SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT Dated as of June 18, 2009 Among

Exhibit 10.1

EXECUTION VERSION

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT

Dated as of June 18, 2009

Among

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders

BANK OF AMERICA, N.A.

as the Agent

BANC OF AMERICA SECURITIES LLC

as Sole Lead Arranger and Book Manager

BANK OF AMERICA, N.A. and

THE CIT GROUP/BUSINESS CREDIT, INC.

as Co-Syndication Agents

GENERAL ELECTRIC CAPITAL CORPORATION

THE CIT GROUP/BUSINESS CREDIT, INC.

as Co-Collateral Agents

GENERAL ELECTRIC CAPITAL CORPORATION

as Documentation Agent

EDDIE BAUER, INC.

as Borrower

and

EDDIE BAUER HOLDINGS, INC.

THE SUBSIDIARIES OF EDDIE BAUER, INC. PARTY HERETO

as Guarantors

TABLE OF CONTENTS

 

 

(i)

 

(ii)

 

(iii)

 

(iv)

 

(v)

EXHIBITS

EXHIBIT A - FORM OF BORROWING BASE CERTIFICATE

EXHIBIT B - FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT C - FORM OF NOTICE OF BORROWING

EXHIBIT D - FORM OF INTERIM BORROWING ORDER

SCHEDULES

 

 

(vi)

SENIOR SECURED, SUPER-PRIORITY DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT

Senior Secured, Super-Priority Debtor-in-Possession Loan and Security Agreement, dated as of June 18, 2009, among the financial institutions listed on the signature pages hereof (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “ Lender ” and collectively as the “ Lenders ”), Bank of America, N.A., with an office at 100 Federal Street, Boston, Massachusetts 02110, as agent for the Lenders (in its capacity as agent, together with any successor in such capacity, the “ Agent ”), Banc of America Securities LLC, as sole lead arranger and book manager (in such capacity, the “ Arranger ”), Bank of America, N.A. and The CIT Group/Business Credit, Inc., as co-syndication agents (in such capacity, the “ Co-Syndication Agents ”), General Electric Capital Corporation and The CIT Group/Business Credit, Inc., as co-collateral agents (in such capacity, the “ Co-Collateral Agents ”), General Electric Capital Corporation, as documentation agent (in such capacity, the “ Documentation Agent ”) Eddie Bauer, Inc., as a debtor and debtor-in-possession, a Delaware corporation (“ Borrower ”, and in its capacity as authorized representative of the Loan Parties, the “ Authorized Representative ”), and each of its direct and indirect domestic Subsidiaries that is a signatory hereto as a Guarantor, each as a debtor and debtor-in-possession, and Eddie Bauer Holdings, Inc., as a debtor and debtor-in-possession, a Delaware corporation (“ Holdings ”) as a Guarantor (each a “ Guarantor ” and collectively, the “ Guarantors ”).

WITNESSETH:

WHEREAS, on June 17, 2009 the Borrower, Holdings and the domestic Guarantors filed in the Bankruptcy Court (as hereinafter defined) separate voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (as hereinafter defined) and have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code, and such reorganization cases have been administratively consolidated and are being jointly administered under Case Number 09-12099 (the “Case”);

WHEREAS, on June 17, 2009, certain Canadian Subsidiaries of the Borrower commenced court proceedings bearing Case No. CV-09-8240-CL (the “Canadian Case”) by filing a notice seeking an initial order under the Companies’ Creditors Arrangement Act (Canada) with the Ontario Superior Court of Justice, Commercial List (the “Canadian Bankruptcy Court”); and

WHEREAS, the Borrower has requested that the Agent and the Lenders provide a senior secured, super-priority revolving credit facility to the Borrower on the terms and conditions set forth herein;

 

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

ARTICLE 1

INTERPRETATION OF THIS AGREEMENT

1.1 Definitions As used herein:

“ 11 Week Cash Flow ” means the Borrower’s eleven (11) week cash flow projection (corresponding to each week beginning on a Sunday and ending on the following Saturday), substantially in the form of the Initial Budget annexed hereto as Schedule 1.2 , and any subsequent eleven week cash flow projections furnished pursuant to Section 6.6(j) hereof, in each case, in substance satisfactory to the Agent and the Co-Collateral Agents in their sole discretion, reflecting on a line-item basis, among other things, cash receipts, inventory levels, disbursements, the Borrowing Base, and Combined Availability for the subject period, which 11 Week Cash Flow may be amended and modified solely with the written consent of the Agent and the Co-Collateral Agents.

“ 363 Sale ” means (i) the sale of all or substantially all of the Loan Parties’ assets as a going concern as approved by the Bankruptcy Court pursuant to Section 363 and the other applicable provisions of the Bankruptcy Code; provided that any going concern sale shall be for cash consideration in an amount at least equal to all outstanding Obligations (other than contingent indemnification obligations for which a claim has not been asserted) and all Pre-Petition Liabilities (other than contingent indemnification obligations for which a claim has not been asserted), or (ii) a transaction or transactions combining the sale of all or substantially all of the Loan Parties’ assets and the permanent closing of one or more of the Loan Parties’ stores and the sale of all Collateral located therein through any so-called store closing, store liquidation, “Going-Out-Of-Business” or similar sales, as approved by the Bankruptcy Court pursuant to Section 363 and the other applicable provisions of the Bankruptcy Code; provided that such sale shall be for cash consideration in an amount at least equal to all outstanding Obligations (other than contingent indemnification obligations for which a claim has not been asserted) and all Pre-Petition Liabilities (other than contingent indemnification obligations for which a claim has not been asserted); and provided further that with respect to any such sale, upon consummation thereof, all outstanding Obligations (other than contingent indemnification obligations for which a claim has not been asserted) and all Pre-Petition Liabilities (other than contingent indemnification obligations for which a claim has not been asserted) shall be paid in full in cash.

“ Account Debtor ” means each Person obligated in any way on or in connection with an Account, Chattel Paper or General Intangible (including a payment intangible).

“ Accounts ” means, with respect to any Loan Party, all of such Loan Party’s now owned or hereafter acquired or arising accounts (as defined in the UCC), and any other rights of such Loan Party to payment for the sale or lease of Inventory or goods or rendition of services, whether or not they have been earned by performance, including, without limitation, Major Credit Card Receivables.

“ ACH Transactions ” means any automatic clearing house transfer of funds by the Bank or any other Lender (or any Affiliate of such Lender), in each instance, for the account of any Loan Party.

 

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“ Administration Charge ” has the meaning set forth in the Initial Order.

“ Affiliate ” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person or which owns, directly or indirectly, ten percent (10%) or more of the outstanding equity interest of such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise.

“ Agent ” means the Bank, solely in its capacity as agent for the Lenders, and any successor agent.

“ Agent Advances ” has the meaning specified in Section 2.2(i).

“ Agent Professional Fee and Expense Reserve ” means a Reserve in an amount up to $750,000 as determined by the Agent and the Co-Collateral Agents in their sole discretion with respect to Attorney Costs incurred by the Agent or any Co-Collateral Agent and other professional fees and expenses incurred by the Agent or any Co-Collateral Agent in connection with the Loan Documents and the Case.

“ Agent-Related Persons ” means the Agent, the Co-Collateral Agents, and any successor agent or co-collateral agent, together with their respective Affiliates, and the officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of such Persons.

“ Agent’s Liens ” means the Liens granted to the Agent, for the ratable benefit of the Lenders, the Bank and the Agent, pursuant to the DIP Orders, this Agreement and the other Loan Documents.

“ Aggregate Outstandings ” means, at any date of determination, without duplication: the sum of (a) the aggregate unpaid principal balance of all Revolving Loans, (b) one hundred percent (100%) of the aggregate undrawn amount of all outstanding Letters of Credit and (c) the aggregate amount of any unpaid reimbursement obligations in respect of all Letters of Credit.

“ Agreement ” means this Senior Secured, Super-Priority Debtor-in-Possession Loan and Security Agreement.

“ Agreement Value ” means, for each Hedge Agreement, on any date of determination, an amount determined by the Agent equal to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc. (the “ Master Agreement ”), the amount, if any, that would be payable by a Loan Party or any of its Subsidiaries to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or such Subsidiary was the sole “Affected Party”, and (iii) the Agent was the sole party determining such payment amount (with the Agent making such determination pursuant to the provisions of the form of Master Agreement); or (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to a Loan Party or its Subsidiary

 

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party to such Hedge Agreement determined by the Agent based on the settlement price of such Hedge Agreement on such date of determination, or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to a Loan Party or its Subsidiary party to such Hedge Agreement determined by the Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or such Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or such Subsidiary pursuant to such Hedge Agreement; capitalized terms used and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement.

“ Applicable Margin ” means, the rates set forth in the table, below:

 

“ Arranger ” has the meaning specified in the introductory paragraph hereof.

“ Assignee ” has the meaning specified in Section 13.2(a) .

“ Assignment and Assumption ” has the meaning specified in Section 13.2(a) .

“ Attorney Costs ” means and includes all reasonable fees, expenses and disbursements of any law firm or other counsel engaged by the Agent and the Co-Collateral Agents.

“ Authorized Representative ” has the meaning specified in the introductory paragraph hereof.

“ Availability Block ” means an amount equal to five (5%) percent of the Borrowing Base (without giving effect to clauses (i) through (l) thereof).

“ Bank ” means Bank of America, N.A., a national banking association, or any successor entity thereto.

“ Bank Loan ” and “ Bank Loans ” have the meanings specified in Section 2.2(h).

“ Bank Products ” means any one or more of the following types of services or facilities extended to any Loan Party by the Bank or any Affiliate of the Bank, or any other Lender (or any of its Affiliates) or other bank, in each case, reasonably acceptable to the Agent (it being agreed by the Agent that each of the Lenders and their respective Affiliates is acceptable to the Agent): (i) credit cards (including, without limitation, merchant card processing services); (ii) ACH Transactions; (iii) cash management, including controlled disbursement services; and (iv) Hedge Agreements.

 

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“ Bank Product Reserves ” means all reserves which the Agent from time to time establishes in its reasonable discretion for the Bank Products then provided or outstanding.

“ Bankruptcy Code ” means Title 11 of the United States Code (11 U.S.C. § 101).

“ Bankruptcy Court ” means the United States Bankruptcy Court for the District of Delaware and, to the extent the United States District Court for the District of Delaware sits in bankruptcy with respect to any matter relating to the Case, then the United States District Court for the District of Delaware.

“ Bankruptcy Recoveries ” means any and all claims and causes of action which a Loan Party may be entitled to assert by reason of any avoidance or other power vested in or on behalf of a Loan Party or the estate of a Loan Party under Chapter 5 of the Bankruptcy Code and any and all recoveries or proceeds of any such claims or causes of action.

“ Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the rate of interest in effect for such day as publicly announced from time to time by the Bank as its “prime rate”; (b) the Federal Funds Rate for such day, plus 0.50%; and (c) the LIBO Rate for a 30 day interest period as determined on such day, plus 1.0%. The “prime rate” is a rate set by the Bank based upon various factors including the Bank’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by the Bank shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Base Rate Loan ” means a Loan during any period in which it bears interest based on the Base Rate.

“ Blocked Account Agreement ” means an agreement among a Loan Party, the Agent and a Clearing Bank, in form and substance reasonably satisfactory to the Agent, concerning the collection of payments which represent the proceeds of Accounts or of any other Collateral, including any such agreement entered into in connection with the Pre-Petition Loan Documents which remains in effect during the Case.

“ Borrower ” has the meaning specified in the introductory paragraph to this Agreement.

“ Borrower Pension Plan ” means the Eddie Bauer Pension Plan.

“ Borrowing ” means a borrowing hereunder consisting of Loans made on the same day by the Lenders to the Borrower (or by the Bank in the case of a Borrowing funded by Bank Loans) or by the Agent in the case of a Borrowing consisting of an Agent Advance.

