CREDIT AGREEMENT dated as of August 28, 2009, among

Exhibit 10.3

EXECUTION COPY

 

CREDIT AGREEMENT

dated as of August 28, 2009,

among

SPECTRUM BRANDS, INC.,

as the Borrower,

the Subsidiaries of the Borrower party hereto,

GENERAL ELECTRIC CAPITAL CORPORATION,

as Administrative Agent, Co-Collateral Agent,

Swingline Lender and Supplemental Loan Lender,

BANK OF AMERICA, N.A.,

as Co-Collateral Agent and L/C Issuer

RBS ASSET FINANCE, INC., THROUGH ITS DIVISION RBS BUSINESS CAPITAL,

as Syndication Agent

and

the LENDERS party hereto

 

GE CAPITAL MARKETS, INC.,

as Joint Lead Arranger and Joint Book Runner

and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arranger, Joint Book Runner and Documentation Agent

 

TABLE OF CONTENTS

 

 

i

TABLE OF CONTENTS

(continued)

 

 

ii

TABLE OF CONTENTS

(continued)

 

 

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SCHEDULES

 

EXHIBITS

 

 

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This CREDIT AGREEMENT (this “ Agreement ”) is entered into as of August 28, 2009 among Spectrum Brands, Inc., a Delaware corporation (the “ Borrower ”); the Subsidiaries of the Borrower party hereto; General Electric Capital Corporation (“ GE Capital ”), as the Administrative Agent, Co-Collateral Agent, Swingline Lender and Supplemental Loan Lender; Bank of America, N.A. (“ Bank of America ”), as Co-Collateral Agent and L/C Issuer; RBS Asset Finance, Inc., through its division RBS Business Capital (“ RBS ”), as Syndication Agent, and the Lenders (as defined below) from time to time party hereto.

W I T N E S S E T H

WHEREAS, on February 3, 2009 (“ Petition Date ”), the Borrower and the Subsidiary Loan Parties (as defined below), as debtors and debtors-in-possession, commenced voluntary cases under Chapter 11 of the Bankruptcy Code (as defined below) in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division (the “ Bankruptcy Court ”), which cases are being jointly administered (the “ Chapter 11 Case ”); and

WHEREAS, certain lenders have provided a secured revolving credit facility to the Loan Parties in the Chapter 11 Case pursuant to the Ratification Agreement (as defined below) to the Existing Credit Agreement (as defined below) and the Financing Order (as defined below); and

WHEREAS, the Plan of Reorganization of the Loan Parties (the “ Plan of Reorganization ”, as hereinafter further defined) has been confirmed pursuant to the Confirmation Order (as defined below), and concurrently with the making of the initial loans or issuance of letters of credit hereunder, the effective date with respect to such Plan of Reorganization has occurred; and

WHEREAS, Borrower and Subsidiary Loan Parties have requested that the Agents, the L/C Issuer and the Lenders enter into financing arrangements with the Borrower pursuant to which the Lenders may make loans and provide other financial accommodations to the Borrower on and after the effective date of the Plan of Reorganization; and

WHEREAS, each Lender and L/C Issuer is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

“ ABL Collateral ” has the meaning specified in the ABL Guarantee and Collateral Agreement.

“ ABL Guarantee and Collateral Agreement ” means the ABL Guarantee and Collateral Agreement dated as of the date hereof among the Borrower, the Subsidiary Loan Parties and the Collateral Agent, substantially in the form of Exhibit A hereto.

“ ABL Intercreditor Agreement ” means the Amended and Restated Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent, the administrative agent under the Term Credit Agreement and the Borrower, substantially in the form of Exhibit B hereto.

“ Acceptable Bank ” has the meaning specified in the definition of “OECD Cash Equivalents”.

“ Accession Agreement ” has the meaning specified in Section 2.07(d) .

“ account debtor ” means any Person obligated on an Account.

“ Accounts ” means, as to the Borrower or any Designated Subsidiary, all present and future rights of the Borrower or such Designated Subsidiary to payment of a monetary obligation, whether or not earned by performance, that is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.

“ Accounts Borrowing Base Availability ” means, at any time, the Borrowing Base at such time, minus any amount thereof attributable to Eligible Inventory.

“ Accrued Right to Offset Accounts ” means all accrued rebates, co-op allowances, slotting fees, trade allowances and other accrued allowances or rebates.

“ Acquisition ” means any transaction or series of related transactions by the Borrower or its Subsidiaries for the purpose of, or resulting directly or indirectly in, (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of more than 50% of the capital stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary).

“ Administrative Agent ” means GE Capital, in its capacity as the administrative agent under this Agreement, or any successor administrative agent.

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

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

“ Affiliate ” means, with respect to any 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.

“ Agency Fee Letter ” that certain agency fee letter, dated the date hereof, among GE Capital, Bank of America and the Borrower.

“ Agents ” means, collectively, the Administrative Agent, the Co-Collateral Agents and the Syndication Agent.

 

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“ Agreement ” means this Credit Agreement.

“ Applicable Percentage ” means, as to any Revolving Lender, the percentage (carried out to the ninth decimal place) of the aggregate Commitments represented by such Revolving Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentage shall be determined by dividing (a) the Revolving Exposure of such Revolving Lender by (b) the aggregate Revolving Exposures of all Revolving Lenders.

“ Applicable Premium ” means (a) on or prior to the first anniversary of the Closing Date, 2.00% of the total aggregate amount of the Commitments terminated or permanently reduced (or the total aggregate amount of the Revolving Exposure prepaid or reduced with the proceeds of a new credit facility) and (b) after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, an amount equal to 1.00% of the total aggregate amount of the Commitments terminated or permanently reduced (or the total aggregate amount of the Revolving Exposure prepaid or reduced with the proceeds of a new credit facility).

“ Applicable Rate ” means (a) in the case of Eurodollar Rate Loans, 4.00% per annum, (b) in the case of Base Rate Loans, 3.00% per annum, and (c) in the case of the Supplemental Loan, 14.50% per annum.

“ Applicable Unused Commitment Fee Rate ” means, for any day, a percentage per annum equal to the percentage set forth in the column opposite the percentage of the Unused Commitment on such day.

 

“ Approved Hedging L/C ” means, in respect of a Secured Hedging Agreement, a letter of credit issued by an Acceptable Bank to the Collateral Agent in an undrawn face amount equal to 105% of the Swap Termination Value of such Secured Hedging Agreement and which may be drawn (i) upon the occurrence of an event of default or termination event under such Secured Hedging Agreement or any other event pursuant to which such Secured Hedging Agreement may be terminated (including early termination), or (ii) in the event that the Approved Hedging L/C is not renewed or replaced within 30 days of its then-current expiration date and Excess Availability is, at that time, less than $5,000,000.

“ Arrangers ” means GE Capital Markets, Inc. and Banc of America Securities LLC in their respective capacities as joint lead arrangers for the Facilities.

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

“ Assignment Effective Date ” has the meaning specified in Section 10.06(c) .

“ Attributable Indebtedness ” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount of the remaining lease thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease

 

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Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person as of such date.

“ Availability Block ” means $15,000,000.

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

“ Bank of America ” has the meaning specified in the introductory paragraph hereto.

“ Bankruptcy Code ” means the United States Bankruptcy Code, being Title 11 of the United States Code (11 U.S.C. Section 101-1330), as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules and regulations thereunder.

“ Base Rate ” means, for any day, a floating rate of interest per annum equal to the highest of (a) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent), (b) the sum of 0.50% per annum and the Federal Funds Rate, (c) the sum of 1.00% and the Eurodollar Rate calculated for each such day based on an Interest Period of three months determined two (2) Business Days prior to such day, and (d) 3.50% per annum. Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change in the “bank prime loan” rate, the Federal Funds Rate, or the Eurodollar Rate for an Interest Period of three months.

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

“ Blocked Accounts ” has the meaning specified in Section 2.16(a) .

“ Borrower ” has the meaning specified in the introductory paragraph hereto.

“ Borrowing ” means (a) a Revolving Borrowing, (b) a Swingline Loan, (c) a Special Agent Loan, or (d) the Supplemental Loan.

“ Borrowing Base ” means, at any time, (a) the sum of (i) 85% of the Eligible Accounts of the Borrower and the Designated Subsidiaries, minus the Dilution Reserve, and (ii) the lesser of (A) 65% of the Value of the Eligible Inventory of the Borrower and the Designated Subsidiaries, and (B) 85% of the Net Recovery Percentage multiplied by the Value of such Eligible Inventory, minus , without duplication, (b) the Other Reserves (other than (except for purposes of Section 2.06(b)(i) ), the Specified Reserves) in effect at such time. The Borrowing Base in effect at any time shall be reasonably determined by the Collateral Agent, based on the Borrowing Base Certificate most recently delivered by the Borrower prior to such time pursuant to Section 2.15(a) , 4.01(a)(xi) or 6.17(a) , but subject to (x) any adjustments thereto as a result of any Designated Subsidiary ceasing to be such as provided in Section 2.15(b) or the consummation of any Disposition and (y) the Other Reserves established by the Co-Collateral Agents.

 

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“ Borrowing Base Certificate ” means a certificate of the Borrower substantially in the form of Exhibit D (with such changes thereto as may be reasonably requested by the Administrative Agent from time to time to reflect the components of and reserves against the Borrowing Base as provided for hereunder from time to time).

“ Budget ” has the meaning specified in Section 7.18 .

“ Business Day ” means any day other than (a) a Saturday, Sunday or other day on which commercial banks in New York are authorized to close under the Laws of the State of New York or are in fact closed in the State where the Administrative Agent’s Office is located and (b) if such day relates to a Eurodollar Rate Loan, a day on which banks are not open for general business in London.

“ Capital Expenditures ” means, with respect to any Person for any period, all expenditures that, in accordance with GAAP, would be required to be capitalized and shown on the Consolidated balance sheet of the Borrower, but excluding expenditures made with Net Cash Proceeds of Dispositions that are reinvested as provided in Section 2.06(b)(ii) or in connection with the replacement, substitution, restoration or trade-in of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored, (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced or (c) with a credit by the seller of such assets for assets being contemporaneously traded in.

“ Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“ Cash Collateral Account ” means a blocked deposit account of the Borrower at a commercial bank that is in the name of the Collateral Agent and under the sole dominion and control of the Collateral Agent and in which the Collateral Agent has a perfected security interest, all in a manner reasonably satisfactory to the Collateral Agent.

“ Cash Equivalents ” means (A) with respect to any Investment or Disposition of the assets of a Subsidiary operating outside of the United States or Canada, OECD Cash Equivalents and (B) otherwise, any of the following types of Investments (except as provided in Section 7.03(a) ):

(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States or Canada or any agency or instrumentality thereof having maturities of not more than 365 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America or Canada is pledged in support thereof;

(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States or Canada, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States or Canada, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $250,000,000 (or the equivalent in the applicable currency), in each case with maturities of not more than 365 days from the date of acquisition thereof;

(c) commercial paper issued by any Person organized under the laws of any state of the United States or Canada or the District of Columbia or any Acceptable Bank and rated at least “Prime-1”

 

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(or the then equivalent grade) by Moody’s or Fitch or at least “A-1” (or the then equivalent grade) by S&P, or guaranteed by any industrial company with long-term unsecured debt rating (at the time of investment) of at least Aa by Moody’s or Fitch or at least AA by S&P, in each case with maturities of not more than 365 days from the date of acquisition thereof;

(d) investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs that are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition;

(e) repurchase agreements with any Lender or any primary dealer maturing within 365 days from the date of investment that are fully collateralized by investment instruments that would otherwise be Cash Equivalents; provided that the terms of such repurchase agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy — Repurchase Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985;

(f) sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an Acceptable Bank (or their dematerialized equivalents);

(g) any other debt security approved by the Required Lenders; and

(h) any investment made by a Foreign Subsidiary in its jurisdiction of organization that is of character, credit quality and maturity similar to one of the investments described in clauses (a) through (f) above.

“ Cash Management Obligations ” means obligations set forth in subsection (d) of the definition of “Obligations”.

“ Cash Management Systems ” has the meaning specified in Section 2.16 .

“ Casualty Event ” means any casualty or other insured damage to, or any taking under any power of eminent domain or condemnation or similar proceeding of, any assets of the Borrower or any of its Subsidiaries.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

“ CERCLIS ” means the Comprehensive Environmental Response, Compensation, and Liability Information System maintained by the U.S. Environmental Protection Agency.

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

 

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“ Change of Control ” means, an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than, in the case of a “group”, a group consisting of Permitted Holders and no other persons, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “ option right ”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests of the Borrower (the “ Change of Control Threshold ”), it being understood and agreed that if any single Permitted Holder shall have such beneficial ownership of an amount of Equity Interests of the Borrower that is greater than or equal to the Change of Control Threshold, there shall be a Change of Control as a result thereof;

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower ceases to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of clauses (ii) and (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

(c) the occurrence of a “Change of Control” (or a similar event, however denominated) under, and as defined in, the New Indenture or any agreement, instrument or document governing or evidencing any Material Indebtedness of the Borrower that refinanced Indebtedness under the New Indenture (in each case, after giving effect to any applicable grace period).

