Ratio ” shall mean, at any date of determination, the ratio of Consolidated Indebtedness (other than Subordinated Debt issued to and held by any Permitted Holder) on such date to Consolidated EBITDA for the Test Period then most recently ended.

 

“ LIBOR Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period therefor, the rate per annum determined by the Administrative Agent to be the arithmetic mean (rounded upwards, if necessary, to the nearest 1/100 ^th of 1%) of the offered rates for deposits in Dollars with a term comparable to such Interest Period that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; provided , however , that (i) if no comparable term for an Interest Period is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such Interest Period and (ii) if there shall at any time no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, “LIBOR Rate” shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in Dollars at approximately 11:00 a.m., London, England time, two Business Days prior to the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period. “ Telerate British Bankers Assoc. Interest Settlement Rates Page ” shall mean the display designated as Page 3750 on the Telerate System Incorporated Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which Dollar deposits are offered by leading banks in the London interbank deposit market).

 

“ Lien ” shall mean, with respect to any Property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security interest or encumbrance of any kind, any other type of preferential arrangement having the practical effect of any of the foregoing in respect of such Property or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, right-of-way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing; (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 Property; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“ Line Reserve ” shall have the meaning assigned to such term in Section 2.10(g) .

 

“ Loan Documents ” shall mean this Agreement, any Borrowing Base Certificate, the Letters of Credit, the Notes (if any), the Security Documents, the Fee Letter, the Management Fee Subordination Agreement and each Hedging Agreement entered into with any counterparty

 

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that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into.

 

“ Loan Parties ” shall mean Holdings, Borrower and the Subsidiary Guarantors.

 

“ Loans ” shall mean advances made to or at the instructions of Borrower pursuant to Article II hereof and may constitute Revolving Loans or Swingline Loans.

 

“ Management Fee Subordination Agreement ” shall mean that certain Management Fee Subordination Agreement, dated as of June 17, 2004, among Borrower, Holdings, each Subsidiary Guarantor, Wasserstein & Co., LP, the Administrative Agent and certain other parties.

 

“ Management Services Agreement ” shall mean the management services agreement dated as of June 17, 2004 between Wasserstein & Co., LP and the Borrower having terms and conditions reasonably acceptable to the Administrative Agent.

 

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

 

“ Material Adverse Effect ” shall mean (a) a material adverse effect on the business, Property, results of operations, prospects or financial condition of Borrower and the Subsidiaries, taken as a whole; (b) a material impairment of the ability of the Loan Parties to fully and timely perform any of their obligations under any Loan Document; (c) a material impairment of the rights of or benefits or remedies available to the Lenders or the Collateral Agent under any Loan Document; or (d) a material adverse effect on the Collateral or the Liens in favor of the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral or the priority of such Liens.

 

“ Material Indebtedness ” shall mean (a) Indebtedness evidenced by the Senior Notes and (b) any other Indebtedness (other than the Loans and Letters of Credit or trade payables in the ordinary course of business), or obligations in respect of one or more Hedging Agreements, of any Loan Party evidencing an aggregate outstanding principal amount exceeding $3.0 million. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of such Loan Party in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if such Hedging Agreement were terminated at such time.

 

“ Maximum Rate ” shall have the meaning assigned to such term in Section 11.13 .

 

“ Mortgage ” shall mean an agreement, including, but not limited to, a mortgage, deed of trust or any other document, creating and evidencing a Lien on a Mortgaged Real Property, which shall be substantially in the form of Exhibit G , with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign law.

 

“ Mortgaged Real Property ” shall mean (a) each parcel of Real Property identified on Schedule 1.01(a) hereto, which schedule shall list, among other things, each county in which

 

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such Real Property is located and (b) each parcel of Real Property, if any, which shall be subject to a Mortgage delivered after the Closing Date pursuant to Section 5.11(c) .

 

“ Multiemployer Plan ” shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any ERISA Affiliate is then making or accruing an obligation to make contributions; (b) to which any Company or any ERISA Affiliate has within the preceding five plan years made contributions; or (c) with respect to which any Company could incur material liability.

 

“Net Cash Proceeds” shall mean:

 

(a)        with respect to any Asset Sale, the cash proceeds received by any Loan Party (including cash proceeds subsequently received (as and when received by any Loan Party) in respect of noncash consideration initially received) net of (i) selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and Borrower’s good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations associated with 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) Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the assets 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); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the asset sold in such Asset Sale and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset);

 

(b)        with respect to any Debt Issuance the cash proceeds thereof, net of customary fees, commissions, costs and other expenses incurred in connection therewith; and

 

(c)        with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event.

 

For purposes of determining the amount of any prepayments required pursuant to this Agreement except to the extent needed to make a prepayment or other payment or cash collateralization required pursuant to Section 2.10(b)(iii), “Net Cash Proceeds” shall not include any of the foregoing amounts to the extent at the time of the receipt thereof (i) a Cash Dominion Trigger Event shall not be continuing and (ii) such amounts are not prohibited under Section 6.09 of this Agreement from being used to prepay the Senior Notes.

 

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“ Net Orderly Liquidation Percentage ” shall mean (i) for the months of January through and including September of each calendar year, 48.99% and (ii) at all other times, 70.36% or such other percentages as determined by the Collateral Agent in the exercise of its reasonable credit judgment in connection with the most recent Inventory Appraisal.

 

“ NOL Loan ” shall mean the loan made to Holdings pursuant to the NOL Loan Agreement.

 

“ NOL Loan Agreement ” shall mean that certain Credit Agreement dated as June 17, 2004 by and among Holdings, the lenders parties thereto, and UBS AG, Stamford Branch, as administrative agent.

 

“ NOL Payment ” shall mean any payment made to Holdings after the Closing Date pursuant to Section 8.06 of the Acquisition Agreement.

 

“ Notes ” shall mean any notes evidencing the Revolving Loans or Swingline Loans issued pursuant to the Original Credit Agreement or this Agreement, if any, substantially in the form of Exhibit H-1 or H-2 , as the case may be.