“ Borrowing Base ” means, at any time of calculation, an amount equal to:

(a) 85% of the aggregate Net Amount of Eligible Major Credit Card Receivables of the Borrower at such time, plus

 

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(b) 85% of the aggregate Orderly Liquidation Value of Eligible Inventory of the Borrower at such time, plus

(c) LC Inventory Availability of the Borrower at such time, plus

(d) 85% of the aggregate Orderly Liquidation Value of Eligible In Transit Inventory of the Borrower at such time, plus

(e) (i) the aggregate Net Amount of Eligible Major Credit Card Receivables of the Canadian Subsidiaries at such time multiplied by (ii) an advance rate to be determined by the Agent and the Co-Collateral Agents in their sole discretion, plus

(f) 45% of the aggregate value of Eligible Inventory of the Canadian Subsidiaries at such time valued at cost (calculated in accordance with the Canadian Subsidiaries’ historical practices in accordance with GAAP), plus

(g) LC Inventory Availability of the Canadian Subsidiaries at such time, plus

(h) (i) the aggregate Orderly Liquidation Value of Eligible In Transit Inventory of the Canadian Subsidiaries at such time multiplied by (ii) an advance rate to be determined by the Agent and the Co-Collateral Agents in their sole discretion, minus

(i) the then amount of all Reserves (without duplication of the Reserves set forth in clauses (j) and (k) below and without duplication of the Availability Block set forth in clause (l) below), minus

(j) the Carve Out Reserve, minus

(k) the Agent Professional Fee and Expense Reserve, minus

(l) commencing on August 1, 2009, in the event that the order authorizing the 363 Sale has not been entered on or before July 31, 2009, the Availability Block;

provided that (x) until such time as the Agent and the Co-Collateral Agents shall have conducted such due diligence as determined by the Agent and the Co-Collateral Agents in their sole discretion with respect to the assets of the Canadian Subsidiaries to be included in the Borrowing Base pursuant to clauses (e) through (h) above and shall have received the Initial Order, the Intercompany Loan Documents and the Collateral Assignment of Intercompany Loan Documents, none of the assets set forth in clauses (e) through (h) above shall be included in the Borrowing Base, (y) at any time when the assets set forth in clauses (e) through (h) above are included in the Borrowing Base, the maximum amount available to be borrowed and outstanding under clauses (e) through (h) above shall not exceed an amount equal to the lesser of (i) the amount of any loans outstanding from time to time from the Borrower to the Canadian Subsidiaries pursuant to the Intercompany Loan Documents and (ii) $7,500,000, and (z) the maximum amounts available to be borrowed and outstanding under clauses (c), (d), (g) and (h) above, shall not exceed, in the aggregate, thirty percent (30%) (as such percentage may be increased by the Agent and the Co-Collateral Agents in their sole discretion) of the Borrowing Base at any time.

 

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“ Borrowing Base Certificate ” means a certificate by a Responsible Officer of the Borrower, substantially in the form of Exhibit A (or another form acceptable to the Agent and the Co-Collateral Agents) setting forth a good faith calculation of the Combined Availability, including a good faith calculation of each component thereof, as of the close of business on the immediately preceding Business Day, all in such detail as shall be satisfactory to the Agent and the Co-Collateral Agents. All calculations of Combined Availability in connection with the preparation of any Borrowing Base Certificate shall originally be made by the Borrower and certified to the Agent; provided, that the Agent and the Co-Collateral Agents shall have the right to review and adjust, in the exercise of their reasonable credit judgment, any such calculation (1) to reflect reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that such calculation is not in accordance with this Agreement.

“ Business Day ” means any day that is not a Saturday, Sunday, or a day on which banks in New York, New York or Charlotte, North Carolina are required or permitted to be closed.

“ Canadian Based Proceeds ” means proceeds of Loans received pursuant to any borrowing in respect of clauses (e) through (h) of the Borrowing Base.

“ Canadian Subsidiaries ” means Eddie Bauer of Canada, Inc. and Eddie Bauer Customer Services, Inc.

“ Capital Adequacy Regulation ” means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any Lender or of any corporation controlling a Lender.

“ Capital Lease ” means any lease of property by any Loan Party which, in accordance with GAAP, should be reflected as a capital lease on the balance sheet of such Loan Party.

“ Carve Out ” means an amount equal to $3,500,000, plus Reported Fee Accruals for Professional Fees and Expenses, subject to any limitations contained in the DIP Orders.

“ Carve Out Reserve ” means a Reserve equal to the maximum possible amount of the Carve Out.

“ Case ” has the meaning specified in the Recitals hereof.

“ Change of Control ” means either of the following: (i) any one or more events shall occur (whether at the same or different times) the result of which is any “person” or “group of persons” (as such terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) shall become or obtain rights (whether by means of warrant, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 of the Securities Exchange Act of 1934, as amended) directly or indirectly, of 20% or more of the capital stock of Holdings, or (ii) the board of directors of Holdings shall cease to consist of a majority of Continuing Directors, or (iii) Holdings shall fail to own and control, of record and beneficially, directly or indirectly, 100% of the outstanding equity interests of each other Loan Party (except the Agent’s Liens, Liens granted under the Pre-Petition Loan Documents, or Liens to secure the Term Debt).

 

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“ Chattel Paper ” means, with respect to any Loan Party, all of such Loan Party’s now owned or hereafter acquired chattel paper, as defined in the UCC, including electronic chattel paper.

“ Clearing Bank ” means the Bank or any other banking institution with whom a Payment Account has been established pursuant to a Blocked Account Agreement.

“ Closing Date ” means the date on which the conditions precedent set forth in Section 10.1 have been satisfied or waived by the Lenders and this Agreement becomes effective.

“ Co-Collateral Agents ” has the meaning specified in the introductory paragraph of this Agreement.

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

“ Collateral ” has the meaning specified in Section 6.1.

“ Collateral Assignment of Intercompany Loan Documents ” means an agreement evidencing the collateral assignment of the Intercompany Loan Documents by the Borrower to the Agent, for the benefit of the Agent, the Co-Collateral Agents and the Lenders, which agreement shall be satisfactory to the Agent and the Co-Collateral Agents in their sole discretion.

“ Combined Availability ” of the Borrower means, at any time:

(a) the lesser of (i) the Maximum Revolver Amount at such time or (ii) the Borrowing Base, minus

(b) the then outstanding amount of the Pre-Petition Liabilities, minus

(c) the sum of (i) the aggregate unpaid balance of all Revolving Loans made to the Borrower at such time, (ii) the aggregate amount of all Pending Revolving Loans to be made to the Borrower at such time (after giving effect to any Pending Revolving Loans to be made to pay amounts then outstanding under clause (iv) below), (iii) the aggregate undrawn amount of all outstanding Letters of Credit at such time, and (iv) the aggregate amount of any unpaid reimbursement Obligations in respect of Letters of Credit at such time.

“ Commitment ” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the heading “ Commitment ” on Schedule 1.1(a ) attached to this Agreement or on the signature page of the Assignment and Assumption pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.3 , as such Commitment may be adjusted from time to time in accordance with the provisions of Section 13.3 and Section 4.3 , and “ Commitments ” means, collectively, the aggregate amount of the commitments of all of the Lenders.

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

 

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“ Consummation Date ” means the date of substantial consummation (as defined in Section 1101 of the Bankruptcy Code) of a Plan of Reorganization by the Borrower confirmed by a Final Order of the Bankruptcy Court.

“ Contaminant ” means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or waste.

“ Continuing Directors ” means the directors of Holdings on the Closing Date, and each other director, if, in each case, such other director’s nomination for election to the board of directors of Holdings is recommended by at least 66  ² / 3 % of the then Continuing Directors.

“ Convertible Notes Documents ”: the Convertible Note Indenture, the Convertible Notes issued thereunder and any other documentation executed in connection therewith, as in effect on the Closing Date, together with any amendments and supplements thereto permitted under Section 9.12(b) hereof.

“ Convertible Note Indenture ”: the Indenture dated as of April 4, 2007 among Holdings, the subsidiary guarantors party thereto and the trustee therefor, as in effect on the Closing Date, together with any amendments and supplements thereto permitted under Section 9.12(b) hereof.

“ Convertible Notes ”: the convertible notes issued by Holdings pursuant to the Convertible Note Indenture.

“ Co-Syndication Agents ” has the meaning specified in the introductory paragraph of this Agreement.

“ Credit Support ” has the meaning specified in Section 2.3(a) .

“ Creditors’ Committee ” means any official committee of creditors formed, appointed or approved in the Case pursuant to the Bankruptcy Code.

“ Debt ” means, without duplication, all liabilities, obligations and indebtedness of any Loan Party to any Person, of any kind or nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting of indebtedness for borrowed money or the deferred purchase price of property, excluding trade payables, but including in any event (a) all Obligations; (b) all obligations and liabilities of any Person secured by any Lien on any Loan Party’s property, even though such Loan Party shall not have assumed or become liable for the payment thereof; provided, however, that all such obligations and liabilities that are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Loan Party prepared in accordance with GAAP; (c) all obligations or liabilities created or arising under any Capital Lease or conditional sale or other title retention agreement with respect to property used or acquired by any Loan

 

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Party, even if the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; provided, however, that all such obligations and liabilities that are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Loan Party prepared in accordance with GAAP; (d) all obligations and liabilities under Guaranties; (e) the present value (discounted at the Base Rate) of lease payments due under synthetic leases; (f) all obligations and liabilities of any Loan Party, contingent or otherwise, as an account party or applicant under or in respect of a letter of credit; and (g) all obligations and liabilities of any Loan Party in respect of Hedge Agreements, with Hedge Agreements to be valued at the Agreement Value thereof.

“ Default ” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event of Default.

“ Default Rate ” means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate plus (b) 2% per annum. Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, the Default Rate shall result in an increase in the Letter of Credit Fee by two percentage points per annum.

“ Defaulting Lender ” has the meaning specified in Section 2.2(g)(ii) .

“ DIP Orders ” means and refers to the Interim Borrowing Order and the Final Borrowing Order.

“ Directors’ Charge ” has the meaning set forth in the Initial Order.

“ Disclosure Statement ” means a disclosure statement filed in the Case in connection with a Plan of Reorganization.

“ Distribution ” means, in respect of any corporation: (a) the payment or making of any dividend or other distribution of property in respect of capital stock (or any options or warrants for, or other rights with respect to, such stock) of such corporation, other than distributions in capital stock (or any options or warrants for such stock) of the same class; or (b) the redemption or other acquisition by such corporation of any capital stock (or any options or warrants for such stock) of such corporation.

“ Documentation Agent ” has the meaning specified in the introductory paragraph of this Agreement.

“ Documents ” means, with respect to any Loan Party, all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by such Loan Party.

“ DOL ” means the United States Department of Labor or any successor department or agency.

 

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“ Dollar ” and “ $ ” means dollars in the lawful currency of the United States. Unless otherwise specified, all payments under this Agreement shall be made in Dollars.

“ Effect of Bankruptcy ” means, with respect to any contractual obligation, contract or agreement to which a Loan Party is a party, any default or other legal consequences arising directly or indirectly on account of the commencement, pendency or continuation of the Case (including the implementation of any stay), or the rejection of any such contractual obligation, contract or agreement with the approval of the Bankruptcy Court.

“ Eligible Assignee ” means (a) a commercial bank, commercial finance company or other asset based lender, having total assets in excess of $1,000,000,000, that is reasonably acceptable to the Agent and only so long as no Event of Default has occurred that has not been waived in writing by the Required Lenders, reasonably acceptable to the Authorized Representative; (b) any Lender listed on the signature page of this Agreement; (c) any Affiliate of any Lender; and (d) any other financial institution or other Person engaged in making, purchasing or investing in commercial loans in the ordinary course of its business that is reasonably acceptable to the Agent and the Co-Collateral Agents.

“ Eligible In Transit Inventory ” means Inventory (a) not yet delivered to the Borrower or a Canadian Subsidiary, as applicable, (b) for which payment has been made by the Borrower or such Canadian Subsidiary, as applicable, (c) for which a bill of lading or other title document names the Borrower or a Canadian Subsidiary, as applicable, as consignee, (d) as to which a customs broker agency agreement, reasonably satisfactory to the Agent and the Co-Collateral Agents, is in effect, and (e) which otherwise would not be excluded by the definition of Eligible Inventory.