“ Change of Control Threshold ” has the meaning specified in the definition of “Change of Control”.

“ Chapter 11 Case ” has the meaning specified in the recitals hereto.

“ Closing Date ” means the first date on which all of the conditions precedent set forth in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

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

“ Co-Collateral Agents ” means GE Capital and Bank of America, in their respective capacities as a collateral agent or a co-collateral agent under this Agreement, the ABL Guarantee and Collateral Agreement and the other Collateral Documents, or any of their respective successors in such capacities; provided , that in the event that Bank of America resigns as a Co-Collateral Agent, no successor Co-Collateral Agent shall be appointed.

 

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“ Collateral Access Agreement ” means an agreement, in form and substance reasonably satisfactory to the Collateral Agent, from any lessor of premises to any Loan Party, or any other Person to whom any ABL Collateral is consigned or who has custody, control or possession of any ABL Collateral or is otherwise the owner or operator of any premises on which any ABL Collateral is located, in favor of the Collateral Agent with respect to the ABL Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other Person.

“ Collateral Agent ” means GE Capital in its capacity as the Co-Collateral Agent or any successor to GE Capital in such capacity.

“ Collection Account ” means that certain account of Collateral Agent, account number 50285681 at Deutsche Bank Trust Company Americas, United States with ABA No. 021-001-033 and Treasury Code GB53, or such other account as may be specified in writing by Collateral Agent as the “Collection Account.”

“ Collateral Documents ” means, collectively, the ABL Guarantee and Collateral Agreement, each Deposit Account Control Agreement, each Collateral Access Agreement and each other document or agreement that creates or purports to create a Lien in favor of the Collateral Agent, for the benefit of the Secured Parties.

“ Commitment ” means, as to each Revolving Lender, its obligation to make Revolving Loans to the Borrower pursuant to Section 2.01 , to acquire participations in Letters of Credit pursuant to Section 2.03 , to acquire participations in Swingline Loans pursuant to Section 2.04 and to acquire participations in Special Agent Loans pursuant to Section 2.05 , expressed as an amount representing the maximum aggregate amount of such Revolving Lender’s Revolving Exposure hereunder, as such commitment may be (a) reduced or increased 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 Revolving Lender pursuant to Section 10.06 . The initial amount of each Revolving Lender’s Commitment is set forth on Schedule 2.01 , or in the Assignment and Assumption or the Accession Agreement pursuant to which such Revolving Lender becomes a party hereto, as applicable. The initial aggregate amount of the Revolving Lenders’ Commitments is $197,000,000. For the purposes of calculating the Unused Commitment Fee under Section 2.10(a) , the Commitments shall include the Initial Incremental Facility Commitment Amount.

“ Commitment Letter ” means the Commitment Letter, dated June 15, 2009, between the Borrower and GE Capital.

“ Committed Loan Notice ” means a notice of (a) a Borrowing of Revolving Loans, (b) a conversion of Revolving Loans from one Type to the other or (c) a continuation of Eurodollar Rate Loans, delivered by the Borrower pursuant to Section 2.02(a) , which shall be substantially in the form of Exhibit E-1 .

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit F .

“ Concentration Accoun t” has the meaning specified in Section 2.16(a) .

“ Concentration Account Bank ” has the meaning specified in Section 2.16(a) .

“ Confirmation Order ” means the Findings of Fact, Conclusions of Law, and Order Confirming the Loan Parties’ Plan of Reorganization issued by the Bankruptcy Court and entered on July 15, 2009 in the Chapter 11 Case.

 

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“ Consolidated ” means, with respect to any Person, the accounts of such Person and its Subsidiaries consolidated in accordance with GAAP.

“ Consolidated Cash Interest Expense ” means, with respect to any Person for any period, the Consolidated Interest Expense of such Person for such period less the sum of, in each case to the extent included in the definition of Consolidated Interest Expense, (a) the amortized amount of debt discount and debt issuance costs, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Consolidated Total Debt, (c) interest payable in evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest.

“ Consolidated EBITDA ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in calculating such Consolidated Net Income, the sum of: (i) Consolidated Interest Expense for such period, (ii) the provision for Taxes payable by the Borrower and its Subsidiaries for such period, (iii) depreciation and amortization expense for such period, (iv) severance costs for such period, (v) Restructuring Charges and cash extraordinary or cash non-recurring losses or charges incurred by the Borrower and the Subsidiaries for such period, provided that such Restructuring Charges and such cash extraordinary and cash non-recurring losses and charges shall not exceed, in the aggregate since the Closing Date, an amount (such amount being referred to as the “ Permitted Basket Amount ”) equal to (A) $14,000,000 minus (B) the aggregate amount of cash payments not deducted as set forth in clause (b)(ii) below in reliance on the proviso set forth at the end of such clause and (vi) non-cash extraordinary or non-cash non-recurring losses or charges for such period (and excluding any such non-cash losses and charges in respect of an item that was included in Consolidated Net Income in a prior period) and minus (b) the sum of (i) without duplication and to the extent included in calculating such Consolidated Net Income, extraordinary or non-recurring gains for such period and (ii) all cash payments made during such period on account of non-cash losses and charges (other than any Restructuring Charges) that were added to Consolidated EBITDA pursuant to clause (a)(vi) above in a prior period, provided that no cash payment shall be required to be deducted pursuant to this clause (b)(ii) to the extent such payment does not exceed the Permitted Basket Amount as in effect at the end of the period during which such payment was made (such Permitted Basket Amount to be determined, for purposes of this calculation, without giving effect to such payment); provided that (A) in the event the Borrower or its Subsidiaries shall have consummated an Acquisition, the Consolidated EBITDA for any period during which such Acquisition shall have been consummated shall be calculated on a pro forma basis (based on the historical financial statements of the Person acquired or the assets of which were acquired) to give effect to such Acquisition (including any resulting increase or reduction in Indebtedness) as if such Acquisition had occurred on the first day of such period and (B) in the event the Borrower or its Subsidiaries shall have consummated a Specified Disposition, the Consolidated EBITDA for any period during which such Specified Disposition shall have been consummated shall be calculated on a pro forma basis (based on the historical financial statements of the Borrower and its Subsidiaries) to give effect to such Specified Disposition (including any resulting increase or reduction in Indebtedness) as if such Specified Disposition had occurred on the first day of such period, in each case as reasonably determined by the Borrower. The Compliance Certificate delivered for any period for which any adjustments to the Consolidated EBITDA set forth in clause (A) or (B) above shall have been made shall include a computation of such adjustments in reasonable detail. Notwithstanding the foregoing, any Restructuring Charges or cash extraordinary or cash non-recurring charges incurred by or reimbursed by the Borrower or any of the Subsidiaries deducted in calculating Consolidated Net Income shall be added back to Consolidated EBITDA (without regard to or reducing the Permitted Basket Amount) to the extent such Restructuring Charges or cash extraordinary or cash non-recurring charges constitute costs incurred or reimbursed in connection with the Chapter 11 Cases (whether incurred before or after the Closing Date).

 

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“ Consolidated Fixed Charge Coverage Ratio ” means, with respect to any Person for any period, the ratio of (a) Consolidated EBITDA of such Person for such period minus Capital Expenditures of such Person for such period minus the total liability for United States federal income taxes and other taxes measured by net income actually payable by such Person in cash in respect of such period to (b) the Consolidated Fixed Charges of such Person for such period.

“ Consolidated Fixed Charges ” means, with respect to any Person for any period, the sum, determined on a Consolidated basis, of (a) the Consolidated Cash Interest Expense of such Person and its Subsidiaries for such period, (b) the principal amount of Consolidated Total Debt of such Person and its Subsidiaries having a scheduled due date during such period, (c) all cash dividends payable by such Person and its Subsidiaries on Stock in respect of such period to Persons other than such Person and its Subsidiaries and (d) all commitment fees and other costs, fees and expenses payable by such Person and its Subsidiaries during such period in order to effect, or because of, the incurrence of any Indebtedness.

“ Consolidated Interest Expense ” means, for any Person for any period, (a) Consolidated total interest expense of such Person and its Subsidiaries for such period and including, in any event, (i) interest capitalized during such period and net costs under Interest Rate Contracts for such period and (ii) all fees, charges, commissions, discounts and other similar obligations (other than reimbursement obligations) with respect to letters of credit, bank guarantees, banker’s acceptances, surety bonds and performance bonds (whether or not matured) payable by such Person and its Subsidiaries during such period minus (b) the sum of (i) Consolidated net gains of such Person and its Subsidiaries under Interest Rate Contracts for such period and (ii) Consolidated interest income of such Person and its Subsidiaries for such period.

“ Consolidated Net Income ” means, for any period, for the Borrower and its Subsidiaries on a Consolidated basis, the net income (or loss) of the Borrower and its Subsidiaries for such period, provided that there shall be excluded (a) the net income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary from such income is not at the time permitted by the terms of its charter or by-laws or any judgment, decree, order or other Law, or any agreement, indenture or other instrument that is binding on such Subsidiary (other than any agreement, indenture or other instrument the breach of which could not reasonably be expected to result in a Material Adverse Effect), (b) the net income of any Person (other than the Borrower) in which any other Person (other than the Borrower or a Wholly-Owned Subsidiary or any director holding qualifying shares, or any Person holding shares due to native ownership requirements, in accordance with applicable Law) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid by such Person to the Borrower or a Wholly-Owned Subsidiary during such period and (c) any after-tax gains or losses attributable to any Specified Disposition or returned surplus assets of any Pension Plan.

“ Consolidated Total Debt ” of any Person means all Indebtedness of a type described in clause (a), (b), (c) or (e) of the definition thereof and all Guarantees with respect to any such Indebtedness, in each case of such Person and its Subsidiaries on a Consolidated basis.

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound, other than the Loan Documents.

 

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“ Control ” means the possession, directly or indirectly, of the power (a) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, or (b) to vote 10% or more of the Equity Interests having ordinary voting power for the election of members of the board of directors or equivalent governing body of such Person. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

“ Credit Extension ” means the making of a Borrowing or the issuance, amendment, renewal or extension of a Letter of Credit.

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

“ Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time or both, would constitute an Event of Default.

“ Defaulting Lender ” shall mean any Lender, as reasonably determined by the Administrative Agent, that has (a) failed to comply with its obligation to fund any portion of its Loans within three Business Days of the date required to be funded by it hereunder, (b) notified the Borrower, the Administrative Agent or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or generally under other agreements in which it has committed to extend credit, (c) failed, within three Business Days after written request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans; provided that any such Lender shall cease to be a Defaulting Lender under this clause (c) upon receipt of such confirmation by the Administrative Agent, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e)(i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in such Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof.

“ Default Rate ” means (a) when used with respect to Obligations other than Eurodollar Rate Loans and Participation Fees, an interest rate per annum equal to (i) the Base Rate, plus (ii) the Applicable Rate applicable to Base Rate Loans, plus (iii) 2.00% per annum, (b) when used with respect to Eurodollar Rate Loans, an interest rate per annum equal to the interest rate (including the Applicable Rate) otherwise applicable to such Loan plus 2.00% per annum and (c) when used with respect to Participation Fees, the aggregate rate per annum at which Participation Fees shall otherwise accrue hereunder plus 2.00% per annum.

 

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“ Deposit Account Control Agreement ” means an agreement, in form and substance reasonably satisfactory to the Collateral Agent, among the Collateral Agent, the applicable Loan Party with a deposit account at any bank and the bank at which such deposit account is at any time maintained.

“ Designated Subsidiary ” means each Subsidiary set forth on Schedule 1.01(a) and each other Subsidiary that has become a Designated Subsidiary pursuant to Section 2.15(a) , other than any Subsidiary that shall have ceased to be a Designated Subsidiary as provided in Section 2.15(b) .

“ Dilution Reserve ” means, on any date, a reserve established by the Co-Collateral Agents to reflect dilution with respect to the Accounts, reasonably determined by the Administrative Agent at any time as the product of (a) the Eligible Accounts at such time and (b) the excess, if any, of (i) the percentage obtained by dividing (A) the aggregate amount of non-cash reductions in Accounts of the Borrower and the Designated Subsidiaries for a period, as reasonably determined by the Administrative Agent, preceding such time by (B) the total net sales of the Borrower and the Designated Subsidiaries for such period over (ii) 5.00%.

“ Disbursement Account ” has the meaning specified in Section 2.16(b) .

“ Disclosure Documents ” means, collectively, (a) all confidential information memoranda and related materials prepared in connection with the syndication of the Facilities and (b) all other documents filed by any Loan Party with the SEC.

“ Disposition ” or “ Dispose ” means, with respect to any Person, the sale, transfer, or other disposition of any assets by such Person, including any sale and leaseback transaction (but excluding other license or lease arrangements entered into in the ordinary course of business or that are customarily entered into by companies in the same or similar line of business).

“ Document ” has the meaning specified in Section 9-102 of the UCC.

