THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

EXHIBIT 4.1

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and among

CHARMING SHOPPES, INC.

CHARMING SHOPPES OF DELAWARE, INC.

CSI INDUSTRIES, INC.

CATHERINES STORES CORPORATION

LANE BRYANT, INC.

and

FB APPAREL, INC.

as Borrowers,

and

CHARMING SHOPPES OF DELAWARE, INC.

as Administrative Borrower,

certain other Subsidiaries of Charming Shoppes, Inc.

as Guarantors

and

THE LENDERS AND ISSUING BANKS FROM TIME TO TIME PARTY HERETO

WELLS FARGO RETAIL FINANCE, LLC,

as Administrative Agent

and

WELLS FARGO SECURITIES, LLC and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers and Bookrunners

and

BANK OF AMERICA, N.A.,

as Syndication Agent

and

GMAC COMMERCIAL FINANCE LLC,

as Documentation Agent

Dated: July 31, 2009

 

 

TABLE OF CONTENTS

 

INDEX

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EXHIBITS AND SCHEDULES

 

 

THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Third Amended and Restated Loan and Security Agreement, dated July 31, 2009 is entered into by and among Charming Shoppes, Inc., a Pennsylvania corporation (“Parent”), Charming Shoppes of Delaware, Inc., a Pennsylvania corporation (“CS Delaware”), CSI Industries, Inc., a Delaware corporation (“CSI”), FB Apparel, Inc., an Indiana corporation (“FB Apparel”), Catherines Stores Corporation, a Tennessee corporation (“Catherines”), Lane Bryant, Inc., a Delaware corporation (“Lane Bryant” and, together with Parent, CS Delaware, CSI, FB Apparel and Catherines hereinafter referred to individually as a “Borrower” and collectively as “Borrowers” as hereinafter further defined), CS Delaware in its capacity as agent for itself as a Borrower and for the other Borrowers (“Administrative Borrower”), those certain Subsidiaries of Parent parties hereto, whether by execution of this Agreement or by a Guarantor Joinder Agreement (collectively, the “Guarantors”), the financial institutions from time to time parties hereto as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined) and Wells Fargo Retail Finance, LLC, a Delaware limited liability company (as replacement and successor agent to Wachovia Bank, National Association, a national banking association) , in its capacity as agent for Lenders (in such capacity, “Agent” as hereinafter further defined).

W I T N E S S E T H :

WHEREAS, Borrowers and certain Subsidiaries of Parent operate a chain of retail apparel stores and certain related businesses and certain other Subsidiaries of Parent operate a direct marketing business selling apparel, food and specialty gifts; and

WHEREAS, Agent, certain lenders, Borrowers and certain Subsidiaries of Parent entered into financing arrangements pursuant to which such lenders made loans and advances and provided other financial accommodations to Borrowers as set forth in the Second Amended and Restated Loan and Security Agreement, dated July 28, 2005, as amended by Amendment No. 1 to Second Amended and Restated Loan and Security Agreement, dated as of May 17, 2006, by and among Wachovia Bank National Association, as Agent, the lenders parties thereto, Borrowers and certain Subsidiaries of Parent (the “Existing Loan Agreement”, and together with all agreements, documents and instruments at any time executed and/or delivered in connection therewith or related thereto, as from time to time amended, modified, supplemented, extended, renewed, restated or replaced prior to the date hereof (as hereinafter defined) collectively, the “Existing Financing Agreements”); and

WHEREAS, prior to the execution of this Agreement, Wachovia Bank, National Association has resigned as Agent and Wells Fargo Retail Finance, LLC has been appointed by the Required Lenders (as such term is defined in the Existing Loan Agreement) as the successor Agent hereunder and the other Existing Financing Agreements; and

WHEREAS, Borrowers and the other Obligors (as defined below) have requested that Agent and Lenders amend and restate the Existing Loan Agreement and continue to provide financing arrangements to Borrowers pursuant to which each Lender from time to time party hereto (severally and not jointly) may make loans and provide other financial accommodations to Borrowers; and

 

 

WHEREAS, Agent and Lenders have agreed to amend and restate the Existing Loan Agreement and each Lender (severally and not jointly) has agreed to continue to make such loans and provide such other financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Agent has agreed to continue to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements.

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

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1  “Accounts” shall have the meaning given to such term in the UCC and shall also include, without limitation, all present and future rights of each Obligor to payment of a monetary obligation whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) consisting of Credit Card Receivables.

1.2  “Additional L/C Accommodations” shall mean the Letters of Credit (including, without limitation, Existing Letters of Credit), guarantees and other financial accommodations provided by Issuing Bank to the Additional L/C Debtors pursuant to the Trade Financing Agreements.

1.3  “Additional L/C Collateral” shall mean the “Collateral” as defined in the Trade Financing Agreements as in effect on the date hereof.

1.4  “Additional L/C Debt” shall mean, collectively, the reimbursement obligations with respect to the Additional L/C Accommodations and other indebtedness owed by the Additional L/C Debtors to Agent pursuant to the Trade Financing Agreements.

1.5  “Additional L/C Debtors” shall mean, individually and collectively, Sentani Trading Limited, Trimoland Limited, Huambo Limited, CS Insurance Ltd. and any other Subsidiary of Parent designated as an Additional L/C Debtor in a writing by Administrative Borrower delivered to Agent after the date hereof so long as such Additional L/C Debtor executes a Trade Financing Agreement and such other documents as Agent may reasonably request.

1.6  “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a)  the London Interbank Offered Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage.  For purposes hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of

 

 

Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time.  Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender.  The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage and shall be applicable to all Eurodollar Rate Loans requested on or after such date.

1.7  “Administrative Borrower” shall mean CS Delaware, in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.12 hereof and it successors and assigns in such capacity.

1.8  “Affiliates” shall mean, with respect to a specified Person, a partnership, corporation or any other person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock and (c) any director or executive officer of such Person.  For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock or by agreement or otherwise.  For purposes of Section 9.16 hereof only, with respect to Obligors, the term “Affiliate” shall exclude Parent and any Subsidiary of Parent.

1.9  “Agent” shall mean Wells Fargo Retail Finance, LLC, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

1.10  “Agent Payment Account” shall mean account no.4945088607 of Agent, at Wells Fargo Bank, National Association, or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

1.11  “Agreement” shall mean this Third Amended and Restated Loan and Security Agreement, as amended, modified, extended or restated from time to time.

1.12  “Applicable L/C Fee Rate” shall mean, at any time, as to the letter of credit fees and banker’s acceptance fees to be charged by Agent in accordance with Section 3.2(b) hereof in respect of Letters of Credit and banker’s acceptances, subject to the provisions below, the

 

 

applicable percentage (on a per annum basis) set forth below if Monthly Average Liquidity is at or within the amounts indicated for such percentage:

provided , that , (i) the Applicable L/C Fee Rate shall be calculated and adjusted each fiscal month as of the 16 th day of such fiscal month (the “Applicable L/C Fee Rate Adjustment Date”) based upon the Monthly Average Liquidity for the immediately preceding month and shall be effective on the Applicable L/C Fee Rate Adjustment Date as to all Letters of Credit and banker’s acceptances; (ii) from the date hereof through and including August 15, 2009, the Applicable L/C Fee Rate shall the amounts set forth in Tier 1 above; and (iii) in the event that Borrowers fail to provide any Borrowing Base Certificate for any period within two (2) Business Days of the date required hereunder, effective as of the date on which such Borrowing Base Certificate was due, at Agent’s option, the Applicable L/C Fee Rate shall be based on the highest rate above until the next Business Day after the Borrowing Base Certificate is provided for the applicable period at which time the Applicable L/C Fee Rate shall be adjusted as otherwise provided herein.  In the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was less than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable L/C Fee Rate for such period as a result of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Monthly Average Liquidity, at Agent’s option, the Applicable L/C Fee Rate for such prior period shall be adjusted to the applicable percentage based on such actual Monthly Average Liquidity and any additional letter of credit fees and banker’s acceptance fees for the applicable period as a result of such recalculation shall be paid to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor; provided , however , that , in the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was greater than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable L/C Fee Rate for such period and the Applicable L/C Fee Rate based on such actual Monthly Average Liquidity would have been lower, the amount of any additional payment required in accordance with this sentence shall be reduced by the amount of any such overpayment by Borrowers.  The foregoing shall not be construed to limit the rights of Agent and Lenders with respect to the amount of letter of credit fees and banker’s acceptance fees payable after an Event of Default whether based on such recalculated percentage or otherwise.

 

 

1.13  “Applicable Margin” shall mean, at any time, as to the Interest Rate for Base Rate Loans and Eurodollar Rate Loans, subject to the provisions below, the applicable percentage (on a per annum basis) set forth below if Monthly Average Liquidity is at or within the amounts indicated for such percentage:

provided , that , (i) the Applicable Margin shall be calculated and adjusted each fiscal month as of the 16 th day of such fiscal month (the “Applicable Margin Adjustment Date”) based upon the Monthly Average Liquidity for the immediately preceding month and shall be effective on the Applicable Margin Adjustment Date as to all Base Rate Loans and for each Eurodollar Rate Loan requested on or after such Applicable Margin Adjustment Date; (ii) as to each Eurodollar Rate Loan outstanding on such Applicable Margin Adjustment Date, the new Applicable Margin shall be effective as to each such Eurodollar Rate Loan on the first day of the Interest Period commencing on or after such Applicable Margin Adjustment Date; (iii) from the date hereof through and including August 15, 2009, the Applicable Margin shall the amounts set forth in Tier 1 above; and (iv) in the event that Borrowers fail to provide any Borrowing Base Certificate for any period within two (2) Business Days of the date required hereunder, effective as of the date on which such Borrowing Base Certificate was due, at Agent’s option, the Applicable Margin shall be based on the highest rate above until the next Business Day after the Borrowing Base Certificate is provided for the applicable period at which time the Applicable Margin shall be adjusted as otherwise provided herein.  In the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was less than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable Margin for such period as a result of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Monthly Average Liquidity, at Agent’s option, the Applicable Margin for such prior period shall be adjusted to the applicable percentage based on such actual Monthly Average Liquidity and any additional interest for the applicable period as a result of such recalculation shall be paid to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor; provided , however , that , in the event that at any time after the end of any fiscal month period the actual amount of the Monthly Average Liquidity for such fiscal month was greater than the Monthly Average Liquidity for such fiscal month used for the determination of the Applicable Margin for such period and the Applicable Margin based on such actual Monthly Average Liquidity would have been lower, the amount of any additional payment required in accordance with this sentence shall be reduced by the amount of any such overpayment by Borrowers.  The foregoing shall not

 

 

be construed to limit the rights of Agent and Lenders with respect to the amount of interest payable after an Event of Default whether based on such recalculated percentage or otherwise

1.14  “Assignment and Acceptance” shall mean an Assignment and Acceptance Agreement substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions of Section 13.7 hereof.