“ Eligible Inventory ” means Inventory of the Borrower or the Canadian Subsidiaries, as applicable, which the Agent and the Co-Collateral Agents, in their reasonable discretion, determine to be Eligible Inventory. Without limiting the discretion of the Agent and the Co-Collateral Agents to establish other criteria of ineligibility, Eligible Inventory shall not, unless the Agent and the Co-Collateral Agents in their sole discretion elect, include any Inventory:

(a) that is not owned by the Borrower or the Canadian Subsidiaries, as applicable;

(b) that is not subject to the Agent’s Liens, which are perfected as to such Inventory, or that are subject to any other Lien whatsoever (other than the Liens described in clauses (a), (d), (g), (i) or (m)  of the definition of Permitted Liens provided that such Permitted Liens (i) are junior in priority (unless such Permitted Liens have priority by operation of applicable law and except for Permitted Liens under clause (m) of the definition thereof) to the Agent’s Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral);

(c) that does not consist of finished goods;

(d) that consists of raw materials, work-in-process, chemicals, samples, prototypes, supplies, or packing and shipping materials;

 

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(e) that is not in good condition, is unmerchantable, or does not meet all standards imposed by any Governmental Authority, having regulatory authority over such goods, their use or sale;

(f) that is not currently either usable or salable, at prices approximating at least cost, in the normal course of the Borrower’s or a Canadian Subsidiary’s business, or that is slow moving or stale;

(g) that is obsolete or repossessed or used goods taken in trade or held for return to vendors;

(h) that is located outside the United States of America (with respect to Inventory owned by the Borrower) or Canada (with respect to Inventory owned by a Canadian Subsidiary) (or that is in-transit from vendors or suppliers except Eligible In Transit Inventory and LC Inventory Availability);

(i) that is located in a public warehouse or in possession of a bailee or in a facility leased by the Borrower or a Canadian Subsidiary, if the warehouseman, or the bailee, or the lessor has not delivered to the Agent, if requested by the Agent or any Co-Collateral Agent, a subordination agreement in form and substance satisfactory to the Agent and the Co-Collateral Agents or if a Reserve for rents or storage charges, if the Agent or any Co-Collateral Agent so requires, has not been established for Inventory at that location;

(j) that contains or bears any Proprietary Rights licensed to the Borrower or a Canadian Subsidiary by any Person, if the Agent or any Co-Collateral Agent is not satisfied that it may sell or otherwise dispose of such Inventory in accordance with the terms of Section 11.2 without infringing the rights of the licensor of such Proprietary Rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement), and, as to which the Borrower or applicable Canadian Subsidiary has not delivered to the Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Agent and the Co-Collateral Agents if requested;

(k) that is not reflected in the details of a current perpetual inventory report; or

(l) that is Inventory placed on consignment.

If any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory.

“ Eligible Major Credit Card Receivables ” means all Major Credit Card Receivables of the Borrower or the Canadian Subsidiaries, as applicable, which the Agent and the Co-Collateral Agents in the exercise of their reasonable discretion determine to be Eligible Major Credit Card Receivables. Without limiting the discretion of the Agent and the Co-Collateral Agents to establish criteria of eligibility and ineligibility, Eligible Major Credit Card Receivables shall not, unless the Agent and the Co-Collateral Agents in their sole discretion elect, include any Major Credit Card Receivable unless such Major Credit Card Receivable:

(a) has arisen under a Major Credit Card Account;

 

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(b) has not been outstanding for more than five (5) Business Days from the date of sale;

(c) was created in compliance with all Requirements of Law and pursuant to a Major Credit Card Program Agreement that complies with all Requirements of Law;

(d) is such that at the time of and at all times after the creation of such Major Credit Card Receivable the Borrower or a Canadian Subsidiary, as applicable, has good and marketable title thereto, free and clear of all Liens (other than Liens in favor of the Agent and Liens described in clauses (a), (d), (g), (i) or (m)  of the definition of Permitted Liens provided that such Permitted Liens (i) are junior in priority (unless such Permitted Liens have priority by operation of applicable law and except for Permitted Liens under clause (m) of the definition thereof) to the Agent’s Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral);

(e) is the legal, valid and binding payment obligation of the Major Credit Card Obligor specified in the Major Credit Card Program Agreement related thereto, enforceable against such obligor in accordance with its terms, subject to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles;

(f) constitutes an “account” or a “general intangible” under Article 9 of the UCC;

(g) is payable in Dollars or, with respect to the Canadian Subsidiaries, Canadian dollars;

(h) is subject to a first priority and perfected security interest in favor of the Agent for the benefit of the Agent and the Lenders and is subject to no other Liens (other than the Liens described in clauses (a), (d), (g), (i) or (m)  of the definition of Permitted Liens provided that such Permitted Liens (i) are junior in priority (unless such Permitted Liens have priority by operation of applicable law and except for Permitted Liens under clause (m) of the definition thereof) to the Agent’s Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral); and

(i) complies with each of the representations, warranties, covenants and agreements contained in Section 6.8 relating thereto.

“ Environmental Claims ” means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for a Release or injury to the environment.

 

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“ Environmental Compliance Reserve ” means any reserve which the Agent establishes in its reasonable discretion after prior written notice to the Borrower from time to time for amounts that are reasonably likely to be expended by any of the Loan Parties in order for such Loan Party and its operations and property (a) to comply with any notice from a Governmental Authority asserting material non-compliance with Environmental Laws, or (b) to correct any such material non-compliance identified in a report delivered to the Agent and the Lenders pursuant to Section 9.6.

“ Environmental Laws ” means all federal, state, or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety and land use matters.

“ Environmental Lien ” means a Lien in favor of any Governmental Authority for (1) any liability under any Environmental Laws, or (2) damages arising from, or costs incurred by such Governmental Authority in response to a Release or threatened Release of a Contaminant into the environment.

“ Equipment ” means, with respect to any Loan Party, all of such Loan Party’s now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including embedded software, motor vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all of such types of property leased by such Loan Party and all of such Loan Party’s rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located.

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

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) that, together with any Loan Party is treated as a single employer under Section 414 of the Code or Section 4001(a)(14) of ERISA.

“ ERISA Event ” means, other than with respect to liabilities under or relating to the termination of the Borrower Pension Plan described on Schedule 8.20 hereto, (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001 (a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA Affiliate from a Multiemployer Plan or other applicable legislation or notification that a Multiemployer Plan or Pension Plan regulated or governed by other applicable legislation is in reorganization; (d) the filing of a notice of intent to terminate or the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA or other law where such termination or amendment would reasonably be

 

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expected to result in an unsatisfied liability of any Loan Party or ERISA Affiliate to the Pension Plan or PBGC, or the commencement of proceedings by the PBGC or other applicable Governmental Authority to terminate a Pension Plan or Multiemployer Plan; (e) the occurrence of an event or condition which would reasonably be expected to constitute grounds under Section 4042 of ERISA or other law for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA or other applicable legislation, upon any Loan Party or any ERISA Affiliate.

“ Event of Default ” has the meaning specified in Section 11.1 .

“ Exchange Act ” means the Securities and Exchange Act of 1934, and regulations promulgated thereunder.

“ Existing Letters of Credit ” means each of the letters of credit issued under the Pre-Petition Loan Agreement prior to the date hereof and set forth on Schedule 2.3 hereto.

“ FSAC ” means Financial Services Acceptance Corp.

“ FDIC ” means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions.

“ Federal Funds Rate ” means, for any day, the rate per annum (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Bank on such day on such transactions as determined by the Agent.

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System or any successor thereto.

“ Final Borrowing Order ” means an order of the Bankruptcy Court which order shall be substantially similar to the Interim Borrowing Order and otherwise reasonably acceptable to the Agent and the Co-Collateral Agents, which, among other matters but not by way of limitation, authorizes the Loan Parties to obtain credit, incur (or guaranty) the Obligations, grant Liens under this Agreement and the other Loan Documents, as the case may be, provides for the super priority of the Agent’s and the Lenders’ claims, to the extent contemplated hereby, and grants the lenders under the Pre-Petition Loan Agreement adequate protection of their interests, which order is a Final Order.

“ Final Order ” means an order or judgment of the Bankruptcy Court as entered on the docket of the Clerk of the Bankruptcy Court that has not been reversed, stayed, modified or amended and as to which the time to appeal, petition for certiorari, reargue or seek rehearing or

 

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reconsideration has expired or been waived by the Bankruptcy Court and no proceeding for certiorari, reargument, rehearing or reconsideration is pending or if an appeal, petition for certiorari, reargument, rehearing or reconsideration has been sought, the order or judgment of the Bankruptcy Court has been affirmed by the highest court to which the order was appealed, from which the reargument, rehearing or reconsideration was sought, or certiorari has been denied and the time to take any further appeal or to seek certiorari or further reargument, rehearing or reconsideration has expired.

“ Financial Statements ” means, any financial statements required to be given to the Lenders or the Agent pursuant to this Agreement.

“ Fiscal Year ” means any period of 52 or 53 consecutive weeks which historically make up the fiscal year of Holdings and its Subsidiaries.

“ Fixed Assets ” means, with respect to any Loan Party, Equipment and Real Estate of such Loan Party.

“ Funding Date ” means the date on which a Borrowing occurs.

“ GAAP ” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession).

“ General Intangibles ” means, with respect to any Loan Party, all of such Loan Party’s now owned or hereafter acquired general intangibles (as defined in the UCC), choses in action and causes of action and all other intangible personal property of such Loan Party of every kind and nature (other than Accounts), including, without limitation, all contract rights, payment intangibles, Proprietary Rights, corporate or other business records, inventions, designs, blueprints, plans, specifications, patents, patent applications, trademarks, service marks, trade names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to such Loan Party in connection with the termination of any Plan or other employee benefit plan or any rights thereto and any other amounts payable to such Loan Party from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Loan Party is beneficiary, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged equity interests or Investment Property and any letter of credit, guarantee, claim, security interest or other security held by or granted to such Loan Party, letter of credit, guarantee, claim, security interest or other security held by or granted to such Loan Party.

“ Governmental Authority ” means any nation or government, any state, province, municipality or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or

 

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administrative functions of or pertaining to government, any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing and any department, agency, board, commission, tribunal, committee or instrumentality of any of the foregoing.

“ Guarantors ” has the meaning specified in the introductory paragraph hereof.

“ Guaranty ” or “ Guarantee ” means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness, dividend or other obligations of any other Person (the “ guaranteed obligations ”), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including, without limitation, any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services.

“ Hedge Agreement ” means any and all transactions, agreements or documents now existing or hereafter entered into, which provides for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging any Loan Party’s exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

“ Independent Consultants ” means each of Peter J. Solomon and Company and Alvarez and Marsal Inc. (or another independent third party consultant reasonably acceptable to the Agent and the Required Lenders).

“ Initial Budget ” means an initial cash flow projection for the first eleven weeks following the Closing Date attached hereto as Schedule 1.2 .

“ Initial Order ” means an order issued and entered by the Canadian Bankruptcy Court, in form and with provisions as may be reasonably acceptable to the Agent and the Lenders or on record at the hearing with respect to such order in the Canadian Case, which shall stay all proceedings against the Canadian Subsidiaries and which shall, inter alia, approve the Canadian Subsidiaries’ entering into and performing their respective obligations under the Intercompany Loan Documents.

“ Instruments ” means, with respect to any Loan Party, all instruments as such term is defined in the UCC, now owned or hereafter acquired by such Loan Party.

“ Intercompany Accounts ” means all assets and liabilities, however arising, which are due to any Loan Party from, which are due from any Loan Party to, or which otherwise arise from any transaction by any Loan Party with, any other Loan Party or any Affiliate of any Loan Party.

“ Intercompany Loan Documents ” means all documentation satisfactory to the Agent and the Co-Collateral Agents in their sole discretion evidencing, securing, or otherwise relating to the

 

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intercompany loan arrangement among the Borrower, as lender, and the Canadian Subsidiaries, as borrowers, which arrangement shall include, without limitation, a valid and existing and first priority perfected Lien (subject to Permitted Liens having priority by operation of applicable law) of the Borrower in the assets of the Canadian Subsidiaries to be included in the Borrowing Base.

“ Intercreditor Agreement ” means the Intercreditor Agreement between the Agent and the agent under the Term Debt dated as of June 21, 2005, as amended and in effect from time to time.

“ Interest Rate ” means each or any of the interest rates, including the Default Rate, set forth in Section 3.1 .

“ Interim Borrowing Order ” means an order of the Bankruptcy Court which order shall be in the form of, and containing the provisions set forth in, Exhibit D (or such other form and provisions as may be reasonably acceptable to the Agent and the Lenders or on record at the hearing with respect to such order in the Case) which, among other matters but not by way of limitation, authorizes, on an interim basis, the Loan Parties to obtain credit, incur (or guaranty) the Obligations, grant Liens under this Agreement and the other Loan Documents, as the case may be, provides for the super priority of the Agent’s and the Lenders’ claims, to the extent contemplated hereby, and grants the lenders under the Pre-Petition Loan Agreement adequate protection of their interests.

