LOAN AND SECURITY AGREEMENT by and among

Exhibit 10(i)A(7)

 

L OAN AND S ECURITY A GREEMENT

by and among

ACUITY ENTERPRISE, INC.

as “Borrower”

ACUITY SPECIALTY PRODUCTS, INC.

as the initial “Servicer”

REGIONS BANK

as a “Lender” and as “Administrative Agent”

and

The Other LENDERS

From Time to Time Party Hereto

as “Lenders”

October 14, 2009

 

 

TABLE OF CONTENTS

 

 

i

TABLE OF CONTENTS

(continued)

 

 

ii

TABLE OF CONTENTS

(continued)

 

 

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EXHIBITS AND SCHEDULES

EXHIBITS:

 

 

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT, dated as of October 14, 2009 (this “ Agreement ”), by and among ACUITY ENTERPRISE, INC., a Delaware corporation (the “ Borrower ”), ACUITY SPECIALTY PRODUCTS, INC., a Georgia corporation in its capacity as the initial servicer (in such capacity, together with its successors and permitted assigns in such capacity, the “ Servicer ”), REGIONS BANK, an Alabama bank, in its capacity as a Lender (as defined below), and in its capacity as administrative agent (in such capacity, together with its successors and assigns in such capacity, the “ Administrative Agent ”), and each of the other financial institutions from time to time party hereto as lenders (each, together with its successors and assigns, a “ Lender ”).

W I T N E S S E T H :

In consideration of the premises and of the mutual covenants herein contained and to induce Lenders to extend credit to Borrower, the parties agree as follows:

 

1.

DEFINITIONS; RELATED TERMS .

1.1         Certain UCC Terms . Any term used in this Agreement or in any financing statement filed in connection herewith which is defined in the UCC and not otherwise defined in this Agreement or in any other Loan Document shall have the meaning given to the term in the UCC, including, without limitation, Accession, Account Debtor, Chattel Paper, Account, Commercial Tort Claim, Deposit Account, Document, Electronic Chattel Paper, Equipment, Fixture, General Intangible, Instrument, Inventory, Investment Property, Letter-of-Credit Right, Proceeds, Supporting Obligation, and Tangible Chattel Paper.

1.2         Defined Terms . Capitalized terms that are not otherwise defined herein shall have the meanings set forth in this Section 1.2.

“ Accounts Receivable Turnover Ratio ” means, on any date of determination, the ratio computed as of the most recent Calculation Date by dividing (a) the aggregate amount of net Sales during the 12 consecutive Calculation Periods most recently ended by (b) the average amount of the Unpaid Balance of all Receivables on the 12 most recent Calculation Dates.

“ Activation Notice ” means, with respect to any Lock Box Account, a notice given by Administrative Agent to the applicable Lock Box Bank in accordance with the terms of this Agreement and the Deposit Account Control Agreement covering such Lock Box Account, pursuant to which Administrative Agent notifies such Lock Box Bank that from and after the date of such notice and any period of implementing the same (if and to the extent set forth in such Deposit Account Control Agreement), such Lock Box Bank shall follow only the instructions of Administrative Agent in respect of any withdrawals, transfers, or other disposition of funds from such Lock Box Account.

“ Advance Rate ” means, on any date of determination, a percentage equal to (a) 100% minus (b) the Reserve Percentage.

“ Adverse Claim ” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement).

“ Affected Lender ” has the meaning set forth in Section 10.10.

“ Affiliate ” of any Person means any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) as applied to any Person means (i) with respect to any Person holding voting shares or their equivalent and elected directors, managers or Persons performing similar functions, the possession, directly or indirectly, of the power to vote 10% or more of the Equity

Interests having ordinary voting power of such Person or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting shares or their equivalent, by contract or otherwise.

“ Agent’s Account ” means one or more Deposit Accounts maintained by Borrower with Administrative Agent or established and maintained by Administrative Agent in its own name (whether at Administrative Agent or another bank) into which Collections shall, to the extent provided or required herein or in the other Loan Documents, be deposited or paid and to which only Administrative Agent shall have access to withdraw or otherwise direct the disposition of funds on deposit therein.

“ Applicable Margin ” shall mean 2.25% per annum; provided , however , that, the Applicable Margin shall decrease to 2.00% per annum automatically on the first date on which each of the following conditions shall be satisfied: (a) a notice of the type described in the proviso to clause (b) of the definition of “Defaulted Receivable” shall have been delivered and the related 30-day notice period shall have elapsed and (b) a notice of the type described in the last paragraph of the definition of “Loss Reserve” shall have been delivered and the related 30-day notice period shall have elapsed.

“ ASP ” means Acuity Specialty Products, Inc., and its successors and assigns.

“ Assignee ” has the meaning set forth in Section 12.6(c).

“ Assignment and Acceptance ” means an assignment and acceptance executed in accordance with Section 12.6(c) in the form attached hereto as Exhibit D .

“ Base Rate ” means, as of any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greatest of (a) the Federal Funds Rate in effect on such day plus  ¹ / 2 of 1%; (b) the Prime Rate in effect on such day and (c) 1.00%. If for any reason Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable, after due inquiry, to ascertain the Federal Funds Rate for any reason, including the inability or failure of Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively.

“ Base Rate Loan ” means a Loan, or portion thereof, during any period in which it bears interest at a rate based on the Base Rate.

“ Borrowing Base ” means, on any date of determination, an amount equal to the sum of (a) the product of (i) the Advance Rate as of the most recent Calculation Date times (ii) the Net Receivable Balance, less (b) Reserves.

“ Borrowing Base Certificate ” means a borrowing base certificate substantially in the form of Exhibit K , attached hereto and made a part hereof, and which will be delivered in connection with each Receivables Report.

“ Borrowing Base Deficit ” means, on any date of determination, an amount equal to the excess, if any, of (a) the aggregate principal amount of all outstanding Loans at such time over (b) the Borrowing Base (as reported in the most recent Borrowing Base Certificate).

“ Business Day ” means (a) any weekday on which Administrative Agent is open for business in Birmingham, Alabama, and Atlanta, Georgia, and (b) with respect to the determination of the LIBOR Index Rate, any day that is also a day for trading by and between banks in U.S. dollar deposits in the London interbank market.

“ Calculation Date ” means the last day of each Fiscal Month.

 

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“ Calculation Period ” means each Fiscal Month (or portion thereof in the case of the first and last periods) which elapses during the term of this Agreement. The first Calculation Period shall commence on the Closing Date, and the final Calculation Period shall terminate on the Termination Date.

“ Change of Control ” has the meaning given such term in the Receivables Sale Agreement.

“ Change of Law ” has the meaning set forth in Section 11.2.

“ Charge-Off ” means a Receivable not previously deemed a Defaulted Receivable that is written-off by the Servicer.

“ Closing Date ” means the earliest date on or after October 14, 2009, on which all of the conditions precedent in Section 4.1 of this Agreement are satisfied.

“ Collateral ” means all of Borrower’s right, title, and interest in and to the following property, wherever located and whether now owned by Borrower or hereafter acquired: (a) all Receivables, Collections, and Related Security; (b) all of Borrower’s rights, remedies, powers, and privileges in respect of the Receivables Sale Agreement, including, without limitation, its rights to receive Purchase Price Credits and indemnity payments thereunder; (c) each Lock Box and all mail and Items therein (to the extent the same constitute Collateral or Proceeds of the Collateral) and each Lock Box Account and all other Deposit Accounts (including, without limitation, the Agent’s Account) and all funds on deposit therein, together with all certificates and Instruments, if any, from time to time evidencing such Lock Box Accounts or other Deposit Accounts or such funds on deposit; (d) all funds otherwise on deposit with or under the Control of Administrative Agent or any Lender or any of their agents or correspondents; (e) to the extent constituting Proceeds of any other Collateral, all General Intangibles, all Instruments, Documents, Items, any other instrument or intangible representing payment for goods or services, and all Investment Property; and (f) all Proceeds (including, without limitation, insurance proceeds) of any and all of the property described above. Collateral also includes any other real or personal property in which Administrative Agent has, now or hereafter, been granted a Lien to secure all or a portion of the Obligations.

“ Collateral Disclosure Certificate ” means, as to each of Borrower and Originator, the most recent Collateral Disclosure Certificate (in the form delivered on or about the Closing Date) executed and delivered to Administrative Agent by such Person, as the same may be amended, restated, supplemented, or otherwise modified from time to time or replaced from time to time in accordance with the terms of this Agreement.

“ Collections ” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including, without limitation, all yield, Finance Charges, or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable.

“ Commitment ” means, with respect to each Lender, (a) the amount set forth as its “Commitment” opposite the name of such Lender on the signature pages hereof, and (b) as to any Lender which enters into any Assignment and Acceptance (whether as transferor Lender or as Assignee thereunder), the amount of such Lender’s “Commitment” after giving effect to such Assignment and Acceptance.