1.15  “Bank Group Hedge Agreement” shall mean a Hedge Agreement between any Obligor and any Bank Product Provider; sometimes being collectively referred to herein as “Bank Group Hedge Agreements”.

1.16  “Bank Product Provider” shall mean any Lender or any Affiliate of any Lender that provides any Bank Products to Borrowers or Guarantors.

1.17  “Bank Products” shall mean any one or more of the following types of services or facilities provided to an Obligor by a Bank Product Provider: (a) credit cards, debit cards or stored value cards or the processing of credit card, debit card or stored value card sales or receipts, (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of an Obligor pursuant to agreement or overdraft for any accounts of Obligors maintained at Wachovia or any Affiliate of Agent or any other Bank Product Provider that are subject to the control of Agent pursuant to any Deposit Account Control Agreement to which Agent or such Bank Product Provider is a party, as applicable (to the extent such Deposit Account Control Agreement is required hereunder), and (ii) controlled disbursement services,  (c) Bank Group Hedge Agreements if and to the extent permitted hereunder, and (d) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases, but excluding any factoring services.

1.18  “Bankruptcy Code” shall mean the United States Bankruptcy Code, being Title 11 of the United States Code as enacted in 1978, as the same has heretofore been or may hereafter be amended, recodified, modified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

1.19  “BAS” shall mean Banc of America Securities LLC and its successors and assigns.

1.20  “Base Rate” shall mean, on any date, the highest of (a) the Prime Rate, (b) the London Interbank Offered Rate in effect on such date for one (1) month dollar deposits, plus one (1%) percent, or (c) the Federal Funds Rate in effect on such date plus one-half (½%) percent.  Each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the London Interbank Offered Rate or the Federal Funds Rate, as applicable.

1.21  “Base Rate Loans” shall mean, any Revolving Loans or portion thereof on which interest is payable based on the Base Rate in accordance with the terms hereof.

1.22  “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

 

 

1.23  “Borrowers” shall mean, collectively, the following (together with their respective successors and assigns): (a) Charming Shoppes, Inc., a Pennsylvania corporation, (b) Charming Shoppes of Delaware, Inc., a Pennsylvania corporation, (c) CSI Industries, Inc., a Delaware corporation, (d) FB Apparel, Inc., an Indiana corporation, (e) Catherines Stores Corporation, a Tennessee corporation, (f) Lane Bryant, Inc., a Delaware corporation, and (g) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a “Borrower”.

1.24  “Borrowing Base” shall mean, at any time the amount equal to the sum of:

1.25  “Borrowing Base Certificate” shall mean a report substantially in the form of Exhibit E hereto, as the same may from time to time be modified by Agent in consultation with Administrative Borrower, which is duly completed as provided in Section 9.6 hereof and executed by a financial officer of Administrative Borrower on behalf of all Obligors and delivered to Agent.

1.26  “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

1.27           “Capital Expenditures” shall mean all expenditures for any fixed or capital assets or improvements, including, but not limited to, the purchase or construction of equipment or other physical assets.

1.28  “Capital Leases” shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such

 

 

Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

1.29  “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock, partnership interests or limited liability company interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

1.30  “Cash Dominion Event” shall mean a period either (a) commencing on the date that an Event of Default shall exist or have occurred and be continuing and ending on the date that such Event of Default ceases to exist or be continuing or (b) commencing on the date that Excess Availability has been less than, at any time, the amount equal to $40,000,000 and ending on the date that Excess Availability has been greater than such amount for any thirty (30) consecutive day period thereafter; provided , that , a Cash Dominion Event period resulting from the event described in clause (b) may not be terminated on more than two (2) occasions in any period of 365 consecutive days.

1.31  “Cash Equivalents” shall mean, at any time, (a) obligations of states and local governments or agencies thereof (including variable rate demand notes) with a maturity date or reset period of one (1) year or less from the date of determination; (b) certificates of deposit, time deposits or bankers’ acceptances with a maturity of one (1) year or less of any Lender or any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $250,000,000; (c) commercial paper with a maturity of one hundred eighty (180) days or less issued by a corporation (except an Affiliate of Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s Ratings Service, a division of The McGraw Hill Companies, Inc. or at least P-1 by Moody’s Investors Service, Inc.; (d) corporate bonds or notes (including variable rate demand notes and Eurodollar notes) issued by a corporation (except an Affiliate of Borrower) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s Rating Service, a division of The McGraw Hill Companies, Inc. or at least A by Moody’s Investors Service, Inc.; (e) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $250,000,000; (f) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one (1) year or less from the date of determination; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; (g) municipal securities (including variable rate demand notes) issued by states and local governments or agencies thereof and rated at least A by Standard & Poor’s Rating Service, a division of The McGraw Hill Companies, Inc. or at least VMIG-1 by Moody’s Investors Service, Inc.; and

 

 

(h) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (g) above.

1.32  “Catherines Card” shall mean the private label credit card or cards issued by a Credit Card Issuer or the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards) to customers or prospective customers of Catherines or any Subsidiary thereof.

1.33  “C.D. Credit Plan Agreement” shall mean the Consumer Credit Plan Agreement dated as of August 12, 1994, as amended and restated as of March 26, 1996 and as of June 1, 1999, between CS Delaware and FSC, as amended, modified, supplemented or restated from time to time.

1.34  “Change of Control” shall mean the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or indirectly, of fifty (50%) percent or more of the voting power of the total outstanding Voting Stock of Parent.

1.35  “Co-Branded Card” shall mean a revolving Visa or Mastercard which account is co-branded with “Fashion Bug” stores or the name of any Obligor.

1.36  “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

1.37  “Collateral” shall mean have the meaning set forth in Section 5.1 hereof.

1.38  “Collateral Access Agreement” shall mean an agreement in writing in form and substance reasonably satisfactory to Agent from (a) any lessor of premises on which Collateral is located, any owner or operator of any premises on which Collateral is located, or any mortgagee of any premises owned by any Subsidiary of Parent (excluding, in any such case, the following premises: (i) any Retail Store location, (ii) any premises on which Inventory not in excess of $1,000,000 at any time is located, or (iii) any chief executive office of an Obligor if (A) the Inventory at such location does not exceed $1,000,000 at any time and (B) either (1) no Records are stored or maintained at such location or (2) the Records stored or maintained at such location are also stored or maintained at a location for which Agent has received a Collateral Access Agreement) or (b) any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral (excluding any common carrier or any other Person transporting any such Collateral).

1.39  “Concentration Account” shall mean individually and collectively, (a) the collection and cash management accounts of CS Delaware maintained at Wachovia on the date hereof and (b) such other collection and cash management accounts established by Borrowers and Guarantors in accordance with the provisions of this Agreement.

1.40  “Commitment” shall mean, at any time, as to each Lender, the principal amount designated as its Commitment set forth next to such Lender’s name on Schedule 1.40 hereto, as

 

 

the same may be adjusted from time to time in accordance with Section 2.4 hereof or on Schedule 1 to the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Commitments”.

1.41  “Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the net income (loss) of such person and its Subsidiaries, on a consolidated basis, for such period (excluding to the extent included therein any extraordinary and/or unusual and non-recurring gains and non-cash losses with respect to the write down of fixed and intangible assets) after deducting all charges which should be deducted before arriving at the net income (loss) for such period and, without duplication, after deducting the Provision for Taxes for such period, all as determined in accordance with GAAP consistently applied; provided , that , (a) the net income for any Person that is not a wholly owned Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a wholly owned Subsidiary of such Person; (b) except to the extent included pursuant to the foregoing clause, the net income of any Person accrued prior to the date it becomes a wholly owned Subsidiary of such Person or is merged into or consolidated with such Person or any of its wholly owned Subsidiaries or that Person’s assets are acquired by such Person or by its wholly owned Subsidiaries shall be excluded; and (c) the net income (if positive) of any wholly owned Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such wholly owned Subsidiary to such Person or to any other wholly owned Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such wholly owned Subsidiary shall be excluded.  For the purposes of this definition, net income excludes any gain or loss (exclusive of non-cash losses with respect to the write down of fixed assets), together with any related Provision for Taxes for such gain, realized upon the sale or other disposition of any assets that are sold out of the ordinary course of business (including, without limitation, dispositions pursuant to sale and leaseback transactions) or of any Capital Stock of such Person or a Subsidiary of such Person and any net income realized or loss incurred as a result of changes in accounting principles or the application thereof to such Person.

1.42  “Convertible 2007 Senior Note Agreements” shall mean, individually and collectively, the Convertible 2007 Senior Notes, the Convertible 2007 Senior Note Indenture and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by Parent, any other Obligor or any other Person in connection with the issuance of the Convertible 2007 Senior Notes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.43  “Convertible 2007 Senior Note Indenture” shall mean the Indenture, dated as of April 30, 2007, between Parent and Convertible 2007 Senior Note Trustee, with respect to the Convertible 2007 Senior Notes, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.44  “Convertible 2007 Senior Notes” shall mean, the 1.125% Senior Convertible Notes due May 1, 2014, issued by Parent pursuant to the Convertible 2007 Senior Note Indenture.

 

 

1.45  “Convertible 2007 Senior Note Trustee” shall mean Wells Fargo Bank, N.A., in its capacity as trustee under the Convertible 2007 Senior Note Indenture, and its successors and assigns, and any replacement trustee permitted pursuant to the terms and conditions of the Convertible 2007 Senior Note Indenture.

1.46  “Cost” shall mean, as to the Inventory as of any date, the cost of such Inventory as of such date, determined under the retail method of accounting in accordance with GAAP.  For purposes of determining “cost” of Inventory hereunder, with respect to any Inventory sold by an Obligor to another Obligor, such term shall mean the original cost thereof to such Obligor which originally purchased such Inventory and shall not include any mark up or profit on such intercompany sale.

1.47  “Credit Balance Cash Collateral” shall have the meaning set forth in Section 6.4(b) hereof.