“ Inventory ” means, with respect to any Loan Party, or, for purposes of determining the Borrowing Base, any Canadian Subsidiary, all of such Loan Party’s or Canadian Subsidiary’s, as applicable, now owned and hereafter acquired inventory (as defined in the UCC), goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work in process, finished goods (including embedded software), other materials and supplies of any kind, nature or description which are used or consumed in such Loan Party’s or Canadian Subsidiary’s, as applicable, business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise and such other personal property, and all documents of title or other Documents representing them.

“ Inventory Appraisal ” means each Inventory Appraisal delivered pursuant to Section 15.19 , as updated pursuant to such Section.

“ Investment Property ” means, with respect to any Loan Party, all of such Loan Party’s right, title and interest in and to any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements; (c) securities accounts; (d) commodity contracts; or (e) commodity accounts.

“ IRS ” means the Internal Revenue Service and any Governmental Authority succeeding to any of its principal functions under the Code.

“ LC Inventory Availability ” means, as of any date, an amount equal to (i) with respect to the Borrower 85% of the Orderly Liquidation Percentage for Inventory of Borrower on such date, and (ii) with respect to the Canadian Subsidiaries, such advance rate as may be determined

 

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by the Agent and the Co-Collateral Agents in their sole discretion, multiplied by the Orderly Liquidation Percentage for Inventory of the Canadian Subsidiaries on such date, in each case multiplied by the undrawn amount of all Letters of Credit issued by the Bank then outstanding which will expire in 90 days (or such longer period as the Agent and the Co-Collateral Agents shall agree in their sole discretion) or less and which are issued to secure the payment by Borrower or a Canadian Subsidiary, as applicable, of the purchase of non-U.S. Inventory by Borrower or non-Canadian Inventory by such Canadian Subsidiary, as applicable, in the ordinary course of its business, as to which Inventory a customs broker agency agreement, reasonably satisfactory to the Agent, is in effect and which Inventory is not included in Eligible Inventory or Eligible In Transit Inventory, but would otherwise constitute Eligible Inventory upon delivery of such Inventory to the Borrower or the Canadian Subsidiaries, as applicable.

“ Lender ” and “ Lenders ” have the meanings specified in the introductory paragraph hereof and shall include the Agent to the extent of any Agent Advance outstanding and the Bank to the extent of any Bank Loan outstanding; provided that no such Agent Advance or Bank Loan shall be taken into account in determining any Lender’s Pro Rata Share.

“ Letter of Credit ” means a letter of credit issued or caused to be issued for the account of the Borrower pursuant to Section 2.3 , and includes, without limitation, the Existing Letters of Credit.

“ Letter of Credit Fee ” has the meaning specified in Section 3.5 .

“ Letter of Credit Issuer ” means the Bank, any affiliate of the Bank, any other Lender or any affiliate of any such other Lender, in each instance, that issues any Letter of Credit pursuant to this Agreement.

“ Letter of Credit Rights ” means, with respect to any Loan Party, all of such Loan Party’s now owned or hereafter acquired letter of credit rights, as defined in the UCC.

“ LIBO Rate ” means the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”) for a 30 day interest period (“Interest Period”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “LIBO Rate” shall be the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the first day of a 30 day interest period in same day funds in the approximate amount of the Loan being made by the Bank and with a term equivalent to such 30 day interest period would be offered by the Bank’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such 30 day interest period.

“ Lien ” means: (a) any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including, without limitation, a security interest, charge, claim, or lien

 

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arising from a mortgage, deed of trust, deemed trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; (b) to the extent not included under clause (a), any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting property; and (c) any contingent or other agreement to provide any of the foregoing.

“ LILO Tranche ” has the meaning specified in Section 2.5(a).

“ LILO Tranche Effective Date ” has the meaning specified in Section 2.5(d).

“ Loan Account ’ means the loan account of the Borrower, which account shall be maintained by the Agent.

“ Loan Documents ” means this Agreement, the Borrowing Base Certificates, the Collateral Assignment of Intercompany Loan Documents, any Hedge Agreement between a Loan Party and a Lender or an affiliate of a Lender, the DIP Orders, and any other agreements, instruments, and documents heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise relating to the Obligations, the Collateral, or any other aspect of the transactions contemplated by this Agreement, excluding, for the avoidance of doubt, any Pre-Petition Loan Documents.

“ Loan Parties ” means a collective reference to the Borrower and the Guarantors, and “ Loan Party ” means any one of them.

“ Loans ” means, collectively, all loans and advances provided for in Article 2 .

“ Major Credit Card Account ” means each account established by or with any of the Major Credit Card Obligors under any Major Credit Card Program Agreement.

“ Major Credit Card Obligors ” means JPMorgan Chase Bank, Chase Merchant Services, L.L.C., BA Merchant Services, Inc., Novus Services, Inc., Discover Business Services, Discover Financial Services, Inc., American Express Travel Related Services Company, Inc., World Financial Network National Bank, each successor thereto and any other financial institution designated by the Borrower or any Canadian Subsidiary, as applicable, in writing and reasonably acceptable to the Agent, serving in a similar capacity.

“ Major Credit Card Program Agreements ” means each of the agreements described on Schedule 1.1(b ) hereto, any amendments or supplements thereto and any other agreement, specified by the Borrower or any Canadian Subsidiary, as applicable, in writing and reasonably acceptable to the Agent, providing for the reimbursement of the Borrower or any Canadian Subsidiary, as applicable, for any goods or services purchased from the Borrower or any Canadian Subsidiary, as applicable, with any credit, cash or similar card bearing any of a Visa, Plus, MasterCard, Cirrus, Maestro, Discover, Optima, World Financial Network National Bank or American Express logo.

“ Major Credit Card Receivables ” means all amounts due to the Borrower or any Canadian Subsidiary, as applicable, pursuant to a Major Credit Card Program Agreement with respect to sales by the Borrower or any Canadian Subsidiary, as applicable, of merchandise or services to its retail customers.

 

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“ Margin Stock ” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“ Material Adverse Effect ” means, other than as a result of the commencement, pendency or continuation of the Case, (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of (i) the Borrower, or (ii) Holdings and its Subsidiaries taken as a whole or (iii) any substantial portion of the Collateral; (b) a material impairment of the ability of the Loan Parties to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Loan Parties of any Loan Document.

“ Maximum Revolver Amount ” means (i) until entry of the Final Borrowing Order, $90,000,000, and (ii) upon entry of the Final Borrowing Order, $100,000,000, as such amount may be reduced from time to time in accordance with the provisions of Section 4.3 .

“ Multiemployer Plan ” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding five (5) years contributed to by any Loan Party or any ERISA Affiliate.

“ Multiple Employer Plan ” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party and at least one trade or business other than the Loan Party or (b) was so maintained and in respect of which any Loan Party could reasonably be expected to have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“ Net Amount of Eligible Major Credit Card Receivables ” means, at any time, the gross amount of Eligible Major Credit Card Receivables less sales, excise or similar taxes, and less returns, discounts, claims, credits, allowances, accrued rebates, offsets, deductions, counterclaims, disputes and other defenses of any nature at any time issued, owing, granted, outstanding, available or claimed and less all finance charges, late payment fees, annual fees (if any), credit insurance premiums, returned check charges and any other fees or charges.

“ Notice of Borrowing ” has the meaning specified in Section 2.2(b) .

“ Obligations ” means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by any Loan Party to the Agent and/or any Lender (or an affiliate of any Lender), arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including, without limitation, all principal, interest, charges, expenses, fees, attorneys’ fees, filing fees and any other sums chargeable to any Loan Party hereunder or under any of the other Loan Documents. “ Obligations ” includes, without limitation, (a) all Revolving Loans and all debts, liabilities, and obligations now or hereafter owing from any Loan Party to the Agent and/or any Lender under or in connection with the Revolving Loans or the Letters of Credit and (b) all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products.

 

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“ Orderly Liquidation Percentage ” means, with respect to Inventory of the Borrower or any Canadian Subsidiary, as applicable, at any time, the ratio (expressed as a percentage) computed by dividing (i) the net recovery value of the Inventory of the Borrower or any Canadian Subsidiary, as applicable, (which in any event shall give effect to all costs and expenses of liquidation) as set forth in the Inventory Appraisal most recently delivered pursuant to Section 15.19 , as updated pursuant to such Section by (ii) the cost (calculated in accordance with the Borrower’s or a Canadian Subsidiary’s, as applicable, historical practices) of the Inventory of the Borrower or any Canadian Subsidiary, as applicable, as set forth in the corresponding Inventory Appraisal (or update thereof).

“ Orderly Liquidation Value ” means, with respect to the Eligible Inventory of the Borrower or any Canadian Subsidiary, as applicable, at any time, an amount equal to the product of (i) the value of the Eligible Inventory of the Borrower or any Canadian Subsidiary, as applicable, at such time valued at the cost (calculated in accordance with the Borrower’s or the Canadian Subsidiary’s, as applicable, historical practices), multiplied by (ii) the Orderly Liquidation Percentage for the Borrower or any Canadian Subsidiary, as applicable, in effect at such time.

“ Other Taxes ” means any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to this Agreement or any other Loan Documents.

“ Participating Lender ” means any Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“ Payment Account ” means each blocked bank account established pursuant to Section 6.8 , to which the funds of a Loan Party (including, without limitation, proceeds of Accounts and other Collateral) are deposited or credited.

“ Payment Intangibles ” means, with respect to any Loan Party, all of such Loan Party’s now owned or hereafter acquired payments intangibles, as defined in the UCC.

“ PBGC ” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof.

“ Pending Revolving Loans ” means at any time, the aggregate principal amount of all Revolving Loans requested by the Borrower in any Notice(s) of Borrowing received by the Agent which have not yet been advanced.

“ Pension Plan ” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA (other than a Multiemployer Plan), including the Borrower Pension Plan, or a defined benefit plan maintained in any non-U.S. jurisdiction, in each case which any Loan Party

 

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sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiple Employer Plan has made contributions at any time during the immediately preceding five (5) plan years.

“ Permitted Liens ” means the following Liens:

(a) Liens for taxes and assessments not delinquent encumbering assets or properties of any Loan Party or statutory Liens for taxes encumbering assets or properties of any Loan Party, provided that the payment of such taxes which are due and payable is being contested in good faith and by appropriate proceedings diligently pursued and as to which adequate financial reserves have been established on the relevant Loan Party’s books and records and a stay of enforcement of any such Lien is in effect, and provided further that nothing contained herein shall limit or impair the Agent’s right to establish Reserves on account of Liens encumbering Accounts, Inventory, or proceeds thereof that are prior to the Agent’s Liens therein;

(b) the Agent’s Liens;

(c) Liens consisting of deposits made in the ordinary course of business in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure statutory obligations (other than liens arising under ERISA or Environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds (including, without limitation, customs bonds, utility bonds and lease bonds) in the ordinary course of business;

(d) Liens imposed by law securing the claims or demands (in each case, arising in the ordinary course of business) of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, provided that the payment of such claims or demands are not overdue by more than forty-five (45) days or are being contested in good faith and by appropriate proceedings diligently pursued and for which adequate reserves have been provided in accordance with GAAP and, in each instance, a stay of enforcement of any such Lien which arises from the nonpayment of any such claims or demands is in effect and if any such Lien arises from the nonpayment of such claims or demand when due, such claims or demands are not material in the aggregate;

(e) reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate; provided that they do not in the aggregate materially detract from the value of any Real Estate or materially interfere with its use in the ordinary conduct of any Loan Party’s business;

(f) Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result

 

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in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have been set aside and no material property or asset is subject to a material risk of loss or forfeiture and the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles) and a stay of execution pending appeal or proceeding for review is in effect;

(g) Liens described on Schedule 9.16 hereto and Liens granted under the Pre-Petition Loan Documents;

(h) purchase money Liens in Fixed Assets securing Debt permitted under Section 9.11(d) (including the interest of a lessor under a Capital Lease and purchase money Liens to which any capital property is subject at the time of acquisition thereof, and limited in each case to the capital property purchased with the proceeds thereof or subject to such Capital Lease);

(i) Liens securing Term Debt permitted pursuant to Section 9.11(e) hereof and Guaranties thereof permitted pursuant to Section 9.10(i) hereof;

(j) interests of licensees in trademarks and copyrights;

(k) extensions, renewals or replacements of any Liens referred to in clauses (g), (h) and (i) of this definition; provided , that the principal amount of the obligations secured thereby is not increased (other than as a result of payment of accrued and unpaid interest, fees and expenses) and that any such extension, renewal or replacement is limited to the property originally encumbered thereby;

(l) Permitted Prior Encumbrances (as defined in the DIP Orders);

(m) intercompany Liens granted by the Canadian Subsidiaries to the Borrower; provided that such Liens are collaterally assigned to the Agent, and Liens constituting the Administration Charge and the Directors’ Charge in the Canadian Case; and

(n) Liens granted by the Bankruptcy Court securing any liability of any Loan Party under or relating to the Borrower Pension Plan or the termination of the Borrower Pension Plan.