“ Commitment Percentage ” means, for each Lender at any time of determination, (a) the percentage equal to its Commitment at such time divided by the Revolving Loan Commitment at such time or (b) if the Commitments have terminated, the percentage equal to the aggregate outstanding balance of its Loans at such time divided by the aggregate outstanding principal amount of all Loans.

“ Compliance Certificate ” means a compliance and no default certificate substantially in the form of Exhibit C , attached hereto and made a part hereof.

“ Concentration Limit ” means, as to any Obligor and its Affiliates (if any) and on any date of determination, the maximum percentage of all Eligible Receivables which the Receivables of such Obligor and its Affiliates may comprise, which maximum percentage shall be determined by reference to the following table for Obligors who

 

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have short term unsecured debt ratings currently assigned to them by S&P and Moody’s (or in the absence thereof, the equivalent long term unsecured senior debt ratings):

 

; provided , however , that (a) if any Obligor has a split rating, the applicable rating will be the lower of the two, (b) if any Obligor is rated by neither S&P nor Moody’s, the applicable Concentration Limit shall be the one set forth in the last line of the table above, (c) any of the percentages in the foregoing table may be modified in writing from time to time by mutual agreement of Administrative Agent and Borrower; and (d) upon Borrower’s request from time to time, Administrative Agent may agree to a greater Concentration Limit for a particular Obligor and its Affiliates (each such higher percentage, a “ Special Concentration Limit ”), it being understood that any Special Concentration Limit may be cancelled by Administrative Agent upon not less than five (5) Business Days’ written notice to the Loan Parties. As of the Closing Date, the Special Concentration Limit for all Receivables owing from The Home Depot, Inc., and its Affiliates is 30% of the aggregate Unpaid Balance of all Eligible Receivables.

“ Contingent Obligation ” means, as to any Person, any agreement, undertaking, or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.

“ Contract ” has the meaning given such term in the Receivables Sale Agreement.

“ Contractual Dilutions ” means, for any period of determination, the aggregate amount of reductions to Sales during such period including, but not limited to, buy-back or repurchase arrangements, pre-negotiated freight charges, volume rebates, and advertising allowances.

“ Contractual Dilution Reserve ” means, for any period of determination, the aggregate amount of balance sheet accruals, established in accordance with GAAP, reflecting the liability for Contractual Dilutions.

“ Control ” means, with respect to any asset, right, or property with respect to which a security interest therein is perfected by a secured party’s having “control” thereof (whether pursuant to the terms of an agreement or through the existence of certain facts and circumstances), that Administrative Agent or any Lender has “control” of such asset, right, or property in accordance with the terms of Article 9 of the UCC.

“ Credit and Collection Policy ” has the meaning given such term in the Receivables Sale Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with this Agreement.

“ Credit Party ” means each Borrower and Servicer.

“ Days Sales Outstanding Ratio ” means, on any date of determination, the ratio computed as of the most recent Calculation Date by dividing (a) 360 by (b) the Accounts Receivable Turnover Ratio determined as of such Calculation Date.

“ Debt ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness of such Person for the deferred purchase price of property or services (other than property and services purchased, and expense accruals and deferred compensation items arising, in the ordinary course of

 

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business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments (other than performance, surety and appeal bonds arising in the ordinary course of business), (d) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as capital leases, to the extent required to be so recorded, (f) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities (other than letters of credit in support of trade obligations or in connection with workers’ compensation, unemployment insurance, old-age pensions and other social security benefits in the ordinary course of business), (g) all net obligations of such Person in respect of interest rate swap, cap, collar, swaption, option or similar agreements, (h) all obligations arising in connection with a sale or other transfer of any of such Person’s financial assets which are, or are intended to be, classified as loans for federal tax purposes, (i) all Debt referred to in clauses (a) through (h) above guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss in respect of such Debt, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss in respect of such Debt, and (j) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

“ Default ” means any event or circumstance which, upon satisfaction of any requirement for the giving of notice or the lapse of time, or the happening of any further condition, event, or act, would constitute an Event of Default.

“ Default Rate ” means, as of any date, a rate per annum that is equal to (a) in the case of each Loan outstanding on such date, 2.00% in excess of the rate otherwise applicable to such Loan on such date and (b) in the case of any other Obligations outstanding on such date, 2.00% in excess of the Base Rate in effect on such date.

“ Default Ratio ” means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) the sum (without double counting) of (i) the Unpaid Balance of Receivables that became Defaulted Receivables during the Calculation Period ending on such Calculation Date, plus (ii) the Unpaid Balance of Receivables that became Charge-Offs (but not including any Receivable which was, at the time it became a Charge-Off, a Defaulted Receivable) during the Calculation Period ending on such Calculation Date by (b) Sales for the Calculation Period ending 3 months prior to such Calculation Date.

“ Defaulted Receivable ” means, as of any time of determination, any Receivable (a) which, in accordance with the Credit and Collection Policy, would be written off Borrower’s books as uncollectible or the Servicer has charged-off or deemed uncollectible or (b) as to which, as of such date of determination, any payment, or part thereof, remains unpaid for 61 days or more past the original due date for such payment ( provided , however , that, until either Administrative Agent or Borrower provides to the other 30 days’ prior written notice to the contrary, no “Sales and Service aging” Receivable (as opposed to a “Retail aging” Receivable) shall constitute a Defaulted Receivable under this clause (b) unless such Receivable remains unpaid for 91 days or more past the original due date for such payment).

“ Defaulting Lender ” means any Lender which has defaulted in any of its obligations to Administrative Agent, any other Lender or Borrower hereunder, if and so long as such default is continuing without express waiver or permitted cure.

“ Delinquency Ratio ” means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date, by dividing (a) the Unpaid Balance of Receivables that are Delinquent Receivables as of such Calculation Date by (b) an amount equal to the Net Receivable Balance as of such Calculation Date.

 

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“ Delinquent Receivable ” means, on any date of determination, any Receivable (other than a Defaulted Receivable) as to which, as of such time, any payment or part thereof remains unpaid for 31 days or more past the original due date for such payment.

“ Deposit Account Control Agreement ” means each agreement executed and delivered by Borrower, Administrative Agent, and a Lock Box Bank or other depository institution with respect to one or more Lock Box Accounts or other Deposit Accounts, pursuant to which Borrower grants Control of such Lock Box Accounts or other Deposit Accounts to Administrative Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time as provided therein.

“ Dilution Horizon Ratio ” means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) an amount equal to (i) Sales for the Calculation Period ending on such Calculation Date plus (ii) an amount equal to 50% (or such other percent as Administrative Agent may choose in its commercially reasonable discretion) of Sales for the immediately preceding Calculation Period, by (b) an amount equal to the Net Receivable Balance as of such Calculation Date.

“ Dilution Ratio ” means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing (a) Dilutions (other than Contractual Dilutions) for the Calculation Period ending on such Calculation Date by (b) Sales for the Calculation Period ending one Calculation Period prior to such Calculation Date.

“ Dilution Reserve ” means, on any date of determination, the product (expressed as a percentage) computed as of the most recent Calculation Date, of

(a) the sum of

(i) the product of (x) the Stress Factor times (y) the Expected Dilution Ratio plus

(ii) the product of (x) the positive difference, if any, between (1) the Dilution Spike Rate less (2) the Expected Dilution Ratio times (y) a ratio computed by dividing (1) the Dilution Spike Rate by (2) the Expected Dilution Ratio; times

(b) the Dilution Horizon Ratio.

“ Dilution Spike Rate ” means, on any date of determination, the highest Dilution Ratio over the 12 Calculation Periods ending on the most recent Calculation Date.

“ Dilutions ” means returns, allowances, net credits, and any other non-cash deductions or reductions to the Sales during such period (other than Contractual Dilutions).

“ Eligible Financial Institution ” in reference to assignments and participations made or sold pursuant to Section 12.6, means (i) any existing Lender, (ii) any Affiliate of an existing Lender, and (iii) any other commercial bank or other financial institution not described in clauses (i) or (ii) above, which is domiciled in the United States and has total assets in excess of $5,000,000,000 (or a United States Affiliate thereof); provided that, in the case of clause (iii) only, Administrative Agent and, unless an Event of Default then exists, Borrower, each shall have consented to such Person becoming an “Eligible Financial Institution”; provided , further , that Borrower’s consent, when required, shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, solely for purposes of Section 12.6(b); ( i.e. , sale of participations) “Eligible Financial Institution” shall include any commercial bank or other financial institution which, in the ordinary course of business of a Lender, acts as a conduit for the reallocation by such Lender of interest rate risks associated with the making and carrying of LIR Loans, and neither Administrative Agent’s consent nor Borrower’s consent shall be required relative thereto.