1.48  “Credit Card Acknowledgments” shall mean, individually and collectively, the agreements in favor of  Agent by Credit Card Issuers or Credit Card Processors who are parties to Credit Card Agreements acknowledging the security interest of  Agent in the monies due and to become due to any Obligor (including, without limitation, credits and reserves) under the Credit Card Agreements, and agreeing to transfer all such amounts to the Blocked Accounts, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.49  “Credit Card Agreements” shall mean the C.D. Credit Plan Agreement and all other agreements now or hereafter entered into by any Obligor with any Credit Card Issuer or any Credit Card Processor, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, including, but not limited to, as to Borrowers, the agreements set forth on Schedule 8.18 hereto.

1.50  “Credit Card Issuer” shall mean any Person (including each of the Financing Subsidiaries and any applicable Obligor) who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa, U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, any Private Label Credit Card and other non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through American Express Travel Related Services Company, Inc.

1.51  “Credit Card Processor” shall mean any servicing or processing agent or any factor or financial intermediary who facilitates, services, processes or manages the credit authorization, billing transfer and/or payment procedures with respect to any sales transactions of Obligors involving credit card or debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.  FSC shall be deemed a Credit Card Processor in respect of the Fashion Bug Card, the Co-Branded Card, the Catherines Card and the Lane Bryant Card.

1.52  “Credit Card Receivables” shall mean collectively, (a) all present and future rights of any Obligor to payment from any Credit Card Issuer, Credit Card Processor or other third party arising from sales of goods or rendition of services to customers who have purchased such

 

 

goods or services using a credit or debit card, and (b) all present and future rights of any Obligor to payment from any Credit Card Issuer, Credit Card Processor or other third party in connection with the sale or transfer of Credit Card Receivables arising pursuant to the sale of goods or rendition of services to customers who have purchased such goods or services using a credit card or a debit card, including, but not limited to, all amounts at any time due or to become due from any Credit Card Issuer or Credit Card Processor under the Credit Card Agreements or otherwise.

1.53  “Credit Facility” shall mean the Loans and Letters of Credit provided to or for the benefit of Borrowers hereunder.

1.54  “Crosstown” shall mean Crosstown Traders, Inc., a Delaware corporation and its successors and assigns.

1.55  “CS Securitization Undertaking” means (a) any extension of credit by CS Delaware, Parent or any other Obligor to a Financing Subsidiary, (b) any capital contribution or other investment by CS Delaware or Parent in a Financing Subsidiary, (c) any agreement by CS Delaware or Parent to guarantee or otherwise become liable for the obligations of a Financing Subsidiary (which agreement does not provide that CS Delaware or Parent shall grant a Lien on any Collateral in support of any guarantee or support of any Financing Subsidiary), or (d) any covenant, representation, warranty or indemnity given by an Obligor pursuant to a Permitted Securitization Transaction that is customary in securitization transactions and does not constitute recourse for credit losses.

1.56  “Default” shall mean an act, condition or event which with notice or passage of time or both would constitute an Event of Default.

1.57  “Defaulting Lender” shall mean (a) any Lender that has failed to fund any portion of the Revolving Loans, participations in Letter of Credit Obligations or participations in Swing Line Loans required to be funded by it hereunder within one (1) Business Day of the date required to be funded by it hereunder, or has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one (1) Business Day of the date when due, (b) any Lender that has notified Agent, any Lender, Issuing Bank, or any Obligor in writing that it will not or does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it will not or does not intend to comply with its funding obligations under this Agreement or under similar agreements in which it has agreed to make commercial loans or provide other similar financial accommodations, or (c) any Lender that becomes or is insolvent or has a parent company that has become or is insolvent or becomes the subject of an Insolvency Proceeding, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such Insolvency Proceeding and has not obtained all required orders, approvals or consents of any court or other Governmental Authority to continue to fulfill its obligations hereunder, in form and substance satisfactory to Agent.

1.58  “Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, by and among Agent, an Obligor, with a deposit account at any bank and the bank at which such deposit account is at any time maintained which provides that such bank will comply with instructions originated by Agent directing disposition

 

 

of the funds in the deposit account without further consent by such Obligor and has such other terms and conditions as Agent may reasonably require in accordance with the terms of this Agreement.

1.59  “Deteriorating Lender” means any Lender as to which Agent, any Issuing Bank or Swing Line Lender has notice or knowledge that either (a) in the prior ninety (90) days, such Lender has defaulted in fulfilling its obligations under one or more other syndicated credit facilities, or (b) such Lender is reasonably likely to be or become a Defaulting Lender.

1.60  “EBITDA” shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (b) depreciation, amortization and other non-cash charges (including, but not limited to, imputed interest and deferred compensation) of such Person and its Subsidiaries for such period (to the extent deducted in the computation of Consolidated Net Income of such Person for such period), all in accordance with GAAP, plus (c) Interest Expense of such Person and its Subsidiaries for such period (to the extent deducted in the computation of Consolidated Net Income of such Person for such period), plus (d) charges of such Person and its Subsidiaries for Federal, State, local and foreign income taxes for such period (to the extent deducted in the computation of Consolidated Net Income for such Person for such period).

1.61  “Eligible Credit Card Receivables” shall mean the Credit Card Receivables of an Obligor which satisfy each of the criteria set forth below applicable thereto.  Credit Card Receivables shall be Eligible Credit Card Receivables if:

 

 

Processor shall have been obtained in connection with the sale giving rise to such Credit Card Receivables;

 

 

 

 

date hereof or as such practices may hereafter change as a result of changes to the policies of such Credit Card Issuer or Credit Card Processor applicable to its customers generally and unrelated to the circumstances of such Obligor); and

General criteria for Eligible Credit Card Receivables may be established and revised from time to time by Agent in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could reasonably be expected to adversely affect the collectability of the Credit Card Receivables in the reasonable good faith determination of Agent.  Agent shall not establish or revise criteria for Eligible Credit Card Receivables unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Credit Card Receivables which are not Eligible Credit Card Receivables shall nevertheless be part of the Collateral.

1.62  “Eligible Installment Sales Receivables” shall mean, as to any of the Figi Companies, Installment Sales Receivables of such Obligor which satisfy each of the criteria applicable thereto pursuant to this definition (provided, that, to the extent an Account debtor may use a credit card or debit card to pay any installment in respect of an Installment Sales Receivable, the amount of the Installment Sales Receivable shall be deemed reduced by the amount of such payment).  Installment Sales Receivables shall be Eligible Installment Sales Receivables if:

 

 

Notwithstanding the foregoing, Installment Sales Receivables shall not be or be deemed to be Eligible Installment Sales Receivables until Agent shall have conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent and Bank of America, N.A., in its capacity as Syndication Agent, and then only to the extent the criteria for Eligible Installment Sales Receivables set forth herein are satisfied with respect thereto.  General criteria for Eligible Installment Sales Receivables may be established and revised from time to time by Agent, in consultation with Bank of America, in its capacity as Syndication Agent, in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could reasonably be expected to adversely affect the collectability of the Installment Sales Receivables in the reasonable good faith determination of Agent.  Agent shall not establish or revise criteria for Eligible Installment Sales Receivables unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the

 

 

occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Installment Sales Receivables which are not Eligible Installment Sales Receivables shall nevertheless be part of the Collateral.

1.63  “Eligible In-Transit Inventory” shall mean Inventory owned by Obligors that otherwise satisfies the criteria for Eligible Inventory set forth herein but is located outside of the United States of America and which is in transit to a location for which Agent shall have received a Collateral Access Agreement from the applicable lessor, owner, or operator of such location executed and delivered by such lessor, owner or operator, as the case may be; provided, that,

provided, that, Agent may, upon notice to Administrative Borrower, exclude any particular Inventory from the definition of “Eligible In-Transit Inventory” in the event that the Agent determines that such Inventory is subject to any Person’s right or claim which is (or is capable of

 

 

being) senior to, or pari passu with, the Lien of the Agent (such as, without limitation, a right of stoppage in transit), as applicable, or may otherwise adversely impact the ability of the Agent, to realize upon such Inventory.

1.64  “Eligible Inventory” shall mean Inventory of each Obligor consisting of finished goods held for resale in the ordinary course of the business of such Obligor, and food of the Figi Companies, in each case which satisfy the criteria set forth below.  In general, Eligible Inventory shall not include (a) packaging and shipping materials and raw materials; (b) supplies used or consumed in such Obligor’s business; (c) Inventory at any distribution center leased by any Obligor unless Agent shall have received a Collateral Access Agreement from the lessor of such location executed and delivered by such lessor; (d) Inventory subject to a Lien in favor of any person other than Agent  except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance satisfactory to Agent between the holder of such security interest or lien and Agent; (e) bill and hold goods; (f) slow moving and obsolete Inventory; provided, that, slow moving Inventory shall not include the immediately prior season’s Inventory to the extent it is included in the most recent appraisal of Inventory received by Agent, in accordance with the terms of this Agreement; (g) Inventory which is not subject to the first priority, valid and perfected security interest of Agent; (h) damaged and/or defective Inventory; (i) Inventory purchased or sold on consignment; (j) Inventory not located at: (i) a premises set forth on Omnibus Schedule 2 hereto, (ii) a Retail Store location, (iii) a premises owned by an Obligor, or (iv) a premises for which Agent shall have received a Collateral Access Agreement from the lessor or owner of such location executed and delivered by such lessor or owner unless Obligors are not required in accordance with the definition of Collateral Access Agreement to obtain a Collateral Access Agreement for such location or such requirement has been waived by Agent in its reasonable discretion; (k) Inventory in transit to any Obligor (except for (i) Eligible In-Transit Inventory (provided, that, the amount of Eligible In-Transit Inventory included in the calculation of the Eligible Inventory component of the Borrowing Base shall not exceed $25,000,000 in the aggregate at any time), and Eligible L/C Inventory and (ii) Inventory in transit (A) to a warehouse location for which Agent shall have received a Collateral Access Agreement from the lessor, owner or operator of such location executed and delivered by such lessor, owner or operator, which Inventory is located in the United States and has cleared United States customs or (B) to any Obligor from a warehouse location listed on Omnibus Schedule 2 hereto or from a warehouse for which Agent shall have received a Collateral Access Agreement from the lessor, owner or operator of such location executed and delivered by such lessor, owner or operator); (l) Inventory held for return to vendors; (m) Inventory returned by customers and not held for resale; (n) lay away Inventory; (o) Inventory consisting of samples; (p) highly perishable Inventory; and (q) Inventory located outside of the United States except to the extent such Inventory is Eligible In-Transit Inventory or Eligible L/C Inventory and as may otherwise be agreed to by Agent and Administrative Borrower.  Notwithstanding the foregoing, the Inventory of the Figi Companies shall not be or be deemed to be Eligible Inventory until Agent shall have (1) received an appraisal thereof in form and containing assumptions and appraisal methods reasonably satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely and (2) conducted a field examination with respect to such assets and the results of such field examination and other due diligence shall be reasonably satisfactory to Agent, and then only to the extent the criteria for Eligible Inventory set forth herein are satisfied with respect thereto.  General criteria for Eligible Inventory may be

 

 

established and revised from time to time by Agent in good faith based on an event, condition or other circumstance arising after the date hereof which adversely affects or could reasonably be expected to adversely affect the value of the Inventory in the reasonable good faith determination of Agent.  Agent shall not establish or revise criteria for Eligible Inventory unless Agent shall have provided Administrative Borrower five (5) Business Days prior written notice (such notice not to be required after the occurrence of an Event of Default) and an explanation of the nature of such new or revised criteria.  Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.