 

“ Obligations ” shall mean (a) obligations of Borrower and any and all of 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, (ii) each payment required to be made by Borrower and any and all of the other Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of Borrower and any and all of the other Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Borrower and each Loan Party under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of Borrower and any and all of the other Loan Parties under each Hedging Agreement entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into; provided that the aggregate amount of such obligations described in this clause (c) and included in the “Obligations” shall not exceed $5,000,000 in the aggregate, and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any Lender, any Affiliate of a Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds; provided that the aggregate amount of such obligations described in this clause (d) and included in the “Obligations” shall not exceed $5,000,000 in the aggregate.

 

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“ Officer’s Certificate ” shall mean a certificate executed by the Chief Executive Officer, the President, or the Chief Financial Officer, each in his or her official (and not individual) capacity.

 

“ Original Closing Date ” means June 17, 2004.

 

“ Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise or Property taxes, charges or similar levies (including interest, fines solely in respect of the payment of such Other Taxes, penalties and additions to tax) arising from any payment made or required to be made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

“ Overadvance ” shall have the meaning assigned to such term in Section 10.10 .

 

“ PACA ” shall mean the Perishable Agricultural Commodities Act, 17 U.S.C. 499.e(c) (or any successor legislation thereto), as amended from time to time, and any regulations promulgated thereunder.

 

“ Participant ” shall have the meaning assigned to such term in Section 11.04(e) .

 

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

“ Perfection Certificate ” shall mean a certificate in the form of Exhibit I-1 or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise.

 

“ Perfection Certificate Supplement ” shall mean a certificate supplement in the form of Exhibit I-2 or any other form approved by the Collateral Agent.

 

“ Permitted Acquisition ” shall mean any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any Person, or of any business or division of any Person, by Borrower or any of its Subsidiaries or (b) acquisition of 100% of the Equity Interests of any Person by Borrower or any of its Subsidiaries, and otherwise causing such Person to become a Subsidiary of Borrower, if in any such case, each of the following conditions is met:

 

(i)        No Default or Event of Default then exists or would occur as a result of the consummation of any such transaction,

 

(ii)        after giving effect to such transaction on a Pro Forma Basis, Holdings shall be in compliance with all covenants set forth in Section 6.08 as of the most recent Test Period (assuming, for purposes of Section 6.08 , that such transaction, and all other Permitted Acquisitions consummated since the first day of the relevant Test Period for each of the financial covenants set forth in Section 6.08 ending on or prior to the date of such transaction, had occurred on the first day of such relevant Test Period),

 

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(iii)        no Company shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or other liability (including any material tax or ERISA liability) of the related seller or the business, person or properties acquired, except (A) to the extent permitted under Section 6.01 and (B) obligations not constituting Indebtedness permitted to be assumed or otherwise supported by any Company hereunder;

 

(iv)        the person or business to be acquired shall be, or shall be engaged in, a business of the type that Borrower and its Subsidiaries are permitted to be engaged in under Section 6.13 and the property acquired in connection with any such transaction shall be made subject to the Lien of the Security Documents (to the extent permitted by applicable law) and shall be free and clear of any Liens, other than Permitted Liens;

 

(v)        the Board of Directors of the person to be acquired shall not have indicated publicly its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn);

 

(vi)        all transactions in connection therewith shall be consummated in accordance with all applicable Requirements of Law;

 

(vii)        at least 10 Business Days prior to the proposed date of consummation of the transaction, Borrowers shall have delivered to the Agents and the Lenders an Officers’ Certificate certifying that (A) such transaction complies with this definition, and (B) such transaction could not reasonably be expected to result in a Material Adverse Effect; and

 

(viii)        the aggregate amount of the Acquisition Consideration for all Permitted Acquisitions since the Closing Date (net of purchase price adjustments or similar payments) shall not exceed $30.0 million.

 

“ Permitted Holders ” shall mean each Sponsor and each of its Affiliates.

 

“ Permitted Liens ” shall have the meaning assigned to such term in Section 6.02 .

 

“ Person ” shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof.

 

“ Plan ” shall mean any “employee pension benefit plan” as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Company or its ERISA Affiliate or with respect to which any Company could incur liability (including, without limitation, under Section 4069 of ERISA).

 

“ Preferred Stock ” shall mean, with respect to any Person, any and all preferred or preference Equity Interests (however designated) of such Person whether now outstanding or issued after the Issue Date.

 

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“ Prior Lien ” shall have the meaning assigned to such term in the applicable Security Document.

 

“ Pro Forma Basis ” shall mean on a basis in accordance with GAAP and Regulation S-X and otherwise reasonably satisfactory to the Administrative Agent.

 

“ Pro Rata Percentage ” of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitment represented by such Lender’s Revolving Commitment.

 

“ Property ” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any Person and whether now in existence or owned or hereafter entered into or acquired, including, without limitation, all Real Property.

 

“ Purchase Money Obligation ” shall mean, for any Person, the obligations of such Person in respect of Indebtedness incurred for the purpose of financing all or any part of the purchase price of any Property (including Equity Interests of any Person) and/or the cost of installation, construction or improvement of any Property or assets and any refinancing thereof; provided , however , that such Indebtedness is incurred within 90 days after such acquisition of such Property by such Person.

 

“ Qualified Capital Stock ” of any Person shall mean any capital stock of such Person that is not Disqualified Capital Stock.

 

“ Qualified Equity Offering ” shall mean a Qualified Equity Offering as defined in the Senior Notes Indenture, as in effect on the Closing Date.

 

“ Real Property ” shall mean, collectively, all right, title and interest (including any leasehold 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 improvements and appurtenant fixtures and equipment, and all general intangibles and contract rights and other Property and rights incidental to the ownership, lease or operation thereof.

 

“ Refinancing ” shall mean the repayment in full and the termination of any commitment to make extensions of credit under the Second Lien Loan Documents.

 

“ Register ” shall have the meaning assigned to such term in Section 11.04(c) .

 

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

 

“ Regulation S-X ” shall mean Regulation S-X promulgated under the Securities Act.

 

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

 

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

 

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

 

“ Reinvestment Reserves ” shall have the meaning assigned to such term in Section 2.10(g) .

 

“ Release ” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Materials in, into, onto or through the Environment.

 

“ Required Lenders ” shall mean, at any time, Lenders having more than fifty percent (50%) of the Revolving Commitments or, if the Revolving Commitments have been terminated, more than fifty percent (50%) of the Revolving Exposure.