 

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“ Eligible Receivable ” means each Receivable:

(a)         which was created by Originator in its ordinary course of business; is not owing in respect of any installment sales contract or similar arrangement;

(b)         which was documented in compliance with the applicable Originator’s standard administration and documentation policies and procedures and which satisfies all applicable requirements of the Credit and Collection Policy;

(c)         which is not a Defaulted Receivable; which is not a Receivable that has been re-aged or converted or subject to, or constitutes, any debit memo or similar advice;

(d)         which is denominated and payable in U.S. dollars and is only payable in the United States of America;

(e)         the Obligor of which is a resident of the United States of America;

(f)         the Obligor of which is not an officer, director, or Affiliate of Borrower, Servicer, Originator, or Parent;

(g)         the Obligor of which is not (i) a Governmental Authority ( provided , however , that, until the date which is 2 Business Days after Borrower’s receipt of written notice from Administrative Agent to the contrary, up to 2.50% of the aggregate amount of Eligible Receivables may be derived from Eligible Receivables which would otherwise be deemed ineligible solely on account of this clause (g)(i)) or (ii) a Sanctioned Person;

(h)         which requires repayment in full of the Unpaid Balance thereof within 60 days of the date of the creation thereof (it being understood that net 60 days terms are eligible) (except that up to 5% of the aggregate Unpaid Balance of all Receivables may have terms payable within 61-90 days of the original billing date, to the extent such Receivables otherwise constitute Eligible Receivables hereunder);

(i)         which is not owing from an Obligor as to which more than 35% of the aggregate Unpaid Balance of all Receivables owing from such Obligor are Defaulted Receivables;

(j)         which was not a Delinquent Receivable on the date on which it was acquired by Borrower from the applicable Originator;

(k)         as to which, at the time of the sale of such Receivable to Borrower, the applicable Originator was the sole owner thereof and had good and marketable title thereto, and which was sold to Borrower pursuant to the Receivables Sale Agreement free and clear of all Adverse Claims other than Permitted Encumbrances;

(l)         the assignment of which by the applicable Originator to Borrower pursuant to the Receivables Sale Agreement does not in any material manner contravene or conflict with any law, rule or regulation or any contractual or other restriction, limitation or encumbrance, and the sale or assignment of which does not require the consent of the Obligor thereof;

(m)         that is in full force and effect and constitutes the legally valid and binding payment obligation of the Obligor with respect thereto, enforceable against such Obligor in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally and general principles of equity;

(n)         [Intentionally Omitted];

(o)         as to which each of Borrower’s and Administrative Agent’s first priority (subject to Permitted Encumbrances) security interest in such Receivable has been perfected under the applicable UCC and other applicable laws;

(p)         as to which Servicer is in possession of the related Records;

 

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(q)         which constitutes an “account” or a “payment intangible” under and as defined in Article 9 of the UCC of all applicable jurisdictions;

(r)         which is not subject to any dispute, right of rescission, set-off, customer deposit, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim other than Permitted Encumbrances, and the Obligor thereon holds no right as against Originator to cause Originator to repurchase the goods the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or goods returned in accordance with the terms of the Contract); provided , however , that (i) if such dispute, offset, counterclaim or defense affects only a portion of the Unpaid Balance of such Receivable, then such Receivable may be deemed an Eligible Receivable to the extent of the portion of such Unpaid Balance which is not so affected and (ii) no portion of any Receivable which is otherwise an Eligible Receivable will be excluded on account of any dispute, offset, counterclaim, or defense to the extent any such dispute, offset, counterclaim, or defense is already taken into account in the calculation of the Contractual Dilution Reserve;

(s)         the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor (excluding product and service warranty obligations in favor of Obligors under which no claims exist);

(t)         arises under a Contract which does not contain a confidentiality provision that purports to restrict the ability of Administrative Agent or any Lender to exercise its respective rights under this Agreement, including, without limitation, its right to review the Contract related thereto;

(u)         which arises under a Contract that contains an obligation to pay a specified sum of money;

(v)         which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation;

(w)         as to which each of the representations and warranties contained in Sections 5.7, 5.18, 5.19, 5.21, 5.24, and 5.25 is true and correct; and

(x)         as to which the Obligor thereon has not suffered and is not the subject of an Event of Bankruptcy.

For purposes of clarification only, no Receivable shall constitute an Eligible Receivable unless it satisfies each of the foregoing criteria.

“ Equity Interest ” means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interest in (however designated) equity of such Person, including, without limitation, any common stock, preferred stock, limited or general partnership interests, and limited liability company membership interests, whether voting or non-voting.

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

“ Event of Bankruptcy ” shall be deemed to have occurred with respect to a Person if either:

(a)         a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or

 

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(b)         such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.

“ Event of Default ” has the meaning given such term in Section 9.1.

“ Excess Concentration Amount ” means, on any date of determination, with respect to any Obligor and its Affiliates considered as if they were one and the same Obligor, the aggregate Unpaid Balance of all Eligible Receivables of such Obligor at such time which is in excess of the Concentration Limit applicable to such Obligor.

“ Excluded Taxes ” means, in the case of any Indemnified Party, Taxes imposed on its overall net income, and franchise taxes and branch profit taxes based on net income imposed on it, and Taxes imposed by a Governmental Authority as a result of a connection or former connection between an Indemnified Party and the jurisdiction imposing such tax, including without limitation, any connection arising from such Indemnified Party being a citizen, domiciliary, or resident of such jurisdiction, being organized in such jurisdiction, or having a permanent establishment or fixed place of business therein, but excluding any such connection arising solely from this Agreement or the Loan Documents.

“ Expected Dilution Ratio ” means, on any date of determination, the rolling twelve-month average Dilution Ratio for the 12 Calculation Periods ending on the most recent Calculation Date.

“ 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 published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:00 a.m. (Birmingham, Alabama, time) for such day on such transactions received by Administrative Agent from 3 federal funds brokers of recognized standing selected by it in its discretion.

“ Fee Letter ” means that certain letter agreement regarding Fees, dated as of the Closing Date, and executed and delivered by Borrower and Administrative Agent, as the same may be amended, restated, supplemented, or otherwise modified from time to time by agreement of Borrower and Administrative Agent.

“ Fees ” means the Unused Fee and all other fees payable from time to time by Borrower to Administrative Agent or the Lenders under this Agreement or the other Loan Documents, including, without limitation, all fees payable to Administrative Agent in accordance with the Fee Letter.

“ Finance Charges ” means, with respect to any Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.

“ Fiscal Month ,” “ Fiscal Quarter ,” and “ Fiscal Year ” means, with respect to any Person, each of such Person’s fiscal months, quarters, or years, as applicable.

“ GAAP ” means generally accepted accounting principles as in effect in the United States from time to time.

“ Governmental Authority ” means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government including any authority or other quasi-governmental entity established to perform any of such functions.

 

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“ Indemnified Amount ” means any amounts arising for any reason which any Credit Party is required to pay to any Indemnified Party pursuant to this Agreement.

“ Indemnified Party ” has the meaning set forth in Section 12.3(b).

“ Independent Director ” has the meaning given such term in Section 6.6(b).

“ Item ” means any “item” as defined in Section 4-104 of the UCC, and shall also mean and include checks, drafts, money orders or other media of payment.

“ Landlord Waiver ” means each landlord waiver in form and substance satisfactory to Administrative Agent pursuant to which, among other things, the landlord of any premises at which any Collateral is located has agreed to subordinate its interests (if any) in and to such Collateral to Administrative Agent’s interest therein and granted Administrative Agent access to such premises for purposes of assembling, copying, examining, repossessing or otherwise dealing with the Collateral located on such premises, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Lending Office ” means, as to each Lender, its office located at its address set forth on the signature pages hereof (or identified on the signature page of an Assignment and Acceptance as its “Lending Office”) or such other office as such Lender may hereafter designate as its “Lending Office” by notice to Borrower and Administrative Agent.

“ LIBOR ” means a rate per annum equal to the rate offered by prime banks in the London interbank eurodollar market for deposits in U.S. dollars in an amount comparable to the Loan for which such rate is being determined and for a period equal to the interest period applicable thereto, all as determined by Administrative Agent with reference to the financial information reporting service used by Administrative Agent at the time of such determination. Each calculation by Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error.

“ LIBOR Index Rate ” means, for any LIR Loan and on any date of determination, a per annum rate equal to LIBOR determined with respect to an interest period of one month. The LIBOR Index Rate shall be determined by Administrative Agent on the first Business Day of each calendar month and such rate as so determined by Administrative Agent shall be the LIBOR Index Rate for such day and each day thereafter, through but not including the first Business Day of the following calendar month. Upon Borrower’s request from time to time, Administrative Agent shall inform Borrower and each Lender of the LIBOR Index Rate for the applicable calendar month. The initial LIBOR Index Rate is set forth in Section 2.3(g).

“ LIBOR Reserve Requirements ” means the maximum reserves (whether basic, supplemental, marginal, emergency, or otherwise) prescribed from time to time by the Board of Governors of the Federal Reserve System (or any successor) with respect to liabilities or assets consisting of or including “Eurocurrency liabilities” (as defined in Regulation D of the Board of Governors of the Federal Reserve System).

“ Lien ” means any lien (statutory or otherwise), mortgage, deed of trust, deed to secure debt, pledge, hypothecation, security interest, trust arrangement, security deed, financing lease, collateral assignment, encumbrance, conditional sale or title retention agreement, or any other interest in property designed to secure the repayment or performance of any obligation, whether arising by agreement or under any statute or law or otherwise.