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

“ Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

“ Dormant Subsidiaries ” means any Subsidiary so designated by the Borrower in a certificate to the Administrative Agent as to the matters below, so long as, in the case of each Subsidiary so designated, (a) such Subsidiary, taken together with all other Subsidiaries so designated, does not have Consolidated assets with a fair market value in the aggregate in excess of 2.50% of the Total Assets and (b) such Subsidiary transacts no business and has no operations other than activities required to maintain its existence; provided that no Subsidiary may be a Dormant Subsidiary if (i) such Subsidiary is a Designated Subsidiary or (ii) the Borrower or any of its other Subsidiaries provides any credit support to such Subsidiary or is liable in any respect for the liabilities of such Subsidiary greater in the aggregate than such Subsidiary’s fair market value.

“ Electronic Transmission ” means each document, instruction, authorization, file, information and any other communication transmitted, posted or otherwise made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

 

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“ Eligible Accounts ” shall mean Accounts of the Borrower and the Designated Subsidiaries that, in each case, satisfy the criteria set forth below, as reasonably determined by the Co-Collateral Agents:

(a) such Accounts arise from the actual and bona fide sale and delivery of goods or rendition of services by the Borrower or any Designated Subsidiary in the ordinary course of its business, which transactions are completed in accordance with the terms and provisions contained in any documents related thereto and for which an invoice has been rendered;

(b) such Accounts are neither (i) unpaid more than 60 days after the date due nor (ii) unpaid more than 90 days after the date of the original invoice therefor, except for certain Home and Garden Business, Tetra Pond and Jungle Pond Accounts, not to exceed in the aggregate $4,000,000 which are unpaid (i) more than 60 days after the date due or (ii) more than 120 days after the date of the original invoice therefor;

(c) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return (other than in the ordinary course of business consistent with past practices, as disclosed to the Collateral Agent prior to the date hereof), sale on approval or other terms under which payment by the account debtor may be conditional or contingent;

(d) the chief executive office of the account debtor with respect to such Accounts is located in the United States or Canada and such account debtor is formed or organized under the laws of a State of the United States or a Province of Canada (provided that, at any time promptly upon a Co-Collateral Agent’s reasonable request, the Borrower or the applicable Designated Subsidiary shall execute and deliver, or cause to be executed and delivered, such other agreements, documents and instruments as may reasonably be required by the Co-Collateral Agents to perfect the security interests of the Collateral Agent in the Accounts owed by any such account debtor the chief executive office of which is located in Canada, or which is formed or organized under the laws of a Province of Canada, in accordance with the applicable Federal or Provincial laws of Canada, and take or cause to be taken such other and further actions as the Co-Collateral Agents may reasonably request to enable the Collateral Agent as a secured party with respect thereto to collect such Accounts under the applicable Federal or Provincial laws of Canada);

(e) such Accounts have been invoiced and do not consist of progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon the Borrower’s or the applicable Designated Subsidiary’s satisfactory completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except, in the case of bill and hold invoices, if the Collateral Agent shall have received an agreement in writing from the account debtor, in form and substance reasonably satisfactory to the Co-Collateral Agents, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;

(f) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and is not owed or does not claim to be owed any amounts that may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by the Borrower or the applicable Designated Subsidiary to such account debtor or claimed owed by such account debtor may be deemed Eligible Accounts);

 

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(g) such Accounts are subject to a valid and perfected security interest of the Collateral Agent as provided in the Collateral Documents (which security interest is first in priority, except with respect to non-consensual Liens permitted under this Agreement that have a higher priority than such security interest as a matter of Law), and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any Liens except those permitted under this Agreement; provided , that if such Accounts are subject to any Liens described in Section 7.01(h) or 7.01(j) , an Other Reserve, to the extent required by the Co-Collateral Agents, has been established in respect thereof.

(h) the account debtor with respect to such Accounts is not an officer, director, employee, agent or other Affiliate of any Loan Party;

(i) the account debtor with respect to such Accounts is not a Governmental Authority;

(j) the account debtor with respect to such Accounts is not subject to any pending or, to the knowledge of the Borrower or any Designated Subsidiary, threatened bankruptcy, dissolution, liquidation, reorganization or similar proceeding;

(k) such Accounts are not owed by an account debtor any Accounts of which are unpaid (i) more than 60 days after the date due or (ii) more than 90 days after the date of the original invoice therefor, except for certain Home and Garden Business, Tetra Pond and Jungle Pond Accounts, which are unpaid (i) more than 60 days after the date due or (ii) more than 120 days after the date of the original invoice therefor, in each case where such unpaid Accounts constitute more than 50% of the total Accounts of such account debtor;

(l) such Accounts are not subject to a retailer mandated or other factoring program;

(m) the account debtor with respect to such Accounts is not located in a State requiring the filing of a “Notice of Business Activities Report” or a similar report in order to permit the Borrower or the applicable Designated Subsidiary to seek judicial enforcement in such State of payment of such Account, unless the Borrower or such Designated Subsidiary, as the case may be, is qualified to do business in such State or has filed a “Notice of Business Activities Report” or such similar report for the then current year or such failure to file and inability to seek judicial enforcement are capable of being remedied without any material delay or material cost.

Notwithstanding the foregoing, (i) all Accounts of any single account debtor and its Affiliates that, in the aggregate, exceed the Applicable Concentration Percentage of the total amount of all Eligible Accounts at any time of determination shall be deemed not to be Eligible Accounts to the extent of such excess (it being understood that the foregoing percentage limitation must be satisfied after excluding all Accounts required to be excluded by the preceding sentence) and (ii) without duplication of any ineligibility determinations made pursuant to clause (f) of this definition, Eligible Accounts shall be reduced by the aggregate amount of the Accrued Right to Offset Accounts. For purposes hereof, “ Applicable Concentration Percentage ” means (a) for the account debtors, and their Affiliates, set forth on Schedule 1.01(b) , the percentage specified on such Schedule and (b) for any other account debtor, 20%.

The criteria for Eligible Accounts set forth above may be changed and any new criteria for Eligible Accounts may be established by the Co-Collateral Agents in their reasonable discretion. Any Accounts that are not Eligible Accounts shall nevertheless be part of the ABL Collateral.

 

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“ Eligible Assignee ” means (a) any Lender, any Affiliate of any Lender and any Related Fund of any Lender (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) and (b) any commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933) and which extends credit or buys loans; provided that neither the Borrower nor any Affiliate of the Borrower shall be an Eligible Assignee.

“ Eligible In-Transit Inventory ” means any Inventory owned by the Borrower or any Designated Subsidiary expected to be received within 30 days of shipment that would be Eligible Inventory if it were not subject to a Document and in transit from a foreign location to a location of the Borrower or such Designated Subsidiary within the United States, and that Co-Collateral Agents, in their reasonable discretion deem to be Eligible In-Transit Inventory. Without limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory unless it (a) is subject to a negotiable Document showing Collateral Agent (or, with the consent of Co-Collateral Agents, the Borrower or applicable Designated Subsidiary) as consignee, which Document is in the possession of Collateral Agent or such other Person as Co-Collateral Agents shall approve; (b) is fully insured in a manner reasonably satisfactory to Co-Collateral Agents; (c) has been identified to the applicable sales contract and title has passed to the Borrower or such Designated Subsidiary; (d) is not Sold by a vendor that has a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights against the Inventory, or with respect to whom the Borrower or such Designated Subsidiary is in default of any obligations; (e) is subject to purchase orders and other sale documentation reasonably satisfactory to Co-Collateral Agents; (f) is shipped by a common carrier that is not affiliated with the vendor; and (g) from and after the 60th day after the Closing Date, is being handled by a customs broker, freight-forwarder or other handler that has delivered a lien waiver acceptable to Co-Collateral Agents.

“ Eligible Inventory ” means Inventory consisting of finished goods held for resale in the ordinary course of the business of the Borrower and the Designated Subsidiaries, raw materials for such finished goods and work-in-process consisting of unpackaged finished batteries that, in each case, satisfy the criteria set forth below, as reasonably determined by the Co-Collateral Agents. Eligible Inventory shall not include: (a) work-in-process (other than unpackaged finished batteries); (b) components that are not part of finished goods; (c) spare parts for equipment; (d) packaging, display and shipping materials; (e) supplies used or consumed in the business of the Borrower and its Subsidiaries; (f) Inventory located at premises other than those owned by, or leased and controlled by, the Borrower or any Designated Subsidiary, including Inventory in transit with common carriers, except (i) Inventory located at premises with respect to which (A) the Collateral Agent has received a Collateral Access Agreement or (B) an appropriate Landlord Reserve has been established and (ii) Eligible In-Transit Inventory; (g) Inventory subject to a Lien in favor of any Person other than the Collateral Agent, except Liens permitted under this Agreement ( provided , that if such Inventory is subject to any Liens described in Section 7.01(h) or 7.01(j) , an Other Reserve, to the extent required by the Co-Collateral Agents, has been established in respect thereof); (h) bill and hold goods; (i) unserviceable, obsolete or close-out Inventory; (j) Inventory that is not subject to a valid and perfected security interest of the Collateral Agent as provided in the Collateral Documents (which security interest is first in priority, except with respect to nonconsensual Liens permitted under this Agreement that have a higher priority than such security interest as a matter of Law); (k) returned, damaged, re-worked and/or defective Inventory; (l) Inventory that is the subject of consignment by the Borrower or any Designated Subsidiary as consignor or consignee; and (m) Inventory located outside the United States, including Inventory in transit with common carriers (other than Eligible In-Transit Inventory); provided , however , that the Value of Eligible In-Transit Inventory at any time treated as Eligible Inventory shall not exceed $10,000,000. The criteria for Eligible Inventory set forth above may be changed and any new criteria for Eligible Inventory may be established by the Co-Collateral Agents in their reasonable discretion. Any Inventory that is not Eligible Inventory shall nevertheless be part of the ABL Collateral.

 

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“ Environmental Laws ” means any and all Federal, state, local, and foreign statutes, laws, regulations, codes, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution, the protection of the environment or natural resources, or the presence, management or release into the environment of any pollutants, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems, or to health and safety matters.

“ Environmental Liabilities ” means all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, directives, fines, penalties, demands, investigations, notices, notices of violation, fees, expenses and costs (including administrative oversight costs, natural resource damages and the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, manufacture, possession, presence, processing, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials or (d) the Release or threatened Release of any Hazardous Materials into the environment.

“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

“ Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“ Equivalent ” in Dollars of any foreign currency on any date means the equivalent in Dollars of such foreign currency determined by using the prevailing foreign exchange spot rate of JPMorgan Chase Bank, N.A., or another commercial bank reasonably acceptable to the Administrative Agent, and the “Equivalent” in any foreign currency of Dollars on any date means the equivalent in such foreign currency of Dollars determined by using the prevailing foreign exchange spot rate of JPMorgan Chase Bank, N.A., or such other commercial bank, for such date.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the existence with respect to any Pension Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), and, 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 Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (c) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is

 

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treated as such a withdrawal under Section 4062(e) of ERISA; (d) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan, or notification that a Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA; (e) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (g) a determination that any Pension Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4)(A) of ERISA or Section 403(i)(4)(A) of the Code); (h) the application for a minimum funding waiver with respect to a Pension Plan; (i) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate; (j) 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 the Borrower or any of its Subsidiaries; or (k) any other event similar to those described under clauses (a) through (j) with respect to any Foreign Plan.

“ E-Signature ” means the process of attaching to or logically associating with an Electronic Transmission an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Electronic Transmission) with the intent to sign, authenticate or accept such Electronic Transmission.

“ E-System ” means any electronic system, including Intralinks ^® and ClearPar ^® and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent, any of its Related Persons or any other Person, providing for access to data protected by passcodes or other security systems.

“ Eurodollar Base Rate ” means, with respect to any Interest Period for any Eurodollar Rate Loan, the rate determined by the Administrative Agent to be the offered rate for deposits in Dollars for the applicable Interest Period appearing on the Reuters Screen LIBOR01 page as of 11:00 a.m. (London time) on the second full Business Day preceding the first day of each Interest Period; provided , however , that such rate with respect to any Interest Period of one or two months shall not be less than the rate with respect to an Interest Period of three months. In the event that such rate does not appear on the Reuters Screen LIBOR01 page at such time, the “Eurodollar Base Rate” shall be determined by reference to such other comparable publicly available service for displaying the offered rate for deposit in Dollars in the London interbank market as may be selected by the Administrative Agent and, in the absence of availability, such other method to determine such offered rate as may be selected by the Administrative Agent in its sole discretion.

“ Eurodollar Rate ” means, with respect to any Interest Period and for any Eurodollar Rate Loan, an interest rate per annum equal to the greater of (a) an interest rate per annum determined as the ratio of (x) the Eurodollar Base Rate with respect to such Interest Period for such Eurodollar Rate Loan to (y) the difference between the number one and the Eurodollar Reserve Requirements with respect to such Interest Period and for such Eurodollar Rate Loan, and (b) 2.50% (or, in the case of the Supplemental Loan, 3.00%) per annum.