 

“ Requirements of Law ” shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, ordinances, rules, regulations or similar statutes or case law.

 

“ Reserves ” shall mean reserves established against the Borrowing Base that the Collateral Agent may, in its reasonable credit judgment, establish from time to time, including, without limitation, reserves with respect to any potential claims against any Company or its respective Property pursuant to PACA. The Administrative Agent shall endeavor to provide the Borrower with no less than 2 Business Days prior notice of any such Reserve; provided , that the failure to provide such notice shall not affect the application of such Reserve.

 

“ Response ” shall mean (a) “response” as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to: (i) clean up, remove, treat, abate or in any other way address any Hazardous Materials in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Materials; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above.

 

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

 

“ Revolving Availability Period ” shall mean the period from and including the Closing Date to but excluding the earlier of the Final Maturity Date and the date of termination of the Revolving Commitments.

 

“ Revolving Borrowing ” shall mean a Borrowing comprised of Revolving Loans.

 

“ Revolving Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Lender, or in the

 

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Assignment and Acceptance pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04 . The aggregate amount of the Lenders’ Revolving Commitments on the Closing Date is $125.0 million.

 

“ Revolving Exposure ” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such of such Lender’s Swingline Exposure.

 

“ Revolving Lender ” shall mean a Lender with a Revolving Commitment.

 

“ Revolving Loans ” shall mean the Loans made by the Lenders to Borrower pursuant to Section 2.01(b) .

 

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

 

“ Secured Parties ” shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders (and Affiliates thereof with respect to overdrafts and related liabilities as described in clause (d) of the definition of “Obligations”) and each party to a Hedging Agreement if at the date of entering into such Hedging Agreement such Person was a Lender or an Affiliate of a Lender and such Affiliate executes and delivers to the Administrative Agent a letter agreement in form and substance acceptable to the Administrative Agent pursuant to which such Person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Section 9.05 .

 

“ Securities Act ” shall mean the Securities Act of 1933, as amended.

 

“ Security Agreement ” shall mean a Security Agreement substantially in the form of Exhibit J among the Loan Parties and the Collateral Agent for the benefit of the Secured Parties.

 

“ Security Agreement Collateral ” shall mean all Property pledged or granted as collateral pursuant to the Security Agreement delivered on the Original Closing Date or thereafter pursuant to Section 5.11 .

 

“ Security Documents ” shall mean the Security Agreement, the Mortgages, the Perfection Certificate and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected Lien in any Property, and all UCC or other financing statements or instruments of perfection required by this Agreement, the Security Agreement or any Mortgage to be filed with respect to the Liens in Property and fixtures created pursuant to the Security Agreement or any Mortgage and any other document or instrument utilized to pledge as collateral for the Obligations any Property of whatever kind or nature.

 

“ Senior Fixed Rate Notes ” shall mean Borrower’s 9.0% Senior Notes due 2013 issued pursuant to the Senior Notes Indenture in an aggregate principal amount not to exceed $175

 

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million, and any registered notes issued by Borrower in exchange for, and as contemplated by, such notes with substantially identical terms as such notes.

 

“ Senior Floating Rate Notes ” shall mean Borrower’s Floating Rate Senior Notes due 2012 issued pursuant to the Senior Notes Indenture in an aggregate principal amount not to exceed $70 million and any registered notes issued by Borrower in exchange for, and as contemplated by, such notes with substantially identical terms as such notes.

 

“ Senior Note Documents ” shall mean the Senior Notes, the Senior Notes Indenture, the Senior Note Guarantees and all other documents executed and delivered with respect to the Senior Notes or the Senior Notes Indenture.

 

“ Senior Note Guarantees ” shall mean the guarantees of Holdings and the Subsidiary Guarantors pursuant to the Senior Notes Indenture.

 

“ Senior Notes ” shall mean the Senior Fixed Rate Notes and the Senior Floating Rate Notes.

 

“ Senior Notes Indenture ” shall mean any indenture, note purchase agreement or other agreement pursuant to which the Senior Notes are issued as in effect on the date hereof and thereafter amended from time to time subject to the requirements of this Agreement.

 

“Senior Notes Offering Memorandum” shall mean that certain Offering Memorandum dated as of February 18, 2005, relating to the issuance of the Senior Notes.

 

“ Senior Notes Trustee ” shall mean Wells Fargo Bank, N.A., as trustee, and its successors and assigns.

 

“ Special Agent Advance ” shall have the meaning assigned to such term in Section 10.11 .

 

“ Sponsor ” shall mean each of U.S. Equity Partners II, LP and Highfields Capital Management LP.

 

“ Standby Letter of Credit ” shall mean any standby letter of credit or similar instrument issued for the purpose of supporting (a) workers’ compensation liabilities of Borrower, any Subsidiary Guarantor or their respective Subsidiaries, (b) the obligations of third-party insurers of Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries arising by virtue of the laws of any jurisdiction requiring third-party insurers to obtain such letters of credit, or (c) performance, payment, deposit or surety obligations of Borrower, any Subsidiary Guarantor or any of their respective Subsidiaries if required by law or governmental rule or regulation or in accordance with custom and practice in the relevant industry.

 

“ Statutory Reserves ” shall mean, for any Interest Period for any Eurodollar Borrowing in Dollars, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion Dollars against “Eurodollar liabilities” (as such term is used

 

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in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.

 

“ Subordinated Debt ” means unsecured Indebtedness of Holdings that (i) has a final maturity date no earlier than one year after the Final Maturity Date and that requires no mandatory prepayments or redemptions or other scheduled repayments prior to one year after the Final Maturity Date, (ii) contains covenants, events of default, remedies and terms of subordination reasonably satisfactory to the Administrative Agent (as evidenced by the written approval of the Administrative Agent) and (iii) does not have the benefit of a guarantee or any other credit support from the Borrower or any other Subsidiary of Holdings.

 

“ Subsidiary ” shall mean, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, by the parent or one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent. Unless otherwise set forth herein, reference in this Agreement to “Subsidiary” shall mean Holdings’ direct and indirect Subsidiaries.