“ Person ” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity.

“ Petition Date ” means June 17, 2009.

“ Plan ” means an employee benefit plan (as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) or the applicable laws of any other jurisdiction) which any Loan Party sponsors or maintains or to which such Loan Party makes, is making, or is obligated to make contributions and includes any Pension Plan.

 

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“ Plan of Reorganization ” means a plan (within the meaning of the Bankruptcy Code) proposed by the Borrower for, among others, the Borrower which is filed with and confirmed by a Final Order of the Bankruptcy Court.

“ Pre-Petition Liabilities ” means the “Obligations”, as defined in the Pre-Petition Loan Agreement, but excluding all Existing Letters of Credit so long as and to the extent that such Existing Letters of Credit are deemed to be Obligations hereunder pursuant to the DIP Orders.

“ Pre-Petition Loan Agreement ” means that certain Loan and Security Agreement dated as of June 21, 2005 entered into among the Borrower, the Guarantors, the Agent and the Lenders (as each of those terms is defined therein), together with all instruments, documents and agreements executed or delivered in connection therewith, in each case, as amended to the date hereof.

“ Pre-Petition Loan Documents ” means the “Loan Documents” as defined in the Pre-Petition Loan Agreement.

“ Proceeds ” as defined in the UCC.

“ Professional Fees and Expenses ” means, subject to any limitations contained in the DIP Orders, (a) allowed administrative expenses payable pursuant to 28 U.S.C. § 1930(a)(6), and (b) professional fees of, and expenses incurred by, attorneys, accountants, financial advisors, consultants and other professionals retained by the Loan Parties or the Creditors’ Committee or other statutory committee appointed in the Case pursuant to §§327 and 1103 of the Bankruptcy Code.

“ Pro Rata Share ” means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender’s Commitment and the denominator of which is the sum of the amounts of all of the Lenders’ Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the amount of Obligations (other than any Obligations under Bank Products) owed to such Lender and the denominator of which is the aggregate amount of the Obligations (other than any Obligations under Bank Products) owed to the Lenders, in each case after giving effect to a Lender’s participation in Bank Loans and Agent Advances.

“ Proprietary Rights ” means, with respect to any Loan Party, all of such Loan Party’s now owned and hereafter arising or acquired: licenses, franchises, permits, patents, patent rights, industrial designs, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, industrial design, trademark and service mark applications, and all licenses and rights related to any of the foregoing, including, without limitation, those patents, industrial designs, trademarks, service marks, trade names and copyrights set forth on Schedule 8.12 hereto, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present and future infringement of any of the foregoing.

“ Ratable Collateral ” means the Collateral subject to a ratable first priority Lien in favor of the lenders under the Pre-Petition Loan Documents and the lenders of the Term Debt, in accordance with Section 2.2(c) of the Intercreditor Agreement.

 

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“ Real Estate ” means, with respect to any Loan Party, all of such Loan Party’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of such Loan Party’s now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.

“ Release ” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor environment or into or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Real Estate or other property.

“ Reportable Event ” means, with respect to a Pension Plan subject to Title IV of ERISA, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“ Reported Fee Accruals ” means the amount of Professional Fees and Expenses which have been incurred, accrued and invoiced (but remain unpaid) prior to such time as the Agent notifies the Borrower of the occurrence of an Event of Default and which have been reported to the Agent and the Co-Collateral Agents in accordance with the provisions of Section 6.6(k) hereof. Any Professional Fees and Expenses which have been incurred, accrued and invoiced (and remain unpaid) but are not reported to the Agent and the Co-Collateral Agents in accordance with the provisions of Section 6.6(k) hereof shall be conclusively presumed to have been paid and shall not constitute “Reported Fee Accruals.”

“ Required Lenders ” means, at any time, (a) subject to clause (b) below, Lenders whose Pro Rata Shares aggregate 66  ² / 3 % or more of the Commitments or, if no Commitments shall then be in effect, Lenders who hold 66  ² / 3 % or more of the aggregate principal amount of the Loans then outstanding, or (b) if any Lender as of the Closing Date has on or before such time assigned any portion of its Commitment to any Lender who was not a Lender as of the Closing Date, Lenders whose Pro Rata Shares aggregate more than 50% of the Commitments or, if no Commitments shall then be in effect, Lenders who hold more than 50% of the aggregate principal amount of the Loans then outstanding; provided that for purposes of this definition, the Commitments of any Lenders with respect to the LILO Tranche shall not be counted for purposes of determining the percentages set forth above.

“ Requirement of Law ” means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

“ Reserves ” means reserves that limit the availability of credit hereunder, consisting of reserves against the Borrowing Base established by the Agent (or the Co-Collateral Agents, as set forth below) from time to time in the Agent’s reasonable credit judgment exercised in good faith. Without limiting the generality of the foregoing, and without duplication of any of the reserves taken into account in determining “Orderly Liquidation Value”, the following reserves shall be deemed to be a reasonable exercise of the Agent’s credit judgment: (a) Bank Product

 

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Reserves, (b) a reserve for accrued, unpaid interest on the Obligations, (c) reserves for pre-Petition Date past due rent and for two months rent for all of the Borrower’s or Canadian Subsidiaries’, as applicable, leased locations at which Revolving Lender Priority Collateral is located (i) in which the Borrower or a Canadian Subsidiary, as applicable, has granted a contractual Lien to the lessor and (ii) in the states of Virginia, Pennsylvania, Washington, the province of Quebec and other states or provinces in which applicable law provides a landlord with a Lien for unpaid rent having priority over the Lien of the Agent, (d) Inventory shrinkage and Inventory returns and anticipated returns and markdowns, (e) Environmental Compliance Reserves, (f) past due customs charges (including landing costs and freight accruals) to the extent such charges have not been bonded or a cash escrow account has not been established to pay such amounts, (g) guest fulfillment services such as presales and special orders, (h) past due warehousemen’s or bailees’ charges to the extent such charges have not been bonded or a cash escrow account has not been established to pay such amounts, (i) reserves in an amount equal to fifty (50%) percent of the face amount of outstanding gift certificates, to be calculated on the Closing Date with respect to outstanding gift certificates issued on and after January 1, 2006, and thereafter, on a rolling forty-one (41) month basis, (j) reserves for outstanding Taxes and other governmental charges, including, without limitation, ad valorem, real estate, personal property, sales, and other Taxes which may have priority over the interests of the Agent in the Collateral, (k) reserves for salaries, wages and benefits due to employees of the Borrower or the Canadian Subsidiaries, as applicable, (l) reserves for reasonably anticipated changes in the Orderly Liquidation Value of Eligible Inventory between appraisals, (m) reserves with respect to Inventory of the Canadian Subsidiaries subject to rights of suppliers under Section 81.1 of the Bankruptcy and Insolvency Act (Canada), as amended or replaced from time to time, to the extent such Inventory is included in the calculation of the Borrowing Base, (n) unpaid liabilities owing under the Borrower Pension Plan or any other Pension Plan if the Agent or any Co-Collateral Agent determines, in their sole discretion, that there is a reasonable likelihood that any claims with respect to such liabilities could have priority over the Obligations, and (o) reserves for other claims against the Borrower or the Canadian Subsidiaries that the Agent reasonably believes could have priority over the Obligations, including the Administration Charge. Notwithstanding the foregoing, the amount of any Reserve relating to the assets or operations of the Canadian Subsidiaries shall not exceed the available amount under clauses (e) through (h) of the Borrowing Base. Upon the determination by any Co-Collateral Agent that a Reserve should be established or modified, such Co-Collateral Agent shall notify the Agent in writing and the Agent shall thereupon establish or modify such Reserve, subject to the provisions of Section 14.18 of this Agreement.

“ Responsible Officer ” means the chief executive officer or the president of the Borrower, as appropriate, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants and the preparation of the Borrowing Base Certificate, the chief financial officer, chief accounting officer, the controller or the treasurer of Borrower, or any other officer having substantially the same authority and responsibility.

“ Restricted Investment ” means, as to any Loan Party, any acquisition of property by such Loan Party in exchange for cash or other property, whether in the form of an acquisition of stock, debt, or other indebtedness or obligation, or the purchase or acquisition of any other property, or a loan, advance, capital contribution, or subscription, except the following: (a) acquisitions of Equipment to be used in the business of such Loan Party; (b) acquisitions of

 

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Inventory in the ordinary course of business of such Loan Party, (c) acquisitions of current assets acquired in the ordinary course of business of such Loan Party; (d) direct obligations of the United States of America, or any agency thereof, or obligations guaranteed by the United States of America, provided that such obligations mature within 30 days from the date of acquisition thereof, (e) acquisitions of certificates of deposit maturing within 30 days from the date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created by, or with a bank or trust company organized under the laws of the United States of America or any state thereof having capital and surplus aggregating at least $100,000,000; (f) acquisitions of commercial paper given a rating of “A2” or better by Standard & Poor’s Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing not more than 30 days from the date of creation thereof, (g) shares of money market mutual or similar funds which invest substantially all their assets in assets satisfying the requirements of clauses (d) through (f) of this definition; (h) intercompany loans to and investments in other Loan Parties, so long as any such loan or investment is (i) useful for the ordinary conduct of the recipient’s business, (ii) made in the ordinary course of business and (iii) consistent with past practices; (j) existing loans and investments in Canadian Subsidiaries outstanding on the Closing Date not to exceed $6,700,000 in the aggregate; and (k) loans to and investments in Canadian Subsidiaries after the Closing Date not to exceed $7,500,000 in the aggregate outstanding at any time during the term of this Agreement.

“ Revolving Lender Priority Collateral ” has the meaning set forth in the Intercreditor Agreement.

“ Revolving Loans ” has the meaning specified in Section 2.2 and includes each Agent Advance and Bank Loan.

“ SAC ” means Spiegel Acceptance Corp.

“ Settlement” and “Settlement Date ” have the meanings specified in Section 2.2(j)(i) .

“ Specified Bankruptcy Recoveries ” has the meaning given to such term in the DIP Orders.

“ Stated Termination Date ” means January 31, 2010.

“ Structuring Fee ” has the meaning specified in Section 3.7 .

“ Subsidiary ” of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references to a “Subsidiary” refer to a Subsidiary of the Borrower.

“ Supporting Obligations ” means all supporting obligations as such term is defined in the UCC, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments or Investment Property.

 

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“ Taxes ” means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority.

“ Term Debt ” means the Debt due or to become due under that certain Amended and Restated Term Loan Agreement dated as of June 21, 2005 and as amended and restated on April 4, 2007 among Wilmington Trust FSB (as successor by assignment to JPMorgan Chase Bank, N.A.), as administrative agent, the lenders party thereto, the Borrower, and Holdings, together with all other documents relating thereto, including, without limitation, a certain Amended and Restated Guarantee and Collateral Agreement dated as of April 4, 2007 (as each may be amended, modified, supplemented, extended, restated, renewed or replaced from time to time in accordance with the terms hereof and the Intercreditor Agreement, including pursuant to the First Amendment dated as of April 2, 2009).

“ Termination Date ” means the earliest to occur of (i) thirty (30) days following the entry of the Interim Borrowing Order, unless the Final Borrowing Order has been entered on or before such date, (ii) the date of the consummation of the 363 Sale, (iii) the Stated Termination Date, (iv) the date the Total Facility is terminated either by the Borrower pursuant to Section 4.3 or by the Required Lenders pursuant to Section 11.2 , (v) the Consummation Date, and (vi) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement.