“ LIR Loan ” means a Loan, or portion thereof, during any period in which it bears interest at a rate based on the LIBOR Index Rate.

 

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“ Loan Documents ” means this Agreement, the Receivables Sale Agreement, the Performance Undertaking, each Deposit Account Control Agreement, and each other now existing or hereafter arising document, agreement, or instrument evidencing, describing, guaranteeing, or securing the Obligations or delivered in connection with this Agreement and the Receivables Sale Agreement, including, without limitation, each Security Agreement, Note, Landlord Waiver, Third Party Agreement, Collateral Disclosure Certificate, Notice of Borrowing, Receivables Report, and UCC financing statement, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Loans ” means the Revolving Loans.

“ Lock Box ” means a locked postal box maintained on behalf of Borrower or Servicer for the purpose of receiving Items constituting Collections of the Receivables.

“ Lock Box Account ” means any of those Deposit Accounts described on Schedule 5.12 hereto and any additional or replacement Deposit Account to which Mail Payments are deposited for clearing regardless of whether the same is associated with a Lock Box.

“ Lock Box Bank ” means, at any time of determination, any of the banks at which one or more Lock Box Accounts is maintained.

“ Loss Horizon Ratio ” means, on any date of determination, the ratio (expressed as a percentage) computed as of the most recent Calculation Date by dividing :

(a)         the aggregate Sales generated by the Originators during the last 3.5 Fiscal Months ending on such date (or such other period as Administrative Agent shall determine); by

(b)         an amount equal to the Net Receivable Balance as of such Calculation Date.

“ Loss Reserve ” means, on any date of determination but subject to the following paragraph, the lesser of:

(a)         the product (expressed as a percentage) of (i) the highest rolling 3-month average Default Ratio over the 12 most recent Calculation Periods, times (ii) the Loss Horizon Ratio as of such Calculation Date, times (iii) the Stress Factor; and

(b)         an amount (expressed as a percentage) equal to (i) the aggregate Unpaid Balance of all Receivables which remain unpaid 61 days or more after their original due date, divided by (ii) the aggregate Unpaid Balance of all Receivables.

Any of the foregoing of this definition to the contrary notwithstanding, the Loss Reserve shall be determined solely by reference to clause (a) at all times after either Administrative Agent or Borrower shall have given the other 30 days’ prior written notice to such effect.

“ Mail Payments ” has the meaning set forth in Section 8.2(c).

“ Master Account ” means a Deposit Account established and maintained by Borrower at Bank of America, N. A., on or after the Closing Date, which Borrower will utilize, if and when such Deposit Account is established, to accept the deposit of collected balances swept from its other Lock Box Accounts maintained at Bank of America, N.A.

“ Material Adverse Effect ” means any material adverse effect upon (a) the validity, performance, or enforceability of any of the Loan Documents or any of the transactions contemplated hereby or thereby; (b) the properties, business, or condition (financial or otherwise) of (i) Borrower, (ii) Parent and its Subsidiaries as a whole or (iii) at any time when ASP is not Servicer, Servicer; (c) the ability of any Credit Party to fulfill any obligation under any of the Loan Documents; (d) the existence, validity, perfection, or priority of (i) Administrative Agent’s (for the benefit of the Secured Parties) security interest in the Collateral or any significant portion thereof or (ii) Borrower’s ownership interest in a significant portion of the Receivables; or (e) the validity, enforceability or collectibility of any significant portion of the Receivables.

 

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“ Material Agreement ” means an agreement to which any Credit Party or Performance Guarantor is a party (other than the Loan Documents) and (a) which would, as to such Credit Party or Performance Guarantor, constitute a material contract in accordance with Regulation S-K promulgated by the Securities and Exchange Commission under the Securities Act of 1933 or (b) for which breach, termination, cancellation, nonperformance, or failure to renew could reasonably be expected to have a Material Adverse Effect.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Net Receivable Balance ” means, on any date of determination, (a) the aggregate Unpaid Balance of all Eligible Receivables, minus (b) the Excess Concentration Amount for all Obligors, minus (c) the Contractual Dilution Reserve.

“ Note ” shall mean the Revolving Notes and any other promissory note now or hereafter evidencing any Obligations, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Notice of Borrowing ” means each written request for a Revolving Loan substantially in the form of Exhibit B , attached hereto and made a part hereof.

“ Obligations ” means all obligations and covenants now or hereafter from time to time owed to Administrative Agent or any Lender or any Affiliate of Administrative Agent or any Lender by or on behalf of Borrower, related to the Loans, this Agreement, the Loan Documents, or the transactions contemplated herein or therein, including, without limitation or duplication, (a) the Loans and (b) all other amounts now owed or hereafter from time to time owed under the terms of this Agreement and the other Loan Documents, or arising out of the transactions described herein or therein, including, without limitation, principal, interest, commissions, fees (including, without limitation, reasonable attorneys’ fees), charges, costs, expenses, and all amounts due or from time to time becoming due under the indemnification and reimbursement provisions of this Agreement and the other Loan Documents (including, without limitation, Section 12.3), together, in each of the foregoing cases in this definition, with all interest accruing thereon, including any interest on pre-petition Debt accruing after bankruptcy (whether or not allowable in such bankruptcy), and whether any of the foregoing amounts are now due or from time to time hereafter become due, are direct or indirect, or are certain or contingent, and whether such amounts due are from time to time reduced or entirely extinguished and thereafter re-incurred.

“ Obligor ” means, with respect to any Receivable, each Person obligated to make payments with respect to such Receivable, including any guarantor thereof.

“ OFAC ” means the United States Department of the Treasury’s Office of Foreign Assets Control or any successor thereto.

“ Organizational Documents ” means, for any Person, the documents for its formation and organization, which, for example, (a) for a corporation, are its corporate charter and bylaws, (b) for a partnership, are its certificate of partnership (if applicable) and partnership agreement, (c) for a limited liability company, are its certificate of formation or organization and its operating agreement, regulations or the like and (d) for a trust, is the trust agreement, declaration of trust, indenture or bylaws under which it is created.

“ Originator ” means ASP.

“ Parent ” means Zep Inc., a Delaware corporation, together with its successors and assigns.

“ Participant ” has the meaning set forth in Section 12.6(b).

“ Participant Register ” has the meaning set forth in Section 12.6(g).

“ Performance Guarantor ” means Parent.

 

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“ Performance Undertaking ” means that certain Performance Undertaking dated as of the Closing Date and substantially in the form of Exhibit L , attached hereto and made a part hereof, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Permitted Encumbrances ” means (a) Liens for taxes or assessments or other governmental charges not yet due and payable or being contested in good faith; (b) Liens created by the Loan Documents; and (c) any Liens whose existence is revealed by the Supplemental Lien Searches.

“ Permitted Investment ” means, at any time:

(i) marketable obligations issued by, or the full and timely payment of which is directly and fully guaranteed or insured by, the United States government or any other government with an equivalent rating, or any agency or instrumentality thereof when such marketable obligations are backed by the full faith and credit of the United States government or such other equivalently rated government, as the case may be, but excluding any securities which are derivatives of such obligations;

(ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a commercial paper rating of at least “A-1” from S&P or at least “P-1” from Moody’s; and

(iii) time deposits, bankers’ acceptances and certificates of deposit of any domestic commercial bank or any United States branch or agency of a foreign commercial bank which (A) has capital, surplus and undivided profits in excess of $100,000,000 and which has a commercial paper or certificate of deposit rating meeting the requirements specified in clause (iv) below (or equivalent rating from S&P and Moody’s) or (B) is set forth in a list (which may be updated from time to time) approved by Administrative Agent.

“ Person ” means any natural person, corporation, unincorporated organization, trust, joint-stock company, joint venture, association, company, limited or general partnership, limited liability company, any government or any agency or political subdivision of any government, or any other entity or organization.

“ Prime Rate ” means that rate announced by Administrative Agent from time to time as its prime rate and is one of several interest rate bases used by Administrative Agent. Administrative Agent lends at rates both above and below its prime rate, and Borrower acknowledges that Administrative Agent’s prime rate is not represented or intended to be the lowest or most favorable rate of interest offered by Administrative Agent.

“ Purchase Price Credit ” has the meaning set forth in the Receivables Sale Agreement.

“ Purchase Report ” has the meaning set forth in the Receivables Sale Agreement.

“ Receivable ” means each “Receivable” under and as defined in the Receivables Sale Agreement in which Borrower now has or hereafter acquires any right, title or interest.

“ Receivables Report ” means a report in form and substance reasonably satisfactory to Administrative Agent from to time, which shall be prepared by Servicer as of each Receivables Reporting Date and shall be signed by a Responsible Officer of Servicer.

“ Receivables Reporting Date ” means:

(a)         at all times when the Settlement Date occurs on a monthly basis, the last day of the Fiscal Month ending immediately before each Settlement Date;

(b)         at all times when the Settlement Date occurs on a weekly basis, the last day of the calendar week ending immediately before each Settlement Date; and

 

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(c)         at all times when the Settlement Date occurs on a daily basis, the day immediately preceding each Settlement Date.