 

“ Subsidiary Guarantors ” shall mean each of (a) Bear Creek Orchards, Inc., Jackson & Perkins Wholesale, Inc., BCO, Bear Creek Direct Marketing, Inc., Jackson & Perkins Company, Jackson & Perkins Operations, Inc., Harry and David and Bear Creek Stores, Inc. and (b) any other Wholly Owned Subsidiary of Borrower which (i) is organized in a State within the United States, (ii) has executed and delivered to Collateral Agent such joinder agreements to guarantees, contribution and set-off agreements and other Security Documents as Collateral Agent has reasonably requested and has otherwise complied with the requirements of Section 5.11(b) , and so long as Collateral Agent has received and approved, in its reasonable discretion, (A) a collateral audit and Inventory Appraisal and (B) all UCC search results necessary to confirm Collateral Agent’s first priority Lien on all of such Subsidiary Guarantor’s personal Property, encumbered by no Lien other than Permitted Liens.

 

“ Supermajority Lenders ” shall mean at any time, Lenders having at least 66  ² / 3 % of the Revolving Commitments and, if the Revolving Commitments have been terminated, at least 66  ² / 3 % of the sum of Revolving Exposure.

 

“ Survey ” shall mean a survey of any Mortgaged Real Property (and all improvements thereon) (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Real Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Real Property, in which event such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days

 

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prior to such date of delivery, (iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Real Property and issue the endorsements of the type required by Section 4.01(o)(iii) .

 

“ Swingline Commitment ” shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.17 , as the same may be reduced from time to time pursuant to Section 2.07 or Section 2.17 .

 

“ Swingline Exposure ” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

 

“ Swingline Lender ” shall have the meaning assigned to such term in the preamble hereto.

 

“ Swingline Loan ” shall mean any Loan made by the Swingline Lender pursuant to Section 2.17 .

 

“ Tax Return ” shall mean all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes.

 

“ Tax Sharing Agreements ” shall mean all tax sharing, tax allocation and other similar agreements entered into by Holdings or any Subsidiary of Holdings.

 

“ Taxes ” shall mean any and all present or future taxes, duties, levies, fees, imposts, assessments, deductions, withholdings or other charges imposed by a Governmental Authority and any and all liabilities (including interest, fines solely in respect of any payment of such Taxes, penalties or additions to tax) with respect to the foregoing.

 

“ Test Period ” shall mean, at any time, the four consecutive fiscal quarters of Borrower then last ended (in each case taken as one accounting period) for which financial statements have been delivered to the Administrative Agent or are required to be delivered to the Administrative Agent pursuant to Section 5.01(a) or (b) ; provided , however , that, for purposes of calculating the covenants set forth in Section 6.08 for any period ending prior to June 30, 2005, Consolidated Interest Expense (as a component of Consolidated EBITDA) shall be deemed to be equal to the following amounts: (i) $4,600,000 for the fiscal quarter ended December 2003, (ii) $4,000,000 for the fiscal quarter ended March 2004 and (iii) $4,100,000 for the fiscal quarter ended June 2004.

 

“ Title Company ” shall mean any title insurance company as shall be retained by Borrower and reasonably acceptable to the Administrative Agent.

 

“ Title Policy ” shall have the meaning assigned to such term in Section 4.01(o)(iii) .

 

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“ Total Liquidity ” shall mean at any time, the sum of (i) Excess Availability at such time plus (ii) the sum of cash and Cash Equivalents of Holdings and its Consolidated Subsidiaries at such time.

 

“ Transaction Documents ” shall mean the Acquisition Documents, the Loan Documents and the Senior Note Documents.

 

“ Transactions ” shall mean, collectively, the transactions to occur on or prior to the Closing Date pursuant to the Transaction Documents, including (a) the execution and delivery of the Loan Documents and the initial borrowings hereunder; (b) the Refinancing; (c) the issuance of the Senior Notes; (d) the repayment of the NOL Loan on the Closing Date; and (e) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

 

“ Treasury Regulation ” means the regulations promulgated under the Code.

 

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

 

“ UBS AG ” shall have the meaning assigned to such term in the preamble hereto.

 

“ UCC ” shall mean the Uniform Commercial Code as in effect in the applicable state or jurisdiction.

 

“ Voting Participant ” shall have the meaning assigned to such term in Section 11.04(e) .

 

“ Voting Participant Notification ” shall have the meaning assigned to such term in Section 11.04(e) .

 

“ Voting Stock ” shall mean any class or classes of capital stock of Holdings 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 Holdings.

 

“ Wholly Owned Subsidiary ” shall mean, as to any Person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares) is at the time owned by such Person and/or one or more Wholly Owned Subsidiaries of such Person and (b) any partnership, association, joint venture, limited liability company or other entity in which such Person and/or one or more Wholly Owned Subsidiaries of such Person has or have a 100% Equity Interest at such time. Unless otherwise set forth herein, reference in this Agreement to “Wholly Owned Subsidiary” shall mean Holding’s direct and indirect Wholly Owned Subsidiaries.

 

“ Withdrawal Liability ” shall mean 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.

 

“ YCI ” shall mean Yamanouchi Consumer, Inc., a Delaware corporation.

 

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SECTION 1.02   Classification of Loans and Borrowings .   For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g ., a “ Revolving Loan ”) or by Type ( e.g ., a “ Eurodollar Loan ”). Borrowings also may be classified and referred to by Class ( e.g ., a “ Revolving Borrowing ”) or by Type ( e.g ., a “ Eurodollar Borrowing ”).

 

SECTION 1.03   Terms Generally .   The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ”, “ includes ” and “ including ” shall be deemed to be followed by the phrase “ without limitation ”. The word “ will ” shall be construed to have the same meaning and effect as the word “ shall ”. Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument of other document herein 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), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “ herein ”, “ hereof ” and “ hereunder ”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (f) 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, (g) an Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.02 or is cured in a manner satisfactory to Administrative Agent, if such Event of Default is capable of being cured as determined by the Administrative Agent and (h) the word “ month, ” for the purposes of Sections 5.01(c) , 5.15 and 6.06(e) , shall be construed as referring to fiscal months and not calendar months.

 

SECTION 1.04   Accounting Terms; GAAP .   Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect on the date hereof unless agreed to by Borrower and the Required Lenders. In the event that any “Accounting Change” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement or if the Borrower shall change its fiscal year at any time (as may be permitted by this Agreement), then the Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange Commission (or successors thereto or agencies with similar functions).