1.65           “Eligible L/C Inventory” shall mean Eligible Inventory that otherwise satisfies the criteria for Eligible In-Transit Inventory and which has been purchased with and is subject to a Letter of Credit.

1.66  “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (d) for the purposes of Section 2.4 only, any Person (other than a natural Person) approved by Agent and Administrative Borrower (which approval shall not be unreasonably withheld or delayed); provided, that, (i) no Obligor or any Affiliate of any Obligor shall qualify as an Eligible Transferee; and (ii) no Person to whom any Indebtedness which is in any way subordinated by agreement in right of payment to any other Indebtedness of any Obligor shall qualify as an Eligible Transferee, except as Agent may otherwise agree.

1.67  “Engagement Letters” shall mean, collectively, the engagement letter and the engagement fee letter, each dated June 1, 2009, by and among Parent, Agent, WFS and BAS, setting forth, among other things, certain fees payable by Borrowers to Agent for the benefit of itself, WFS, BAS, certain Affiliates of WFS and BAS, and Lenders, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.68  “Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Obligor and any Governmental Authority, (a) relating to pollution and the protection or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials.  The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response,

 

 

 

Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

1.69  “Equipment” shall have the meaning given to such term in the UCC and also shall include, without limitation, all of each Obligor’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment and computer hardware and software, whether owned or licensed, and including embedded software, vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith (other than Inventory), and substitutions and replacements thereof, wherever located.

1.70  “ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as amended, together with all rules, regulations and interpretations thereunder or related thereto.

1.71  “ERISA Affiliate” shall mean any Person required to be aggregated with any Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.72  “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Plan which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any such Plan that is a single employer plan where such termination could result in any liability to the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant to Section 412 of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the occurrence of a “prohibited transaction” as defined in Section 4975(c) of the Code or in Section 406 of ERISA with respect to which any Borrower or any of its Subsidiaries would be liable; (f) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan or Multiemployer Plan; (h) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; (i) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate; and (j) any other event or condition

 

 

with respect to a Plan or Multiemployer Plan or any Plan subject to Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that could reasonably be expected to result in liability of any Obligor.

1.73  “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

1.74  “Event of Default” shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

1.75  “Excess Availability” shall mean the amount, as determined by Agent, calculated at any date, equal to: (a) the lesser of (i) the Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Obligations), minus (b) the sum of (without duplication): (i) the amount of all then outstanding and unpaid Obligations (but not including for this purpose Obligations of such Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of the other Borrowers or any outstanding Letter of Credit Obligations), plus (ii) the amount of all Reserves then established in respect of Letter of Credit Obligations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of Obligors which are outstanding more than sixty (60) days past due as of such date (other than trade payables or other obligations being contested or disputed by such Obligor in good faith), plus (iv) the amount of checks issued by Obligors to pay trade payables and other obligations which are more than sixty (60) days past due as of such date (other than trade payables or other obligations being contested or disputed by such Obligor in good faith), but not yet sent.

1.76  “Exchange Act” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

1.77  “Excluded Property” shall have the meaning set forth in Section 5.2 hereof.

1.78  “Excluded Subsidiaries” shall mean each of the Financing Subsidiaries, the Inactive Subsidiaries, Real Property Holding Companies, Charming J.V. Inc., CSI Charities, Inc., the Foreign Subsidiaries, White Marsh Distribution, LLC, Kafco Development Co., Inc., Festus #2733 Development Co., Inc., Macomb #2619 Development Co., Inc., Rolla #2685 Development Co., Inc., Sikeston #2736 Development Co., Inc., Yucca #2524 Development Co., Inc., FB Distro Distribution Center, LLC, Winks Lane, Inc. and FB Distro, Inc., as named in Omnibus Schedule 1 hereto, subpart 7, and any other Subsidiary formed or acquired pursuant to Sections 9.12 or 9.14 hereof and designated in writing by Administrative Borrower to Agent at or prior to formation or acquisition as an Excluded Subsidiary.

1.79  “Existing Letters of Credit” shall mean, collectively, the Existing Letters of Credit issued for the account of Borrowers and Additional L/C Debtors prior to the date hereof and listed on Schedule 1.79 hereto.

1.80  “Fashion Bug Card” shall mean the private label credit card or cards issued by the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards as to which there has been

 

 

compliance with Section 9.23 hereof) to customers or prospective customers of the Retail Store Subsidiaries operating under the name of “Fashion Bug”.

1.81           “Federal Funds Rate” shall mean, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by Agent from three (3) Federal funds brokers of recognized standing selected by it.

1.82  “Figi’s” shall mean Figi’s Inc., a Wisconsin corporation, and its successors and assigns.

1.83  “Figi Companies” shall mean collectively, Figi’s and its Subsidiaries and their respective successors and assigns.

1.84  “Financing Agreements” shall mean, collectively, this Agreement, the Existing Financing Agreements (other than the Existing Loan Agreement and the Second Amended and Restated Guarantee, dated July 28, 2005, executed by the Guarantors parties thereto which have been amended and restated in their entirety in accordance with Section 14.4 hereof), and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements, and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Obligor in connection with this Agreement; provided , that , in no event shall the term Financing Agreements be deemed to include any Hedge Agreement.

1.85  “Financing Subsidiaries” shall mean, individually and collectively, (a) FSC, Originator, Charming Shoppes Receivables Corp. (formerly known as Fashion SPC, Inc.), Charming Shoppes Seller, Inc., Charming Shoppes Street, Inc., Spirit of America, Inc., Fashion Service Fulfillment Corp., Catalog Seller LLC, Catalog Receivables LLC, and Fashion Service Protection Corp., and (b) any other direct or indirect Subsidiary of any of them or Parent, whether now existing or organized after the date hereof, engaged in originating, financing, funding or servicing Securitization Program Assets, including without limitation, a Special Purpose Vehicle, provided, that, the term “Financing Subsidiary” shall not include any Obligor.

1.86  “Fixed Charge Coverage Ratio” shall mean, as to any Person and its Subsidiaries for any date of determination, the ratio of: (a) EBITDA of such Person and its Subsidiaries, on a consolidated basis, for the immediately preceding twelve (12) consecutive fiscal months as of the end of the most recent month for which Agent has received financial statements pursuant to Section 9.6 hereof, minus , the amount of Capital Expenditures of such Person and its Subsidiaries, on a consolidated basis, during such period (offset by landlord construction allowances which are to be paid by landlords within a reasonable time after incurrence of such Capital Expenditures, such time period not to exceed six (6) months after the incurrence of such Capital Expenditures) to the extent not financed by Indebtedness permitted hereunder for such

 

 

purpose, to (b) Fixed Charges of such Person and its Subsidiaries, on a consolidated basis, for such period.

1.87  “Fixed Charges” shall mean, as to any Person and its Subsidiaries (on a consolidated basis), with respect to any period, the sum of, without duplication, (a) all cash Interest Expense during such period, plus (b) all regularly scheduled principal payments in respect of Indebtedness for borrowed money and Indebtedness with respect to Capital Leases, in any case, to the extent paid in cash during such period excluding any payments due upon maturity or prepayment of any such Indebtedness in the event such Indebtedness is refinanced, plus (c) all income taxes paid in cash during such period.

1.88  “Foreign Subsidiary” shall mean any direct or indirect subsidiary of Parent organized in a jurisdiction other than the United States of America, a state thereof, the District of Columbia, or Puerto Rico, whether now existing or organized after the date hereof.

1.89  “Freight Forwarders” shall mean the persons as may be selected by Administrative Borrower who are reasonably acceptable to Agent to receive and arrange for the shipping of Inventory to the United States of America; each sometimes being referred to herein individually as a “Freight Forwarder”.

1.90  “FSC” shall mean Fashion Service Corp., a Delaware corporation and its successors and assigns.

1.91  “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, provided , that , in the event of any change in GAAP after the date hereof that affects the covenant set forth in Section 9.21 hereof, Administrative Borrower may, by notice to Agent, or Agent may, and at the request of Required Lenders shall, by notice to Administrative Borrower, require that such covenant be calculated in accordance with GAAP as in effect, and as applied by Parent and its Subsidiaries, immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Administrative Borrower, Agent and the Required Lenders.  Administrative Borrower shall deliver to Agent at the same time as the delivery of any financial statements given in accordance with the provisions of Section 9.6 hereof (a) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding monthly, quarterly or annual financial statements and (b) a reasonable estimate of the effect on the financial statements on account of such changes in application.

1.92  “Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

 

1.93  “Guarantor” shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations, including without limitation, those certain Subsidiaries of Parent listed on Schedule 1.93 hereto and any Subsidiary of Parent that executes a Guarantor Joinder Agreement after the date hereof, provided, that, the term “Guarantor” shall not include any Borrowers, Additional L/C Debtors or Excluded Subsidiaries.

1.94  “Guarantor Joinder Agreement” shall mean a Guarantor Joinder Agreement substantially in the form of Exhibit D attached hereto.

1.95  “Hazardous Materials” shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

1.96  “Hedge Agreement” shall mean an agreement between any Obligor and any counterparty that is a swap agreement as such term is defined in 11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices; sometimes being collectively referred to herein as “Hedge Agreements”.

1.97  “Immaterial Insolvency Event” shall mean Involuntary Proceeding(s) or Voluntary Proceeding(s) with respect to any Obligor (other than Parent or Administrative Borrower) so long as the fair market value of the assets of such Obligor, when aggregated with the fair market value of the assets of any other Obligor that is or was the subject of an Immaterial Insolvency Event does not exceed $20,000,000.

1.98  “Inactive Subsidiaries” shall mean, individually and collectively, (a) the Subsidiaries of Parent that do not operate a Retail Store, and (b) the Subsidiaries of Parent which have no material assets or properties and do not engage in any business or commercial activity.