“ Receivables Sale Agreement ” means that certain Second Amended and Restated Receivables Sale Agreement, dated as of October 14, 2009, by and among Originator, as “Seller,” and Borrower, as “Buyer,” as such agreement may be further amended, supplemented, restated, or otherwise modified from time to time to the extent permitted herein.

“ Receivables Sale Documents ” means the Receivables Sale Agreement, the Subordinated Note, and all other documents, instruments, and agreements executed and/or delivered in connection therewith, together with all exhibits, schedules, annexes, and attachments thereto, and all amendments, restatements, supplements, and other modifications thereto.

“ Records ” means with respect to a Receivable, (i) the Contract giving rise to the Receivable and other evidences of the Receivable, including, without limitation, tapes, discs, punch cards and related property and rights and (ii) each UCC financing statement related thereto, if any.

“ Register ” has the meaning set forth in Section 12.6(g).

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

“ Related Security ” has the meaning given such term in the Receivables Sale Agreement.

“ Reporting Period ” means each of (a) the period beginning on (and including) the Closing Date and ending on (and including) the first Receivables Reporting Date thereafter, and (b) each period thereafter beginning on (and including) the day after each Receivables Reporting Date and ending on (and including) the earlier to occur of the succeeding Receivables Reporting Date or the Termination Date.

“ Required Capital Amount ” means $15,000,000.

“ Required Lenders ” means, at any time, the Lender or Lenders having, in the aggregate, more than 50% of the aggregate amount of the Commitments or, if the Commitments are no longer in effect, the Lender or Lenders holding more than 50% of the aggregate outstanding principal amount of the Loans; provided , however , that such calculation shall be made without including any Commitment of, or any principal amount of the Revolving Note held by, any Defaulting Lender.

“ Reserve Floor ” means, for any Calculation Period, the sum (expressed as a percentage) of (a) 20% (or such other percentage as may be mutually agreed upon in writing between Administrative Agent and Borrower) and (b) the product of (i) the Expected Dilution Ratio times (ii) the Dilution Horizon Ratio, in each case, as of the immediately preceding Calculation Date.

“ Reserve Percentage ” means the greater of (a) the Reserve Floor and (b) a percentage equal to the sum of (i) the Loss Reserve, (ii) the Dilution Reserve, (iii) the Yield Reserve, and (iv) the Servicing Reserve.

“ Reserves ” means such amounts as may be required by Administrative Agent at any time and from time to time in Administrative Agent’s reasonable credit judgment; provided , however , that Reserves shall never be (a) less than $0.00 or (b) greater than the amount, if any, by which (i) the Borrowing Base calculated only with regard to clauses (a)(i) and (ii) of the definition thereof but otherwise in accordance with the terms of this Agreement as in effect on the date of calculation exceeds (ii) the Borrowing Base calculated only with regard to clauses (a)(i) and (ii) of the definition thereof and otherwise on the presumptions that (x) both of the notices of the types described in the proviso to clause (b) of the definition of “Defaulted Receivable” and in the last paragraph of the definition of “Loss Reserve” shall have been given and (y) the 30-day notice periods related to such provisions shall have elapsed; provided , further , that (x) Reserves established as a result of litigation shall not exceed $5,000,000 and (y) Administrative Agent shall not establish any Reserves with respect to litigation unless Administrative Agent shall have a reasonable basis for believing that one or more judgments totaling more than $1,000,000 in the aggregate are likely to be entered against Borrower in respect of actual, pending, or threatened litigation involving Borrower.

 

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“ Responsible Officer ” means, with respect to any Person, its president, chief executive officer, corporate controller, treasurer, vice president of finance or chief financial officer.

“ Revolving Loan ” means a loan made by Lenders pursuant to Section 2.1.

“ Revolving Loan Commitment ” means the aggregate commitment of Lenders, subject to the terms and conditions herein, to make Revolving Loans in accordance with the provisions of Section 2, in an aggregate amount not to exceed $40,000,000 at any one time.

“ Revolving Note ” has the meaning set forth in Section 2.2.

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

“ Sales ” means, for any applicable period, the aggregate amount of all trade receivables generated by Originator during such period with credit terms of any kind.

“ Sanctioned Country ” means a country subject to the sanctions program identified on the list maintained by OFAC and available at the following website or as otherwise published from time to time: http://www.treas.gov/offices/enforcement/ofac/programs/ .

“ Sanctioned Person ” means (a) any Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html or as otherwise published from time to time, (b) any agency, authority, or subdivision of the government of a Sanctioned Country, (c) any Person or organization controlled by a Sanctioned Country, or (d) any Person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC.

“ Secured Parties ” means each Lender, Administrative Agent, and each Indemnified Party and the successors and assigns of each of the foregoing.

“ Security Agreement ” means this Agreement as it relates to a security interest in the Collateral, and any other mortgage instrument, deed of trust, pledge agreement, life insurance assignment, security agreement, or similar agreement or instrument now or hereafter executed by any Credit Party or other Person granting Lender a Lien in any property to secure the Obligations.

“ Servicer Event of Default ” has the meaning set forth in Section 8.7.

“ Servicing Fee ” means, for each day in a Calculation Period, an amount equal to (a) the Servicing Fee Rate, times (b) the aggregate Unpaid Balance of all Receivables at the close of business on the Calculation Date for the immediately preceding Calculation Period, times (c) 1/360.

“ Servicing Fee Rate ” means (a) at all times when Originator is Servicer, 1.00% per annum (or such other percentage as Administrative Agent and Borrower may from time to time agree upon in writing based upon then prevailing market conditions) and (b) at all other times, a percentage per annum determined by mutual agreement of Borrower and Administrative Agent and based on the prevailing market rate; provided , however , if Borrower and Administrative Agent are unable to agree upon such percentage under this clause (b) within 2 Business Days after Administrative Agent proposes a percentage to Borrower in writing, then the Servicing Fee Rate will be the percentage determined by Administrative Agent in its commercially reasonable discretion and based on the prevailing market rate.

 

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“ Servicing Reserve ” means, on any date of determination, an amount (expressed as a percentage) equal to (a) the highest Days Sales Unpaid Ratio during the 12 Calculation Periods ending on the most recent Calculation Date, times (b) the Stress Factor, times (c) the Servicing Fee Rate, times (d) 1/360.

“ Settlement Date ” means (a) the 20th day of each calendar month beginning on the 20th day of the calendar month following the Closing Date and (b) such other day or day of the month as Administrative Agent may require from time to time upon written notice to Borrower and Servicer (including, without limitation, on each Business Day); provided , however , (i) if any such day is not a Business Day, the applicable Settlement Date shall be the immediately following Business Day and (ii) Administrative Agent may not require that Settlement Dates occur more frequently than on a monthly basis unless (A) a Default or Event of Default then exists or (B) the aggregate principal balance of the Loans exceeds 80% of the lesser of (1) the Borrowing Base and (2) the Revolving Loan Commitment; provided , further , that, if Administrative Agent, in accordance with this definition, requires Settlement Dates to occur on a more frequent basis than monthly, then such increased frequency shall continue until such time as Administrative Agent shall direct otherwise.

“ Solvent ” means, with respect to any Person, that as of the date of determination both (a)(i) the then fair saleable value of the property of such Person is (A) greater than the total amount of liabilities (including contingent liabilities) of such Person and (B) not less than the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, nor does it reasonably believe that it will incur, debts beyond its ability to pay such debts as they become due and (b) such Person is “ solvent ” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“ Stress Factor ” means 2.0.

“ Subordinated Note ” means that certain promissory note dated as of the Closing Date and made by Borrower to the order of Originator substantially in the form of Exhibit VII to the Receivables Sale Agreement, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Subsidiary ” means, as to any Person, any other Person of which more than 50% of the Equity Interests issued by such other Person are directly or indirectly owned or effectively controlled by such Person.

“ Supplemental Lien Searches ” has the meaning given such term in Section 4.3(a).

“ Taxes ” means any tax, imposts, levies, duties, deductions, or withholdings of any nature now or at anytime hereafter imposed by any Governmental Authority or by any taxing authority thereof or therein.

“ Telephone Instruction Letter ” means a telephone instruction letter substantially in the form of Exhibit G , attached hereto and made a part hereof.

“ Term ” means the period from and including the Closing Date to but not including the Termination Date.

“ Termination Date ” means the earliest to occur of (a) September 30, 2012; (b) the date on which Borrower terminates this Agreement and the entire Revolving Loan Commitment pursuant to Section 2.11; and (c) the date on which Administrative Agent terminates the Revolving Loan Commitment pursuant to Section 9.2 hereof.

“ Third Party ” means (a) any lessor, mortgagee, mechanic or repairman, warehouse operator, processor, packager, or other third party which may have possession of any Collateral or lienholders’ enforcement rights against any Collateral or (b) any licensor whose rights in or with respect to any intellectual property or Collateral limit or restrict or may, in Administrative Agent’s determination, limit or restrict Borrower’s or Administrative Agent’s right to sell or otherwise dispose of such Collateral.