 

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SECTION 1.05    Resolutions of Drafting Ambiguities .  Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof 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 hereof or thereof.

 

ARTICLE II.

 

THE CREDITS

 

SECTION 2.01   Commitments .   Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly to make Revolving Loans to Borrower, at any time and from time to time after the Closing Date until the earlier of one Business Day prior to the Final Maturity Date and the termination of the Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not (subject to the provisions of Sections 10.10 and 10.11 ) result in such Lender’s Revolving Exposure exceeding the lesser of (A) such Lender’s Revolving Commitment less such Lender’s Pro Rata Percentage of any Line Reserve and (B) such Lender’s Pro Rata Percentage multiplied by the Borrowing Base then in effect.

 

Within the limits set forth above and subject to the terms, conditions and limitations set forth herein, Borrower may borrow, pay or prepay and reborrow Revolving Loans. On the Closing Date and prior to any Borrowing hereunder, each Lender that was not a Lender under the Original Credit Agreement or whose Pro Rata Percentage is increasing from that in effect under the Original Credit Agreement as of the Closing Date (the “Increasing Commitment Lenders”) shall purchase Revolving Loans from each other Lender on the Closing Date such that after giving effect to such purchase its outstanding Revolving Loans shall equal its Pro Rata Percentage of the Revolving Loans of all Lenders outstanding as of the Closing Date. Upon the Closing Date any lender under the Original Credit Agreement that is not a party to this Agreement shall be deemed to have its Commitment thereunder and hereunder reduced to zero and shall be promptly paid all amounts owing to such lender under the Original Credit Agreement.

 

SECTION 2.02   Loans .   (a)  Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided , that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f) , Loans (other than Swingline Loans) comprising any Borrowing shall be in an aggregate principal amount that is (i) (A) in the case of ABR Loans, integral multiples of $1.0 million and not less than $5.0 million, or (B) in the case of Eurodollar Loans, integral multiples of $1.0 million and not less than $5.0 million or (ii) equal to the remaining available balance of the applicable Revolving Commitments.

 

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(b)        Subject to Sections 2.11 and 2.12 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower may request pursuant to Section 2.03 . Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided , that any exercise of such option shall not affect the obligation of Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided further that Borrower shall not be entitled to request any Borrowing that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

 

(c)        Except with respect to Loans made pursuant to Section 2.02(f) , each Lender shall make each Loan (other than Swingline Loans) to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 11:00 a.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account maintained with the Administrative Agent as directed by Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

 

(d)        Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above, and the Administrative Agent may, in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.

 

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

 

(f)        If the Issuing Bank shall not have received from Borrower the payment required to be made by Section 2.18(e) within the time specified in such Section, the Issuing Bank will promptly notify the Administrative Agent of the LC Disbursement and the Administrative Agent will promptly notify each Revolving Lender of such LC Disbursement and its Pro Rata Percentage thereof. Each Revolving Lender shall pay by wire transfer of immediately available

 

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funds to the Administrative Agent on such date (or, if such Revolving Lender shall have received such notice later than 12:00 (noon), New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Lender’s Pro Rata Percentage of such LC Disbursement (it being understood that such amount shall be deemed to constitute an ABR Loan of such Lender, and such payment shall be deemed to have reduced the LC Exposure), and the Administrative Agent will promptly pay to the Issuing Bank amounts so received by it from the Revolving Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from Borrower pursuant to Section 2.18(e) prior to the time that any Revolving Lender makes any payment pursuant to this paragraph (f); any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as their interests may appear. If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, such Lender and Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this paragraph (f) to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of Borrower, a rate per annum equal to the interest rate applicable to Revolving Loans pursuant to Section 2.06(a) , and (ii) in the case of such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base Rate.

 

SECTION 2.03   Borrowing Procedure .   To request a Revolving Borrowing, Borrower shall notify the Administrative Agent of such request by telephone (promptly confirmed by telecopy) (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing (other than Swingline Loans), not later than 10:00 a.m., New York City time, on the Business Day of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02 :

 

(a)        whether the requested Borrowing is to be a Revolving Borrowing;

 

(b)        the aggregate amount of such Borrowing;

 

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

 

(d)        whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

 

(e)        in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; provided , that until the earlier of (i) the date on which the Administrative Agent shall have notified Borrower that the primary syndication of the Commitments has been completed and (ii) the date which is 60 days after the Closing Date, the Interest Period shall be two weeks;

 

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(f)        the location and number of Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.02 ; and

 

(g)        that the conditions set forth in Section 4.02 (b) and (c) are satisfied as of the date of the notice.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then Borrower shall be deemed to have selected an Interest Period of one month’s duration (subject to the proviso in clause (e) above). Promptly following receipt of a Borrowing Request in accordance with this Section 2.03 , the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04   Evidence of Debt; Repayment of Loans .  (a)  Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Lender on the Final Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Final Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least three Business Days after such Swingline Loan is made; provided , that on each date that a Revolving Borrowing is made, Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested.

 

(b)        Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

(c)        The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

(d)        The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided , that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of Borrower to repay the Loans in accordance with their terms.

 

(e)        Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibit H-1 , or H-2 , as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times

 

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(including after assignment pursuant to Section 11.04 ) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

(f)        All funds held by Borrower or any other Loan Party shall be deposited in one or more dominion and control bank or investment accounts, in form and substance reasonably satisfactory to Collateral Agent or in other accounts permitted under Section 9.01(e)(iii) , in each case, to be used by the Borrower and the other Loan Parties for purposes permitted or required hereby, and, following the occurrence and during the continuance of a Cash Dominion Trigger Event, shall be forwarded daily to the Concentration Account and applied in accordance with Section 9.01(f) .

 

SECTION 2.05   Fees .  (a)   Commitment Fee .  Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (a “ Commitment Fee ”), equal to 0.75% per annum on the average daily unused amount of each Commitment of such Lender during the period from and including the Closing Date to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears on the last day of March, June, September and December of each calendar year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof. All Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

 

(b)         Administrative Agent Fees; Collateral Agent Fees .  Borrower agrees to pay to the (i) the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter or such other fees payable in the amounts and at the times separately agreed upon between Borrower and the Administrative Agent (the “ Administrative Agent Fees ”) and (ii) Collateral Agent, for its own account, a collateral monitoring fee payable in the amounts and at the times mutually agreed upon in writing between Borrower and the Collateral Agent (the “ Collateral Agent Fees ”).