“ Eurodollar Rate Loan ” means a Revolving Loan that bears interest at a rate based on the Eurodollar Rate or the Supplemental Loan (except for the purposes of Section 2.06 ).

 

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“ Eurodollar Reserve Requirements ” means, with respect to any Interest Period and for any Eurodollar Rate Loan, a rate per annum equal to the aggregate, without duplication, of the maximum rates (expressed as a decimal number) of reserve requirements in effect 2 Business Days prior to the first day of such Interest Period (including basic, supplemental, marginal and emergency reserves) under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “eurocurrency liabilities” in Regulation D of the Federal Reserve Board) maintained by a member bank of the United States Federal Reserve System.

“ Event of Default ” has the meaning specified in Section 8.01 .

“ Excess Availability ” means, at any time, an amount equal to (a) the lesser of (i) the aggregate Commitments at such time and (ii) the Borrowing Base at such time, minus (b) the aggregate amount of the Revolving Exposures at such time.

“ Excess Availability Threshold ” means (a) for the purposes of Section 4.01(a)(xi) , $25,000,000, (b) for the purposes of determining the existence of an Excess Availability Triggering Event for the purposes of Section 6.17(a)(ii)(B) , $20,000,000 and (c) otherwise, the greater of (i) 20% of the lesser of (A) the aggregate Commitments at such time and (B) the Borrowing Base at such time, and (ii) $50,000,000.

“ Excess Availability Trigger Deactivation Date ” has the meaning specified in the definition of “ Excess Availability Triggering Event .”

“ Excess Availability Triggering Event ” means that Excess Availability shall have been less than the Excess Availability Threshold for five (5) consecutive calendar days. An Excess Availability Triggering Event shall be deemed to be continuing unless and until such time as (i) the average Excess Availability calculated for the immediately preceding 60-day period (such period to begin after the Closing Date) is equal to or greater than the applicable Excess Availability Threshold and (ii) no Default or Event of Default exists and Excess Availability is equal to or greater than the applicable Excess Availability Threshold on the 60th day of such period (the “ Excess Availability Trigger Deactivation Date ”); provided , that the Excess Availability Trigger Deactivation Date may not occur more than three times per fiscal year. As of the Closing Date, an Excess Availability Triggering Event shall be deemed to have occurred and be continuing.

“ Excluded Taxes ” means, with respect to any Agent, any Lender, any L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or in which it otherwise does business or, in the case of any Lender, in which its applicable Lending Office is located or in which it otherwise does business, (b) any branch profits taxes imposed by the United States, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.12 ), any United States withholding tax that is imposed on amounts payable by the Borrower to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office or, with respect to the Supplemental Loan, at the time such Foreign Lender exercises its Purchase Option) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(f) , except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such Tax pursuant to Section 3.01(a) and (d) in the case of a Lender that is not a Foreign Lender, other than an assignee pursuant to a request by the Borrower under Section 10.12 , any Tax that is imposed on amounts payable to such Lender at the time

 

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such Lender becomes a party hereto (or designates a new Lending Office) or, with respect to the Supplemental Loan, at the time such Foreign Lender exercises its Purchase Option, or is attributable to such Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(f) , except to the extent that such Lender (or its assignor, if any) was entitled at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such Tax pursuant to Section 3.01(a) .

“ Existing Credit Agreement ” means the Credit Agreement, dated as of September 28, 2007, by and among Borrower, Subsidiary Loan Parties, Wachovia, as administrative agent and the lenders party thereto, as in effect immediately prior to the Petition Date.

“ Exit Financing Protection Order ” means the Order under 11 U.S.C. § 105(a) and 363(b) Authorizing, Approving, and Ratifying Certain Terms of Exit Financing Facility issued by the Bankruptcy Court and entered on August 25, 2009 in the Chapter 11 Case.

“ Facilities Reduction Amount ” has the meaning specified in the Term Credit Agreement as in effect on the date hereof.

“ Facilities ” means the Revolving Facility, the Supplemental Loan and any Incremental Facility.

“ Fall/Winter Selling Period ” means the period from July 1 to December 31 in any given year.

“ Federal Reserve Board ” means the Board of Governors of the United States Federal Reserve System and any successor thereto.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as determined by the Administrative Agent in its reasonable discretion.

“ Fee Letter ” means the Fee Letter, dated June 15, 2009, between the Borrower, and GE Capital and any supplement thereto.

“ Final Order ” means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court and has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a stay, new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a stay, new trial, reargument or rehearing shall then be pending or (b) if an appeal, writ of certiorari, stay, new trial, reargument or rehearing thereof has been sought, (i) such order or judgment shall have been affirmed by the highest court to which such order was appealed, certiorari shall have been denied or a stay, new trial, reargument or rehearing shall have been denied or resulted in no modification of such order and (ii) the time to take any further appeal, petition for certiorari, or move for a stay, new trial, reargument or rehearing shall have expired.

“ Financing Order ” means the final order of the Bankruptcy Court dated March 5, 2009 authorizing debtor-in-possession financing for the Loan Parties under the Existing Credit Agreement as ratified and amended by the Ratification Agreement.

 

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“ Fitch ” means Fitch Ratings and any successor thereto.

“ Foreign Government Scheme or Arrangement ” has the meaning specified in Section 5.12(c) .

“ Foreign Lender ” means any Lender that is organized under the laws of a jurisdiction other than the United States, each State thereof and the District of Columbia.

“ Foreign Plan ” has the meaning specified in Section 5.12(c) .

“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.

“ Fronting Fees ” has the meaning specified in Section 2.10(b) .

“ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, which are applicable to the circumstances as of the date of determination.

“ GE Capital ” has the meaning specified in the introductory paragraph hereto.

“ Governmental Authority ” means any nation, sovereign or government, any state or other political subdivision thereof, any agency, authority or instrumentality thereof and any entity or authority exercising executive, legislative, taxing, judicial, regulatory (including, without limitation, any self-regulatory organization (including the National Association of Insurance Commissioners)) or administrative functions of or pertaining to government (including, without limitation, any central bank, stock exchange, regulatory body, arbitrator, public sector entity, or supra-national entity (including the European Union and the European Central Bank)).

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

 

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“ Guarantee and Collateral Requirement ” means, at any time, the requirement that:

(a) the Collateral Agent shall have received from each Loan Party either (i) a counterpart of the ABL Guarantee and Collateral Agreement duly executed and delivered on behalf of such Loan Party or (ii) in the case of any Person that becomes a Loan Party after the Closing Date, a supplement to the ABL Guarantee and Collateral Agreement, in the form specified therein, duly executed and delivered on behalf of such Loan Party;

(b) all documents and instruments, including Uniform Commercial Code financing statements and documents required by Law or reasonably requested by the Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by the ABL Guarantee and Collateral Agreement and perfect such Liens to the extent required by, and with the priority required by, the ABL Guarantee and Collateral Agreement, shall have been filed, registered or recorded or delivered to the Collateral Agent for filing, registration or recording;

(c) with respect to each Loan Party, the requirements set forth in Section 2.16 shall have been satisfied;

(d) each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Collateral Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder, in each case, other than any such consents and approvals that could not reasonably be expected to be material to the interests of the Lenders under the Loan Documents or the Secured Hedging Counterparties under the Secured Hedging Agreements;

(e) the Collateral Agent shall have received, in form and substance reasonably satisfactory to the Collateral Agent, all waivers, acknowledgments and other agreements (including Collateral Access Agreements) from third parties that the Collateral Agent may deem necessary or desirable in order to permit and perfect its Liens on the ABL Collateral or to effectuate the provisions or purposes of this Agreement, the other Loan Documents and the Secured Hedging Agreements; and

(f) the Collateral Agent shall have received evidence, in form and substance reasonably satisfactory to the Co-Collateral Agents, that the Collateral Agent has a valid and perfected Lien on all of the ABL Collateral.

The foregoing definition shall not require the creation or perfection of security interests in, or the obtaining of Deposit Account Control Agreements with respect to, particular assets if and for so long as, in the judgment of the Co-Collateral Agents, the cost, difficulty or practicality of creating or perfecting such security interests in such assets or obtaining Deposit Account Control Agreements in respect of such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom or otherwise not material. The Co-Collateral Agents may grant extensions of time for the delivery of consents, approvals, waivers, acknowledgments and other agreements referred to in clause (c), (d) or (e) above (including extensions beyond the Closing Date), where they determine that such delivery cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the Collateral Documents. The requirements of clause (e) above shall be deemed to have been satisfied if the Loan Parties shall have used their reasonable best efforts to obtain the waivers, acknowledgments and agreements referred to herein (irrespective of whether such waivers, acknowledgements or agreements were in fact obtained) and a Landlord Reserve or Other Reserve, if required by the Co-Collateral Agents, is established by the Collateral Agent.

 

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“ Hazardous Materials ” means all radioactive substances, radioactive wastes, hazardous or toxic substances, hazardous or toxic wastes, or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, hazardous materials and all other substances or wastes of any nature prohibited, limited or regulated pursuant to any Environmental Law.

“ Hedging Agreement ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

“ Increase Effective Date ” has the meaning specified in Section 2.07(d) .

“ Increasing Lenders ” has the meaning specified in Section 2.07(d) .

“ Incremental Facility ” has the meaning specified in Section 2.07(d) .

“ Indebtedness ” means, as to any Person, without duplication, all of the following, each to the extent treated as indebtedness or liabilities in accordance with GAAP:

(a) all indebtedness of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (whether standby or commercial), bankers’ acceptances, bank guarantees, surety bonds and similar instruments;

(c) all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade accounts and accrued expenses payable in the ordinary course of business and (ii) any purchase price adjustment, earnout or deferred payment of a similar nature incurred in connection with a Permitted Acquisition or a Disposition, but only to the extent no payment is then owed pursuant to such purchase price adjustment, earnout or deferred payment obligation);

(d) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) in an amount up to the lesser of the amount of indebtedness so secured and the fair market value of the property securing such indebtedness, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(e) all Attributable Indebtedness;

 

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(f) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any cash payment (other than, in each case, at the sole option of such Person or pursuant to exercise by any holder of common stock of such Person, or of options with respect to such common stock, of a right under any equity incentive plan of such Person to require a repurchase thereof in connection with any Taxes payable by such holder as a result of vesting, or lapse of restrictions on transfer, of such common stock or options, to the extent the payment made in any such repurchase does not exceed the amount of Taxes so payable) in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends;

(g) all Guarantees of such Person in respect of any of the foregoing; and

(h) the aggregate Swap Termination Value of all terminated Hedging Agreements of such Person.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.

“ Indemnified Matters ” has the meaning specified in Section 10.04 .

“ Indemnified Taxes ” means Taxes arising from any payment hereunder or under any other Loan Document, other than Excluded Taxes.

“ Indemnitee ” has the meaning specified in Section 10.04 .

“ Information Memorandum ” means the Information Memorandum dated April 2009, used by the Arrangers in connection with the syndication of the Revolving Facility.

“ Initial Borrowings ” has the meaning specified in Section 2.07(d) .

“ Initial Incremental Facility Commitment Amount ” means $15,000,000 as set forth in the Commitment Letter.

“ Interest Payment Date ” means (a) as to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each April, July, October and January and the Maturity Date.

“ Interest Period ” means, with respect to any Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is made or converted to a Eurodollar Rate Loan or, if such loan is continued, on the last day of the immediately preceding Interest Period therefor and, in each case, ending 1, 2, 3 or 6 months thereafter, as selected by the Borrower pursuant hereto in its Committed Loan Notice or, to the extent agreed to by all Lenders, nine or twelve months thereafter; provided , however , that (a) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless the result of such extension would be to extend such Interest Period into another such Business Day in the next calendar month, in

 

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which case such Interest Period shall end on the immediately preceding Business Day, (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month, (c) the Borrower may not select any Interest Period ending after the Maturity Date, (d) the Borrower may not select any Interest Period in respect of Loans having an aggregate principal amount of less than $5,000,000 and (e) there shall be outstanding at any one time no more than 10 Interest Periods.

“ Interest Rate Contracts ” means all interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and interest rate insurance.

“ Internal Control Event ” means a material fraud that involves management employees who have a significant role in the internal controls over financial reporting of the Borrower, in each case as described in the Securities Laws.

“ Inventory ” means, as to the Borrower or any Designated Subsidiary, all of the Borrower’s or such Designated Subsidiary’s now owned and hereafter existing or acquired goods, wherever located, that (a) are leased by the Borrower or such Designated Subsidiary as lessor, (b) are held by the Borrower or such Designated Subsidiary for sale or lease or to be furnished under a contract of service, (c) are furnished by the Borrower or such Designated Subsidiary under a contract of service or (d) consist of raw materials, work in process, finished goods or materials used or consumed in the business of the Borrower or such Designated Subsidiary.

“ Inventory Borrowing Base Availability ” means, at any time, the Borrowing Base at such time, minus any amount thereof attributable to Eligible Accounts.

“ Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“ IP Rights ” has the meaning specified in Section 5.16 .