1.99  “Indebtedness” shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) to pay the deferred purchase price of property or services of any such Person, including, without limitation, all obligations under earn-out or similar agreements (other than trade payables, accrued liabilities, tax payables, non-compete and

 

 

restructuring expenses, and other similar items, in each case arising in the ordinary course of business); (c) all obligations as lessee under leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to mandatorily redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker’s acceptances or similar documents or instruments issued for such Person’s account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual Lien, on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time, provided, that, for the purposes hereof, to the extent such Indebtedness referred to in this clause (g) is non-recourse to such Person, the amount of such Indebtedness shall not be deemed to exceed the lesser of (i) the principal amount of such Indebtedness or (ii) the value of the asset securing such Indebtedness; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values; (i) all obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor; (k) the principal and interest portions of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP; and (l) CS Securitization Undertakings.

1.100  “Insolvency Proceeding” shall mean, as to any Person, any of the following: (a) any case or proceeding with respect to such Person under the Bankruptcy Code or any other Federal or State bankruptcy, insolvency, reorganization or other law affecting creditors’ rights or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person, (b) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or a material portion of its assets, (c) any proceedings for liquidation, dissolution or other winding up of the business of such Person, or (d) any assignment for the benefit of creditors or any marshaling of assets of such Person.

1.101  “Installment Sales Receivables” shall mean any Accounts of the Figi Companies arising pursuant to the sale of non- apparel Inventory by such Obligor to an Account debtor requiring payments of the purchase price in installments over a period of time.

 

 

1.102  “Intellectual Property” shall mean, as to each Obligor, such Obligor’s now owned and hereafter arising or acquired patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Obligor’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

1.103  “Interest Expense” shall mean, for any period, as to any Person and its Subsidiaries, total interest expense, whether paid or accrued (including the interest component of Capital Leases for such period), all of the foregoing as determined in accordance with GAAP.

1.104  “Interest Period” shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2) or three (3) months duration (or, if available to all Lenders, six (6) months duration) as Administrative Borrower on behalf of any Borrower may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; provided, that, Administrative Borrower on behalf of such Borrower may not elect an Interest Period which will end after the last day of the then-current term of this Agreement.

1.105  “Interest Rate” shall mean:

 

 

1.106  “Inventory” shall have the meaning given to such term in the UCC and also include, without limitation, all of each Obligor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are held by any Obligor for sale or lease or to be furnished under a contract of service; (b) are furnished by Obligor under a contract of service; or (c) consist of raw materials, work in process, finished goods or materials used or consumed in the business of any Obligor.

1.107  “Investment Property Control Agreement” shall mean an agreement in writing, either in substantially the form attached hereto as Exhibit C or in such other form as is reasonably acceptable to Agent, by and among Agent, any Obligor and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Obligor including such terms and conditions as Agent may reasonably require, provided, that, no such agreement shall be required with respect to any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Obligor’s salaried employees or property held in trust for the benefit of an employee or any unaffiliated third party.

1.108  “Involuntary Proceeding” shall have the meaning set forth in Section 10.1(g) hereof.

1.109  “Issuing Banks” shall mean (a) Wachovia and its Affiliates, (b) Wells Fargo Bank, National Association, (c) Bank of America, N.A., (d) any other Lender that is approved by Agent that shall issue a Letter of Credit and has agreed in a manner satisfactory to Agent to be subject to the terms hereof as an Issuing Bank, and (e) any successor Issuing Bank, as the same may be appointed by Agent pursuant to Section 12.15 hereof; each sometimes being referred to herein individually as an “Issuing Bank”.

1.110  “Lane Bryant Card” shall mean the private label credit card or cards issued by a Credit Card Issuer or the Financing Subsidiaries (or any subsequent Credit Card Issuer replacing the Financing Subsidiaries with respect to such private label credit card or cards) to customers or prospective customers of Lane Bryant or any Retail Store Subsidiary thereof.

1.111  “Lenders” shall mean the financial institutions and other Persons who are signatories hereto as Lenders and other Persons made a party to this Agreement as a Lender in

 

 

accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a “Lender”.

1.112  “Letter of Credit Documents” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations.

1.113  “Letter of Credit Limit” shall mean $100,000,000.

1.114  “Letter of Credit Obligations” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate amount of all drawings under Letters of Credit for which an Issuing Bank has not at such time been reimbursed, plus (c) without duplication, the aggregate amount of all payments made by each Lender to an Issuing Bank with respect to such Lender’s participation in Letters of Credit as provided in Section 2.2 for which Borrowers have not at such time reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.

1.115  “Letters of Credit” shall mean all (a) letters of credit (whether documentary or stand-by and whether for the purchase of Inventory, Equipment or otherwise) and banker’s acceptances issued with respect to drafts presented under letters of credit (whether for the purchase of Inventory, Equipment or otherwise), in each case issued by an Issuing Bank for the account of any Obligor or any Additional L/C Debtor pursuant to this Agreement and the Trade Financing Agreements and all amendments, renewals, extensions or replacements thereof and including, but not limited to, the Existing Letters of Credit and the Additional L/C Accommodations, and (b) any letter of credit which is issued by Parent or a Subsidiary of Parent, which letter of credit has been confirmed by an Issuing Bank.  The term “banker’s acceptance” as used herein shall refer to a time draft that is an order issued by the beneficiary of a letter of credit as the drawer of the time draft instructing the issuer of the letter of credit as the drawee to pay the amount specified in the time draft that has been accepted by a bank

1.116  “License Agreements” shall have the meaning set forth in Section 8.11 hereof.

1.117  “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security, including without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease or any financing lease having substantially the same economic effect as any of the foregoing.

1.118  “Liquidity” shall mean, on any date of determination, the amount equal to the sum of (a) Excess Availability, plus (b) Liquidity Cash.

1.119  “Liquidity Cash” shall mean unrestricted cash and Cash Equivalents of Obligors which, in each case (a) are subject to the valid, enforceable and first priority perfected security

 

 

interest of Agent in a deposit account or an investment account and subject to a Deposit Account Control Agreement or an Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent, (b) are free and clear of any Liens (other than the first priority security interest and lien in favor of Agent and liens in favor of the depository bank or securities intermediary where the deposit account or investment account is maintained for its customary fees and charges), (c) are available to Obligors without restriction or condition (other than those imposed by Agent), and (d) are not (i) Qualified Cash(except that on any date of determination of the amount of Liquidity Cash, to the extent the Borrowing Base (prior to giving effect to any Reserves) exceeds the Maximum Credit (prior to giving effect to any Reserves) (any such excess shall be referred to as “Surplus”) then Qualified Cash not in excess of the Surplus shall be deemed “Liquidity Cash”) or (ii) funds held at Retail Store Subsidiaries or in deposit accounts used by Retail Store Subsidiaries.

1.120  “Loans” shall mean, collectively, the Revolving Loans and the Swing Line Loans.

1.121  “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by Agent from time to time for purposes of providing quotations of interest rates applicable to eurodollar deposits in dollars in the London interbank market) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, that, if more than one rate is specified on such page for such comparable period, the applicable rate shall be the arithmetic mean of all such rates.  In the event that such rate is not available at such time for any reason, then the term “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of interest per annum at which dollar deposits of $5,000,000 and for a term comparable to such Interest Period are offered by the principal London office of Agent in immediately available funds in the London interbank market at approximately 11:00 a.m. London time two (2) Business Days prior to the commencement of such Interest Period.

1.122  “Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, performance or operations of Obligors, taken as a whole, (b) the Collateral or the value thereof, taken as a whole, or (c) the ability of  Obligors, taken as a whole, to repay the Obligations.

1.123  “Material Contract” shall mean (a) any contract or other agreement (other than the Financing Agreements and purchase orders for merchandise), written or oral, of any Obligor  involving monetary liability of or to any Person in an amount in excess of $20,000,000 in any fiscal year and (b) any other contract or other agreement (other than the Financing Agreements), whether written or oral, to which any Obligor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

1.124  “Maximum Credit” shall mean $225,000,000; provided , that , the Maximum Credit may be increased from time to time in accordance with the provisions of Section 2.4 hereof.

 

 

1.125  “Minimum Frequency” shall mean with respect to the field examinations to be conducted by Agent as provided herein (other than field examinations to be conducted by Agent in connection with a Permitted Acquisition) and the Inventory reports and appraisals to be delivered by Borrowers to Agent as required by Section 7.3(d) hereof: (a) at all times that there are no Revolving Loans outstanding and the outstanding amount of Letter of Credit Obligations is less than $25,000,000, at least one (1) time during each twelve (12) consecutive month period, and (b) at all other times, at least two (2) times during each twelve (12) consecutive month period.

1.126  “Monthly Average Excess Availability” shall mean, at any time, the daily average of the amount of Excess Availability for the immediately preceding fiscal month as set forth in the report referred to in Section 9.6(a)(ii) hereof.

1.127  “Monthly Average Liquidity” shall mean, at any time, the daily average of the amount of Liquidity for the immediately preceding fiscal month as set forth in the report referred to in Section 9.6(a)(ii) hereof.

1.128  “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current plan year or the immediately preceding six (6) plan years contributed to by any Borrower or any ERISA Affiliate.

1.129  “Net Amount of Eligible Credit Card Receivables” shall mean, the gross amount of the Eligible Credit Card Receivables of Obligors after taking into account returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto, less sales, excise or similar taxes included in the amount thereof.

1.130  “Net Amount of Eligible Installment Sales Receivables” shall mean, the gross amount of the Eligible Installment Sales Receivables after taking into account returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed with respect thereto, less sales, excise or similar taxes included in the amount thereof.

1.131  “Net Recovery Cost Percentage” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the recovery on the aggregate amount of the Inventory at such time on a “going out of business sale” basis as set forth in the most recent acceptable appraisal of Inventory received by Agent in accordance with Section 7.3 hereof, net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the original cost of the aggregate amount of the Inventory subject to such appraisal.