 

(c)         LC and Fronting Fees .  Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee (“ LC Participation Fee ”) with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Loans pursuant to Section 2.06 on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee (“ Fronting Fee ”), which shall accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s

 

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standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. LC Participation Fees and Fronting Fees accrued through and including the last day of March, June, September and December of each calendar year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Closing Date; provided , that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). During the continuance of an Event of Default, the LC Participation Fee shall be increased to a per annum rate equal to 2% plus the otherwise applicable rate with respect thereto.

 

(d)        All Fees shall be paid on the dates due, in immediately available funds in Dollars, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the Fronting Fees shall be paid directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

 

SECTION 2.06   Interest on Loans and Default Compensation .  (a)  Subject to the provisions of Section 2.06(c) , the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

 

(b)        Subject to the provisions of Section 2.06(c) , the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

 

(c)        Notwithstanding the foregoing, during the continuance of an Event of Default, all Obligations shall bear interest, after as well as before judgment, at a per annum rate equal to (i) in the case of principal of or interest on any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.06 , (ii) in the case of the LC Participation Fee, such increase as provided in Section 2.05(c) , and (iii) in the case of any other amount then due and payable, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section 2.06 .

 

(d)        Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided , that (i) interest accrued pursuant to paragraph (c) of this Section 2.06 shall be payable on demand ( provided , that, absent demand, such interest shall be payable on each Interest Payment Date and upon termination of the Revolving Commitments), (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the Revolving Availability Period), 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

 

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Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

 

(e)        All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error.

 

SECTION 2.07   Termination and Reduction of Commitments .  (a)  The Revolving Commitments, the Swingline Commitment, and the LC Commitment shall automatically terminate on the Final Maturity Date.

 

(b)        Borrower may at any time terminate, or from time to time reduce, the Commitments of any Class; provided , that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1.0 million and not less than $3.0 million and (ii) the Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment, the Swingline Exposures would exceed the Swingline Commitment Loans in accordance with Section 2.10 , the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments or the LC Exposures would exceed the LC Commitment.

 

(c)        Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 2.07 at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower pursuant to this Section 2.07 shall be irrevocable. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

 

SECTION 2.08   Interest Elections .  (a)  Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.08 . Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. This Section 2.08 shall not apply to Swingline Borrowings, which may not be converted or continued.

 

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(b)        To make an election pursuant to this Section 2.08 , Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if Borrower was requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request substantially in the form of Exhibit D .

 

(c)        Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 :

 

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

 

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

 

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

 

(iv)        if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”; provided , that until the earlier of (i) the date on which the Administrative Agent shall have notified Borrower that the primary syndication of the Commitments has been completed and (ii) the date which is 60 days after the Closing Date, the Interest Period shall be two weeks.

 

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then Borrower shall be deemed to have selected an Interest Period of one month’s duration (subject to the proviso in clause (iv) above).

 

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

 

(e)        If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Eurodollar Borrowing with a one month Interest Period. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies Borrower, then, after the occurrence and during the continuance of such Event of Default (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

 

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SECTION 2.09   [Intentionally Omitted]

 

SECTION 2.10   Optional and Mandatory Prepayments of Loans .

 

(a)         Optional Prepayments .  Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, subject to the requirements of this Section 2.10 ; provided , that each partial prepayment shall be in an amount that is an integral multiple of $1.0 million and not less than $3.0 million.

 

(b)         Revolving Loan Prepayments .

 

(i)        In the event of the termination of all the Revolving Commitments, Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(j) .

 

(ii)        In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect to such reduction and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then Borrower shall, on the date of such reduction, first , repay or prepay all Swingline Loans, second , repay or prepay Revolving Borrowings and third , replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(j) , in an amount sufficient to eliminate such excess.

 

(iii)        In the event that the sum of all Lenders’ Revolving Exposures exceeds the Borrowing Base then in effect, the Borrower shall, without notice or demand, immediately apply an amount equal to such excess to prepay the Loans and any interest accrued thereon, in accordance with this Section 2.10(b)(iii) . The Borrower shall, first , repay or prepay all Swingline Loans, second , repay or prepay Revolving Borrowings, and third , replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(j) , in an amount sufficient to eliminate such excess.

 

(iv)        In the event that the sum of all Lenders’ Revolving Exposures exceeds the Revolving Commitments then in effect, the Borrower shall, without notice or demand, immediately first , repay or prepay all Swingline Loans, second , repay or prepay Revolving Borrowings, and third , replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(j) , in an amount sufficient to eliminate such excess.

 

(v)        In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, the Borrower shall, without notice or demand, immediately replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(j) , in an amount sufficient to eliminate such excess.

 

(c)         Asset Sales . Not later than one Business Day following the receipt of any Net Cash Proceeds of any Asset Sale by a Loan Party, Borrower shall, and shall cause the applicable

 

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Loan Party (with appropriate adjustments to any intercompany loan account balances), to, apply 100% of the Net Cash Proceeds received with respect thereto to make prepayments in accordance with Sections 2.10(j) ; provided , that:

 

(i)        no such prepayment shall be required with respect to (A) any Asset Sale permitted by Section 6.05(b)(ii) , (d) , (e) , (i) or (m) , (B) the disposition of assets subject to a condemnation or eminent domain proceeding or insurance settlement to the extent such proceeding or settlement does not constitute a Casualty Event, or (C) Asset Sales for fair market value resulting in no more than $250,000 in Net Cash Proceeds per Asset Sale (or series of related Asset Sales) and less than $1.0 million in Net Cash Proceeds in any four consecutive fiscal quarters of the Borrower; and

 

(ii)        subject to Section 2.10(g) and so long as no Event of Default shall then exist or would arise therefrom and the aggregate of such Net Cash Proceeds of Asset Sales shall not exceed $5.0 million in any four consecutive fiscal quarters of Borrower, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an Officer’s Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds shall be used to purchase replacement assets or other assets useful in the business of the Companies or acquire 100% of the Equity Interests of any Person that owns such assets no later than one year following the date of such Asset Sale (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended); provided , that if the Property subject to such Asset Sale constituted Collateral, then all Property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12 ; provided , further , that if the Property subject to such Asset Sale did not constitute Collateral but the Property purchased with the net cash proceeds thereof is intended to be subject to the Lien created by any of the Security Documents, then all such Property purchased with the net cash proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12 .