“ IRB Debt ” means Indebtedness of the Borrower arising as a result of the issuance of tax-exempt industrial revenue bonds or similar tax-exempt public financing.

“ IRS ” means the United States Internal Revenue Service.

“ Junior Participation Funds ” has the meaning specified in Section 4.01(o) .

“ Landlord Reserves ” means Other Reserves of the type referred to in clause (E) of the penultimate sentence of the definition of the term “Other Reserves”.

“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, regulations, ordinances and codes, and all applicable administrative orders and agreements with, any Governmental Authority, in each case having the force of law.

 

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“ L/C Disbursement ” means any payment made by an L/C Issuer pursuant to a Letter of Credit.

“ L/C Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The L/C Exposure of any Lender at any time shall be its Applicable Percentage of the total L/C Exposure at such time.

“ L/C Issuer ” means (a) Bank of America and (b) each Lender or other financial institution designated as an L/C Issuer pursuant to Section 2.03(j) , in each case in its capacity as an issuer of Letters of Credit hereunder. Each L/C Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such L/C Issuer, in which case the term “L/C Issuer” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“ L/C Reimbursement Agreement ” means a reimbursement agreement that L/C Issuer generally uses in the ordinary course of its business for the issuance of letters of credit of the type contemplated hereunder.

“ L/C Reimbursement Obligation ” means, for any Letter of Credit, the obligation of the Borrower to the L/C Issuer thereof, as and when matured, to pay all amounts drawn under such Letter of Credit.

“ Lenders ” means the Revolving Lenders, the Swingline Lender, the Supplemental Loan Lender and the Administrative Agent, in its capacity as the lender of the Special Agent Loans, unless the context requires otherwise.

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

“ Letter of Credit ” means any letter of credit issued and outstanding hereunder.

“ Letter of Credit Limit ” means $60,000,000.

“ Liabilities ” means all claims, actions, suits, judgments, damages, losses, liabilities, obligations, fines, penalties, sanctions, costs, reasonable out-of-pocket fees, commissions, charges and expenses, in each case of any kind or nature (including interest accrued thereon or as a result thereto and fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.

“ Lien ” means any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge, priority or other security interest or preferential arrangement in the nature of a security interest of any kind (including (a) any conditional sale or other title retention agreement, (b) any easement, right of way or other encumbrance on title to real property and (c) any financing lease having substantially the same economic effect as any of the foregoing, but not including the interest of a lessor under an operating lease).

“ Loan ” means a Revolving Loan, a Swingline Loan, a Special Agent Loan or the Supplemental Loan, or a combination thereof, as the context requires. For the purposes of Section 2.06 hereof, the Supplemental Loan shall not constitute a Loan.

 

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“ Loan Documents ” means, collectively, this Agreement, each Accession Agreement, the ABL Intercreditor Agreement, the ABL Guarantee and Collateral Agreement, the L/C Reimbursement Agreement and the other Collateral Documents.

“ Loan Parties ” means, collectively, the Borrower and the Subsidiary Loan Parties.

“ Loan Party Reporting Package ” means, for any period, (i) a Consolidated balance sheet of the Borrower and other Loan Parties as of the end of such period and (ii) a profit and loss statement of the Borrower and other Loan Parties for such period, in each case prepared on a basis consistent with the monthly financial statements (excluding Foreign Subsidiaries) prepared by the management of the Borrower and delivered to the Administrative Agent prior to the Closing Date.

“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets or financial condition of the Borrower and its Subsidiaries, taken as a whole; or (b) a material impairment of the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document or of the rights and remedies, taken as a whole, of the Administrative Agent, the Collateral Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; provided that neither the Chapter 11 cases nor the events leading thereto shall constitute a Material Adverse Effect.

“ Material Indebtedness ” means any Indebtedness of the Borrower or any of its Subsidiaries having an aggregate principal amount, including undrawn committed or available amounts, of at least the Threshold Amount.

“ Maturity Date ” means the earliest of (a) March 31, 2012 (or 90 days prior to the maturity date of any loan under the Term Credit Agreement, if sooner), (b) the date of termination of the Commitments pursuant to Section 2.07 or 8.02 and (c) the date on which the Obligations become due and payable pursuant to Section 8.02 .

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

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions.

“ Net Cash Proceeds ” means, with respect to any Disposition by the Borrower or any of its Subsidiaries, the excess, if any, of (a) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (b) the sum of (i) the principal amount of any Indebtedness (A) that is secured by the Disposed asset or (B) in the case of any Disposition by a Foreign Subsidiary, that is owed by such Foreign Subsidiary and, in each case under clause (A) or (B), that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), together with any interest, premium or penalties required to be paid in connection therewith, (ii) the direct costs and expenses (including sales commissions and legal, accounting and investment banking fees but excluding costs and expenses owed to any Affiliate of the Borrower (other than the Permitted Holders)), (iii) Taxes reasonably estimated to be actually payable within one year of the date of such transaction (or receipt of a deferred payment, as applicable) as a result of any gain recognized in connection therewith and (iv) any reserve for adjustment in respect of (x) sale price of the Disposed assets established in accordance with GAAP and (y) any liabilities associated with such asset and retained by the Borrower or any of its Subsidiaries after such Disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnifications obligations associated with such transaction.

 

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“ Net Recovery Percentage ” means a fraction, expressed as a percentage, (a) the numerator of which is the amount of the recovery in respect of the Inventory of the Borrower and the Designated Subsidiaries, stated in Dollars, determined on a “net orderly liquidation value” basis as set forth in the most recent appraisal of such Inventory received by the Administrative Agent in accordance with Section 6.18 , net of operating expenses, liquidation expenses and commissions reasonably estimated to be incurred in connection therewith, and (b) the denominator of which is the Value of such Inventory as of the date of such appraisal (or as of a recent date prior thereto); provided that (i) for purposes of the Borrowing Base Certificate covering the one-month period ending on June 30 of any given year (or, if applicable, the one-week period most recently ended prior to such date), the Net Recovery Percentage to be used in such Borrowing Base Certificate shall be calculated as if such date occurred in the Fall/Winter Selling Period and (ii) for purposes of the Borrowing Base Certificate covering the one-month period ending on December 31 of any given year (or, if applicable, the one-week period most recently ended prior to such date), the Net Recovery Percentage to be used in such Borrowing Base Certificate shall be calculated as if such date occurred in the Spring/Summer Selling Period.

“ New Indenture ” means that certain Indenture, dated as of August 28, 2009, among the Borrower, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, as amended, amended and restated, supplemented or otherwise modified from time to time.

“ New Subordinated Notes ” means the 12% Senior Subordinated Toggle Notes of the Borrower due 2019, issued pursuant to the New Indenture.

“ Non-ABL Collateral ” has the meaning specified in the ABL Intercreditor Agreement.

“ Non-Consenting Lender ” has the meaning specified in Section 10.01 .

“ NPL ” means the National Priorities List under CERCLA.

“ Obligations ” has the meaning specified in the ABL Guarantee and Collateral Agreement.

“ OECD ” means the Organization for Economic Cooperation and Development.

“ OECD Cash Equivalents ” means any of the following types of Investments:

(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States, an OECD Member, any member of the European Economic Union or any agency or instrumentality thereof having maturities of not more than 365 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America, such OECD Member or such member of the European Economic Union is pledged in support thereof;

(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (each such bank, an “ Acceptable Bank ”) (i) (A) is a Lender, (B) is organized under the laws of the United States, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia, and is a member of the Federal Reserve System or (C) is a member of the applicable central

 

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bank of any OECD Member or any member of the European Economic Union, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $250,000,000 (or the equivalent in the applicable currency), in each case with maturities of not more than 365 days from the date of acquisition thereof;

(c) commercial paper issued by any Person organized under the laws of any state of the United States or the District of Columbia, any member state of the European Economic Union or any OECD Member or any Acceptable Bank and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or Fitch or at least “A-1” (or the then equivalent grade) by S&P, or guaranteed by any industrial company with long-term unsecured debt rating (at the time of investment) of at least Aa by Moody’s or Fitch or at least AA by S&P, in each case with maturities of not more than 365 days from the date of acquisition thereof;

(d) investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs that are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition;

(e) repurchase agreements with any Lender or any primary dealer maturing within 365 days from the date of investment that are fully collateralized by investment instruments that would otherwise be OECD Cash Equivalents; provided that the terms of such repurchase agreements comply with the guidelines set forth in the Federal Financial Institutions Examination Council Supervisory Policy — Repurchase Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985;

(f) sterling bills of exchange eligible for rediscount at the Bank of England and accepted by an Acceptable Bank (or their dematerialized equivalents);

(g) any other debt security approved by the Required Lenders; and

(h) any investment made by a Foreign Subsidiary in its jurisdiction of organization that is of character, credit quality and maturity similar to one of the investments described in clauses (a) through (f) above.

“ OECD Member ” means a country that signed or ratified the Convention on the Organization for Economic Cooperation and Development and is thus a member of OECD.

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

 

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“ Other Reserves ” means, as of any date of determination, such amounts as the Co-Collateral Agents may from time to time establish and revise, in their reasonable credit judgment consistent with their other asset-based lending transactions of this type, as reserves reducing the amount of the Borrowing Base that would otherwise be in effect hereunder or, with respect to such reserves that would qualify as Specified Reserves, reducing the amount of credit available hereunder, in each case (a) to reflect events, conditions, contingencies or risks that, adversely affect, or could reasonably be expected to adversely affect, in any material respect (i) the ABL Collateral, its value or the amount that might be received by the Collateral Agent from the sale or other disposition or realization upon such ABL Collateral, (ii) the assets or business of the Borrower and the Designated Subsidiaries or (iii) the security interest of the Collateral Agent in the ABL Collateral (including the enforceability, perfection and priority thereof), all as reasonably determined by the Administrative Agent; (b) to reflect the Co-Collateral Agents’ reasonable belief that any Borrowing Base Certificate, collateral report or other financial information furnished by or on behalf of any Loan Party to the Administrative Agent or the Co-Collateral Agents is or may have been incomplete, inaccurate or misleading in any material respect; (c) in respect of any state of facts that the Co-Collateral Agents reasonably determine constitutes a Default or an Event of Default; or (d) to reflect events, conditions, contingencies or risks described in Sections 2.03(l) , 5.11 , 6.05 , 7.01(c) , 7.01(d) , 7.01(h) and 7.01(j) . Without limiting the generality of the foregoing, Other Reserves may, in the Co-Collateral Agents’ reasonable discretion, be established to reflect, without duplication, (A) cost variances, accrued royalties, returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts, (B) sales, excise or similar Taxes included in the amount of any Accounts reported to the Co-Collateral Agents, (C) a change in the turnover, age or mix of the categories of Inventory that adversely affects the aggregate value of all Inventory by an amount reasonably determined by the Co-Collateral Agents to be material, (D) purchase price variances with respect to Inventory, (E) amounts (including up to three-months rent) due or to become due to owners and lessors of premises where any ABL Collateral is located, other than for those locations where the Collateral Agent has received a Collateral Access Agreement, (F) the Swap Termination Value of any Secured Hedging Agreement, except to the extent such Swap Termination Value is covered by an Approved Hedging L/C or by any cash collateral deposited in a Cash Collateral Account pursuant to Section 2.17 as a result of a drawing upon such Approved Hedging L/C and (G) the Cash Management Obligations. The amount of any Other Reserve established by the Co-Collateral Agents shall have a reasonable relationship to the event, condition or other matter that is the basis for such reserve, as reasonably determined by the Co-Collateral Agents. If the Borrower or its Domestic Subsidiaries enter into arrangements with RBS or its affiliates that give rise to Cash Management Obligations or any exposure under Secured Hedging Agreements, an Other Reserve will be established and maintained to reflect such Cash Management Obligations or such exposure under Secured Hedging Agreements if requested by RBS. Notwithstanding anything herein to the contrary, Other Reserves in effect at any time shall not be duplicative of any ineligibility determinations made pursuant to the criteria set forth in the definitions of the terms “Eligible Accounts” and “Eligible Inventory”.

“ Other Taxes ” means all present or future stamp, documentary, excise, property, intangible, mortgage recording or similar taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ Overadvance Loan ” means any Revolving Loan if, after giving effect to the making thereof, the aggregate amount of the Revolving Exposures (other than any portion thereof attributable to the Special Agent Loan Exposure) exceeds an amount equal to (a) the lesser of (i) the aggregate Commitments at such time, (ii) the Borrowing Base at such time, and (iii) the Facilities Reduction Amount at such time, less (b) the Specified Reserves at such time, less (c) the Availability Block. No Overadvance Loan shall cause the aggregate Revolving Exposures to exceed the aggregate Commitments at such time.

 

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“ Overadvance Loan Exposure ” means, at any time, the aggregate principal amount of all Overadvance Loans outstanding at such time. The Overadvance Loan Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Overadvance Loan Exposure at such time.