“ Total Facility ” has the meaning specified in Section 2.1 .

“ UCC ” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests, provided, that to the extent that the UCC is used to define any term herein or in any other documents and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.

“ Unfunded Pension Liability ” of a Pension Plan means, with respect to a Pension Plan subject to Title IV of ERISA, the excess, if any, of the projected benefit obligation of such Pension Plan over the fair value of the assets of such Pension Plan, as determined pursuant to Statement of Financial Accounting Standards No. 87.

“ Unused Letter of Credit Subfacility ” means an amount equal to $75,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus , without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit.

“ Unused Line Fee ” has the meaning specified in Section 3.4 .

“ Upfront Fee ” has the meaning specified in Section 3.6 .

“ Variance Report ” means a report prepared by the Borrower’s management reflecting on a line-item basis the Loan Parties’ actual performance compared to the 11 Week Cash Flow for the immediately preceding week, or for the first such week, the Initial Budget, and on a

 

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cumulative basis compared to the Initial Budget and the percentage variance of the Loan Parties’ actual results from those reflected in the then extant 11 Week Cash Flow, or, in the case of the first such week, the Initial Budget.

1.2 Accounting Terms . Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements.

1.3 Interpretive Provisions .

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof,” “herein,” “ hereunder ” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and Subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(c) (i) The term “ documents ” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.

(ii) The term “ including ” is not limiting and means “ including , without limitation .”

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

(iv) The word “or” is not exclusive.

(d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(e) The captions and headings of this Agreement and other Loan Documents are for convenience of reference only and shall not affect the interpretation of this Agreement.

(f) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

 

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(g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrower and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent’s or Lenders’ involvement in their preparation.

1.4 Currency Equivalents Generally .

Any amount specified in this Agreement to be in a currency other than Dollars shall also include the equivalent of such amount in Dollars, such equivalent amount to be determined by the Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.4, the “Spot Rate” for a currency means the rate determined by the Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Agent may obtain such spot rate from another financial institution designated by the Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

ARTICLE 2

LOANS AND LETTERS OF CREDIT

2.1 Total Facility . Subject to all of the terms and conditions of this Agreement, the Lenders severally agree to make available a total credit facility of up to the Maximum Revolver Amount (the “Total Facility”) for the Borrower’s use from time to time during the term of this Agreement. The Total Facility shall be comprised of a revolving line of credit consisting of revolving loans and letters of credit up to the Maximum Revolver Amount, as described in Sections 2.2 and 2.3.

2.2 Revolving Loans .

(a) Amounts . Subject to the satisfaction of the conditions precedent set forth in Article 10 , each Lender severally agrees, upon the Borrower’s request from time to time on any Business Day during the period from the Closing Date to but excluding the Termination Date, to make revolving loans (the “ Revolving Loans ”) to the Borrower, in amounts not to exceed (except for the Bank with respect to Bank Loans or Agent Advances) such Lender’s Pro Rata Share of the Combined Availability. If the Combined Availability is equal or less than zero, the Lenders may refuse to make or otherwise restrict the making of Revolving Loans as the Lenders determine until the Combined Availability is greater than zero, subject to the Agent’s authority, in its sole discretion, to make Agent Advances pursuant to the terms of Section 2.2(i) . Subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

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(b) Procedure for Borrowing .

(i) Each Borrowing by the Borrower shall be made upon irrevocable written notice of the Borrower delivered to the Agent in the form of a Notice of Borrowing substantially in the form of Exhibit C or another form acceptable to the Agent (each, a “ Notice of Borrowing ”), which must be received by the Agent no later than 1:30 p.m. (New York City time) on the requested Funding Date, specifying:

(A) the amount of the Borrowing; and

(B) the requested Funding Date, which shall be a Business Day.

(ii) Notwithstanding the provisions of clause (i) above, in lieu of delivering the above-described Notice of Borrowing, the Borrower may give the Agent telephonic notice of such request by the required time with such telephonic notice to be confirmed in writing within 24 hours of the giving of such notice but the Agent shall be entitled to rely on the telephonic notice in making such Revolving Loans.

(c) Reliance upon Authority . On or prior to the Closing Date and thereafter prior to any change with respect to any of the information contained in the following clauses (i) and (ii), the Borrower shall deliver to the Agent a writing setting forth (i) the account or accounts of the Borrower to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested pursuant to this Section 2.2 (each such account, a “ Designated Account ”), and (ii) the names of the officers and any other designated representatives of the Borrower authorized to request Revolving Loans on behalf of the Borrower, and shall provide the Agent with a specimen signature of each such officer and other designated representatives. All such Designated Accounts must be reasonably satisfactory to the Agent. The Agent shall be entitled to rely conclusively on such officer’s or designated representatives’ authority to request Revolving Loans on behalf of the Borrower, the proceeds of which are to be transferred to any of the accounts specified by the Borrower pursuant to the immediately preceding sentence, until the Agent receives written notice to the contrary. The Agent shall have no duty to verify the identity of any individual representing him or herself as one of the officers or designated representatives authorized by the Borrower.

(d) No Liability , The Agent shall not incur any liability to the Borrower as a result of acting upon any notice referred to in Sections 2.2(b) and (c), which notice the Agent believes in good faith to have been given by an officer duly authorized by the Borrower to request Revolving Loans or for otherwise acting in good faith under this Section 2.2 , and the crediting of Revolving Loans to the Borrower’s deposit account, or transmittal to such Person as the Borrower shall direct, shall conclusively establish the obligation of the Borrower to repay such Revolving Loans as provided herein.

(e) Notice Irrevocable . Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and the Borrower shall be bound to borrow the funds requested therein in accordance therewith.

 

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(f) Agent’s Election . Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b) , the Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g) apply to such requested Borrowing, or (ii) so long as the aggregate outstanding principal amount of Bank Loans, after giving effect to the requested Borrowing, does not exceed $25,000,000, to request the Bank to make a Bank Loan pursuant to the terms of Section 2.2(h) in the amount of the requested Borrowing; provided, however, that if the Bank declines in its sole discretion to make a Bank Loan pursuant to Section 2.2(h) , the Agent shall elect to have the terms of Section 2.2(g) apply to such requested Borrowing.

(g) Making of Revolving Loans .

(i) In the event that the Agent shall elect to have the terms of this Section 2.2(g) apply to a requested Borrowing as described in Section 2.2(f) , then promptly after receipt of a Notice of Borrowing or telephonic notice pursuant to Section 2.2(b) , the Agent shall notify the Lenders by telecopy, telephone or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to the Agent in same day funds, to such account of the Agent as the Agent may designate, not later than 2:00 p.m. (New York City time) on the Funding Date applicable thereto. After the Agent’s receipt of the proceeds of such Revolving Loans, upon satisfaction of the applicable conditions precedent set forth in Article 10 , the Agent shall make the proceeds of such Revolving Loans available to the Borrower on the applicable Funding Date by transferring same day funds equal to the proceeds of such Revolving Loans received by the Agent to the account of the Borrower designated in writing by the Borrower and acceptable to the Agent; provided, however , that the amount of Revolving Loans so made on any date shall in no event exceed the Combined Availability on such date. If, notwithstanding the foregoing, the amount of the Revolving Loans so made to the Borrower is in excess of the Combined Availability on any occasion, neither the Agent nor the Lenders shall be deemed to have changed the limits of the Maximum Revolver Amount or the Combined Availability or to be obligated to exceed such limits on any other occasion.

(ii) Unless the Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent that Lender’s Pro Rata Share of the Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available funds on the Funding Date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to the Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Agent submitted to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error, If such amount is so made available, such payment to the Agent shall constitute such Lender’s Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the Business Day following the Funding Date, the Agent will notify the Borrower of such failure to fund and,

 

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upon demand by the Agent, the Borrower shall pay such amount to the Agent for the Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing. The failure of any Lender to make any Loan on any Funding Date (any such Lender, prior to the cure of such failure, being hereinafter referred to as a “ Defaulting Lender ”) shall not relieve any other Lender of any obligation hereunder to make a Loan on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Funding Date.

(iii) The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrower to the Agent for the Defaulting Lender’s benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Agent. The Agent may hold and, in its discretion, re-lend to the Borrower the amount of all such payments received or retained by it for the account of such Defaulting Lender. Any amounts so re-lent to the Borrower shall bear interest at the rate applicable to Base Rate Loans and for all other purposes of this Agreement shall be treated as if they were Revolving Loans, provided, however, that for purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”. Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any Borrowing (1) such Defaulting Lender shall not be entitled to any portion of the Unused Line Fee and (2) the Unused Line Fee shall accrue in favor of the Lenders which have funded their respective Pro Rata Shares of such requested Borrowing, shall be allocated among such performing Lenders ratably based upon their relative Commitments. This section shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its obligations under this Agreement. The terms of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by Borrower of its duties and obligations hereunder.

(h) Making of Bank Loans .

(i) In the event the Agent shall elect, with the consent of the Bank, to have the terms of this Section 2.2(h) apply to a requested Borrowing as described in Section 2.2(f) , the Bank shall make a Revolving Loan in the amount of such Borrowing (any such Revolving Loan made solely by the Bank pursuant to this Section 2.2(h) being referred to as a “ Bank Loan ” and such Revolving Loans being referred to collectively as “ Bank Loans ”) available to the Borrower on the Funding Date applicable thereto by transferring same day funds to an account of the Borrower, designated in writing by the Borrower and acceptable to the Agent; provided, however , that the aggregate outstanding principal amount of Bank Loans shall at no time exceed $25,000,000. Each Bank Loan is a Revolving Loan hereunder and shall be subject to all the terms and conditions applicable to other Revolving Loans, including, without limitation, the terms and conditions set forth in Section 2.2(a), except that all payments thereon shall be payable to the Bank solely for its own account (and for the account of the holder of any participation interest with respect to such Revolving Loan). The Agent shall not request the Bank to make any Bank Loan if the Agent shall have received written notice from any Lender that one or more of the applicable conditions precedent set forth in Article 10 will not be satisfied on the requested Funding Date for the applicable Borrowing. The Bank shall not otherwise be required

 

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to determine whether the applicable conditions precedent set forth in Article 10 have been satisfied or the requested Borrowing would exceed the Combined Availability on the Funding Date applicable thereto prior to making, in its sole discretion, any Bank Loan.

(ii) The Bank Loans shall be repayable as provided herein (including without limitation Section 2.2(i) ) and secured by the Collateral, shall constitute Revolving Loans and Obligations hereunder, and shall bear interest at the rate applicable to Base Rate Loans from time to time.

(i) Agent Advances .

(i) Subject to the limitations set forth in the provisos contained in this Section 2.2(i) , the Agent is hereby authorized by the Borrower and the Lenders, from time to time in the Agent’s sole discretion, (1) after the occurrence of a Default or an Event of Default, or (2) at any time that any of the other applicable conditions precedent set forth in Article 10 have not been satisfied, to make Revolving Loans to the Borrower on behalf of the Lenders which the Agent, in its reasonable business judgment, deems necessary or desirable (A) to preserve or protect the Collateral, or any portion thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (C) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement, including, without limitation, costs, fees and expenses as described in Section 15.6 (any of the advances described in this Section 2.2(i) being hereinafter referred to as “ Agent Advances ”) ; provided , that (w) the Required Lenders may at any time revoke the Agent’s authorization contained in this Section 2.2(i) to make Agent Advances, any such revocation to be in writing and to become effective prospectively upon the Agent’s receipt thereof, (x) the Agent shall not make an Agent Advance which would cause the Aggregate Outstandings to exceed Combined Availability, (y) the Agent shall not make an Agent Advance which, together with all other Agent Advances then outstanding, would aggregate an amount in excess of 5% of the Combined Availability (without giving effect to the Maximum Revolver Amount) at the time such Agent Advance is made and (z) no Agent Advance shall be made if at such time an Agent Advance has been outstanding for more than 45 consecutive days.

(ii) The Agent Advances shall be repayable on demand and secured by the Collateral, shall constitute Revolving Loans and Obligations hereunder, and shall bear interest at the rate applicable to the Base Rate Loans from time to time.