 

(d)         Debt Issuance . Upon any Debt Issuance, Borrower shall, and shall cause the other Loan Parties to, make prepayments in accordance with Sections 2.10(j) in an aggregate principal amount equal to 100% of the Net Cash Proceeds of such Debt Issuance.

 

(e)        [Intentionally Omitted.]

 

(f)         Casualty Events . Not later than one Business Day following the receipt of any net cash proceeds (whether or not otherwise constituting Net Cash Proceeds) in excess of $250,000 from a Casualty Event, Borrower shall, and shall cause the other Loan Parties, to apply an amount equal to 100% of the Net Cash Proceeds to make prepayments required pursuant to Section 2.10(b)(iii), or to the extent that a Cash Dominion Trigger Event has occurred and is continuing, in accordance with Section 2.10(j) ; provided , that subject to Section 2.10(g) and so long as no Event of Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that (A) Borrower shall have delivered an Officer’s Certificate to the Administrative Agent on or prior to such date stating that such

 

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proceeds shall be used to repair, replace or restore any Property the subject of a Casualty Event (which Officer’s Certificate shall set forth the estimates of the proceeds to be so expended) and (B) the Administrative Agent shall have determined that (i) such proceeds, together with Borrower’s cash on hand (or reasonably projected to be on hand) and Excess Availability shall be adequate to enable Borrower to complete any such repairs, replacements, or restorations to any such Property and that such repairs, replacements and restorations shall be completed within 360 days after the receipt of such proceeds and (ii) such Property, after the completion of such repairs, replacements or restorations, shall provide the Companies with substantially similar or greater benefits as were provided by the Property subject to such Casualty Event; provided , that if the Property subject to such Casualty Event constituted Collateral under the Security Documents, then all Property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12 ;

 

(g)        In the event that Borrower has delivered an Officer’s Certificate in accordance with Section 2.10(c)(ii) or in accordance with Section 2.10(f) , (i) the applicable Net Cash Proceeds shall be applied in accordance with Section 2.10(j), without a permanent reduction in the Commitments, (ii) both a Reserve and a reserve against the Commitments (“ Line Reserve ”; and together with the other Reserve established pursuant to this clause (ii), the “ Reinvestment Reserves ”) shall be established (in the amount of the Net Cash Proceeds less, in the case of a Casualty Event, the Net Cash Proceeds attributable to lost or destroyed Inventory) to the extent of the prepayment required under clause (g)(i) above, which shall each be released simultaneously with and to the extent of any Loans advanced to the Borrower for the purpose of purchasing or replacing or repairing or restoring assets in accordance with Section 2.10(c)(ii) or 2.10(f) , as applicable (including the making of progress payments therefor); provided , that, Borrower submits (with the applicable Borrowing Request) an Officer’s Certificate setting forth the use of proceeds of the requested Loan and confirming that such use is in compliance with Section 2.10(c)(ii) or 2.10(f) , as applicable, and (iii) in the event that any part or all of the Reinvestment Reserves remain in place at the end of the time period set forth in Section 2.10(c)(ii) or 2.10(f) , as applicable, such remaining Reinvestment Reserves shall be released; provided , that, if such Reinvestment Reserves relate to Eligible Equipment or Eligible Real Property, (x) such Eligible Equipment or Eligible Real Property shall be deleted from Schedule 1.01(c) and Schedule 1.01(c) shall be amended in accordance with the definition of the term “Fixed Asset Loan Value”, and (y) the Fixed Asset Loan Value of the Person owning such Eligible Equipment or such Eligible Real Property shall be calculated without giving effect to an amount equal to the appraised net orderly liquidation value of such Eligible Equipment or the appraised fair market value of such Eligible Real Property, as applicable.

 

(h)        [ Intentionally Omitted ].

 

(i)         Pay-Downs . The Borrower shall make a mandatory payment during the month of December in each year (which payment shall be made on or prior to the first Business Day after December 25th of each year) of all outstanding Revolving Loans and Swingline Loans. In addition, for 30 consecutive days during each period commencing on the Business Day after December 25th of each year through but excluding February 1 of the immediately succeeding year, the Borrower shall not have outstanding any Revolving Loans or Swingline Loans.

 

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(j)         Application of Prepayments .

 

(i)        Prior to any optional or mandatory prepayment of Borrowings hereunder, Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (i) of this Section 2.10(j) . Subject to Section 9.05 and so long as no Event of Default shall then exist and be continuing, all mandatory prepayments shall be applied as follows: first , to reimbursable expenses of Agents then due and payable pursuant to the Loan Documents and Fees due and payable to the Agents and Lenders pursuant to the Loan Documents; second , to interest then due and payable on all Loans; third , to Overadvances; fourth , to the principal balance of the Swingline Loans until the same have been repaid in full; fifth , to the outstanding principal balance of Revolving Loans until the same have been paid in full, including accompanying accrued interest and charges under Sections 2.12 , 2.13 and 2.15 (Borrower may elect which of any Eurodollar Borrowings is to be prepaid); sixth , to cash collateralize all LC Exposures plus any accrued and unpaid Fees with respect thereto (to be held and applied in accordance with Section 2.18(j) hereof); seventh , to all other Obligations pro rata in accordance with the amounts that such Lender certifies are outstanding and due and payable; and, eighth , returned to Borrower or to such party as otherwise required by law.