“ Overadvance Maximum Amount ” means, at any time, an amount determined by the Administrative Agent in its discretion to be the Overadvance Maximum Amount at such time; provided , that (a) such amount shall not exceed, at any time, $7,500,000 and (b) the sum of the Overadvance Maximum Amount plus the Special Agent Loan Maximum Amount shall not exceed, at any time, an amount equal to the lesser of (i) 10% of the aggregate Commitments in effect at such time and (ii) the Availability Block; provided further that, in the event that the Lenders representing at least the Required Lenders at the time of the delivery thereof shall have delivered to the Administrative Agent a written notice to the effect that the Overadvance Maximum Amount may not exceed the amount specified in such notice, then, from and after the date of the receipt by the Administrative Agent of such notice (and, if applicable, until the date of receipt of a subsequent such notice), for purposes of Sections 2.01(b), 2.04(a) and 4.02(b) the Overadvance Maximum Amount may not exceed the amount set forth in such notice.

“ Participation Fees ” has the meaning specified in Section 2.10(b) .

“ PBGC ” means the Pension Benefit Guaranty Corporation.

“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate, to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute or to which the Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“ Perfection Certificate ” means a certificate in the form attached to the ABL Guarantee and Collateral Agreement or any other form approved by the Collateral Agent.

“ Permitted Acquisition ” means an Investment that is consummated in compliance with the requirements of Section 7.03(h) .

“ Permitted Liens ” has the meaning specified in Section 7.01 .

“ Permitted Holders ” shall mean each of D. E. Shaw Laminar Portfolios, L.L.C., Avenue Investments, LP, Avenue International Master, L.P., Avenue Special Situations Fund V, L.P., Avenue Special Situations Fund IV, L.P., Avenue-CDP Global Opportunities Fund, L.P., Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. and each of their respective Affiliates and Permitted Related Funds.

“ Permitted Related Fund ” shall mean, with respect to any Permitted Holder that is an investment fund, any other investment fund that invests in commercial loans and that is managed by the same investment advisor as such Permitted Holder or by an Affiliate of such investment advisor.

“ Petition Date ” has the meaning specified in the recitals hereto.

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

 

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“ Plan ” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“ Plan of Reorganization ” shall mean the Joint Plan of Reorganization of the Loan Parties, dated April 28, 2009, in the form filed with the Bankruptcy Court and any amendments, supplements or modifications thereto.

“ Pro Forma Basis ” means, with respect to any determination for any period and any Pro Forma Transaction, that such determination shall be made by giving pro forma effect to each such Pro Forma Transaction, as if each such Pro Forma Transaction had been consummated on the first day of such period, based on historical results accounted for in accordance with GAAP and, to the extent applicable, reasonable assumptions that are specified in detail in the relevant Compliance Certificate, Financial Statement or other document provided to the Administrative Agent or any Lender in connection herewith in accordance with Regulation S-X of the Securities Act of 1933.

“ Pro Forma Transaction ” means any transaction consummated as part of the Acquisition, any Permitted Acquisition, together with each other transaction relating thereto and consummated in connection therewith, including any incurrence or repayment of Indebtedness.

“ Purchase Date ” has the meaning specified in Section 2.02A(d)(ii) .

“ Purchase Notice ” has the meaning specified in Section 2.02A(d)(i) .

“ Purchase Option ” has the meaning specified in Section 2.02A(d)(i) .

“ Purchased Obligations ” has the meaning specified in Section 2.02A(d)(i) .

“ Purchasing Participants ” has the meaning specified in Section 2.02A(d)(i) .

“ Qualified Foreign Credit Facility ” means a term loan, revolving credit or overdraft facility provided by a Lender, an Arranger, an Affiliate of any of the foregoing or any other financial institution to any Foreign Subsidiary, which facility (a) is permitted under Section 7.02 and (b) is designated as a “Qualified Foreign Credit Facility” in a written notice by the Borrower to the Administrative Agent, provided that the aggregate principal amount of all such Qualified Foreign Credit Facilities in effect at any time shall not exceed $25,000,000.

“ Ratification Agreement ” means the Ratification and Amendment Agreement dated as of February 5, 2009, by and among Wachovia, as administrative agent and as collateral agent, Wachovia as supplemental loan lender, the Borrower and the Subsidiary Loan Parties.

“ RBS ” has the meaning specified in the introductory paragraph hereto.

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

“ Registered Public Accounting Firm ” has the meaning specified by the Securities Laws and shall be independent of the Borrower, within the meaning of the Securities Laws.

 

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“ Related Fund ” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“ Related Person ” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, attorney, accountant and each insurance, legal, financial and other advisor (including those retained in connection with the satisfaction or attempted satisfaction of any condition set forth in Article IV ) and other consultants and agents of any of the foregoing, together with, if such Person is the Administrative Agent, each other Person or individual designated, nominated or otherwise mandated by or helping the Administrative Agent pursuant to and in accordance with Section 9.04 or any comparable provision of any Loan Document.

“ Relationship Bank ” has the meaning specified in Section 2.16(a) .

“ Release ” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.

“ Required Lenders ” means, at any time, (i) if there is one (1) Lender, such Lender; (ii) if there are two (2) Lenders, both Lenders (or, if one Lender is a Defaulting Lender, the other Lender shall constitute the Required Lenders); (iii) if there are three (3) Lenders, all three (3) Lenders (or, if one or more Lenders are Defaulting Lenders, all non-Defaulting Lenders shall constitute the Required Lenders); and (iv) if there are four (4) or more Lenders, two or more Lenders having in the aggregate more than sixty-six and two thirds percent (66 2/3%) of total Commitments (unless GE Capital and its Affiliates hold in the aggregate thirty percent (30%) or less of total Commitments, in which case two or more Lenders having in the aggregate more than fifty percent (50%) of total Commitments constitute the Required Lenders); provided , that so long as any Lender is a Defaulting Lender, the Commitment of such Defaulting Lender will not be taken into account in determining the calculation of which Lenders constitute Required Lenders; provided , further , if the Commitments have terminated or expired, the Required Lenders shall be determined based on the Revolving Exposure of such Lender. In addition, Supplemental Loan Lender shall not be considered a Lender for purposes of this definition.

“ Requirements of Law ” means, with respect to any Person, collectively, the common law and all federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, ordinances, orders, judgments, writs, injunctions, decrees (including, without limitation, the interpretation or administration thereof by, and other determinations, directives or requirements) of any Governmental Authority (including, without limitation, administrative or judicial precedents or authorities), in each case whether or not having the force of law and that are applicable to and binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ” means, in the case of the Borrower or any other Loan Party, the chairman or vice chairman, chief executive officer, president, chief financial officer, general counsel, secretary, treasurer or assistant treasurer (or such other officer as may be reasonably acceptable to the Administrative Agent) of the Borrower or such Loan Party. Any document delivered hereunder that is

 

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signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party, and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“ Restricted Payment ” means any dividend or other distribution with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof).

“ Restructuring Charges ” means all cash and non-cash charges related to the integration of an acquisition or non-recurring charges related to a non-recurring restructuring of operations of the Borrower and its Subsidiaries appearing on the Consolidated statement of operations of the Borrower and its Subsidiaries prepared in accordance with GAAP.

“ Revolving Borrowing ” means Revolving Loans of the same Type made, converted or continued on the same date and, in the case of Eurodollar Rate Loans, as to which a single Interest Period is in effect.

“ Revolving Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its L/C Exposure, Swingline Exposure and Special Agent Loan Exposure at such time.

“ Revolving Facility ” means, at any time, (a) prior to the Closing Date, the aggregate amount of the Commitments in effect at such time and (b) thereafter, the sum of (i) the aggregate Revolving Exposure at such time and (ii) the aggregate amount of the unused Commitments in effect at such time.

“ Revolving Lenders ” means the Persons listed on Schedule 2.01 as having a Commitment under Section 2.01 and any other Person that shall have become a party hereto pursuant to an Accession Agreement or an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“ Revolving Loan ” means a Loan made pursuant to Section 2.01 or Section 2.07(d) .

“ Rollover Agreement ” shall mean that certain letter agreement, dated the date hereof, among GE Capital, each of the Supplemental Loan Participants, the Borrower and Wachovia.

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

“ Sale and Leaseback Transaction ” means, with respect to any Person (the “ obligor ”), any Contractual Obligation or other arrangement with any other Person (the “ counterparty ”) consisting of a lease by such obligor of any property that, directly or indirectly, has been or is to be Sold by the obligor to such counterparty or to any other Person to whom funds have been advanced by such counterparty based on a Lien on, or an assignment of, such property or any obligations of such obligor under such lease.

“ Sarbanes–Oxley ” means the Sarbanes–Oxley Act of 2002.

 

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

“ Secured Hedging Agreement ” means any Hedging Agreement that is entered into by any Loan Party and a Secured Hedging Counterparty; provided , that in the case of a Hedging Agreement not entered into with or provided or arranged by the Administrative Agent or an Affiliate of the Administrative Agent, the Secured Hedging Counterparty shall give notice to the Administrative Agent after the execution of such Hedging Agreement.

“ Secured Hedging Counterparty ” means (a) a Person who has entered into a Hedging Agreement with a Loan Party if such Hedging Agreement was provided or arranged by the Administrative Agent or an Affiliate of the Administrative Agent, and any assignee of such Person or (b) a Lender or an Affiliate of Lender who has entered into a Hedging Agreement with a Loan Party (or a Person who was a Lender or an Affiliate of a Lender at the time of execution and delivery of the Hedging Agreement).

“ Secured Parties ” has the meaning specified in the ABL Guarantee and Collateral Agreement.

“ Securities Laws ” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and, in each case, the rules and regulations of the SEC promulgated thereunder, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date under this Agreement.

“ Sell ” means, with respect to any property, to sell, convey, transfer, assign, license, lease or otherwise dispose of, any interest therein or to permit any Person to acquire any such interest, including, in each case, through a Sale and Leaseback Transaction or through a sale, factoring at maturity, collection of or other disposal, with or without recourse, of any notes or accounts receivable. Conjugated forms thereof and the noun “ Sale ” have correlative meanings.

“ Settlement Date ” has the meaning specified in Section 2.13(h) .

“ Significant Shareholder ” shall mean any Person owning 10% or more of the Equity Interests of the Borrower.

“ Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the assets of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or other liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s assets would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that could reasonably be expected to become an actual or matured liability.

“ Special Agent Loan ” means a Loan made pursuant to Section 2.05 .

 

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“ Special Agent Loan Exposure ” means, at any time, the aggregate principal amount of all Special Agent Loans outstanding at such time. The Special Agent Loan Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Special Agent Loan Exposure at such time.

“ Special Agent Loan Maximum Amount ” means, at any time, an amount determined by the Administrative Agent in its discretion to be the Special Agent Loan Maximum Amount at such time, provided that the sum of the Special Agent Loan Maximum Amount plus the Overadvance Maximum Amount shall not exceed, at any time, an amount equal to the lesser of (a) 10% of the aggregate Commitments in effect at such time, (b) the Availability Block and (c) $10,000,000; provided further that, in the event that the Lenders representing at least the Required Lenders at the time of the delivery thereof shall have delivered to the Administrative Agent a written notice to the effect that the Special Agent Loan Maximum Amount may not exceed the amount specified in such notice, then, from and after the date of the receipt by the Administrative Agent of such notice (and, if applicable, until the date of receipt of a subsequent such notice), for purposes of Sections 2.05(a) and 4.02(b) the Special Agent Loan Maximum Amount may not exceed the amount set forth in such notice.

“ Specified Disposition ” means any Disposition referred to in Section 7.05(g) or Section 7.05(h) .

“ Specified Reserves ” means, as of any date of determination, Other Reserves on account of items that, in the reasonable judgment of the Co-Collateral Agents, would result in a future cash expenditure by or on behalf of the Borrower or any Subsidiary; provided , that the Co-Collateral Agents may at any time and from time to time, in their reasonable discretion, (a) reduce the amount of Specified Reserves below the amount that would otherwise constitute Specified Reserves determined in accordance with this definition and (b) reinstate (in whole or in part) any reduction made pursuant to clause (a), it being understood that any reduction or reinstatement made pursuant to this paragraph shall not, in itself, affect the amount of Other Reserves (which shall be determined in accordance with the definition of such term).

“ Spring/Summer Selling Period ” means the period from January 1 to June 30 in any given year.

“ Stock ” means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

“ Stock Equivalents ” means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.

“ Subsequent Borrowings ” has the meaning specified in Section 2.07(d) .

“ Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more

 

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intermediaries, or both, by such Person (including, for the avoidance of doubt, a company, corporation or partnership which is a “dependent enterprise” ( abhängiges Unternehmen ) of such Person within the meaning of Section 17 of the German Stock Corporation Act ( Aktiengesetz ), or which is a “subsidiary” ( Tochterunternehmen ) within the meaning of Section 290 of the German Commercial Code ( Handelsgesetzbuch ) of such Person, or where such Person has the power to direct the management and the policies of such entity whether through the ownership of share capital, contract or otherwise). Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

“ Subsidiary Loan Parties ” means any Subsidiary of the Borrower that is not a Foreign Subsidiary or a Dormant Subsidiary and, for purposes of Article VII , that is a party to the ABL Guarantee and Collateral Agreement.