1.132  “Obligations” shall mean, collectively (a) any and all Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by Obligors or Additional L/C Debtors to Agent or any Lender or Issuing Bank, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement and the other Financing Agreements or on account of any Letter of Credit and all other Letter of

 

 

Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to any or all of Obligors or Additional L/C Debtors under the Bankruptcy Code or any similar statute (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by Obligors to Agent and Bank Product Providers arising under or pursuant to any Bank Products, whether now existing or hereafter arising, provided , that , (i) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Bank Group Hedge Agreement, the same shall only be included within the Obligations if, upon Agent’s request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with the Bank Product Provider that is a counterparty to such Bank Group Hedge Agreement, as acknowledged and agreed to by Obligors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Bank Product Provider in connection with such arrangements, (ii) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Bank Product (other than a Bank Group Hedge Agreement if Agent has requested the agreement referred to in clause (i) above), the same shall only be included within the Obligations if the Bank Product Provider with respect thereto shall have delivered written notice to Agent that (A) such Bank Product Provider has entered into a transaction to provide Bank Products to an Obligor and (B) the obligations arising pursuant to such Bank Products provided to Obligors constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, and Agent shall have accepted such notice in writing (provided, that, no such notice or acceptance shall be required as to such obligations, liabilities and indebtedness arising under or pursuant to a Bank Product provided by or owing to Agent or any of its Affiliates), and (iii) in no event shall any Bank Product Provider acting in such capacity to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term “Lender” in Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof shall be deemed to include such Bank Product Provider and in no event shall the approval of any such person in its capacity as Bank Product Provider be required in connection with the release or termination of any security interest or lien of Agent.

1.133  “Obligors” shall mean, collectively, Borrowers and Guarantors; each sometimes being referred to herein individually as an “Obligor”.

1.134  “OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

1.135  “Originator” shall mean Spirit of America National Bank and its successors and assigns.

1.136  “Originator Accounts” shall mean revolving credit card accounts maintained by the Originator, including accounts that have been written off as uncollectible.

 

 

1.137  “Other Taxes” shall mean 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 of the other Financing Agreements.

1.138  “Over Advance” shall have the meaning set forth in Section 12.8 hereof.

1.139  “Participant” shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Revolving Loans and Letters of Credit in conformity with the provisions of Section 13.7 of this Agreement governing participations.

1.140  “Permits” shall have the meaning set forth in Section 8.7(c) hereof.

1.141  “Permitted Acquisitions” shall have the meaning set forth in Section 9.12 hereof.

1.142  “Permitted Liens” shall mean those Liens permitted to be incurred by Obligors in accordance with Section 9.9 hereof.

1.143  “Permitted Securitization Transaction” means (a) a transaction in which (i) Receivables, Accounts or other financial assets originated or acquired by any Obligor or Originator are described as being transferred or required to be transferred to one or more Financing Subsidiaries in a manner that is intended to legally isolate the transferred assets from such Obligor or Originator (such that the transferred assets would not be included in the estate of such Obligor or Originator in any Insolvency Proceeding) and (ii) asset backed certificates or other securities evidencing an interest in, or otherwise backed by, the transferred assets are sold to investors, or (b) a transaction or series of transactions (whether on-balance sheet or off-balance sheet, in the form of a sale, a loan or other transaction) entered into by any Obligor pursuant to which such Obligor may (directly or indirectly) sell, convey or otherwise transfer to a Financing Subsidiary, or may grant a security interest in, any Securitization Program Assets (whether now existing or arising in the future).

1.144  “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.145  “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV of ERISA which any Borrower sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

1.146  “Prime Rate” shall mean the rate of interest announced, from time to time, within Wells Fargo Bank, National Association, a national banking association, at its principal office in San Francisco or its successors, as its “prime rate”, whether or not such announced rate is the best rate available at such bank.

 

 

1.147  “Private Label Credit Cards” shall mean any of the following: (a) the Fashion Bug Card, (b) the Co-Branded Card, (c) the Catherines Card, (d) the Lane Bryant Card, and (e) any other private label credit card issued by Originator, any Financing Subsidiary, or any other Obligor to customers or prospective customers of any Obligors, in respect of which Parent or any Subsidiary of Parent is either the Credit Card Issuer or Credit Card Processor.

1.148  “Proceeds” shall mean all proceeds as defined in the UCC or other applicable law, and all other profits, rentals, or receipts, in whatever form, arising from the collection, sale, lease, or other disposition of, or realization upon, the Collateral, or a specified portion thereof, including, without limitation, any insurance proceeds with respect thereto.

1.149  “Pro Rata Share” shall mean as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender’s Commitment and the denominator of which is the aggregate amount of all of the Commitments of Lenders, as adjusted from time to time in accordance with the provisions of  Sections 2.4 and 13.7 hereof; provided, that, if the Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Loans and its interest in the Letters of Credit and the denominator shall be the aggregate amount of all unpaid Loans and Letters of Credit.

1.150  “Provision for Taxes” shall mean an amount equal to all taxes imposed on or measured by net income, whether Federal, State, Provincial, county or local, and whether foreign or domestic, that are paid or payable by any Person in respect of any period in accordance with GAAP.

1.151  “Qualified Cash” shall mean, as of any date of determination,

(a) at all times that Revolving Loans are outstanding, cash and Cash Equivalents (having a maturity date or reset period of ninety (90) days or less from the date of determination) of Obligors which are, in each case (i) subject to the valid, enforceable and first priority perfected security interest of Agent in a deposit account or an investment account at Wells Fargo or any of its Affiliates and subject to a Deposit Account Control Agreement or an Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent (which agreement shall not permit withdrawal of such cash and Cash Equivalents by the applicable Obligors unless: (A) Administrative Borrower shall have delivered to Agent an updated Borrowing Base Certificate after giving effect to such withdrawal, (B) Excess Availability shall be at least $40,000,000 at the time of such withdrawal and after giving effect thereto, and (C) as of the making of such withdrawal and after giving effect thereto, no Event of Default shall exist or shall have occurred and be continuing), (ii) free and clear of any Liens (other than the first priority security interest and lien in favor of Agent), and (iii) available to Obligors without restriction or condition (other than those imposed by Agent), and

(b) at all times that no Revolving Loans are outstanding, in addition to the cash and Cash Equivalents described in clause (a) of this definition, up to $50,000,000 of cash and Cash Equivalents (having a maturity date or reset period of one (1) year or less from the date of determination) of Obligors which are, in each case (i) subject to the valid, enforceable and first priority perfected security interest of Agent in a deposit account or an investment account at Wells Fargo or any of its Affiliates and subject to a Deposit Account Control Agreement or an

 

 

Investment Property Control Agreement, as the case may be, in form and substance satisfactory to Agent (which agreement shall not contain as to such cash and Cash Equivalents described in this clause (b) any restrictions on withdrawal by the applicable Obligors unless, as of the making of any withdrawal and after giving effect thereto, an Event of Default shall exist or shall have occurred and be continuing), (ii) free and clear of any Liens (other than the first priority security interest and lien in favor of Agent), and (iii) available to Obligors without restriction or condition (other than those imposed by Agent).  In no event shall Qualified Cash be deemed to include funds held at Retail Store Subsidiaries, funds in deposit accounts used by Retail Store Subsidiaries, or funds in deposit accounts used in the cash management system of Obligors.

1.152  “Real Property” shall mean all now owned and hereafter acquired real property of Obligors, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

1.153  “Real Property Holding Companies” shall mean, individually and collectively, any direct or indirect Subsidiary of Parent, whether now existing or organized after the date hereof, which is engaged in owning and/or leasing Real Property, provided, that, the term “Real Property Holding Company” shall not include any Obligor.

1.154  “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of each Obligor:  (a) all Accounts; (b) all Credit Card Receivables and all Installment Sales Receivables; (c) all amounts at any time payable to any Obligor in respect of the sale or other disposition by any Obligor of any Account, other Receivable or other obligation for the payment of money; (d) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account, Installment Sales Receivable or any Credit Card Receivables; (e) all letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Obligor or otherwise in favor of or delivered to any Obligor in connection with any Account; (f) all payment intangibles of any Obligor and other contract rights, chattel paper, instruments, notes and other forms of obligations owing to any Obligor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property and other general intangibles), rendition of services or from loans or advances by such Obligor to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of such Obligor) or otherwise associated with any Accounts, Inventory, other Receivables or general intangibles (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary, bills of lading, warehouse receipts and other documents of title or shipping documents); (g) all monies, securities and other investment property, credit balances, deposits, deposit accounts and other property and the proceeds thereof, now or hereafter held or received or held by, or in transit to, Agent, any Lender or any of their Affiliates or participants or held or received by any other

 

 

bank, other financial institution or other person, whether for safekeeping, pledge, custody, transmission, collection or otherwise; (h) all deposits (general or special) and balances at any bank or other financial institution or other person; (i) all right, title and interest in, to and in respect of the foregoing, including, without limitation, all goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, any of same, including, without limitation, all returned, reclaimed or repossessed Inventory; (j) all right, title and interest, and all enforcement and other rights, remedies, and security and liens, in, to and in respect of any of the foregoing, including, without limitation, rights of stoppage in transit, replevin, repossession, sequestration and reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, guaranties, or other contracts of suretyship with respect thereto, or deposits or other security for the obligation of any account debtor; and (k) all credit and other insurance with respect to any Receivables or Inventory.

1.155  “Records” shall mean all of any Obligor’s present and future books of account of every kind or nature, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media (including any rights of such Obligor with respect to the foregoing maintained with or by any other person).

1.156  “Register” shall have the meaning set forth in Section 13.7 hereof.

1.157  “Required Frequency” shall mean the frequency set forth below of the field examinations to be conducted by Agent as provided herein (other than field examinations to be conducted by Agent in connection with a Permitted Acquisition) and the Inventory reports and appraisals to be delivered by Borrowers to Agent as required by Section 7.3(d) hereof which shall be at the sole cost and expense of Borrowers:

 

 

1.158  “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than fifty (50%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than fifty (50%) percent of the then aggregate amount of all unpaid Loans and Letter of Credit Obligations are owed.