 

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“ Third Party Agreement ” means (i) an agreement in form and substance satisfactory to Administrative Agent pursuant to which a Third Party, as applicable and as required by Administrative Agent, waives or subordinates in favor of Administrative Agent such Third Party’s lienholders’ enforcement rights against any Collateral, grants Administrative Agent access to the Collateral for purposes of allowing Administrative Agent to exercise its rights hereunder and under the other Loan Documents, or authorizes Administrative Agent to dispose of Collateral bearing or consisting of, in whole or in part, such Third Party’s intellectual property and (ii) any Landlord Waiver.

“ Transferee ” has the meaning set forth in Section 12.6(d).

“ Type ” means, with respect to a Loan, whether such Loan is a Base Rate Loan or a LIR Loan.

“ UCC ” means the Uniform Commercial Code (or any successor statute), as adopted and in force in the applicable jurisdiction or, when the laws of any other state govern the method or manner of the perfection or enforcement of any Lien in any of the Collateral, the Uniform Commercial Code (or any successor statute) of such other state.

“ UCC Filing ” has the meaning set forth in Section 5.10.

“ Unpaid Balance ” means, with respect to any Receivable and at any time of determination, an amount equal to (a) the then outstanding principal balance thereof, plus (without duplication), and (b) the aggregate amount required to pay in full all interest, finance, prepayment, and other fees or charges of any kind payable in respect of such Unpaid Balance as of such time.

“ Unused Fee ” has the meaning given such term in Section 2.9(a).

“ U.S. ” means the United States of America.

“ USA Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“ Yield Reserve ” means, on any date of determination, an amount (expressed as a percentage) equal to (a) the highest Days Sales Outstanding Ratio during the 12 Calculation Periods ending on the most recent Calculation Date times (b) the Stress Factor times (c) the Prime Rate as in effect on such Calculation Date divided by (d) 360.

1.3         Financial Terms . All financial terms used herein shall have the meanings assigned to them under GAAP unless another meaning shall be specified.

 

2.

THE CREDIT FACILITY .

2.1         Revolving Loan Commitment . Subject to the terms and conditions of this Agreement, each Lender severally agrees to make Revolving Loans to Borrower from time to time during the Term for the purposes set forth in Section 6.5. Lenders shall have no obligation to make a Revolving Loan (a) if doing so would, after giving effect thereto, cause a Borrowing Base Deficit to exist or cause the aggregate outstanding principal amount of all Revolving Loans made by such Lender to exceed such Lender’s Commitment or (b) during the existence of any Default or Event of Default, if Administrative Agent refuses to permit or accept a request for a Revolving Loan in accordance with Section 9.2. Within the foregoing limits and subject to the terms and conditions of this Agreement, Borrower may borrow, repay, and reborrow the principal amount of the Revolving Loans at any time during the Term.

 

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2.2         The Note . On the Closing Date, Borrower shall execute and deliver to Administrative Agent a promissory note in the form of Exhibit A , attached hereto and made a part hereof (the “ Revolving Note ”), which Revolving Note, together with Administrative Agent’s records, shall evidence all of the Revolving Loans and interest accruing thereon.

2.3         Interest .

(a)         Types of Loans . Subject to the terms and conditions of this Agreement, the Revolving Loans may be Base Rate Loans or LIR Loans. Unless otherwise required by Section 2.3(f), all Loans shall be made and maintained as LIR Loans.

(b)         Agreement to Pay Interest . Borrower agrees to pay interest on the unpaid principal amount of each Loan from the respective date each such Loan is made until such Loan is paid in full (whether at stated maturity, upon acceleration, or otherwise) at the rates of interest and at the times set forth in this Agreement. Notwithstanding anything herein to the contrary, interest shall continue to accrue on the principal amount of each Loan which remains unpaid after the Termination Date.

(c)         Interest Rate . All Loans shall bear interest at a rate equal to (a) with respect to Base Rate Loans, the Base Rate plus the Applicable Margin and (b) with respect to LIR Loans, LIBOR Index Rate plus the Applicable Margin. All interest on any Loan and on all other Obligations shall be calculated on the presumed basis of a year of 360 days, for the actual number of days elapsed, plus, in any case, the Default Rate when and as applicable.

(d)         Adjustment of Interest Rate . The rate of interest on any Base Rate Loan shall be adjusted daily to reflect any change in the Base Rate. Subject to Section 2.3(f), the rate of interest on any LIR Loan shall be adjusted as provided in the definition of “LIBOR Index Rate.”

(e)         Default Rate . At Administrative Agent’s option, during the existence of any Event of Default, the principal amount of all Obligations shall bear interest at the Default Rate. In any event, the Default Rate shall automatically and without notice to any Person apply from the time Administrative Agent accelerates or is deemed to have accelerated any or all of the Obligations pursuant to Section 9.2 until such Obligations are, or any judgment thereon is, paid in full.

(f)         Automatic Conversion to Base Rate . Any provision of this Agreement to the contrary notwithstanding and without limiting the provisions of Section 11, if Administrative Agent should at any time determine (or, in the case of clause (iii) below, be notified that any Lender has determined) that (i) it is not reasonably possible to determine LIBOR or the LIBOR Index Rate, (ii) that LIBOR or the LIBOR Index Rate is no longer available, (iii) it is no longer lawful for one or more Lenders to make Loans at any rate based on LIBOR or the LIBOR Index Rate, or (iv) a Default or Event of Default exists and Administrative Agent shall so elect, then, in each case, (A) all affected LIR Loans shall automatically and without notice be converted into Base Rate Loans and (B) all obligations of the Lenders to make LIR Loans shall cease until such time as Administrative Agent shall have determined (or, in the case of clause (iii) above, be notified that any Lender has determined) that it is able to determine LIBOR or the LIBOR Index Rate, as applicable, such illegality shall be reversed, or such Event of Default shall have been waived or cured, as applicable.

(g)         Opening LIBOR Index Rate . The LIBOR Index Rate on the date hereof is 0.25% per annum and, therefore, the rate of interest in effect hereunder on the date hereof, expressed in simple interest terms (but on a 360-day basis), is 2.50% per annum with respect to any portion of the Revolving Loans bearing interest as a LIR Loan.

2.4         Requests for Borrowings; Conversions .

(a)         Making Requests for New Loans . Each request for the making of a Revolving Loan may be made telephonically; provided , however , that Administrative Agent, in its sole discretion, may from time to time or at all times require each such request to be in writing. If Administrative Agent requires Borrower to make a

 

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request for a Revolving Loan in writing, Borrower shall submit a Notice of Borrowing therefor. Each request (whether telephonic or in writing) shall specify (i) the date for the making of the applicable Loan, which date must be a Business Day; (ii) the principal amount of the applicable Loan to be made; (iii) lawful instructions for the disbursement of the proceeds of such Loan; and (iv) such other information as Administrative Agent may reasonably require from time to time.

(b)         Timing and Acceptance of Requests . Requests made under this Section 2.4 (whether telephonic or in writing) are irrevocable. Requests under this Section 2.4 which Administrative Agent receives after 12:00 p.m. (Atlanta, Georgia, time) shall be deemed to have been received on the next Business Day. Lenders shall make all Revolving Loans hereunder in immediately available funds on the same Business Day on which Administrative Agent receives or is deemed to have received the request therefor or, if Borrower has requested the Loan be made on a later date, the Business Day requested by Borrower in a written Notice of Borrowing relating to such Loan.

2.5         Excess Outstandings . Any provision of this Agreement to the contrary notwithstanding, Administrative Agent may, in its sole and absolute discretion, make or permit to remain outstanding Revolving Loans which are causing or would cause a Borrowing Base Deficit to exist, and all such excess amounts shall (a) be part of the Obligations evidenced by the Revolving Note, (b) bear interest as provided herein, (c) be payable ON DEMAND , (d) be secured by the Collateral, and (e) be entitled to all rights and security as provided under the Loan Documents.

2.6         Repayment of Loans and Obligations .

(a)         Repayment of Obligations Generally . Borrower shall pay all outstanding principal amounts and accrued interest under the Note in accordance with the terms of the Note and this Agreement.

(b)         Payments in Respect of Revolving Loans .

(i)         All outstanding principal of the Revolving Loans shall be due and payable on the Termination Date. Before the Termination Date, Borrower:

(A)         may, from time to time on any Business Day, make a prepayment, in whole or in part, of the outstanding principal amount of any Loans;

(B)         shall, immediately upon any acceleration of any Loans pursuant to Section 9.2(c), repay all Loans; and

(C)         shall, immediately upon discovering that a Borrowing Base Deficit exists or that the outstanding aggregate principal amount of all Loans exceeds the Revolving Loan Commitment, pay the amount of such excess to Administrative Agent on behalf of Lenders.

Each such prepayment shall be subject to the payment of any amounts required by Section 11.