“ Supermajority Required Lenders ” means, at any time, Lenders having Revolving Exposures and unused Commitments representing more than 66 2/3% of the sum of (a) the aggregate Revolving Exposure outstanding at such time and (b) the aggregate unused Commitments in effect at such time.

“ Supplemental Loan ” has the meaning specified in Section 2.02A(a) .

“ Supplemental Loan Amount ” means $45,000,000.

“ Supplemental Loan Lender ” means GE Capital, in its capacity as the fronting lender of the Supplemental Loan.

“ Supplemental Loan Junior Participation Agreement ” means that certain agreement or agreements among Supplemental Loan Participants and Supplemental Loan Lender, which shall be in form and substance reasonably satisfactory to Supplemental Loan Lender and each Supplemental Loan Participant, pursuant to which the Supplemental Loan Participants have purchased, or will purchase, a 100% junior participation in the Supplemental Loan.

“ Supplemental Loan Participant ” means each of D. E. Shaw Laminar Portfolios, L.L.C. and its affiliates, Avenue Investments, LP and its affiliates, Harbinger Capital Partners Master Fund I, Ltd. and its affiliates and Harbinger Capital Partners Special Situations Fund, L.P. and its affiliates.

“ Supplemental Loan Rate ” means the interest rate applicable to the Supplemental Loan pursuant to Section 2.09(a) .

“ Swap Termination Value ” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement (including any margin) relating to such Hedging Agreements, (a) for any date on or after the date such Hedging Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include the Administrative Agent, a Lender or any of their respective Affiliates). It is understood and acknowledged that Obligations in respect of Secured Hedging Agreements owing to or by different, unaffiliated counterparties shall not reduce the Swap Termination Value.

 

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

“ Swingline Lender ” means GE Capital, in its capacity as lender of Swingline Loans hereunder.

“ Swingline Limit ” means $30,000,000.

“ Swingline Loan ” means a Loan made pursuant to Section 2.04 .

“ Swingline Request ” has the meaning specified in Section 2.04(b) .

“ Syndication Agent ” means RBS, in its capacity as the syndication agent for the Facilities.

“ Synthetic Debt ” means, with respect to any Person, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds (including any minority interest transactions that function primarily as a borrowing) but are not otherwise included in the definition of Indebtedness or as a liability on the Consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.

“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

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

“ Term Credit Agreement ” means the Credit Agreement dated as of March 30, 2007, among the Borrower, Bank of New York Mellon (as successor to Goldman Sachs Credit Partners L.P.), as the administrative agent, collateral agent and syndication agent, Bank of America, N.A., as an L/C issuer, and the lenders party thereto, as amended by Amendment No. 1 and Amendment No. 2 thereto each dated the date hereof (and as further amended, restated, supplemented or otherwise modified as permitted by the terms hereof).

“ Threshold Amount ” means $15,000,000.

“ Total Assets ” means, as of any day, the total Consolidated assets of the Borrower and its Subsidiaries, as shown on the most recent balance sheet delivered pursuant to Section 6.01 .

“ Transactions ” means, collectively, the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents, the borrowing of the Loans and the use of the proceeds thereof, the obtaining of the Letters of Credit and the creation and perfection of Liens granted under the Collateral Documents.

 

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“ Type ” means, with respect to any Revolving Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

“ UCC ” means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.

“ Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

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

“ Unused Commitment ” has the meaning specified in Section 2.10(a) .

“ Unused Commitment Fee ” has the meaning specified in Section 2.10(a) .

“ Value ” means, with respect to Inventory, the lower of (a) the cost thereof, computed on a first-in first-out basis in accordance with GAAP, and (b) the market value thereof, in each case as reasonably determined by the Administrative Agent; provided that, for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include (A) the portion of the value of Inventory equal to the profit earned by any Affiliate of the Borrower on the sale thereof to the Borrower or any Subsidiary or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner as, and consistent with, the most recent appraisal of the Inventory received by the Administrative Agent prior to the date hereof.

“ Wachovia ” means Wachovia Bank, National Association.

“ Wholly-Owned Subsidiary ” means any Person in which, other than director’s qualifying shares or similar shares owned by other Persons due to native ownership requirements, 100% of the capital stock or other equity interests of each class is owned beneficially and of record by the Borrower or by one or more other wholly-owned Subsidiaries of the Borrower.

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

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “ without limitation .” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv)

 

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all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

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

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

Section 1.03. Accounting Terms .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, as in effect from time to time, applied on a consistent basis in a manner consistent with that used in preparing the audited Consolidated financial statements of the Borrower and its Subsidiaries for the fiscal year ended September 30, 2008, except as otherwise specifically prescribed herein.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

(c) Pro Forma. All components of financial calculations made to determine compliance with Article VII shall be adjusted on a Pro Forma Basis to include or exclude, as the case may be, without duplication, such components of such calculations attributable to any Pro Forma Transaction consummated after the first day of the applicable period of determination and prior to the end of such period, as determined in good faith by the Borrower based on assumptions expressed therein and that were reasonable based on the information available to the Borrower at the time of preparation of the Compliance Certificate setting forth such calculations.

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

 

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Section 1.05. Currency Equivalents Generally . Unless otherwise set forth herein, any amount specified in this Agreement in Dollars shall include the Equivalent in Dollars of such amount in any foreign currency and if any amount described in this Agreement is comprised of amounts in Dollars and amounts in one or more foreign currencies, the Equivalent in Dollars of such foreign currency amounts shall be used to determine the total.

Section 1.06. Designation as Senior Debt . The Loans and other Obligations hereunder are hereby designated as “Senior Debt” and as “Designated Senior Debt” under, and for purposes of, the New Indenture, and are further given all such other designations (including designations as “senior debt” and “designated senior debt”) as shall be required under the terms of any other subordinated Indebtedness of the Borrower or any of the Subsidiary Loan Parties in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior Indebtedness under the terms of such subordinated Indebtedness.

Section 1.07. Payments . The Administrative Agent may set up standards and procedures to determine or redetermine the equivalent in Dollars of any amount expressed in any currency other than Dollars and otherwise may, but shall not be obligated to, rely on any determination made by any Loan Party or any L/C Issuer. Any such determination or redetermination by the Administrative Agent shall be conclusive and binding for all purposes, absent manifest error. No determination or redetermination by any Secured Party or Loan Party and no other currency conversion shall change or release any obligation of any Loan Party or of any Secured Party (other than the Administrative Agent and its Related Persons) under any Loan Document, each of which agrees to pay separately for any shortfall remaining after any conversion and payment of the amount as converted. The Administrative Agent may round up or down, and may set up appropriate mechanisms to round up or down, any amount hereunder to nearest higher or lower amounts and may determine reasonable de minimis payment thresholds.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

Section 2.01. Commitments . Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount at any time outstanding that will not result in:

(a) the Revolving Exposure of such Lender exceeding (i) such Lender’s Commitment at such time or (ii) such Lender’s Applicable Percentage of the Borrowing Base at such time; or

(b) the aggregate amount of the Revolving Exposures exceeding an amount equal to (i) the lesser of (A) the aggregate Commitments at such time, (B) the Borrowing Base at such time and (C) the Facilities Reduction Amount at such time, minus (ii) the Availability Block, minus (iii) the Specified Reserves at such time, plus (iv) the Overadvance Maximum Amount at such time, plus (v) the Special Agent Loan Exposure at such time.

The Revolving Loans shall be made by the Revolving Lenders ratably in accordance with their respective Commitments and shall be denominated in Dollars. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

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Section 2.02. Borrowings, Conversions and Continuations of Loans .

(a) Subject to Section 2.13(c) , each Revolving Borrowing, each conversion of Revolving Loans from one Type to the other and each continuation of Eurodollar Rate Loans shall be made upon an irrevocable notice by the Borrower to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than (i) 1:00 p.m. three Business Days prior to the requested date of any Revolving Borrowing of, conversion to or continuation of Eurodollar Rate Loans, and (ii) 1:00 p.m. on the requested date of any Revolving Borrowing of or conversion to Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof, and each borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof; provided , however , that in the event any outstanding Revolving Borrowing is not a whole multiple of the multiple thresholds set forth above, then the foregoing multiple thresholds shall not be applicable to such Revolving Borrowing to the extent compliance therewith cannot be accomplished as a result thereof. Each telephonic request and each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Revolving Borrowing, a conversion of Revolving Loans from one Type to the other or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Revolving Borrowing, conversion or continuation, as the case may be, which date shall be a Business Day, (iii) the principal amount of Revolving Loans to be borrowed, converted or continued, (iv) the Type of Revolving Loans to be borrowed or to which existing Revolving Loans are to be converted and (v) in the case of a Eurodollar Rate Loan, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Revolving Loan in a Committed Loan Notice, or if the Borrower fails to give a timely notice requesting a conversion or continuation thereof, then the applicable Revolving Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loan. If the Borrower requests a Revolving Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. The provisions of this Section shall not apply to Swingline Loans, which shall be governed by Section 2.04 , or Special Agent Loans, which shall be governed by Section 2.05 .

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of its Applicable Percentage of the Revolving Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans. Each Lender shall make the amount of each Revolving Loan to be made by it hereunder available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 2:00 p.m. on the Business Day specified in the applicable Committed Loan Notice or, in the case of any Revolving Loans requested pursuant to Section 2.13(c) , in the notice by the Administrative Agent to the Revolving Lenders referred to in such Section. Subject to the satisfaction of the applicable conditions set forth in Article IV , the Administrative Agent shall (i) make all funds so received available to the Borrower, in like funds as received by the Administrative Agent, by wire transfer of such funds in accordance with instructions provided to the Administrative Agent by the Borrower, which instructions shall be reasonably acceptable to the Administrative Agent, or (ii) in the case of any Revolving Loans requested pursuant to Section 2.13(c) , apply such funds for the purposes set forth in such Section.

 

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(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of an Event of Default, no Revolving Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders.

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.

(e) After giving effect to all Borrowings, all conversions of Revolving Loans from one Type to the other and all continuations of Revolving Loans as Revolving Loans of the same Type, there shall be no more than 10 Interest Periods in effect at any time in respect of the Facilities.

Section 2.02A. Supplemental Loan .

(a) Borrowing of Supplemental Loan. Subject to the terms and conditions contained herein, Supplemental Loan Lender shall make on the Closing Date (or shall be deemed to have made pursuant to Section 4.01(p) ) a supplemental loan (the “ Supplemental Loan ”) to Borrower in the principal amount equal to the Supplemental Loan Amount. The Supplemental Loan shall be funded (or deemed to be funded) in full on the Closing Date. The Supplemental Loan shall constitute part of the Obligations and shall be secured by all of the ABL Collateral. Except for the making (or deemed making) of the Supplemental Loan as set forth in this Section 2.02A and subject to conditions contained in Article IV , Borrower shall have no right to request and Supplemental Loan Lender shall have no obligation to make any loans or advances to Borrower and any repayments of the Supplemental Loan (which repayments shall be made in accordance with the terms herein, including without limitation Section 2.07(d) , and the Supplemental Loan Junior Participation Agreement) shall not be subject to any readvance to or reborrowing by Borrower.

(b) Subordination . Notwithstanding anything to the contrary contained herein, the Obligations in respect of the Supplemental Loan (including payment of such Obligations) are subject to the provisions contained in Section 8.03 herein and Section 4 of the Supplemental Loan Junior Participation Agreement.

(c) Voting Matters. With respect to amendments, modifications and waivers to any of the Loan Documents, Supplemental Loan Lender shall not be considered a Lender for voting purposes, including, without limitation, for purposes of the definition of “Required Lenders”, except as specifically set forth in Section 10.01 .

(d) Purchase Option by Supplemental Loan Participants . (i) Notwithstanding anything to the contrary herein, Agents and Lenders hereby agree that, at any time, one or more of the Supplemental Loan Participants (the “ Purchasing Participants ”) shall have the option (the “ Purchase Option ”), upon the delivery of written notice to Administrative Agent to purchase from Agents and Lenders all of Agents’ and Lenders’ right, title and interest in, to and under (a) the Obligations owing to Agents and Lenders on the Purchase Date (as defined below) and (b) the Loan Documents (collectively, the “ Purchased Obligations ”) in accordance with the terms and conditions hereof. The written notice required to be delivered under this Section 2.02A(d)(i) to Administrative Agent (the “ Purchase Notice ”) shall be irrevocable, unless otherwise agreed to in writing by Administrative Agent.