(j) Settlement . It is agreed that each Lender’s funded portion of the Revolving Loan is intended by the Lenders to be equal at all times to such Lender’s Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans, the Bank Loans and the Agent Advances shall take place on a periodic basis in accordance with the following provisions:

(i) The Agent shall request settlement (“ Settlement ”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by the Agent, (1) on behalf of the

 

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Bank, with respect to each outstanding Bank Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect to collections received, in each case, by notifying the Lenders of such requested Settlement by telecopy, telephone or other similar form of transmission, of such requested Settlement, no later than 1:00 p.m. (New York City time) on the date of such requested Settlement (the “ Settlement Date ”). Each Lender (other than the Bank, in the case of Bank Loans) shall make the amount of such Lender’s Pro Rata Share of the outstanding principal amount of Bank Loans and Agent Advances with respect to which Settlement is requested available to the Agent, for itself or for the account of the Bank, in same day funds, to such account of the Agent as the Agent may designate, not later than 3:00 p.m. (New York City time), on the Settlement Date applicable thereto. Settlement may start during the continuation of a Default or an Event of Default and whether or not the applicable conditions precedent set forth in Article 10 have then been satisfied. Such amounts made available to the Agent shall be applied against the amounts of the applicable Bank Loan or Agent Advance and, together with the portion of such Bank Loan or Agent Advance representing the Bank’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount is not made available to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after the Settlement Date and thereafter at the Interest Rate then applicable to the Revolving Loans (A) on behalf of the Bank, with respect to each outstanding Bank Loan, and (B) for itself, with respect to each Agent Advance.

(ii) Notwithstanding the foregoing, not more than one Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Agent has requested a Settlement with respect to a Bank Loan or Agent Advance), each other Lender shall irrevocably and unconditionally purchase and receive from the Bank or the Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Bank Loan or Agent Advance to the extent of such Lender’s Pro Rata Share thereof by paying to the Agent, in same day funds, an amount equal to such Lender’s Pro Rata Share of such Bank Loan or Agent Advance. If such amount is not in fact made available to the Agent by any Lender, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after such demand and thereafter at the Interest Rate then applicable to the Revolving Loans.

(iii) From and after the date, if any, on which any Lender purchases an undivided interest and participation in any Bank Loan or Agent Advance pursuant to subsection (ii) above, the Agent shall promptly distribute to such Lender at such address as such Lender may request in writing, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by the Agent in respect of such Bank Loan or Agent Advance.

(iv) Between Settlement Dates, the Agent, to the extent no Agent Advances or Bank Loans are outstanding, may pay over to the Bank any payments received by Agent, which in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans for application to the Bank’s other outstanding Revolving Loans. If, as of any Settlement Date, collections received since the then immediately preceding Settlement Date have been applied to the Bank’s other outstanding Revolving Loans other than to Bank

 

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Loans or Agent Advances, as provided for in the previous sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, the Bank with respect to Bank Loans, the Agent with respect to Agent Advances, and each Lender with respect to the Revolving Loans other than Bank Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Bank, the Agent and the other Lenders.

(k) Notation . The Agent shall record on its books the principal amount of the Revolving Loans owing to each Lender, including the Bank Loans owing to the Bank, and the Agent Advances owing to the Agent, from time to time. In addition, each Lender is authorized, at such Lender’s option, to note the date and amount of each payment or prepayment of principal of such Lender’s Revolving Loans in its books and records, including computer records, such books and records constituting rebuttably presumptive evidence, subject to Section 4.8 hereof, absent manifest error, of the accuracy of the information contained therein.

(l) Lenders’ Failure to Perform , All Loans (other than Bank Loans and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares. It is understood that (a) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligation to make any Loans hereunder, (b) no failure by any Lender to perform its obligation to make any Loans hereunder shall excuse any other Lender from its obligation to make any Loans hereunder, and (c) the obligations of each Lender hereunder shall be several, not joint and several.

2.3 Letters of Credit .

(a) Agreement to Cause Issuance . Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties of the Borrower and the other Loan Parties herein set forth, the Agent agrees to (1) cause the Letter of Credit Issuer to issue Letters of Credit for the account of the Borrower, and/or (2) provide credit support or other enhancement acceptable to the Agent to the Letter of Credit Issuer, which issues Letters of Credit for the account of the Borrower (any such credit support or enhancement being herein referred to as a “ Credit Support ”) in accordance with this Section 2.3 from time to time during the term of this Agreement.

(b) Amounts; Outside Expiration Date . The Agent shall not have any obligation to cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit at any time if: (1) the maximum undrawn amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the requested Letter of Credit and all commissions, fees, and charges due from the Borrower in connection with the opening thereof exceed the Combined Availability at such time; (3) in the case of a standby Letter of Credit, the

 

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maximum undrawn amount of the requested standby Letter of Credit, together will all other standby Letters of Credit issued for the account of the Borrower, exceeds $20,000,000; or (4) such Letter of Credit has an expiration date later than 30 days after the Stated Termination Date or more than 180 days from the date of issuance. No Letter of Credit issued hereunder shall contain any “evergreen” or automatic renewal provision.

(c) Other Conditions . In addition to being subject to the satisfaction of the applicable conditions precedent contained in Article 10 , the obligation of the Agent to cause to be issued any Letter of Credit or to provide Credit Support for any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner satisfactory to the Agent:

(i) The Borrower shall have delivered to the Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application in form and substance reasonably satisfactory to such Letter of Credit Issuer and the Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to the Agent and such Letter of Credit Issuer;

(ii) As of the date of issuance, no order of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit.

(d) Issuance of Letters of Credit .

(i) Request for Issuance . The Borrower shall give the Agent three Business Days’ prior written notice of the request for the issuance of a Letter of Credit. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, that such Letter of Credit is for the account of the Borrower, the effective date (which date shall be a Business Day) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Borrower shall attach to such notice the proposed form of the Letter of Credit.

(ii) Responsibilities of the Agent; Issuance . The Agent shall determine, as of the Business Day immediately preceding the requested effective date of issuance of the Letter of Credit set forth in the notice from the Borrower pursuant to Section 2.3(d)(i) , (i) the amount of the applicable Unused Letter of Credit Subfacility and (ii) the Combined Availability as of such date. If (i) the undrawn amount of the requested Letter of Credit is not greater than the applicable Unused Letter of Credit Subfacility and (ii) the issuance of such requested Letter of Credit and all commissions, fees, and charges due from the Borrower in connection with the

 

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opening thereof would not exceed the Combined Availability, the Agent shall, subject to the terms and conditions hereof, cause the Letter of Credit Issuer to issue the requested Letter of Credit on such requested effective date of issuance so long as the other conditions here are met.

(iii) No Extensions or Amendment . The Agent shall not be obligated to cause the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this Section 2.3(d) are met as though a new Letter of Credit were being requested and issued.

(iv) Notice of Issuance . On each Settlement Date, the Agent shall give notice to each Lender of the issuance of all Letters of Credit issued since the last Settlement Date.

(e) Payments Pursuant to Letters of Credit .

(i) Payment of Letter of Credit Obligations . Borrower agrees jointly and severally to reimburse (i) the Letter of Credit Issuer for any draw under any Letter of Credit and (ii) the Agent for the account of the Lenders upon any payment pursuant to any Credit Support immediately when due, and to pay the Letter of Credit Issuer the amount of all other obligations and other amounts payable to such issuer under or in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which Borrower may have at any time against such issuer or any other Person. Each drawing under any Letter of Credit shall constitute a request by the Borrower to the Agent for a Borrowing of a Base Rate Loan in the amount of such drawing. The Funding Date with respect to such borrowing shall be the date of such drawing.

(f) Participations .

(i) Purchase of Participations . Immediately upon issuance of any Letter of Credit in accordance with Section 2.3(d) , each Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Lender’s Pro Rata Share of the face amount of such Letter of Credit or the Credit Support provided through the Agent to the Letter of Credit Issuer, if not the Bank, in connection with the issuance of such Letter of Credit (including, without limitation, all obligations of the Borrower with respect thereto, and any security therefor or guaranty pertaining thereto).

(ii) Sharing of Reimbursement Obligation Payments . Whenever the Agent receives a payment from Borrower on account of reimbursement obligations in respect of a Letter of Credit or Credit Support as to which the Agent has previously received for the account of the Letter of Credit Issuer thereof payment from a Lender, the Agent shall promptly pay to such Lender such Lender’s Pro Rata Share of such payment from Borrower in Dollars. Each such payment shall be made by the Agent on the next Settlement Date.

(iii) Documentation . Upon the request of any Lender, the Agent shall furnish to such Lender copies of any Letter of Credit, Credit Support for any Letter of Credit, reimbursement agreements executed in connection therewith, applications for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender.

 

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(iv) Obligations Irrevocable . The obligations of each Lender to make payments to the Agent with respect to any Letter of Credit or with respect to their participation therein or with respect to any Credit Support for any Letter of Credit or with respect to the Revolving Loans made as a result of a drawing under a Letter of Credit and the obligations of the Borrower to make payments to the Agent, for the account of the Lenders, shall be irrevocable and shall not be subject to any qualification or exception whatsoever, including, without limitation, any of the following circumstances:

(A) any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

(B) the existence of any claim, setoff, defense or other right which Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Agent, the issuer of such Letter of Credit, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between Borrower or any other Person and the beneficiary named in any Letter of Credit);

(C) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(D) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;

(E) the occurrence of any Default or Event of Default; or

(F) the failure of Borrower to satisfy the applicable conditions precedent set forth in Article 10 .

(g) Recovery or Avoidance of Payments: Refund of Payments in Error . In the event any payment by or on behalf of any Loan Party received by the Agent with respect to any Letter of Credit or Credit Support provided for any Letter of Credit (or any guaranty by any Loan Party or reimbursement obligation of the Borrower relating thereto) and distributed by the Agent to the Lenders on account of their respective participations therein is thereafter set aside, avoided or recovered from the Agent in connection with any receivership, liquidation or bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of such amount set aside, avoided or recovered, together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice from the Borrower prior to the date on which any payment is due to the Lenders that the Borrower will not make such payment in full as and when required, the Agent may assume that the Borrower has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount

 

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equal to the amount then due such Lender. If and to the extent the Borrower has not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(h) Compensation for Letters of Credit .

(i) Letter of Credit Fee . The Borrower agrees to pay to the Agent with respect to each Letter of Credit, for the account of the Lenders, the Letter of Credit Fee specified in, and in accordance with the terms of, Section 3.5 .

(ii) Issuer Fees and Charges . The Borrower shall pay to the issuer of any Letter of Credit, or to the Agent, for the account of the issuer of any such Letter of Credit, solely for such issuer’s account, such fees and other charges as are charged by such issuer for letters of credit issued by it, including, without limitation, its standard fees for issuing, administering, amending, renewing, paying and canceling letters of credit and all other fees associated with issuing or servicing letters of credit, as and when assessed.

(i) Indemnification by Lenders . To the extent not reimbursed by the Borrower and without limiting the obligations of the Borrower hereunder, the Lenders agree to indemnify the issuer of any Letter of Credit ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees) or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against such issuer in any way relating to or arising out of any Letter of Credit issued by such issuer or the transactions contemplated thereby or any action taken or omitted by such issuer under any Letter of Credit issued by such issuer or any Loan Document in connection therewith; provided that no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the issuer of any Letter of Credit promptly upon demand for its Pro Rata Share of any costs or expenses payable by Borrower to such issuer, to the extent that such issuer is not promptly reimbursed for such costs and expenses by the Borrower. The agreement contained in this Section shall survive payment in full of all other Obligations.

(j) Indemnification; Exoneration; Power of Attorney .

(i) Indemnification . In addition to amounts payable as elsewhere provided in this Section 2.3 , the Borrower hereby agrees to protect, indemnify, pay and save the Lenders and the Agent harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which any Lender or the Agent may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit or the provision of any Credit Support or enhancement in connection therewith. The agreement in this Section 2.3(j)(i) shall survive payments of all Obligations and termination of this Agreement.

 

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(ii) Assumption of Risk by the Borrower . As among the Borrower, the Lenders, and the Agent, the Borrower assumes all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders and the Agent shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof, (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including, without limitation, any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority; or (I) any Letter of Credit issuer’s honor of a draw for which the draw or any certificate fails to comply in any respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of the Agent or any Lender under this Section 2.3(j) .