 

(ii)        Amounts to be applied pursuant to this Section 2.10 to the prepayment of Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Loans. Any amounts remaining after each such application shall be applied to prepay Eurodollar Loans. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding, only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of Borrower:

 

(A)        the balance of such required prepayment shall be prepaid immediately, together with any amounts owing to the Lenders under Section 2.13 or

 

(B)        amounts to be applied pursuant to this Section 2.10(j) to prepay any Eurodollar Borrowing shall be deposited in a Breakage Prepayment Account (as defined below) if the Borrower so requests to avoid the incurrence of costs under Section 2.13 . On the last day of the Interest Period of each Eurodollar Borrowing, the Administrative Agent shall apply any cash on deposit in such Breakage Prepayment Account to amounts due in respect of such Eurodollar Borrowing in the order that Borrower shall specify until all amounts required to be prepaid have been repaid (with any remaining funds being returned to Borrower) or until all the allocable cash on deposit has been exhausted. For purposes of this Section 2.10(j) , the term “ Breakage Prepayment Account ” shall mean an account established by the Borrower with the Administrative Agent and over which the Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal for application in accordance with this Section 2.10(j) . The Administrative Agent will, at the request of Borrower, invest amounts on deposit in a Breakage Prepayment Account in short-term, cash equivalent investments selected by the Administrative Agent in consultation with Borrower that mature prior to the last day of the Interest period of the applicable Eurodollar Borrowing; provided , however , that the Administrative Agent shall have no obligation to invest amounts on deposit in a Breakage Prepayment Account if an Event of

 

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Default shall have occurred and be continuing. The Borrower shall indemnify the Administrative Agent for any losses relating to the investments made at the request or direction of Borrower so that the amount available to prepay amounts due in respect of the applicable Eurodollar Borrowing on the last day of the applicable Interest Period is not less than the amount that would have been available had no investments been made pursuant thereto. Other than any interest earned on such investments (which shall be for the account of the Borrower, to the extent not necessary for the prepayment of Eurodollar Borrowings in accordance with this Section 2.10(j) ), the Breakage Prepayment Account shall not bear interest. Interest or profits, if any, on such investments in any Breakage Prepayment Account shall be deposited in such Breakage Prepayment Account and reinvested and disbursed as specified above. If the maturity of the Loans and all amounts due hereunder has been accelerated pursuant to Article VIII , the Administrative Agent may, in its sole discretion, apply all amounts on deposit in the Breakage Prepayment Accounts to satisfy any of the Obligations (and Borrower has pursuant to the Security Agreement or another Security Document granted to the Administrative Agent a security interest in each of its Breakage Prepayment Accounts to secure such Obligations).

 

(k)         Notice of Prepayment . Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable 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 (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount as provided in Section 2.10(a) , except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06 .

 

SECTION 2.11   Alternate Rate of Interest .  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)        the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

 

(b)        the Administrative Agent is advised by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

 

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then the Administrative Agent shall give notice thereof to Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

SECTION 2.12   Increased Costs .  (a)  If any Change in Law shall:

 

(i)        impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or

 

(ii)        impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

 

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

 

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

 

(c)        A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.12 shall be delivered to Borrower and shall be conclusive absent manifest error. Borrower shall pay Administrative Agent for the account of such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

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(d)        Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided , that Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 2.12 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided , further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall not begin earlier than the date of effectiveness of the Change in Law.

 

SECTION 2.13   Breakage Payments .  In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, (d) any automatic rollover of any Revolving Loan to a Eurodollar Loan pursuant to Section 2.08(e) , or (e) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.16 , then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to Borrower and Administrative Agent and shall be conclusive absent manifest error. Borrower shall pay Administrative Agent for the account of such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

 

SECTION 2.14   Payments Generally; Pro Rata Treatment; Sharing of Set-offs .  (a)  Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.12 , 2.13 or 2.15 , or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 677 Washington Boulevard, Stamford, Connecticut, except payments to be made

 

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directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.12 , 2.13 , 2.15 and 11.03 shall be made to the Administrative Agent for the benefit of the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Administrative Agent for the benefit of the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in Dollars.

 

(b)        Subject to Section 9.05 hereof, if at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c)        If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, and participations in LC Disbursements and Swingline Loans; provided , that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of Borrower in the amount of such participation.

 

(d)        Unless the Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that Borrower will not make such payment, the

 

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Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

(e)        If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c) , 2.02(f) , 2.14(d) , 2.17(d) , 2.18(d) or 11.03(d) , then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

SECTION 2.15   Taxes .  (a)  Any and all payments by or on account of any obligation of Borrower to the Administrative Agent, any Lender or any Issuing Bank hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any and all Indemnified Taxes; provided , that if Borrower shall be required by law to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions or withholdings applicable to additional sums payable under this Section 2.15(a) ) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) Borrower shall make such deductions or withholdings and (iii) Borrower shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.

 

(b)        In addition, Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

(c)        Borrower shall indemnify and pay the Administrative Agent, each Lender and the Issuing Bank, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15 ) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. Notwithstanding anything in this Section 2.15 to the contrary, Borrower shall not have any obligation to a Lender, an Issuing Bank or the Administrative Agent with respect to an Indemnified Tax, Other Tax or other indemnity payment to the extent arising from the willful misconduct of such Lender, Issuing Bank or the Administrative Agent, as applicable.

 

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(d)        Within 30 days after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)        Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or under any other Loan Document shall deliver to Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by Borrower as will permit such payments to be made without withholding or at a reduced rate. Each Foreign Lender either (1) (i) agrees, to the extent it may lawfully do so, to furnish either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (or successor form) and (ii) agrees (for the benefit of Borrower and the Administrative Agent), to the extent it may lawfully do so at such times, upon reasonable request by Borrower or the Administrative Agent, to provide a new Form W-8ECI or Form W-8BEN (or successor form) upon the expiration or obsolescence of any previously delivered form to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. federal withholding tax with respect to any interest payment hereunder; (2) in the case of any such Foreign Lender that is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (i) agrees, to the extent it may lawfully do so, to furnish either (a) a “Non-Bank Certificate” (certifying that such Foreign Lender is not (x) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (y) a “10-percent shareholder” of Borrower within the meaning of Section 871(h)(3)(B) of the Code or (z) a “controlled foreign corporation” related to Borrower within the meaning of Section 864(d)(4) of the Code) in a form acceptable to the Administrative Agent and the Borrower and two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (or successor form) or (b) an Internal Revenue Form W-8ECI (or successor form), certifying (in each case) to such Foreign Lender’s legal entitlement to an exemption or reduction from U.S. federal withholding tax with respect to all interest payments hereunder and (ii) agrees (for the benefit of Borrower and the Administrative Agent) to the extent it may lawfully do so at such times, upon reasonable request by Borrower or the Administrative Agent, to provide a new For