 

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(ii) On the date specified by Purchasing Participants (the “ Purchase Date ”) in the Purchase Notice (which shall not be less than five (5) Business Days, nor more than twenty (20) Business Days after the receipt by Administrative Agent of the Purchase Notice), Agents and Lenders shall, subject to any required approval of any court or other governmental authority, if any, sell to Purchasing Participants, and Purchasing Participants shall purchase from Agents and Lenders, all of the Purchased Obligations; provided , that, Agents and Lenders shall retain all rights to be indemnified or held harmless by Loan Parties in accordance with the terms of the Loan Documents, but shall not retain any rights to the security therefor under the Loan Documents; provided , further , that in no event shall the foregoing be construed to limit or restrict the Obligations owing by Loan Parties to Purchasing Participants after the exercise of the Purchase Option from being secured by the ABL Collateral, which shall include the Purchased Obligations and the Supplemental Loan.

(iii) On the Purchase Date, Agents and Lenders shall sell and assign to the Purchasing Participants, and Purchasing Participants shall purchase from Agents and Lenders, all of Agents’ and Lenders’ right, title and interest in, to and under the Purchased Obligations and the ABL Collateral therefor in exchange for the payment of the Purchase Price by Purchasing Participants to Agents and Lenders; provided, that, on the Purchase Date, Purchasing Participants shall also:

(A) furnish cash collateral to Collateral Agent (or instead of such cash collateral, deliver to Collateral Agent a letter of credit, in form and substance reasonably satisfactory to Collateral Agent, by an Acceptable Bank and payable to Collateral Agent as beneficiary) in a manner and in such amounts as Collateral Agent determines is reasonably necessary to secure Agents and Lenders in connection with (x) any issued and outstanding letters of credit provided by any Lender (or letters of credit that an Agent has arranged to be provided by third parties pursuant to the financing arrangements of Agents and Lenders with the Loan Parties) to the Loan Parties, but in any event in an amount not exceeding 105% of the undrawn face amount of letters of credit, (y) any Secured Hedging Agreement and (z) any Cash Management Obligation;

(B) agree to reimburse Agents and Lenders for any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) in connection with any commissions, fees, costs or expenses related to any issued and outstanding letters of credit as described above and owing to any Agent or any Lender and any checks or other payments provisionally credited to the Obligations, or as to which any Agent or any Lender have not yet received final payment,

(C) agree to reimburse Agents and Lenders in respect of indemnification obligations of the Loan Parties under the Loan Documents as to matters or circumstances actually known to Agents and disclosed to Purchasing Participants at the time of the purchase and sale which could reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to Agents and Lenders (with rights of subrogation against the Loan Parties and in respect of which Agents and Lenders shall assign their rights against the Loan Parties to the Purchasing Participants); and

(D) agree to indemnify and hold harmless Agents and Lenders from and against any loss, liability, claim, damage or expense (including reasonable fees and expenses of legal counsel) arising out of any claim asserted by a third party in respect of the Purchased Obligations or ABL Collateral as a direct result of any acts by Purchasing Participants occurring after the date of such purchase.

 

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(iv) The Purchase Price and such cash collateral shall be remitted by wire transfer in immediately available funds (A) in case of the Purchase Price, to such bank account of Administrative Agent as Administrative Agent may designate (for distribution to Agents and Lenders) and (B) in case of the cash collateral, to such bank account of Collateral Agent as Collateral Agent may designate in writing to Purchasing Participants for such purpose. Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by Purchasing Participants to the bank account so designated are received in such bank account prior to 12:00 noon, New York City time on such Business Day and interest shall be calculated to and including such Business Day if the amounts so paid by Purchasing Participants to the bank account so designated are received in such bank account later than 12:00 noon, New York City time on such Business Day.

(v) Any purchase pursuant to the Purchase Option shall be expressly made without representation or warranty of any kind by any Agent or any Lender as to the Obligations, the ABL Collateral or otherwise and without recourse to any Agent or any Lender; except, that, each Agent and each Lender, as to itself only, shall represent and warrant that: (i) the amount of the Purchased Obligations as reflected in the books and records of Administrative Agent (but without representation or warranty as to the collectibility, validity or enforceability thereof), (ii) each Agent and each Lender owns the Purchased Obligations free and clear of any liens or encumbrances and (iii) each Agent and each Lender has the right to assign all of its right, title and interest in and to the Purchased Obligations and the assignment is duly authorized.

(vi) Any purchase made pursuant to the Purchase Option shall be subject to the terms of Section 2.07(c) .

Section 2.03. Letters of Credit .

(a) Generally . Subject to the terms and conditions set forth herein, the Borrower may request any L/C Issuer to issue Letters of Credit in Dollars for its own account or, so long as the Borrower is a joint and several co-applicant with respect thereto, for the account of any of the Subsidiaries (provided the identity of such Subsidiary is reasonably acceptable to the Administrative Agent), in a form reasonably acceptable to the Administrative Agent and the applicable L/C Issuer, at any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an L/C Issuer relating to any Letter of Credit, the terms and conditions of this Agreement shall control. The Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the account of any Subsidiary as provided in the first sentence of this paragraph, it will be fully responsible for the reimbursement of L/C Disbursements, the payment of interest thereon and the payment of Participation Fees to the same extent as if it were the sole account party in respect of such Letter of Credit (the Borrower hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor of the obligations of any Subsidiary that shall be an account party in respect of any such Letter of Credit).

(b) Notice of Issuance, Amendment, Renewal and Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or send by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable L/C Issuer) to the applicable L/C Issuer and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of such Letter of Credit, or

 

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identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension, as applicable (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with Section 2.03(c) ), the amount of such Letter of Credit, the name and address of the beneficiary thereof, the account party for such Letter of Credit and such other information as shall be necessary to enable the applicable L/C Issuer to prepare, amend, renew or extend such Letter of Credit. If requested by the applicable L/C Issuer, the Borrower also shall submit a letter of credit application on the applicable L/C Issuer’s standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the aggregate L/C Exposure will not exceed the Letter of Credit Limit and (ii) the aggregate amount of the Revolving Exposures (other than any portion thereof attributable to Overadvance Loans or Special Agent Loans) will not exceed (A) the lesser of (1) the aggregate Commitments at such time, (2) the Borrowing Base at such time and (3) the Facilities Reduction Amount at such time, minus (B) the Availability Block at such time, minus (C) the Specified Reserves at such time. Each L/C Issuer agrees that it will not issue, renew, extend or increase the amount of any Letter of Credit without first obtaining written confirmation from the Administrative Agent that such action is then permitted under this Agreement.

(c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided that any Letter of Credit may contain customary automatic renewal provisions agreed upon by the Borrower and the applicable L/C Issuer pursuant to which the expiration date shall be automatically extended for a period of up to 12 months (but not to a date later than the date set forth in clause (ii) above), subject to a right on the part of such L/C Issuer to prevent any such renewal from occurring by giving notice to the beneficiary by a specified time in advance of any such renewal.

(d) Participations . By the issuance of a Letter of Credit, or an amendment to a Letter of Credit increasing the amount thereof, and without any further action on the part of the applicable L/C Issuer or the Revolving Lenders, such L/C Issuer hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from such L/C Issuer, a participation in such Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees that if an L/C Issuer makes a L/C Disbursement that is not reimbursed by the Borrower on the date due as provided in Section 2.03(e) , or is required to refund any reimbursement payment in respect of a L/C Disbursement to the Borrower for any reason, such Revolving Lender shall pay to the Administrative Agent, for the account of the applicable L/C Issuer, such Revolving Lender’s Applicable Percentage of the amount of such L/C Disbursement. Each Revolving Lender acknowledges and agrees that its obligation to acquire and fund participations in respect of Letters of Credit pursuant to this Section 2.03(d) is unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement . If an L/C Issuer shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such L/C Disbursement by paying to such L/C Issuer an amount equal to such L/C Disbursement on the same Business Day that the Borrower receives notice of such L/C Disbursement, if such notice is received prior to 1:00 p.m. If the Borrower fails to make the

 

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payment referred to in the preceding sentence with respect to a Letter of Credit, the applicable L/C Issuer shall notify the Administrative Agent in accordance with Section 2.03(k) , and the Administrative Agent shall in turn notify each Revolving Lender of the applicable L/C Disbursement, the payment then due from the Borrower in respect thereof and such Revolving Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.02 with respect to Revolving Loans made by such Revolving Lender (and Section 2.02 shall apply, mutatis mutandis , to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the applicable L/C Issuer the amounts so received by it from the Revolving Lenders. Such L/C Issuer shall promptly notify the Administrative Agent of any amount subsequently received by it from the Borrower or another Loan Party in respect of such L/C Disbursement, and shall remit to the Administrative Agent any such amount promptly upon receipt thereof. Promptly following receipt by the Administrative Agent of any such remittance or of any payment by or on behalf of the Borrower in respect of such L/C Disbursement, the Administrative Agent shall remit such payment to such L/C Issuer or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse such L/C Issuer, then to the Revolving Lenders and such L/C Issuer as their interests may appear. Any payment made by a Revolving Lender pursuant to this Section 2.03(e) to reimburse an L/C Issuer for any L/C Disbursement shall not constitute a loan and shall not relieve the Borrower (or any other account party in respect of the relevant Letter of Credit) of its obligation to reimburse such L/C Disbursement.

(f) Obligations Absolute . The Borrower’s obligation to reimburse L/C Disbursements as provided in Section 2.03(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an L/C Issuer under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.03(f) , constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. None of the Administrative Agent, the Lenders or the L/C Issuers, or any of their Related Persons shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of an L/C Issuer; provided that the foregoing shall not be construed to excuse any L/C Issuer from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such L/C Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of an L/C Issuer, such L/C Issuer shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable L/C Issuer may either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

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(g) Disbursement Procedures . Each L/C Issuer shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit issued by it. Such L/C Issuer shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by hand delivery or facsimile) of such demand for payment and whether such L/C Issuer has made or will make an L/C Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such L/C Issuer and the Lenders with respect to any such L/C Disbursement.

(h) Interim Interest . If an L/C Issuer shall make any L/C Disbursement, then, unless the Borrower shall reimburse such L/C Disbursement in full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such L/C Disbursement is made to but excluding the date that the Borrower reimburses such L/C Disbursement, at a rate per annum (computed in accordance with Section 2.09(a) ) equal to the rate then applicable to Base Rate Loans; provided that, if the Borrower fails to reimburse such L/C Disbursement when due pursuant to Section 2.03(e) , then Section 2.09(b) shall apply. Interest accrued pursuant to this Section 2.03(h) shall be for the account of the applicable L/C Issuer, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.03(e) to reimburse such L/C Issuer shall be for the account of such Revolving Lender to the extent of such payment.

(i) Termination of an L/C Issuer . Any L/C Issuer may cease to be an L/C Issuer at any time by written agreement among the Borrower, the Administrative Agent and such L/C Issuer, or as provided in Section 9.09(c) . The Administrative Agent shall promptly notify the Revolving Lenders of any such termination of an L/C Issuer. At the time any such termination shall become effective and from time to time thereafter as long as any Letters of Credit issued by such L/C Issuer shall remain outstanding, the Borrower shall pay all unpaid fees accrued for the account of the terminated L/C Issuer pursuant to Section 2.10(b) . After the termination of an L/C Issuer hereunder, such L/C Issuer shall remain a party hereto and shall continue to have all the rights and obligations of an L/C Issuer under this Agreement with respect to Letters of Credit issued by it prior to such termination, but shall not be required to issue additional Letters of Credit.

(j) Additional L/C Issuers . The Borrower may, at any time and from time to time, with the consent of the Co-Collateral Agents (which consent shall not be unreasonably withheld or delayed) and the designated Person, designate one or more additional Lenders to act as an L/C Issuer under the terms of this Agreement, and any Lender so designated shall become an L/C Issuer hereunder.

(k) L/C Issuer Reports . Unless otherwise agreed to by the Administrative Agent, each L/C Issuer shall report in writing to the Administrative Agent (i) on or prior to each Business Day on which such L/C Issuer issues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amount thereof shall have changed), (ii) on each Business Day on which such L/C Issuer makes any L/C Disbursement, the date and amount of such L/C Disbursement, (iii) on any Business Day on which the Borrower fails to reimburse an L/C Disbursement required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such L/C Disbursement and (iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer and outstanding on such Business Day.

 

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(l) Cash Collateralization . If any Event of Default shall occur and be continuing or if the Borrower is required to provide cash collateral pursuant to Section 2.06(b) , on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this Section 2.03(l) , the Borrower shall deposit in an account designated by the Collateral Agent, in the name of the Collateral Agent and for the ratable benefit of the Lenders, an amount in cash equal to 105% of the L/C Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, (i) upon the occurrence of any Event of Default described in Section 8.01(f) and (ii) as required by Section 2.06(b) . If any Lender becomes a Defaulting Lender, on the Business Day that the Borrower receives notice from an L/C Issuer demanding the deposit of cash collateral pursuant to this Section 2.03(l) , the Borrower shall (i) deposit in an account designated by the Collateral Agent, in the name of the Collateral Agent and for the ratable benefit of the Lenders, an amount in cash equal to 105% of such Defaulting Lender’s L/C Exposure as of such date plus any accrued and unpaid interest thereon, (ii) provide a letter of credit, in form and substance reasonably satisfactory to L/C Issuers, issued by an Acceptable Bank to the Collateral Agent as beneficiary in an undrawn face amo