(ii)         Borrower shall pay all accrued and unpaid interest hereunder, in arrears, on (x) the Termination Date and (y) each of the following Settlement Dates, in each case for the period commencing on and including the most recent Settlement Date (or, in the case of the first Settlement Date to occur hereunder, the Closing Date) on which interest was paid, to but not including such Settlement Date:

(A)         at all times when the Settlement Date occurs on a monthly basis, on each Settlement Date;

(B)         at all times when the Settlement Date occurs on a weekly basis, on the third Settlement Date occurring in each calendar month; and

 

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(C)         at all times when the Settlement Date occurs on a daily basis, on the first Settlement Date occurring on or after the 20th day of each calendar month.

2.7         Additional Payment Provisions .

(a)         Payment of Other Obligations . Borrower shall pay Administrative Agent on behalf of Lenders the balance of the Obligations under the Loan Documents requiring the payment of money on the terms set forth in the Loan Documents, or, if no date of payment is otherwise specified in the Loan Documents, (i) if no Default or Event of Default is then in existence, within seven Business Days after Administrative Agent informs or notifies Borrower thereof and (ii) if a Default or Event of Default is in existence, ON DEMAND . This Section 2.7(a) shall apply to all Obligations, including, without limitation, all amounts required to be paid or reimbursed by a Credit Party under Section 12.3.

(b)         Authorization to Debit . (i) Subject to clause (iii), each Lender may, without the consent of Borrower, debit any Deposit Account or other account over which such Lender has Control and apply such amounts to the payment of Obligations which are then due and payable (and such Lender shall promptly notify Administrative Agent of any such debits and applications). (ii) Subject to clause (iii), Administrative Agent may, without the consent of Borrower, debit the Agent’s Account and apply such amounts to the payment of Obligations which are then due and payable. (iii) Administrative Agent or the applicable Lender will provide notice to Borrower before it debits any of Borrower’s Deposit Accounts or other accounts over which it has Control, unless an Event of Default is in existence or Administrative Agent has delivered an Activation Notice with respect to the applicable Deposit Account being debited, in which cases no such notice shall be required.

(c)         Time and Location of Payment . Borrower shall make each payment of principal of and interest and other Obligations which are due and payable not later than 2:00 p.m. (Atlanta, Georgia, time) on the date due, without set-off, counterclaim, or other deduction, in immediately available funds to Lender at its address referred to in Section 12.4 or such other address or account as Administrative Agent may direct from time to time. If any payment of any Obligations shall be due on a day which is not a Business Day, such payment shall be due and payable the next Business Day, and interest shall accrue during such time.

(d)         Tax Forms . Each Lender agrees to complete and deliver to Borrower a duly completed and executed copy of Internal Revenue Service Form W-9 or successor form that indicates that such Lender is a United States Person for U.S. federal income tax purposes and is not subject to backup withholding and information reporting requirements on or prior to becoming a Lender under this Agreement. Notwithstanding the foregoing provisions, and without limiting any terms of Section 12.6, unless an Event of Default then exists, no Lender shall sell any participation in its interests herein, or make any assignment of its interests herein, to any Transferee not organized under the laws of the United States or any State thereof unless, prior to any such sale or assignment becoming effective, the affected Transferee shall have filed all appropriate forms and taken other appropriate action to obtain a certificate or other appropriate document from the appropriate Governmental Authority in the jurisdiction imposing the relevant Taxes, establishing that it is entitled to receive payments of principal and interest under this Agreement and the Note without deduction and free from withholding of any Taxes imposed by such jurisdiction, and shall have provided to Borrower an Internal Revenue Service Form W-8ECI or any successor thereto or other Internal Revenue Service form entitling it to an exemption from United States withholding tax on all payments to be made to such non-U.S. Lender by Borrower.

2.8         Application of Collections .

(a)         All Collections shall be distributed by Servicer or Administrative Agent, as applicable, at such times and in the order of priority set forth in this Section 2.8.

 

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(b)         Before the Termination Date, Servicer shall, on each Settlement Date, distribute from Collections (if any) received during the Reporting Period to which such Settlement Date relates the following amounts, without duplication and in the following order of priority:

first , to Servicer, for the payment of the accrued Servicing Fee payable for the most recently ended Calculation Period, to the extent then due and payable, plus , if applicable, the amount of Servicing Fee payable for any prior Calculation Period to the extent such amount has not been distributed to Servicer;

second , to Administrative Agent for the account of the Lenders, for the payment of all accrued and unpaid interest on the Loans, to the extent due and owing under this Agreement;

third , to Administrative Agent for its own account and for the account the Lenders, for the payment of all accrued and unpaid Fees, to the extent due and owing under any Loan Document;

fourth , to Administrative Agent, for the payment or reimbursement of Administrative Agent’s actual costs incurred under or in connection with this Agreement, to the extent due and owing under any Loan Document;

fifth , to Administrative Agent for the account of the Lenders, for the payment of principal of the Loans, in an amount equal to the Borrowing Base Deficit, if any;

sixth , to Administrative Agent for its own account and for the account of the applicable Secured Parties, for the payment of all other Obligations to the Secured Parties, to the extent then due and owing under any Loan Document; and

seventh , to Borrower for its own account or otherwise in accordance with Borrower’s lawful instructions.

(c)         Without limiting recourse to Borrower for the Obligations under Section 2.6(a), on the Termination Date and on each day thereafter, Servicer shall set aside and hold in trust for the Secured Parties, all Collections received by Servicer on such day. On and after the Termination Date, Servicer shall, on each Settlement Date and each other Business Day specified by Administrative Agent from time to time, remit all Collections received by Servicer (after deducting therefrom all accrued and unpaid Servicing Fee which is then due and payable) to Administrative Agent in accordance with Administrative Agent’s written instructions delivered to Servicer from time to time and, on each such date, Administrative Agent shall apply all of such Collections, together with all other Collections received by Administrative Agent, as follows:

first , to Administrative Agent, for the payment or reimbursement of Administrative Agent’s actual costs incurred under or in connection with this Agreement;

second , to Administrative Agent for the account of the Lenders, for the payment of all accrued and unpaid interest on the Loans;

third , to Administrative Agent for its own account and for the account the Lenders, for the payment of all accrued and unpaid Fees;

fourth , to Administrative Agent for the account of the Lenders, for the payment of principal of the Loans;

fifth , to Administrative Agent for its own account and for the account of the applicable Secured Parties, for the payment of all other Obligations to the Secured Parties; and

sixth , to Borrower for its own account or otherwise in accordance with Borrower’s lawful instructions.

(d)         Each payment of principal of the Loans shall be applied to such Loans as Borrower shall direct or, in the absence of such notice or during the existence of an Event of Default, as Administrative Agent shall

 

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determine in its sole discretion. After the Termination Date has occurred, and after all Obligations have been indefeasibly reduced to zero, all Collections shall be paid to Borrower or otherwise in accordance with Borrower’s instructions. All Collections to be applied to the payment of Obligations owing to the Lenders shall, in the orders of priority provided above, be allocated among the Lenders by Administrative Agent in accordance with their Commitment Percentages.

2.9         Fees .

(a)         Borrower shall pay to the Administrative Agent for the account of the Lenders in accordance with their respective Commitment Percentages a fee (the “ Unused Fee ”) for each day commencing with, and including, the Closing Date and ending on, and including, the Termination Date, equal to (A) 0.35%, divided by (B) 360, times (C) the amount by which the Revolving Loan Commitment exceeded the aggregate outstanding principal amount of Loans on such day. Borrower shall pay the Unused Fee, in arrears, on each date on which interest is or would otherwise be due and payable hereunder.

(b)         Borrower shall pay to Administrative Agent for its own account the Fees set forth in the Fee Letter.

(c)         Unless otherwise expressly provided, all fees payable hereunder or with respect to any Obligations shall be calculated on the presumed basis of a year of 360 days, for the actual number of days elapsed. All Fees, once paid, shall be deemed fully earned upon their becoming due and payable and, once paid, shall be non-refundable, in whole or in part.

2.10         Statement of Account . If Administrative Agent provides Borrower with a statement of account on a periodic basis, each such statement will be presumptive evidence of the matters set forth therein unless, within 45 days of its receipt, Borrower objects in writing and with specificity to such statement.

2.11         Termination . Borrower may terminate this Agreement and the Commitments before the Termination Date, in whole or in part, by giving Administrative Agent 30 days prior written notice; provided , however , (a) no complete termination of the Commitments by Borrower shall be effective until all Obligations have been fully and finally paid and performed; (b) no partial termination of the Commitments shall be effective if, after giving effect thereto, the Revolving Loan Commitment would be less than $20,000,000; and (c) no partial termination of the Commitments shall be effective if, after giving effect thereto, a Borrowing Base Deficit would exist or the aggregate outstanding principal balance of all Loans would exceed the Revolving Loan Commitment. Any notice of termination (whether total or partial) shall be irrevocable once delivered to the Administrative Agent. Administrative Agent may terminate this Agreement and the Revolving Loan Commitment on the terms set forth in Section 9.2. Any reduction of the Commitments shall applied to each Lender’s Commitment in accordance with such Lender’s Commitment Percentage.