(iii) Exoneration . In furtherance and extension, and not in limitation, of the specific provisions set forth above, any action taken or omitted by the Agent or any Lender under or in connection with any of the Letters of Credit or any related certificates shall not put the Agent or any Lender under any resulting liability to the Borrower or relieve the Borrower of any of its obligations hereunder to any such Person.

(iv) Rights Against Letter of Credit Issuer . Nothing contained in this Agreement is intended to limit the Borrower’s rights, if any, with respect to the issuer of a Letter of Credit which arise as a result of the letter of credit application and related documents executed by and between Borrower and such issuer.

(v) Power of Attorney . In connection with all Inventory financed by Letters of Credit, the Borrower hereby appoints the Agent, or the Agent’s designee, as its attorney, with full power and authority, upon the occurrence of an Event of Default and unless and until the same shall have been waived in writing by the Required Lenders: (a) to sign and/or endorse the Borrower’s name upon any warehouse or other receipts; (b) to sign the Borrower’s name on bills of lading and other negotiable and non-negotiable documents; (c) to clear Inventory through customs in the Agent’s, the Borrower’s name, and to sign and deliver to customs officials powers of attorney in the Borrower’s name for such purpose; (d) to complete in the Borrower’s or the Agent’s name, any order, sale, or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof, and (e) to do such other acts and things as are necessary in order to enable the Agent to obtain possession of the

 

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Inventory and to obtain payment of the Obligations. Neither the Agent nor its designee, as the Borrower’s attorney, will be liable for any acts or omissions, nor for any error of judgment or mistakes of fact or law. This power, being coupled with an interest, is irrevocable until all Obligations have been paid and satisfied.

(vi) Account Party . The Borrower hereby authorizes and directs any issuer of a Letter of Credit to name Borrower as an “Account Party” therein and to deliver to the Agent, with notice thereof to the Borrower all instruments, documents and other writings and property received by the issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

(vii) Control of Inventory . In connection with all Inventory financed by Letters of Credit, the Borrower will, at the Agent’s request following the occurrence of an Event of Default and unless and until the same shall have been waived in writing by the Required Lenders, instruct all suppliers, carriers, forwarders, warehouses or others receiving or holding Inventory, documents or instruments in which the Agent holds a security interest to deliver them to the Agent and/or subject to the Agent’s order, and if they shall come into the Borrower’s possession, to deliver them, upon request, to the Agent in their original form. The Borrower shall also, at the Agent’s request, designate the Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents.

(k) Cash Collateral; Supporting Letter of Credit . If, notwithstanding the provisions of Section 2.3(b) and Section 12.1 , any Letter of Credit or Credit Support is outstanding upon the termination of this Agreement, then upon such termination, the Borrower shall deposit with the Agent, for the ratable benefit of the Agent and the Lenders, with respect to each Letter of Credit or Credit Support then outstanding, cash in the amount of 105% of the face amount of such Letter of Credit or a standby letter of credit (a “ Supporting Letter of Credit ”) in form and substance satisfactory to the Agent, issued by an issuer reasonably satisfactory to the Agent in an amount equal to the greatest amount for which such Letter of Credit or such Credit Support may be drawn plus any fees and expenses associated with such Letter of Credit or such Credit Support, under which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent and the applicable Lenders for payments to be made by the Agent and such Lenders under such Letter of Credit or Credit Support and any fees and expenses associated with such Letter of Credit or Credit Support. Such Supporting Letter of Credit shall be held by the Agent, for the ratable benefit of the Agent and the applicable Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or such Credit Support remaining outstanding. Such deposit of cash or Supporting Letter of Credit, as applicable, shall be held by the Agent, for the ratable benefit of the Agent and the Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit or Credit Support remaining outstanding until such time as such Letters of Credit shall have been terminated or canceled and all of the Obligations (other than contingent indemnification obligations for which a claim has not been asserted) owing from the Borrower in respect of the Letters of Credit and/or Credit Support have been paid in full.

 

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(l) Existing Letters of Credit . The Borrower, the Agent and the Lenders agree that the Existing Letters of Credit shall be deemed Letters of Credit hereunder as if issued by the Letter of Credit Issuer.

2.4 Bank Products . The Borrower may request and the Agent (in the case of the Bank and its Affiliates) or another Lender (in the case of such other Lender and its Affiliates) may, in its sole and absolute discretion, arrange for the Borrower to obtain from the Bank or any of its Affiliates (in the case of the Agent) or such other Lender or its Affiliates (in the case of such other Lender) Bank Products although the Borrower is not required to do so. If Bank Products are provided by an Affiliate of the Bank or another Lender, the Borrower agrees to indemnify and hold the Agent, the Bank and the other Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the Bank or any other Lender which arise from any indemnity given by the Agent or such other Lender, as the case may be, to its Affiliates related to such Bank Products; provided, however, (x) nothing contained herein is intended to limit the Borrower’s rights, with respect to the Bank, another Lender or their respective Affiliates, if any, which arise as a result of the execution of documents by and between Borrower and the Bank or another Lender, as applicable, which relate to Bank Products and (y) Bank Products consisting of cash management services, including controlled disbursement services, and ACH Transactions may only be provided to Borrower by the Bank or an Affiliate of the Bank or another bank acceptable to the Agent. The indemnification and hold harmless provisions contained in this Section shall survive termination of this Agreement. Borrower acknowledges and agrees that the obtaining of Bank Products from the Bank, another Lender or any of their respective Affiliates (a) is in the sole and absolute discretion of the Bank, such other Lender or the applicable Affiliate of the Bank or such other Lender, as the case may be, and (b) is subject to all rules and regulations of the Bank, such other Lender or the applicable Affiliate of the Bank or such other Lender, as the case may be.

2.5 Increase in Commitments; LILO Tranche .

(a) Request for Increase . Provided no Default that has not been cured within any applicable grace period or Event of Default that has not been waived in writing by the Required Lenders has occurred or would arise therefrom, upon notice to the Agent (which shall promptly notify the Lenders), the Borrower may on a one-time basis, request (which request may be granted or denied by the Agent and the Lenders in their sole discretion) an increase in the Commitments by an amount not exceeding $20,000,000 pursuant to a last in, last out term loan hereunder (the “ LILO Tranche ”). Nothing contained herein shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder.

(b) Lender Elections to Increase . Each Lender shall notify the Agent within three (3) Business Days whether or not it agrees to increase its Commitment and participate in the LILO Tranche, and if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such LILO Tranche. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

 

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(c) Notification by Agent; Additional Lenders . The Agent shall notify the Borrower and each Lender of the Lenders’ responses to any request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Agent and the Lenders, to the extent that the existing Lenders decline to increase their Commitments to participate in the LILO Tranche, or decline to increase their Commitments to the amount requested by the Borrower, the Borrower may invite Eligible Assignees to become a Lender hereunder and to issue commitments in an amount not to exceed the amount of the LILO Tranche requested by the Borrower and not accepted by the existing Lenders, provided, however, that without the consent of the Agent, at no time shall the Commitment of any additional Person which becomes a Lender pursuant to this Section 2.5(c) be less than $1,000,000.

(d) LILO Tranche Effective Date and Allocations . If the Commitments are increased pursuant to a LILO Tranche in accordance with this Section, the Agent, in consultation with the Borrower, shall determine the effective date (the “ LILO Tranche Effective Date ”) and the final allocation of such increase. The Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the LILO Tranche Effective Date and on the LILO Tranche Effective Date (i) the Commitments under, and for all purposes of, this Agreement shall be increased by the aggregate amount of the LILO Tranche, and (ii)  Schedule 1.1(a) shall be deemed modified, without further action, to reflect the revised Commitments of the Lenders.

(e) Conditions to Effectiveness of Increase . As a condition precedent to such increase and the establishment of the LILO Tranche, (i) the Borrower shall deliver to the Agent a certificate of each Loan Party dated as of the LILO Tranche Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (B) in the case of the Borrower, certifying that, before and after giving effect to such increase, (1) the representations and warranties contained in Article VIII and the other Loan Documents are true and correct on and as of the LILO Tranche Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, (ii) the Borrower, the Agent, and any additional Person which becomes a Lender pursuant to this Section shall have executed and delivered a joinder to the Loan Documents in such form as the Agent shall reasonably require; (iii) the Borrower shall have paid such fees and other compensation to the Lenders participating in the LILO Tranche as the Borrower and such Lenders shall agree; (iv) the Borrower shall have paid such arrangement fees to the Agent as the Borrower and the Agent may agree; (v) the Borrower and the Lenders participating in the LILO Tranche shall have delivered such other instruments, documents and agreements as the Agent and the Lenders participating in the LILO Tranche may reasonably have requested; and (vi) no Default that has not been cured within any applicable grace period or Event of Default that has not been waived in writing by the Required Lenders has occurred.

(f) Borrowing of LILO Tranche . In the event that the LILO Tranche is established pursuant to the provisions hereof, any amount outstanding under such LILO Tranche shall not be considered in the calculation of the Borrowing Base or Combined Availability or the determination of the Maximum Revolver Amount, but shall otherwise be deemed to be Obligations hereunder.

 

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ARTICLE 3

INTEREST AND FEES

3.1 Interest .

(a) Interest Rates . All outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made until paid in full in cash at a fluctuating per annum rate equal to the Base Rate plus the Applicable Margin, but not to exceed the Maximum Rate described in Section 3.3 . Each change in the Base Rate shall be reflected in the interest rate described above as of the effective date of such change. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). The Borrower shall pay to the Agent, for the ratable benefit of the Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each month after the Closing Date and on the Termination Date.

(b) Default Rate . If any Default or Event of Default occurs and the Agent or the Required Lenders in their discretion so elect, then, unless any such Default is cured within any applicable grace period or unless and until such Event of Default has been waived in writing by the Required Lenders, all of the Obligations shall bear interest at the Default Rate applicable thereto.

3.2 Intentionally Omitted .

3.3 Maximum Interest Rate . In no event shall any interest rate provided for hereunder exceed the maximum rate legally chargeable by the Lenders under applicable law for loans of the type provided for hereunder (the “Maximum Rate”). If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 3.3, have been paid or accrued if the interest rates otherwise set forth in this Agreement had at all times been in effect, then the Borrower shall, to the extent permitted by applicable law, pay the Agent, for the account of the Lenders, an amount equal to the difference between (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rates otherwise set forth in this Agreement, at all times, been in effect and (b) the amount of interest actually paid or accrued under this Agreement. In the event that a court determines that the Agent and/or any Lender has received interest and other charges hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if there are no Obligations outstanding, the Agent and/or such Lender shall refund to the Borrower such excess.

 

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3.4 Unused Line Fee . Until the Obligations (other than contingent indemnification obligations for which a claim has not been asserted) have been paid in full and this Agreement is terminated, the Borrower agrees to pay, on the first day of each month and on the Termination Date, to the Agent, for the ratable account of the Lenders, an unused line fee (the “ Unused Line Fee ”) equal to 1.00% per annum on the amount by which the average daily Maximum Revolver Amount exceeded the sum of the average daily outstanding amount of Pre-Petition Liabilities, the average daily outstanding amount of Revolving Loans, the average daily aggregate undrawn face amount of all outstanding Letters of Credit plus the average daily aggregate amount of any unpaid reimbursement Obligations in respect of Letters of Credit, during the immediately preceding month or shorter period if calculated on the Termination Date. The Unused Line Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. All payments received by the Agent on account of Accounts or as proceeds of other Collateral shall be deemed to be credited to the Borrower’s Loan Account immediately upon receipt for purposes of calculating the unused line fee pursuant to this Section 3.4.

3.5 Letter of Credit Fee . The Borrower agrees to pay to the Agent, for the ratable account of the Lenders, for each Letter of Credit, a fee (the “Letter of Credit Fee”) equal to the Applicable Margin for Letters of Credit of the average daily outstanding undrawn face amount of such Letter of Credit, plus all out-of-pocket costs, fees and expenses incurred by the Agent in connection with the application for, issuance of, or amendment to such Letter of Credit, which costs, fees and expenses will also include a “fronting fee” of 25 basis points times the face amount of such Letter of Credit at the time of issuance. The Letter of Credit Fee shall be payable by the Borrower monthly in arrears on the first day of each month following any month in which a Letter of Credit was issued and/or in which a Letter of Credit remains outstanding. The Letter of Credit Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. If any Event of Default occurs that has not been waived in writing by the Required Lenders, then the Letter of Credit Fee shall be equal to the Applicable Margin for Letters of Credit plus two percent (2%)&nb