1.159  “Reserves” shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in good faith, exercising its commercially reasonable business judgment, reducing the amount of Loans and Letters of Credit which would otherwise be available to any Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as reasonably determined by Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or its value, (ii) the assets of Obligors, taken as a whole or (iii) the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s reasonable and good faith belief that any collateral report or financial information furnished by or on behalf of any Obligor to Agent is incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letters of Credit as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in good faith constitutes a Default or an Event of Default.  Without limiting any other rights or remedies of Agent under this Agreement or any of the other Financing Agreements with respect to the establishment of Reserves in respect of the events, conditions, contingencies or risks set forth in clauses (a) through (d) of the immediately preceding sentence, Agent may establish and revise Reserves to reflect any of the following: (i) an increase in inventory shrinkage over historical levels (but such Reserve shall only be established to the extent that such Inventory shrinkage was not deducted in determining the Value of such Inventory); (ii) an increase in reserves in respect of markdowns over historical levels to the extent not reflected in the most recent Borrowing Base Certificate delivered to Agent or the most recent appraisal delivered to Agent in accordance with the terms of this Agreement; (iii) cost variances, to the extent such cost variances result in the value of Inventory as set forth in the most recent Borrowing Base Certificate exceeding the Value of Inventory; (iv) the aggregate amount of deposits, if any, received by any Obligor from its retail customers in respect of unfilled orders for merchandise but only to the extent such Inventory is included in the calculation of the Borrowing Base without deduction for deposits received; (v) amounts past due or to become due (provided, that, so long as no Event of Default has occurred and is continuing, the amount of such Reserve in respect of amounts to become due will not exceed the amount which is to become due over any consecutive three (3) month period) in respect of sales, use and/or withholding taxes to the extent that the dollar amount of Eligible Inventory, Eligible Credit Card Receivables or Eligible Installment Sales Receivables included in the Borrowing Base has not already been reduced to reflect such amounts; (vi) any past due rental payments, service charges or other amounts to become due to lessors of real property to the extent Inventory or Records needed to monitor or otherwise deal with the Collateral are located in or on such property, other than for any location where either: (A) Agent has received a Collateral Access Agreement executed and delivered in accordance with the definition thereof or (B) the delivery of a Collateral Access Agreement is not required or was waived by Agent, other than in the case of retail store locations, provided , that , the Reserves established pursuant to this clause (vi) shall not exceed the greater of (1) the rental payments, service charges and other amounts past due or (2) the rental payments, service charges and other amounts payable for the next three (3) months, to the lessors of such locations located in those States where any right of

 

 

the lessor to Collateral may have priority over the Lien of Agent (Borrowers acknowledge that Agent is not establishing a Reserve in respect of retail stores on the date hereof and that Agent retains the right to establish such Reserves in its good faith judgment except, that, in the event that the aggregate amount of Revolving Loans and Letter of Credit Obligations at any time exceeds the amount equal to fifty (50%) percent of the Maximum Credit, Agent shall establish such a Reserve); (vii) amounts owing by Obligors to Credit Card Issuers or Credit Card Processors in connection with the Credit Card Agreements to the extent not already deducted in the determination of Eligible Credit Card Receivables; (viii) increase in the number of days of the turnover of Inventory or a deterioration in its nature, quality or mix (but only to the extent not addressed by the lending formulas in a manner reasonably satisfactory to Agent); (ix) variances between the perpetual inventory records of Borrowers and the results of the test counts of Inventory conducted by Agent with respect thereto in excess of the percentage acceptable to Agent, (x) to reflect the amount of duty, freight, and taxes arising in connection with imported goods other than as already reserved for pursuant to this definition, (xi) to reflect the amount of any Lien in accordance with Section 9.9(b) hereof, (xii) to reflect the obligations, liabilities or indebtedness of Obligors in respect of gift cards issued to or for the benefit of customers of Obligors, (xiii) to reflect that a judgment described in Section 9.9(j) hereof has been entered against an Obligor (for which Administrative Borrower has not either (A) delivered a writing to Agent that the applicable insurer has assumed responsibility for such judgment or (B) certified in writing to Agent that such judgment is covered by insurance) which would result in a Lien in respect of the Collateral that would have priority over the Lien of the Agent in such Collateral, provided, that, such Reserve shall in no event exceed the lesser of (1) the amount any Obligor would be required to pay to satisfy such judgment (net of any insurance applicable thereto) or  (2) the value of any Collateral subject to the Lien of such judgment, (xiv) to reflect that dilution with respect to the Credit Card Receivables (based on the ratio of the aggregate amount of non-cash reductions in Credit Card Receivables for any period to the aggregate dollar amount of the sales of Obligors giving rise to Credit Card Receivables for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five (5%) percent, (xv) obligations, liabilities or indebtedness (contingent or otherwise) of Obligors to Agent or any Bank Product Provider arising under or in connection with any Bank Products (other than cash management or related services) as such Bank Product Provider may require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein and receive the benefit of the security interest of Agent in any Collateral, and (xvi) reserves in respect of Eligible In-Transit Inventory, including freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of an Obligor’s locations for Eligible Inventory within the United States of America.  The amount of any Reserve established by Agent shall have a reasonable and direct relationship to the event, condition or other matter which is the basis for such Reserve as determined by Agent in good faith and Agent may, at its option, deduct such Reserve from the Maximum Credit, at any time that such limit is less than the amount of the Borrowing Base.  Agent shall not establish or increase Reserves for any event or condition already factored into the calculation of the relevant Net Recovery Cost Percentage, Net Amount of Eligible Credit Card Receivables or Net Amount of Eligible Installment Sales Receivables or for Inventory or Receivables that have been deemed ineligible by Agent.  Agent shall not establish Reserves (excluding reserves for Letters of Credit as provided in Section 2.2 hereof and Reserves in effect on the date hereof) or increase the amount of such Reserves after the date

 

 

hereof and Agent shall have prior to the establishment or increase of such Reserve explained to Administrative Borrower the nature and amount of the Reserve.  Agent may increase a Reserve and shall reduce or eliminate a Reserve if the event or condition giving rise to such Reserve shall warrant, as Agent may reasonably and in good faith determine.

1.160           “Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of  Parent or any other Obligor, as the case may be, now or hereafter outstanding, except a dividend payable solely in shares of Capital Stock of Parent or such other Obligor, as the case may be; (b) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of Capital Stock of Parent or any other Obligor, as the case may be, now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares or interests, except to the extent that the consideration therefor consists solely of shares of Capital Stock of Parent or such other Obligor; or (c) any sinking fund, other prepayment or installment payment on account of any Capital Stock of Parent or any other Obligor.

1.161  “Retail Sales Price” shall mean the current ticketed sales price in the Retail Stores, net of markdowns from the original retail sales price with respect thereto, for the types, categories and styles of Inventory included in the Eligible Inventory of Obligors.

1.162  “Retail Stores” shall mean the retail stores which are now or hereafter operated by Obligors and which sell Inventory.

1.163  “Retail Store Subsidiary” shall mean an Obligor which now or hereafter owns a Retail Store or which is now existing or hereafter organized to operate a Retail Store in the future but shall not include any Inactive Subsidiaries.

1.164  “Revolving Loans” shall mean the loans now or hereafter made by or on behalf of any Lender or by Agent for the ratable account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1(a)(i) hereof.

1.165  “Sanctioned Entity” shall mean (a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a person resident in, a country that is subject to a sanctions program identified on the list maintained and published by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/programs , or as otherwise published from time to time as such program may be applicable to such agency, organization or person.

1.166  “Sanctioned Person” shall mean a person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as otherwise published from time to time.

1.167  “Secured Parties” shall mean, collectively, (a) Agent, (b) Lenders, (c) Issuing Banks and (d) any Bank Product Providers (only to the extent of the Obligations owing to such Bank Product Provider); sometimes referred to herein individually as a “Secured Party”.

 

 

1.168  “Securitization Documents” means (a) a receivables purchase agreement, pooling and servicing agreement, credit agreement, agreements to acquire undivided interests or other agreement to transfer, or create a security interest in, Securitization Program Assets, in each case as amended, modified, supplemented or restated and in effect from time to time entered into by any Obligor or any Financing Subsidiary, and (b) each other instrument, agreement and other document entered into by any Obligor or any Financing Subsidiary relating to the transactions contemplated by the agreements referred to in clause (a) above, and (c) each CS Securitization Undertaking made by CS Delaware or Parent, in each case as amended, modified, supplemented or restated and in effect from time to time.

1.169  “Securitization Program Assets” means (a) all Securitized Receivables, (b) all Securitization Related Assets, and (c) all collections (including recoveries) and other proceeds of the assets described in the foregoing clauses.

1.170  “Securitized Receivables” means all Receivables (including rights to payment) described in any Securitization Documents as being transferred or required to be transferred by any Obligor or Originator to any Financing Subsidiary, but such Receivables shall not include Installment Sales Receivables.

1.171  “Securitization Related Assets” means (a) any rights, remedies, powers and privileges with respect to the Securitized Receivables (including rights in respect of Liens securing such Securitized Receivables and other credit support in respect of such Securitized Receivables), (b) all funds received from or on behalf of the obligors thereon, or applied to amounts owed by such obligors (including without limitation insurance payments and proceeds of sale or other disposition of Securitized Receivables), (c) all contracts, books and records that relate to the Securitized Receivables, (d) any proceeds of such Securitized Receivables and any lockboxes or accounts in which such proceeds are deposited, (e) any spread accounts of the Financing Subsidiaries or Special Purpose Vehicles or any other similar account (or deposits therein) established in connection with a Permitted Securitization Transaction, (f) any warranty, indemnity, dilution and other intercompany claim arising out of Securitization Documents, and (g) other assets of Originators which are transferred or in respect of which Liens are customarily granted in connection with asset securitization transactions involving accounts receivable; provided, that, the Securitization Related Assets shall not include any returned, repossessed or foreclosed goods and/or merchandise the sale of which by any Obligor gave rise to a Securitized Receivable that constitutes a Securitization Related Asset.

1.172  “Special Agent Advances” shall have the meaning set forth in Section 12.11 hereof.

1.173  “Special Purpose Vehicle” shall mean a trust, partnership or other special purpose Person established by an Excluded Subsidiary or Parent in a manner that intended to legally isolate the assets of such Person from the Parent and its Subsidiaries as a consolidated group, to implement a Permitted Securitization Transaction.

1.174  “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority

 

 

of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person.

1.175  “Supermajority Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than sixty-six and two-thirds (66⅔%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than sixty-six and two-thirds (66⅔%) percent of the aggregate amount of all unpaid Loans and Letter of Credit Obligations are owed.

1.176  “Swing Line Lender” shall mean Wells Fargo Retail Finance, LLC, in its capacity as lender of Swing Line Loans.

1.177  “Swing Line Loan Limit” shall mean $30,000,000.

1.178  “Swing Line Loans” shall have the meaning set forth in Section 2.1(a)(ii) hereof.

1.179  “Taxes” shall mean any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of any Lender, such taxes (including income taxes, franchise taxes or capital taxes) as are imposed on or measured by such Lender’ s net or gross income or capital by any jurisdiction (or any political subdivision thereof).

1.180  “Termination Date” shall have the meaning set forth in Section 13.1 hereof.

1.181  “Trade Financing Agreements” shall mean, individually and collectively the following (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced), (a) the Trade Financing Agreement [Security Agreement,] dated as of August 16, 2001, by and among the Additional L/C Debtors (other than CS Insurance Limited) and Agent; (b) the Letter of Credit Reimbursement Agreement, dated as of August 16, 2001, by and between CS Insurance Ltd. and Agent; and (c) all other agreements, documents and instruments executed in connection with the foregoing.