2.12         USA Patriot Act Notice . To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each Person who opens an account. For purposes of this section, account shall be understood to include loan accounts.

 

3.

SECURITY AGREEMENT .

3.1         Security Interest .

(a)         As security for the full and final payment and performance of the Obligations, Borrower hereby grants to Administrative Agent (on behalf of the Secured Parties) a continuing security interest in and to all right, title, and interest of Borrower in and to the Collateral, whether now owned or hereafter acquired by Borrower.

(b)         Administrative Agent’s sole duty with respect to the custody, safekeeping, and physical preservation of the Collateral shall be to exercise reasonable care and it shall have no further obligation to (i) exercise any degree of care in connection with any Collateral in its possession or (ii) take any steps necessary to preserve any rights in the Collateral or to preserve any rights in the Collateral against senior or prior parties (which

 

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steps Borrower agrees to take). In any case, Administrative Agent shall be deemed to have exercised reasonable care of the Collateral if Administrative Agent takes such steps for the care and preservation of the Collateral or rights therein as it does with similar property for its own account; provided that Administrative Agent’s omission to take any action not requested by Borrower shall not be deemed a failure to exercise reasonable care. Administrative Agent’s segregation or specific allocation of specified items of Collateral against any of Borrower’s liabilities shall not waive or affect any Lien against other items of Collateral or any of Administrative Agent’s options, powers, or rights under this Agreement or otherwise arising.

(c)         Notwithstanding anything herein to the contrary, no Instrument or other obligation or property of any kind due from, owed by, or belonging to, a Sanctioned Person shall be Collateral or shall be credited toward the payment of the Obligations.

3.2         Financing Statements; Power of Attorney . Borrower authorizes Administrative Agent to file any financing statements (and other similar filings or public records or notices relating to the perfection of Liens), and amendments thereto relating to the Collateral which Administrative Agent deems appropriate, in form and substance required by Administrative Agent, and to (a) describe the Collateral thereon in a manner consistent with the Liens granted to the Administrative Agent under the Loan Documents and (b) include therein all other information which is required by Article 9 of the UCC or other applicable law with respect to the preparation or filing of a financing statement (or other similar filings or public records or notices relating to the perfection of Liens) or amendment. Borrower appoints Administrative Agent as its attorney-in-fact to perform all acts which Administrative Agent deems appropriate to perfect and to continue perfection of the Lien granted to Administrative Agent under any Security Agreement, including, without limitation, (i) the filing of financing statements (and other similar filings or public records or notices relating to the perfection of Liens) and amendments, (ii) the execution in Borrower’s name of any agreements which Administrative Agent determines are reasonably necessary to create Control in favor Administrative Agent over, or perfection of Administrative Agent’s security interest in, any applicable Collateral, and (iii) during the existence of an Event of Default or at any time after an Activation Notice has been delivered by Administrative Agent, the indorsement, presentation, and collection on behalf of Borrower and in Borrower’s name of any Items or other documents necessary or desirable to collect any amounts which Borrower may be owed, such power of attorney being coupled with an interest and is therefore irrevocable. Borrower grants Administrative Agent a license or other right to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, and any Property of a similar nature, as it pertains to the Collateral, in advertising for sale and selling any Collateral, and Borrower’s rights under all licenses and all franchise agreements shall inure to Administrative Agent’s benefit. Borrower shall be liable for any and all expense incurred in connection with Administrative Agent’s exercising its rights under this Section 3.2.

3.3         Entry . Borrower irrevocably consents to any lawful act by Administrative Agent or its agents in entering upon any premises for the purposes of either, in accordance with the Loan Documents, (a) inspecting any Collateral or (b) taking possession of any Collateral. Borrower waives, as to Administrative Agent and its agents, any now existing or hereafter arising claim based upon trespass or any similar cause of action for entering upon any premises where Collateral may be located.

3.4         Other Rights . Without limiting any Credit Party’s or Performance Guarantor’s obligations under the Loan Documents, Borrower authorizes Administrative Agent from time to time (a) to (i) take from any party and hold additional Collateral for the payment of the Obligations or any part thereof, (ii) exchange or release such Collateral or any part thereof, and (iii) release or substitute any indorser or any party who has granted Administrative Agent any security interest in any property as security for the payment of the Obligations or any part thereof or any party in any way obligated to pay the Obligations or any part thereof, and (b) during the existence of any Event of Default, to direct the manner of the disposition of the Collateral and the enforcement of any indorsements, guaranties, letters of credit, or other security or Supporting Obligations relating to the Obligations or any part thereof as Administrative Agent in its sole discretion may determine.

3.5         Accounts . After the occurrence and during the continuance of any Event of Default, Administrative Agent may contact any Obligor or Account Debtor (a) to direct such Obligor or Account Debtor to make payments (and to verify that such Obligor is making payments) on Borrower’s Accounts to a Lock Box Account or the Collections Account (as applicable) or as otherwise directed by Administrative Agent in accordance with Section 8.2(c)(ii) and (b) to notify such Obligor of the existence of Administrative Agent’s Liens under the Security Agreements.

 

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3.6         Waiver of Marshaling . Borrower hereby waives any right it may have to require marshaling of its assets.

3.7         Control; Further Assurances . Borrower will, at its expense, cooperate with Administrative Agent in (a) obtaining Control of, or Control agreements with respect to, Collateral for which Control or a Control agreement is required for perfection of Administrative Agent’s security interest under the UCC and (b) perfecting Administrative Agent’s Lien in the Collateral.

 

4.

CONDITIONS PRECEDENT TO OCCURRENCE OF THE CLOSING DATE .

4.1         Conditions Precedent to Occurrence of Closing Date . The Closing Date shall not be deemed to have occurred unless and until the following conditions precedent shall have been satisfied, in the sole opinion of Administrative Agent and its counsel:

(a)         Loan Documents . Borrower, Servicer, Parent, and each other party to any Loan Document, as applicable, shall have executed and delivered this Agreement, the Note, and the other required Loan Documents (including, without limitation, the Receivables Sale Agreement), all in form and substance satisfactory to Administrative Agent.

(b)         Supporting Documents and Other Conditions . Borrower and Servicer shall cause to be delivered to Administrative Agent the following documents (each of which must be in form and substance satisfactory to Administrative Agent) and shall satisfy the following conditions:

(i)         (A) A copy of the Organizational Documents of Borrower, Parent, and Originator; (B) good standing certificates of Borrower, Parent, and Originator, certified by the appropriate official of their respective states of incorporation; and (C) good standing certificates of Borrower and Originator, certified by the appropriate official of each of the state in which such Person has a physical location;

(ii)         Incumbency certificates and certified resolutions of the board of directors (or other appropriate governing body) of Borrower, Servicer, Parent, and Originator, signed by the secretary or another Responsible Officer of such Person, authorizing the execution, delivery, and performance of the Loan Documents;

(iii)         The legal opinion of each Credit Party’s and Performance Guarantor’s legal counsel addressed to Administrative Agent regarding (A) organization, existence and good standing, corporate authority, necessary approvals, execution and delivery, enforceability, attachment and perfection of security interests and purchase rights, no conflicts with Material Agreements, laws, orders, decrees, and judgments, or Organizational Documents, Investment Company Act, Regulations T, U, and X, and such other matters as Administrative Agent and its counsel may reasonably request and (B) true-sale and substantive non-consolidation matters;

(iv)         An opening Receivables Report and Borrowing Base Certificate, dated as of the Closing Date;

(v)         A full and complete copy of the Credit and Collections Policy as existing on the Closing Date;

(vi)         UCC-1 searches and other Lien searches (other than the Supplemental Lien Searches) showing no existing security interests in or Liens on the Collateral (other than Permitted Encumbrances acceptable to Administrative Agent);

(vii)         A Collateral Disclosure Certificate duly completed by each of Borrower and the Originator;

 

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(viii)        A fully executed Landlord Waiver respecting each location at which any Records owned by Borrower or in which Borrower has an interest are maintained, to the extent required by Administrative Agent;

(ix)         UCC financing statements (and other similar filings or public records or notices relating to the perfection of Liens) to perfect (A) Borrower’s security interest / rights as purchaser in and to the Receivables, all Related Security, and all Collections and (B) Administrative Agent’s security interest in the Collateral (for itself and for the benefit of the Secured Parties) shall, in each case, have been recorded or filed in the manner and places required by law to establish, preserve, protect, and perfect the interests and rights created or intended to be created by the Receivables Sale Agreement and the Security Agreements and all taxes, fees, and other charges in connection with the execution, delivery, and filing of the Security Agreements and the financing statements (and any other similar filings or public records or notices relating to the perfection of Liens) shall have been paid;

(x)         Certified copies of all documents evidencing any necessary consents and governmental approvals (if any) with respect to the Loan Documents;

(xi)         Copies of the Receivables Sale Documents, each of which shall have been executed and delivered by all parties thereto, as applicable, and each of which shall be certified as to accuracy and completeness by a Responsible Officer of Borrower;

(x