1.182  “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, together with any regulations thereunder, in each case as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute).  References to sections of the UCC shall be construed to also refer to any successor sections.

1.183  “US Subsidiary” means a Subsidiary which is a corporation now existing or hereafter organized under the laws of the United States of America or of any state of the United States of America, the District of Columbia or Puerto Rico, except that such term shall not include the Excluded Subsidiaries.

 

 

1.184  “Value” shall mean the lower of (a) cost or (b) market value, provided, that, for purposes of the calculation of the Borrowing Base, the Value of the Inventory shall not include: (i) the portion of the Value of Inventory equal to the profit earned by any Affiliate on the sale thereof to an Obligor or (ii) write ups or write downs in value with respect to currency exchange rates.  Notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be determined in the same manner and consistent with the most recent appraisal of the Inventory conducted in accordance with Section 7.2 hereof and received by Agent prior to the date of determination.

1.185  “Voluntary Proceeding” shall have the meaning set forth in Section 10.1(h) hereof.

1.186  “Voting Stock” shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

1.187  “Wachovia” shall mean Wachovia Bank, National Association, a national banking association, in its individual capacity, and its successors and assigns.

1.188  “Wells Fargo” shall mean Wells Fargo Retail Finance, LLC, a Delaware limited liability company, in its individual capacity, and its successors and assigns.

1.189  “WFS” shall mean Wells Fargo Securities, LLC, formerly known as Wachovia Capital Markets LLC, and its Affiliates, successors and assigns.

 

 

the Swing Line Loans outstanding to all Borrowers at any one time shall not exceed the Swing Line Loan Limit.

 

 

 

 

Reserves with respect to such Letter of Credit, on the date of the proposed issuance of any Letter of Credit, shall be equal to or greater than: (A) if the proposed Letter of Credit is for the purpose of purchasing Eligible L/C Inventory, the sum of (1) one hundred (100%) percent of the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of any Obligor’s locations for Eligible Inventory within the United States of America and (B) if the proposed Letter of Credit is for any other purpose and the conditions contained in the definition of Eligible L/C Inventory are not satisfied, an amount equal to one hundred (100%) percent of the Letter of Credit Obligations with respect thereto, and (v) no Lender is at such time a Defaulting Lender or Deteriorating Lender, unless the applicable Issuing Bank has entered into satisfactory arrangements with Borrowers and/or such Lender with respect to such Defaulting Lender or Deteriorating Lender, as the case may be.  Effective on the issuance of each Letter of Credit, a Reserve shall be established in the applicable amount set forth in Section 2.2(c)(iv)(A) or Section 2.2(c)(iv)(B) above.

 

 

respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and, for such purposes only, the drawer or beneficiary shall be deemed Borrower’s agent.  Borrowers assume all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances thereunder.  Borrowers hereby release and hold Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by Borrowers, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit, except for the gross negligence or willful misconduct of Agent as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  The provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

 

 

occurred and is continuing), Borrowers and Additional L/C Debtors may waive discrepancies in the presentation of documents required for payment under any Letters of Credit other than for the required presentation or delivery of a bill of lading or cargo receipt or other transport document with respect to Eligible Inventory thereunder.  Agent may take such actions either in its own name or in the name of any Borrower, any Additional L/C Debtor or Administrative Borrower.

 

 

“Banker’s Acceptance Cash Collateral Accounts”) maintained at such securities intermediary reasonably acceptable to Agent, and (ii) Agent shall have received, in form and substance reasonably satisfactory to Agent, an Investment Property Control Agreement among Agent, the applicable Obligor and such securities intermediary with respect to the Banker’s Acceptance Cash Collateral Accounts, duly executed and delivered by such Obligor and such securities intermediary.  Borrowers and Guarantors hereby pledge and grant to Agent, for itself and the benefit of the applicable Issuing Bank and Lenders, a security interest in all cash and Cash Equivalents held in the Banker’s Acceptance Cash Collateral Accounts from time to time and all proceeds thereof as security for the payment of all Obligations including without limitation all Letter of Credit Obligations in respect of banker’s acceptances, whether or not then due.  So long as no Cash Dominion Event has occurred and is continuing: (A) any funds in the Banker’s Acceptance Cash Collateral Accounts shall be applied to the Letter of Credit Obligations in respect of banker’s acceptances then due and owing as such banker’s acceptances come due, unless otherwise directed by Administrative Borrower, and (B) any funds in the Banker’s Acceptance Cash Collateral Accounts shall be paid to Administrative Borrower or any other Person at Administrative Borrower’s request.

Borrowers shall be liable for all amounts due to Agent, Issuing Banks and Lenders under this Agreement, regardless of which Borrower actually receives the Loans, Letters of Credit or other extensions of credit hereunder or the amount of such Loans received or the manner in which Agent accounts for such Loans, Letters of Credit or other extensions of credit on its books and records.  The Obligations with respect to Loans and Letters of Credit or other extensions of credit made to a Borrower, and the Obligations arising as a result of the joint and several liability of a Borrower hereunder, with respect to Loans and Letters of Credit or other extensions of credit made to the other Borrowers hereunder, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of all Borrowers.  The Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letters of Credit or other extensions of credit made to the other Borrowers hereunder shall, to the fullest extent permitted by law, be unconditional irrespective of (a) the validity or enforceability, avoidance or subordination of the Obligations of the other Borrowers or of any promissory note or other document evidencing all or any part of the Obligations of the other Borrowers, (b) the absence of any attempt to collect the Obligations from the other Borrowers, any Guarantor or any other security therefor, or the absence of any other action to enforce the same, (c) the waiver, consent, extension, forbearance or granting of any indulgence by Agent with respect to any provisions of any instrument evidencing the Obligations of the other Borrowers, or any part thereof, or any other agreement now or hereafter executed by the other Borrowers and Guarantors and delivered to Agent, (d) the failure by Agent to take any steps to perfect and maintain its security interest in, or to preserve its rights and maintain its security or collateral for the Obligations of the other Borrowers and Guarantors, (e) the election of Agent in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any portion of the claim(s) of Agent for the repayment of the Obligations of the other Borrowers and Guarantors under Section 502 of the Bankruptcy Code, or (g) any other circumstances which might constitute a legal or equitable discharge or defense of any Obligor, other than the willful misconduct or gross negligence of Agent, any Issuing Bank or

 

 

Lenders as determined pursuant to a final, non-appealable order of a court of competent jurisdiction.  With respect to the Obligations arising as a result of the joint and several liability of a Borrower hereunder with respect to Loans, Letters of Credit or other extensions of credit made to the other Borrowers hereunder, each Borrower and Guarantor waives, until the Obligations shall have been paid in full in immediately available funds and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent now has or may hereafter have against Borrowers and Guarantors, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to Agent.  Upon any Event of Default and for so long as the same is continuing, Agent may proceed directly and at once, without notice, against any Borrower or Guarantor to collect and recover the full amount, or any portion of the Obligations, without first proceeding against the other Borrowers or any other Person, or against any security or collateral for the Obligations.  Each Borrower and Guarantor consents and agrees that Agent and Lenders shall be under no obligation to marshal any assets in favor of Borrower(s) or Guarantors against or in payment of any or all of the Obligations.

 

 

to allocate such commitments, first to Lenders and then to Eligible Transferees, in such amounts and manner as Agent may determine, after consultation with Administrative Borrower.

Notwithstanding anything to the contrary contained herein, the increase in Commitments in accordance with the foregoing shall not exceed the increase in the Maximum Credit requested by Administrative Borrower without the consent of Administrative Borrower.

 

 

Administrative Borrower, the Maximum Credit may thereafter be increased again on the date that is sixty (60) days after the date of the original request by Administrative Borrower for such increase based on any additional increase in Commitments or new Commitments received by Agent (i) after the Early Increase Date but (ii) prior to the date that is sixty (60) days after the date of such original request by Administrative Borrower for any such increase.

 

 

Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable.  Notwithstanding anything to the contrary contained herein, Agent and Lenders shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans.

 

 

Section 2.2(l) hereof) during the immediately preceding month (or part thereof) while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears and calculated based on a three hundred sixty (360) day year and actual days elapsed.

 

 

requirements, applicable to any Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a “Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank, any Lender or Issuing Bank complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender’s or Issuing Bank’s capital as a consequence of its obligations hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s or Issuing Bank’s policies with respect to capital adequacy) by an amount deemed by such Lender or Issuing Bank to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters of Credit or its Commitment, then Borrowers shall from time to time pay to Agent promptly (but in any event within five (5) Business Days) following Agent’s written demand therefor such additional amounts sufficient to indemnify such Lender or Issuing Bank, as the case may be, against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified).  A certificate as to the amount of such increased cost and the basis for such determination shall be submitted to Administrative Borrower by Agent or the applicable Lender and shall be conclusive, absent manifest error.

 

 

 

 

the date that such Lender or Issuing Bank, as the case may be, notifies the Administrative Borrower of the change giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the change giving rise to such increased costs or reductions is retroactive, then the six month period referred to above shall be extended to include the period of retroactive effect thereof).

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

 

 

Each of the following is a condition precedent to Agent and Lenders making the initial Loans and each Issuing Bank providing the initial Letters of Credit hereunder:

 

 

field examination and no change or event shall have occurred which would impair the ability of Obligors, taken as a whole, to perform their obligations hereunder or under any of the other Financing Agreements to which any of them is party or of Agent to enforce the Obligations or realize upon the Collateral.  Without limiting the generality of the foregoing, no investigation, litigation or other proceedings shall be pending or threatened against any Obligor as of the closing which could have a Material Adverse Effect in the good faith determination of Agent and Lenders;

 

 

The obligation of Lenders to make the Loans, including the initial Loans, or of each Issuing Bank to issue any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, or waiver of, immediately prior to or concurrently with the making of each such Loan or the issuance of such Letter of Credit of each of the following conditions precedent:

To secure payment and performance of all Obligations, each Obligor hereby grants to Agent, for itself and the benefit of the Secured Parties, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of the Secured Parties, and hereby confirms, reaffirms and restates the prior grant thereof to Agent, for itself and the Secured Parties, pursuant to the Existing Financing Agreements (as amended and restated hereby), as security, all of the following personal property and interests in personal property, of each Obligor, whether now owned or hereafter acquired or existing, and wherever located (collectively, the “Collateral”) including: