[Execution]

by and among

as Lender

and

THE CATOCORPORATION

CATOSOUTHLLC

CATOWEST,LLC

CATOWO LLC CATOOF

CATOOF FLORIDA L.L.C.

CATOOF ILLINOIS, LLC

CATOOF NORTH CAROLINA, LLC

OHIO CATOSTORES, LLC

CATOOF SOUTH CAROLINA,LLC

CATOOF TENNESSEE, LLC

CATOOF VIRGINIA,LLC as

Borrowers

catocorp.com, LLC

CATOSOUTHWES

INC.

as Guarantors

Dated as of March 13, 2025

Tableof Contents

Page

1.

DEFINITIONS AND CONSTRUCTION............................................................................................1

1.1

Definitions.....................................................................................................................................1

1.2

Accounting Terms.......................................................................................................................25

1.3

UCC Terms.................................................................................................................................26

1.4

Construction................................................................................................................................26

1.5

Time References .........................................................................................................................27

1.6

Payment in Full...........................................................................................................................27

1.7

[Reserved]...................................................................................................................................27

1.8

Resolution of Drafting Ambiguities............................................................................................27

1.9

Rates............................................................................................................................................27

1.10

Schedules and Exhibits...............................................................................................................28

1.11

Divisions.....................................................................................................................................28

2.

CREDIT FACILITY...........................................................................................................................28

2.1

Revolving Loans.........................................................................................................................28

2.2

Borrowing Procedures.................................................................................................................29

2.3

Letter of Credit Facility...............................................................................................................30

2.4

Payments; Prepayments..............................................................................................................30

2.5

Interest and Fees. ........................................................................................................................33

2.6

Intent to Limit Charges toMaximum Lawful Rate.....................................................................33

2.7

Illegality; Market Conditions......................................................................................................34

2.8

Increased Costs...........................................................................................................................34

2.9

Capital Requirements..................................................................................................................34

2.10

Certificates for Reimbursement..................................................................................................35

2.11

Delay in Requests .......................................................................................................................35

2.12

Term SOFR Conforming Changes..............................................................................................35

2.13

Increase in MaximumCredit.......................................................................................................35

2.14

Joint and Several Liabilityof Borrowers....................................................................................36

3.

CONDITIONS; TERM OFAGREEMENT.......................................................................................39

3.1

Conditions Precedent to the Initial RevolvingLoan...................................................................39

3.2

Conditions Precedent to allRevolving Loans.............................................................................39

3.3

Maturity.......................................................................................................................................40

3.4

Effect of Maturity .......................................................................................................................40

3.5

Early Termination by Borrowers ................................................................................................40

4.

REPRESENTATIONSAND WARRANTIES...................................................................................40

4.1

Due Organization and Qualification...........................................................................................40

4.2

Due Authorization; No Conflict..................................................................................................40

4.3

Binding Obligations; PerfectedLiens.........................................................................................41

4.4

Title to Assets; No Encumbrances..............................................................................................41

4.5

Litigation.....................................................................................................................................41

4.6

Compliance with Laws................................................................................................................41

4.7

No Material Adverse Effect........................................................................................................41

4.8

Solvency......................................................................................................................................42

4.9

Environmental Condition............................................................................................................42

4.10

Complete Disclosure; Projections...............................................................................................42

4.11

Taxes ...........................................................................................................................................42

4.12

Margin Stock; Investment CompanyAct, Etc ............................................................................42

4.13

OFAC; Sanctions; Anti-Corruption Laws;Anti-Money LaunderingLaws;Patriot Act ............43

4.14

Employee and Labor Matters......................................................................................................43

4.15

ERISA.........................................................................................................................................43

4.16

Capitalization and Subsidiaries...................................................................................................43

4.17

Intellectual Property; Licenses....................................................................................................43

4.18

Deposit Accounts; Credit Card Arrangements............................................................................44

4.19

Material Contracts.......................................................................................................................44

4.20

Reserved......................................................................................................................................44

4.21

Eligible Credit Card Receivables................................................................................................44

4.22

Eligible Inventory.......................................................................................................................44

4.23

Brokers........................................................................................................................................44

5.

AFFIRMATIVE COVENANTS.........................................................................................................44

5.1

Financial Statements; BorrowingBase Certificate; Other Information......................................44

5.2

Notices of Material Events..........................................................................................................45

5.3

Existence.....................................................................................................................................45

5.4

Maintenance of Properties..........................................................................................................45

5.5

Taxes ...........................................................................................................................................45

5.6

Insurance.....................................................................................................................................46

5.7

Field Examinations; Appraisals..................................................................................................46

5.8

Compliance with Laws; OFAC; Sanctions, Etc..........................................................................46

5.9

Cash Management; Collectionof Proceeds of Collateral...........................................................46

5.10

Physical Inventories....................................................................................................................48

5.11

Further Assurances......................................................................................................................48

5.12

Formation of Subsidiaries...........................................................................................................49

5.13

Costs and Expenses.....................................................................................................................49

5.14

Post-Closing Actions ..................................................................................................................50

6.

NEGATIVE COVENANTS ...............................................................................................................50

6.1

Indebtedness................................................................................................................................50

6.2

Liens............................................................................................................................................50

6.3

Restrictions on Fundamental Changes........................................................................................50

6.4

Asset Dispositions.......................................................................................................................51

6.5

Nature of Business......................................................................................................................51

6.6

Prepayments and Amendments...................................................................................................51

6.7

Restricted Payments....................................................................................................................52

6.8

Accounting Methods...................................................................................................................52

6.9

Investments.................................................................................................................................52

6.10

Transactions with Affiliates........................................................................................................52

6.11

Deposit Accounts; Credit Card Processors.................................................................................53

6.12

Use of Proceeds...........................................................................................................................53

7.

COVENANT................................................................................................................54

7.1

Minimum Excess Availability ....................................................................................................54

8.

EVENTS OF DEFAULTAND REMEDIES.....................................................................................54

8.1

Events of Default ........................................................................................................................54

8.2

Remedies.....................................................................................................................................55

9.

NOTICES, AMENDMENTS,WAIVERS, INDEMNIFICATION, ETC. .........................................56

9.1

Demand; Protest; Counterclaims,Etc.........................................................................................56

9.2

Indemnification...........................................................................................................................56

9.3

Notices ........................................................................................................................................57

9.4

Assignments; Successors............................................................................................................57

9.5

Amendments; Waivers................................................................................................................57

10.

JURY TRIAL WAIVER; OTHER WAIVERS CONSENTS; GOVERNINGL

AW.

....................57

10.1

GOVERNING LAW...................................................................................................................58

10.2

FORUM NON CONVENIENS..................................................................................................58

10.3

WAIVER OF JURYTRIAL.......................................................................................................58

10.4

SUBMISSION TO JURISDICTION..........................................................................................58

10.5

WAIVER OF CLAIMS ..............................................................................................................58

11.

PROVISIONS .............................................................................................................59

11.1

Effectiveness; Section Headings; Severability............................................................................59

11.2

Counterparts; ElectronicExecution............................................................................................59

11.3

Patriot Act...................................................................................................................................59

11.4

Integration...................................................................................................................................59

11.5

Confidentiality; Disclosure.........................................................................................................60

11.6

The Cato Corporation as Agentfor Borrowers...........................................................................60

11.7

Acknowledgement RegardingAny Supported QFCs.................................................................61

Schedules

Schedule 1.1(a)Definition of Eligible CreditCard Receivables

Schedule 1.1(b)Definition of Eligible Inventory

Schedule 1.1(c)Excluded Subsidiaries

Schedule 1.1(d)[Reserved]

Schedule 1.1(e)Immaterial Subsidiaries

Schedule 1.1(f)Investment Policy

Schedule 2.5Fees

Schedule 2.7SOFR Replacement

Schedule 3.1Conditions Precedent to Initial RevolvingLoans

Schedule 4.5Pending Litigation

Schedule 4.14Collective Bargaining Agreements,Etc.

Schedule 4.16Subsidiaries

Schedule 4.18(a)Deposit Accounts

Schedule 4.18(b)Credit Card Arrangements

Schedule 4.19Material Contracts

Schedule 5.1 Financial and Collateral Reporting Exhibit A Form of Borrowing Base Certificate

Schedule 5.14Post-Closing Actions

Schedule 6.1Existing Indebtedness

Schedule 6.2Existing Liens

Schedule 6.9Existing Investments

Exhibits

Exhibit BForm of Compliance Certificate

Exhibit CForm of Joinder Agreement

Exhibit DForm of SOFR Loan Notice

Exhibit E Form of Credit Card Notification is entered into as of March 13, 2025, by and among , among

Exhibit FCash Management Structure

v

 

 

 

 

THE CATOCORPORATION, a Delaware corporation (“Parent” or the “AdministrativeBorrower”),

CATOSOUTHLLC, a North Carolinalimited liability company(“CatoSouth”), CATO OF TEXAS L.P.,a

Texas limited partnership (“Cato of Texas”), CATOWEST LLC, a Nevada limited liabilitycompany

(“CatoWest”), CATO WO LLC, a Delaware limited liability company(“Cato WO”), CATOOF

GEORGIA, LLC, a Georgia limited liabilitycompany (“Cato of Georgia”), CATO OF FLORIDA L.L.C.,

a Florida limited liability company(“Cato of Florida”), CATO OF ILLINOIS, LLC, an Illinois limited

liability company (“Cato of Illinois”),CATOOF NORTH CAROLINA, LLC, a North Carolinalimited

liability company (“Cato ofNorth Carolina”), OHIOCATOSTORES, LLC, an Ohio limitedliability

company (“Ohio Cato”), CATO OF SOUTH CAROLINA, LLC, a SouthCarolina limited liability

company (“Cato of SouthCarolina”), CATO OF TENNESSEE, LLC, a Tennessee limited liability

company (“Cato of Tennessee”), and CATO OF VIRGINIA, LLC, a Virginia limited liability company

(“Cato of Virginia,” and together with AdministrativeBorrower, CatoSouth, Cato of Texas, CatoWest,

Cato WO, Cato of Georgia, Cato of Florida,Cato of Illinois, Cato of NorthCarolina, Ohio Cato, Catoof

South Carolina, and Cato ofTennessee, and together withany entity that mayhereafter become party

hereto as a Borrower, individually, a “Borrower” and collectively, “Borrowers”), CATO SOUTHWES

INC., a Delaware corporation(“Cato Southwest”), CHWLLC, a Delaware limited liabilitycompany

(“CHW”), CADEL LLC, aDelaware limited liability company(“CaDel”), catocorp.com, LLC,a

Delaware limited liability company(“catocorp”, and together withCato Southwest, CH

CaDel and any

entity that may hereafter becomeparty hereto as a Guarantor, individually, a “Guarantor” and

collectively, “Guarantors,” and together with Borrowers,individually, a “Loan Party” and collectively,

“Loan Parties”) and WELLSFARGO BANK, NATIONA

ASSOCIATION (“Lender”).

The parties agree as follows:

1.

1.1

Definitions

.As used in this Agreement,the following terms shall have thefollowing

definitions:

“Accounting Changes” means changesin accounting principles requiredby the promulgation of

any rule, regulation, pronouncementor opinion by the Financial AccountingStandards Board of the

American Institute of CertifiedPublic Accountants (or successorthereto or any agency with similar

functions).

“Acquisition” means the acquisitionof (a) a controllingequity interest in another Person

(including the purchase ofan option, warrant or convertibleor similar type securityto acquire

such a controlling interest at thetime it becomes exercisable bythe holder thereof), whether by

purchase of such equity interest orupon exercise of an optionor warrant for, or conversion of

securities into, such equityinterest, or (b) assets of anotherPerson which constitute all or any

material part of the assets of such Personor of a line or lines of businessconducted by such

Person.

“Adjusted Term SOFR”means, forpurposes of anycalculation, therate perannum equalto (a)

Term SOFR forsuch calculation plus (b) the TermSOFR Adjustment; provided, that, if Adjusted Term

SOFR as so determined shall ever be lessthan the Floor, then Adjusted TermSOFR shall be deemed to

be the Floor.

“Administrative Borrower” has the meaningset forth in Section 11.6.

 

 

 

 

 

 

 

 

 

 

 

 

“Affiliate” means, as applied to any Person,any other Person who controls,is controlled by, or is

under common control with,such Person.For purposes of this definition,“control” means the

possession, directly or indirectlythrough one or more intermediaries,of the power to direct the

management and policies ofa Person, whether throughthe ownership of Equity Interests,by contract, or

otherwise; provided, that, forpurposes of Section 6.10:(a) if any Person owns directlyor indirectly 10%

or more of the Equity Interestshaving ordinary voting powerfor the election of directors orequivalent

governing body of a Person,then both such Persons shall be Affiliatesof each other, (b) each director (or

comparable manager) of aPerson shall be deemed tobe an Affiliate of such Person,and (c) each

partnership in which a Personis a general partner shall be deemedan Affiliate of such Person.

“Agreement” means this Credit Agreement.

“Anti-Corruption Laws” means: (a)the U.S.Foreign Corrupt Practices Actof 1977, (b)the U.K.

Bribery Act 2010, and (c) any otheranti-bribery or anti-corruption laws, regulations or ordinances in any

jurisdiction in which any memberof the Loan Party Group is located ordoing business.

“Anti-Money Laundering Laws” means applicablelaws or regulations in anyjurisdiction in

which any member of the Loan PartyGroup is located or doingbusiness that relates to moneylaundering,

any predicate crime to moneylaundering, or any financial recordkeeping and reportingrequirements

related thereto.

“Applicable Margin” means, as of anydate of determination and withrespect to SOFR Loans,

1.50% per annum, and withrespect to Base Rate Loans, 0.50%per annum.

“Authorized Person” meansany one of the individualsidentified as an officer of a Loan Partyor

any other individual identifiedby Administrative Borrowerin writing as an authorized personand

authenticated through Lender’s electronicplatform or portal in accordancewith its procedures for such

authentication.

“Bank Product” means any one or moreof the following financial productsor accommodations

provided by Lender or its Affiliatesto a Loan Party: (a) credit cards(including commercial cards

(including so-called “purchasecards”, “procurement cards”or “p-cards”)), (b) anyservices related to the

acceptance and/or processingof payment cards or devices, (c)debit cards, (d) stored valuecards, (e) any

cash management or relatedservices, including treasury, depository, return items, overdraft, controlled

disbursement,merchant store value cards, e-payablesservices, electronicfunds transfer, interstate

depository network, automaticclearing house transfer(including the Automated ClearingHouse

processing of electronic fundstransfers through the direct FederalReserve Fedline system)and other cash

management arrangements,or (f) transactions under HedgeAgreements.

“Bank Product Obligations” meansall obligations, liabilities, reimbursementobligations, fees, or

expenses owing by a LoanParty to Lender or any of its Affiliates pursuantto or in connection with a

Bank Product and irrespectiveof whether for the payment ofmoney, and whether direct or indirect,

absolute or contingent, dueor to become due, now existingor hereafter arising.

“Bankruptcy Code” means Title 11 of the United StatesCode.

“Base Rate” means the greatest of (a) the Floor, (b)the Federal Funds Rate plus1/2%, (c)

Adjusted Term SOFR for a one (1) month tenor ineffect on such day, plus 1%, provided, that this clause

(c) shall not be applicable duringany period in which AdjustedTerm SOFR is unavailable or

unascertainable, and (d) therate of interest announced,from time to time, withinWells Fargo at its

principal office in San Francisco as its “prime rate” in effect on such day, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the

 

 

 

 

 

 

 

 

 

 

 

 

basis upon which effective rates ofinterest are calculated for those loansmaking reference theretoand is

evidenced by the recordingthereof after its announcementin such internal publicationsas Wells Fargo

may designate.

“Base Rate Loan” means eachportion of the RevolvingLoans that bears interest at a rate

determined by reference tothe Base Rate.

“Beneficial Ownership Certification”means a certification regardingbeneficial ownership as

required by the BeneficialOwnership Regulation.

“Beneficial Ownership Regulation” means31 C.F.R. § 1010.230.

“Benefit Plan” means a “defined benefitplan” (as defined in Section3(35) of ERISA) for which

any Loan Party or any of itsSubsidiaries or ERISAAffiliates has been an “employer” (as definedin

Section 3(5) of ERISA) within thepast six years.

“BHC Act Affiliate” of a Person means an “affiliate” (assuch term is defined under and

interpreted in accordance with,12 U.S.C. 1841(k)) of suchPerson.

“Borrower” and “Borrowers” havethe respective meaningsset forth in the preamble to this

Agreement.

“Borrowing Base” means, as of anydate of determination, the resultof:

(a)

90.0% multiplied by the EligibleCredit Card Receivables;plus

(b)

90.0% of the Net RecoveryPercentage in the most recent appraisalof Eligible Inventorythat

is acceptable to Lender in its PermittedDiscretion multiplied by theValueof such Eligible Inventoryat

such time; minus

(c)

Reserves.

“Borrowing Base Certificate” meansa certificate setting forth the calculationof the Borrowing Base

in the form of Exhibit Ato this Agreement, as suchform, subject to the termshereof, may from timeto

time be modified by Lender, which is dulycompleted (including all schedulesthereto) and delivered by or

on behalf of Borrowers to Lender.

“Business Day” means anyday that is not a Saturday, Sunday, or other day on which banks are

authorized or required to close inthe State of New York or Massachusetts.

“Capital Lease” means a lease that isrequired to be capitalized forfinancial reporting purposesin

accordance with GAAP, provided, that, all leases of any Person thatare or would be characterized asan

operating lease in accordancewith GAAP on or prior tothe effectiveness of FASB ASC 842 as applicable

to Parent (whether or not suchoperating lease were in effect on such date)shall be accounted for as an

operating lease (and not asa Capital Lease) for purposes of this Agreement.

“Cash Dominion Event” meansat any time on and after either(a) Excess Availability is less than

the greater of (i) 15.0% ofthe Loan Cap or (ii) $10,000,000 or (b)an Event of Default exists; provided,

that, (i) to the extent that the Cash DominionEvent has occurred dueto clause (a) of this definition,if

Excess Availability is greater than the applicable amount specified above for at least 30 consecutive days, the Cash Dominion Event shall no longer be deemed to exist until such time as Excess Availability may

 

 

 

 

 

 

 

 

 

again be less than the applicablespecified amount, and(ii) to the extent that the Cash DominionEvent

has occurred due to clause (b) ofthis definition, if no Eventof Default exists, the Cash DominionEvent

shall no longer be deemedto exist until such time as anEvent of Default may thereafter occuragain.

“Cash Management Bank” has the meaningset forth in Section 5.9.

“Cash Management Structure” meansthe description of the deposit accountsof Parent and its

Subsidiaries and transfers offunds between such deposit accountsset forth in Exhibit F.

“Cedar Hill” means Cedar Hill NationalBank, a wholly-ownedSubsidiary of Parent.

“Change in Law” means the occurrenceafter the date of this Agreementof:(a) the adoption or

effectiveness of any law, rule, regulation, judicial ruling,judgment or treaty, (b) any change in any law,

rule, regulation, judicial ruling,judgment or treaty or in the administration,interpretation, implementation

or application by any GovernmentalAuthority of any law, rule, regulation, guideline or treaty, (c) any

new, or adjustment to, requirements prescribed bythe Board of Governors ofthe Federal Reserve System

(or any successor) for “EurocurrencyLiabilities” (as defined in RegulationD of the Board of Governors

of the Federal Reserve System),requirements imposed bythe Federal Deposit Insurance Corporation,or

similar requirements imposedby any domestic or foreigngovernmental authority or resultingfrom

compliance by Lender with anyrequest or directive (whether ornot having the force of law)from any

central bank or other GovernmentalAuthority and related in any mannerto SOFR, the Term SOFR

Reference Rate, AdjustedTerm SOFR or Term SOFR, or (d) the making or issuance by any

Governmental Authority ofany request, rule, guidelineor directive, whether or nothaving the force of

law; provided, that, notwithstandinganything in this Agreementto the contrary, (i) the Dodd-Frank

Wa

ll

Street Reform and Consumer ProtectionActand all requests, rules, guidelinesor directives thereunder or

issued in connection therewith,and (ii) all requests, rules, guidelinesor directives concerningcapital

adequacy promulgated bythe Bank for International Settlements,the Basel Committee on Banking

Supervision (or any successoror similar authority) or the United Statesor foreign regulatory authorities,

in each case pursuant to Basel III,shall, in each case, be deemed to be a “Changein Law,” regardless of

the date enacted, adopted or issued.

“Change of Control” meansthat (a) any Person or twoor more Persons acting in concert(other

than John Cato) shall haveacquired beneficial ownership (withinthe meaning of Rule 13d-3of the SEC

under the Securities ExchangeAct of 1934) of 50% or moreof the outstanding shares of the voting

stock of Parent;or (ii) as of any date a majorityof the Board of Directors of Parentconsists of individuals

who were not either (A) directors ofParent as of the correspondingdate of the previous year, or (B)

approved or nominated to becomedirectors by the Board of Directorsof Parent of which a majority

consisted of individuals describedin clause (A), or (b) Parent failsto own and control, directly or

indirectly, 100% of the Equity Interests of each other LoanParty or (c) the occurrenceof any “Change of

Control” or equivalent term as definedin any agreement with respectto any Material Indebtedness.

“Closing Date” means the first dateall the conditions precedentin Section 3.1 are satisfied (or

waived in accordance withSection 9.5).

“Collateral”shall have the meaninggiven to such term in the SecurityAgreement and shall

include any other assets subject to any othersecurity agreement enteredinto after the Closing Date that

are or are intended under the terms of such other security agreement to be subject to a Lien in favor of “Collateral Access Agreement” means an agreement with a lessor, warehouseman, processor,

Lender.

 

 

 

 

 

 

 

 

 

 

 

consignee, bailee, or other Personin possession of, havinga Lien upon, or having rights or interestsin

any Collateral, duly authorized,executed and delivery bysuch Person, in each case, in formand

“Collection Account” meanseach deposit account of a Borroweridentified on Schedule 4.18(a)

as a collection account and such otherdeposit accounts as maybe established after the Closing Date in

accordance with the terms hereofin each case used exclusivelyto receive payments on Credit Card

Receivables, accounts and proceedsof other Collateral.

“Commitment” means the commitmentof Lender to make RevolvingLoans or otherwise provide

any credit or services to a Borrowerunder this Agreement.

“Commitment Increase” has the meaningset forth in Section 2.13.

“Compliance Certificate” meansa certificate in the formof Exhibit B to this Agreement, as such

form, subject to the termshereof, may from timeto time be modified by Lender, which is dulycompleted

(including all schedules thereto),and delivered by or on behalfof Borrowers to Lender.

“Concentration Account” meansthe deposit accounts at Lender setforth on Schedule 4.18(a)

designated as the “Concentration Account”and such other deposit accountof Parent at Lender as maybe

established after the ClosingDate in accordance with the termshereof to which funds receivedin a

Collection Account are transferredand is designated in writingby Administrative Borrowerto Lender as

a “Concentration Account” with the consentof Lender.

“Control Agreement” means a controlagreement, in formand substance reasonably satisfactory

to Lender, executed and delivered by a Loan Party, Lender, and the applicablesecurities intermediary

(with respect to a securities account)or bank (with respect to a depositaccount).

“Covered Entity” means any of thefollowing:

(a)

a “covered entity” as that termis defined in, and interpreted in accordancewith, 12 C.F.R. §

252.82(b);

(b)

a “covered bank” as that termis defined in, and interpreted in accordancewith, 12 C.F.R. §

47.3(b); or

(c)

a “covered FSI” as that termis defined in, and interpreted in accordancewith, 12 C.F.R. §

382.2(b).

“Covered Party” has the meaning set forthin Section 11.7.

“Credit Card Issuer” meansany person (other than a LoanParty or an Affiliate of a Loan Party)

who issues or whose membersissue credit cards, including,without limitation, MasterCard orVISA bank

credit or debit cards or other bankcredit or debit cards issued throughMasterCard International, Inc.,Visa,

U.S.A., Inc. or Visa International and AmericanExpress, Discover, Diners Club, Carte Blancheand other

non-bank credit or debit cards,including, without limitation, creditor debit cards issued by or through

American Express Travel Related Services Company, Inc.,and Novus Services, Inc. andother issuers

approved by the Lender.

“Credit Card Notifications” has the meaningspecified in Section 5.9(d).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Credit Card Processor” meansany servicing or processingagent or any factor or financial

intermediary who facilitates, services,processes or manages thecredit authorization, billingtransfer

and/or payment procedureswith respect to any Borrower’s salestransactions involvingcredit card or

debit card purchases by customersusing credit cards ordebit cards issued by anyCredit Card Issuer.

“Credit Card Receivables” meanseach “payment intangible” (as definedin the UCC) together with

all income, paymentsand proceeds thereof, owed bya Credit Card Issuer or CreditCard Processor to a

Loan Party resulting from charges bya customer of a Loan Party on creditor debit cards issued by such

Credit Card Issuer in connectionwith the sale of goodsby a Loan Party, or services performed by a Loan

Party, in each case in the ordinary course of its business.

“Credit Facility” means the RevolvingLoans provided to or for the benefit of eachBorrower

pursuant to Section 2.1 or otherfinancial accommodations providedfor under the Loan Documents.

“DDA Notification” has themeaning specified in Section5.9(b).

“Default” means any condition orevent which constitutesan Event of Default or whichwith the

giving of notice or lapse oftime or both would, unlesscured or waived in writing,become an Event of

Default.

“Default Rate” means, for anyRevolving Loan (including,to the extent permitted by law, interest

not paid when due), two percentplus the interest rate otherwiseapplicable thereto, or in the caseof the

Letter of Credit fee, two percent abovethe per annum rate otherwiseapplicable thereto.

“Default Right” has the meaningassigned to that term in, and shallbe interpreted in accordance

with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“Dollars” or “$” means United Statesdollars.

“EBITDA” means, with respect to anyfiscal period and with respectto any Person and its

Subsidiaries determined, ineach case, on a consolidated basisin accordance with GAAP, (a) the

consolidated net income (orloss), for such period, minus(b) without duplication, thesum of the

following amounts for suchperiod to the extent includedin determining consolidatednet income (or loss)

for such period: (i) unusualor non-recurring gains and (ii)interest income, plus (c) without duplication,

the sum of the following amountsfor such period to the extentdeducted in determiningconsolidated net

income (or loss) for such period:(i) non-cash unusual or non-cashnon-recurring losses, (ii) Interest

Expense, (iii) income taxes, and (iv)depreciation and amortization.

“Eligible Credit Card Receivables”has the meaning set forthin Schedule 1.1(a).

“EligibleInventory” has the meaningset forth in Schedule 1.1(b).

“EquityInterests” means, with respectto a Person, all of the shares,options, warrants, interests,

participations, or other equivalents(regardless of how designated)of or in such Person, whethervoting or

nonvoting, including capital stockor partnership, limited liabilitycompany or other equity ownershipor

profit interests or units, preferredstock, or any other “equity security”(as such term is defined in Rule

3a11-1 of the General Rules and Regulationspromulgated by the SECunder the Securities ExchangeAct

of 1934).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as

successor statute thereto.

 

 

 

 

 

 

employed by the same employeras the employees of anyLoan Party or its Subsidiaries underIRC

Section 414(b), (b) any tradeor business subject to ERISAwhose employees are treated asemployed by

the same employer as the employeesof any Loan Party or its Subsidiariesunder IRC Section 414(c),(c)

solely for purposes of Section 302of ERISA and Section 412 ofthe IRC, any organization subjectto

ERISA that is a memberof an affiliated service group ofwhich any Loan Party or anyof its Subsidiaries

is a member under IRCSection 414(m), or (d) solelyfor purposes of Section 302of ERISA and Section

412 of the IRC, any Personsubject to ERISA that is a partyto an arrangement withany Loan Party or any

of its Subsidiaries and whose employeesare aggregated with the employeesof such Loan Party or its

Subsidiaries under IRCSection 414(o).

“Event of Default” has the meaningset forth in Section 8.1.

“Excess Availability” means, as of anydate of determination, the amount,as determined by

Lender, equal to: (a) the lesser of: (i) the BorrowingBase and (ii) the MaximumCredit, minus, without

duplication, (b) the amountof Revolving Loans and Letter ofCredit Usage.

“Excluded Deposit Account”has the meaning set forthin the Security Agreement.

“Excluded Property” has the meaningset forth in the Security Agreement.

“Excluded Subsidiary” means:

Date);

(a)

anImmaterial Subsidiary (otherthan a Subsidiary that is a LoanParty on or about the Closing

(b)

a Subsidiary of Parent to the extentsuch Subsidiary has beenformed for the sole purposeof

entering into a joint venturewith one or more third partiesto the extent, after engagingin good faith

negotiations with such thirdparties, a guarantee would not be permittedby the terms of such Subsidiary’s

Governing Documents as ineffect on the Closing Date or the datethe applicable person becomesa direct

or indirect Subsidiary of Parent;

(c)

a Subsidiary of Parent that is prohibitedby applicable law, rule or regulation or by any

contractual obligation witha third party (with respect toany such contractual obligations,only to the

extent existing on the ClosingDate or the date the applicable personbecomes a direct or indirect

subsidiary of Parent and notcreated or entered into in contemplationof the Credit Facility) from

guaranteeing the Credit Facilityor which would require governmental(including regulatory) consent,

approval, license or authorizationto provide a guarantee (unlesssuch consent, approval,license or

authorization has been received),including the guaranteeby any Loan Party of ExcludedSwap

Obligations;

(d)

any Subsidiary with respectto which the guarantee therefrom wouldreasonably be expected

to result in a material adversetax consequence to Parent andits Subsidiaries (as determinedby the Parent

in good faith and in consultationwith Lender);

(e)

any Foreign Subsidiary;

(f)

any Subsidiary that owns anyportion of the Fort Mill Land solong as such Subsidiary does

not directly or indirectly ownany assets consisting of the typesof assets at any timeincluded in the

Borrowing Base, any typeof Intellectual Property or Equity Interests(other than Equity Interests of

another Subsidiary that constitutes an Excluded Subsidiary under this clause (f) because it owns any portion of the Fort Mill Land and does not directly or indirectly own any assets consisting of the types of

 

 

 

 

 

 

 

assets at any time included in the BorrowingBase, any type of Intellectual Propertyor Equity Interests,

other than Equity Interestsof such an Excluded Subsidiary);

(g)

any Subsidiary that only providesemployee services, actsas employer to the employeesof

any Loan Party or its Subsidiaries, orfor other employmentrelated functions, consistent withand

substantially the same as suchservices and functions performedby Cato Employee Services

Management, LLC and CatoEmployee Services, L.P. as of the date hereof, so longas such Subsidiary

does not directly or indirectlyown any other assets or haveany other operations or business andso long

as books and records relatingto employees are availabledirectly from AdministrativeBorroweror

another Loan Party.

Notwithstanding the foregoing,no Subsidiary will be an “ExcludedSubsidiary” hereunder if such

Subsidiary guarantees or isotherwise liable in respect of anyMaterial Indebtedness.Upon any Subsidiary

ceasing to be an Excluded Subsidiary, such Subsidiaryshall comply with Section 5.11, to the extent

applicable.As of the Closing Date, theSubsidiaries of Parent listedon Schedule 1.1(c) are

Excluded Subsidiaries.

“Excluded Swap Obligation” means,with respect to any Loan Party, any Swap Obligationif, and to

the extent that, all or a portionof the guaranty of such Loan Partyof, or the grant by such Loan Partyof a

security interest to secure, such SwapObligation (or anyguaranty thereof) is or becomesillegal under the

Commodity ExchangeAct (7 U.S.C. § 1 et seq.), and anysuccessor statute or any rule,regulation or order

of the Commodity FuturesTrading Commission (or the application orofficial interpretation of any thereof)

due to such Loan Party’s failure for any reasonto constitute an “eligible contract participant”as defined in

the Commodity ExchangeAct (7 U.S.C. § 1 et seq.), andany successor statute and theregulations

thereunder at the time the guarantyof such Loan Party or the grantof such security interest becomes

effective with respect to such SwapObligation.If a Swap Obligation arisesunder a master agreement

governing more than one swap, suchexclusion shall applyonly to the portion of suchSwap Obligation that

is attributable to swaps forwhich such guaranty or securityinterest is or becomes illegal.

“Existing Letter of Credit” meansthe Irrevocable StandbyLetter of Credit no. IS000516587U, dated

February 13, 2025, issued byLender payable to American AlternativeInsurance Corporation forthe

account of Parent in the amountof $3,000,000.

“Federal Funds Rate” means,for any period, a fluctuatinginterest rate per annum equal to, for

each day during such period, the weightedaverage of the rates on overnightFederal funds transactions

with members of the Federal ReserveSystem, as published on thenext succeeding Business Dayby the

Federal Reserve Bank of NewYork, or,if such rate is not so publishedfor any day which is a Business

Day, the average of the quotations for such dayon such transactions received byLender from three

Federal funds brokers of recognizedstanding selected by it (and, ifany such rate is below zero,then the

rate determined pursuant to this definitionshall be deemed to be zero).

“Floor” means a rate of interest equalto 0.00%.

“Foreign Subsidiary” meansany Subsidiary of any LoanParty that is organized underthe laws of

any jurisdiction other thanthe United States, anystate thereof or the District of Columbia.

“Fort Mill Land” means the realproperty owned by Parent orany Subsidiary of Parent locatedin

York County,South Carolina, consistingof approximately 310 grossacres of land as of the ClosingDate.

“Funding Date” means the date on whicha Revolving Loan is made.

 

 

 

 

 

 

 

 

 

“FTZ” means a foreign tradezone or special purpose sub-zoneestablished by the U.S.

Department of CommerceForeign Trade Zone Board in accordance withthe Foreign Trade Zone Actof

1934.

“FTZ Fees” has the meaningset forth in the definition of “Reserves.”

“GAAP”means generally accepted accountingprinciples as in effect from timeto time in the

United States, consistentlyapplied.

“Governing Documents” means, withrespect to any Person, the certificateor articles of

incorporation, certificate offormation, by-laws, limitedliability company agreement, operatingagreement

or other organizational or governingdocuments of suchPerson.

“Governmental Authority”means the government of anynation or any political subdivision

thereof, whether at the national, state,territorial, provincial, county, municipal or anyother level, and any

agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising

executive, legislative, judicial,taxing, regulatory or administrativepowers or functions of, or pertaining

to, government (including anysupra-national bodies such asthe European Union or the EuropeanCentral

Bank).

“Guarantor” has the meaninggiven to such term in the introductoryparagraph hereof.

“Guaranty” means the Guaranty, dated of even dateherewith, by each Loan Partyin favor of

Lender and any other guaranteeof the Obligations at anytime executed and delivered by a Loan Partyin

favor of Lender.

“Hedge Agreement” means a “swapagreement” as that term is definedin Section 101(53B)(A) of

the Bankruptcy Code.

“Immaterial Subsidiary” means thoseSubsidiaries of Parent specifiedon Schedule 1.1(e) hereto

and each other Subsidiary ofParent that has been designatedby Administrative Borrowerin writing to

Lender as an “Immaterial Subsidiary”for purposes of this Agreementand the other Loan Documents,

provided, that, for purposesof this Agreement, at no timeshall (a) the assets of any Immaterial Subsidiary

as of the end of the most recentfiscal month for which financialstatements have been deliveredpursuant

to Section 5.1 hereof, equalor exceed 2.5% of the consolidatedtotal tangible assets of Parentand its

Subsidiaries (and in the eventthat the assets of any ImmaterialSubsidiary tested at any fiscalmonth end

exceed such amount, suchSubsidiary shall no longer be deemedto be an Immaterial Subsidiaryand

Administrative Borrowershall cause such Subsidiary to becomea Loan Party as set forth in Section5.12

hereof) or the total assets of all ImmaterialSubsidiaries, as of the endof the most recent fiscal monthfor

which financial statements havebeen delivered pursuant to Section 5.1 hereof,equal or exceed 5.0% of

the consolidated total tangible assetsof Parent and its Subsidiaries(and in the event that the total assetsof

all Immaterial Subsidiaries as testedat the end of any fiscal monthexceed such amount, Administrative

Borrowershall promptly designate one ormore Immaterial Subsidiariesto be a Loan Party as maybe

necessary such that the foregoing5.0% limit shall not be exceeded, such designatedSubsidiaries shall no

longer be deemed to be ImmaterialSubsidiaries and AdministrativeBorrower shall cause such designated

Subsidiary or Subsidiaries,as the case may be, to becomea Loan Party as set forth in Section 5.12

hereof), or (b) the EBITDA of anyImmaterial Subsidiary for any12 consecutive fiscal month period

equals or exceeds 2.5% of theEBITDA of Parent and its Subsidiaries forsuch period (and in the event

that the EBITDA of any ImmaterialSubsidiary for any 12 consecutivefiscal month period exceeds such

amount, such Subsidiary shall no longer be deemedto be an Immaterial Subsidiaryand Administrative

Borrower shall cause such Subsidiary to become a Loan Party as set forth in Section 5.12 hereof) or the EBITDA of all Immaterial Subsidiaries for any 12 consecutive fiscal month period equals or exceeds

 

 

 

5.0% of the EBITDA of Parentand its Subsidiaries forsuch period, in each case asdetermined in

accordance with GAAP (and inthe event that the EBITDAof all Immaterial Subsidiaries forany 12

consecutive fiscal month period exceedssuch amounts, AdministrativeBorrowershall promptly designate

one or more Immaterial Subsidiariesto be a Loan Partyas may be necessary such that the foregoing5.0%

limit shall not be exceeded, such designatedSubsidiaries shall no longer be deemedto be Immaterial

Subsidiaries and AdministrativeBorrower shall cause such designatedSubsidiary or Subsidiaries,as the

case may be, to become a Loan Partyas set forth in Section 5.12 hereof); provided,that, no Loan Party

shall at any time be deemedto be an Immaterial Subsidiary; provided,further, that, Administrative

Borrowermay re-designate Subsidiariesas Immaterial Subsidiaries solong as in compliance with the

foregoing.

“Increase Effective Date” hasthe meaning set forth in Section2.13.

“Indebtedness” as to any Person means(a) all obligations of such Personfor borrowed money, (b)

all obligations of such Personevidenced by bonds, debentures,notes, or other similar instrumentsand all

reimbursement or other obligationsin respect of lettersof credit, bankers acceptances,or other financial

products, (c) all obligationsof such Person as a lesseeunder Capital Leases, (d) all obligationsor

liabilities of others securedby a Lien on any asset of suchPerson, irrespective of whethersuch obligation

or liability is assumed, (e) all obligationsof such Person to pay thedeferred purchase price ofassets

(other than (i) trade payables incurredin the ordinary course of businessand repayable in accordancewith

customary trade practices and (ii) royaltypayments payable in the ordinarycourse of business in respect

of non-exclusive licenses),(f) all monetary obligationsof such Person owing underHedge Agreements

(which amount shall be calculatedbased on the amount that wouldbe payable by such Personif the

Hedge Agreement were terminatedon the date of determination),and (g) any obligation ofsuch Person

guaranteeing or intended toguarantee (whether directlyor indirectly guaranteed, endorsed,co-made,

discounted, or sold with recourse)any obligation of anyother Person that constitutes Indebtednessunder

any of clauses (a) through(f) above.For purposes of this definition,(i) the amount of any Indebtedness

represented by a guarantyor other similar instrument shall bethe lesser of the principal amountof the

obligations guaranteed and still outstandingand the maximum amountfor which the guaranteeingPerson

may be liable pursuant to the termsof the instrument embodyingsuch Indebtedness, and (ii) the amount

of any Indebtedness which is limitedor is non-recourse to a Personor for which recourse islimited to an

identified asset shall be valued atthe lesser of (A) if applicable,the limited amount of such obligations,

and (B) if applicable, the fair marketvalue of such assets securingsuch obligation.

“Indemnified Taxes” means all present or future taxes,levies, imposts, duties, deductions,

withholdings (including backupwithholding), assessments, fees or other charges imposedby any

Governmental Authority, including any interest, additionsto tax or penalties applicable thereto,other than

Excluded Taxes, imposed on or with respect to anypayment made by or on accountof any obligation of

Borrowers under any Loan Document.For purposes hereof, “ExcludedTaxes” means taxes imposed on

or with respect to Lender measuredby net income (howeverdenominated), franchise taxes,and branch

profits taxes, in each case, (i)imposed as a result of Lenderbeing organized under the lawsof, or having

its principal office located in the jurisdictionimposing such tax (or anypolitical subdivision thereof)or

(ii) that are taxes imposed asa result of a present or formerconnection between Lender and the

jurisdiction imposing such tax,(b) U.S. federalwithholding taxes imposed onamounts payable to or for

the account of Lender withrespect to an applicable interestin a Loan or Commitment pursuantto a law in

effect on the date on which (i) Lender hasacquired such interest in the Loanor Commitment (other than

pursuant to an assignment requestby Administrative Borrower)or (ii) Lender changes its lendingoffice,

and (c) any U.S. federal withholdingtaxes imposed under Sections1471 through 1474 of the Internal

Revenue Code, as of the date ofthis Agreement (or anyamended or successor version thatis

substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section

 

 

 

 

 

 

 

1471(b)(1) of the Internal RevenueCode.

“Insolvency Proceeding” means anyproceeding commenced byor against any Person under any

provision of the BankruptcyCode or under any other Federal or Statebankruptcy or insolvencylaw,

assignments for the benefit of creditors,formal or informal moratoria, compositions,extensions generally

with creditors, or proceedingsseeking reorganization, arrangement,or other similar relief.

“Intellectual Property” means all presentand future:(a) trade secrets, know-howand other

proprietary information; (b)trademarks, trademarkapplications, internet domain names,service marks,

trade dress, trade names, businessnames, designs, logos,slogans (and all translations,adaptations,

derivations and combinationsof the foregoing) indiciaand other source and/or businessidentifiers, and

all registrations or applications forregistrations which have heretoforebeen or may hereafter be issued

thereon throughout the world; (c)copyrights and copyrightapplications; (including copyrightsfor

computer programs); (d) unpatentedinventions (whether or notpatentable), patents and patent

applications; (e) industrialdesign applications and registeredindustrial designs; (f) books,customer lists,

records, writings, computertapes or disks, flow diagrams,specification sheets, computer software,source

codes, object codes, executable code,data and databases; (g) all other intellectualproperty; and (h) all

common law and other rightsthroughout the world inand to all of the foregoing.

“IntercompanySubordinationAgreement”meanstheintercompanysubordinationagreement,

dated as ofeven date with this Agreement, executed anddelivered by each Loan Party andeach of its

Subsidiaries, and Lender, the form and substanceof which is reasonably satisfactoryto Lender.

“Interest Expense” means, forany period, the aggregateof the interest expense of aPerson and its

Subsidiaries for such period,determined on a consolidatedbasis in accordance with GAA

P.

“Interest Payment Date” means,(a) as to any SOFR Loan, thelast day of each Interest Period

applicable to such SOFR Loanand the Maturity Date; provided,that, if any Interest Period for a SOFR

Loan exceeds three months,the respective dates that areevery three months afterthe beginning of such

Interest Period shall also be InterestPayment Dates; and (b)as to any Base Rate Loan, thefirst day after

the end of each month andthe Maturity Date.

“Interest Period” means, as to anySOFR Loan, the period commencingon the date such SOFR

Loan is disbursed or convertedto or continued as a SOFRLoan and ending one, three or sixmonths

thereafter, as selected by the AdministrativeBorrower in its SOFR Loan Notice;provided that: (a) interest

shall accrue at the applicablerate based upon Adjusted Term SOFR, fromand including the first day of

each Interest Period to, butexcluding, the day on whichany Interest Period expires; (b) anyInterest

Period that would otherwiseend on a day that is not aBusiness Day shall be extended to thenext

succeeding Business Day unless suchBusiness Day falls in anothercalendar month, in whichcase such

Interest Period shall end onthe next preceding BusinessDay; (c) any Interest Period thatbegins on the

last Business Day of a calendar month(or on a day for which thereis no numerically correspondingday

in the calendar month at theend of such Interest Period) shallend on the last Business Dayof the calendar

month that is one, three or six monthsafter the date on which the InterestPeriod began, as applicable;(d)

no Interest Period shall extendbeyond the Maturity Date; and(e) no tenor that has been removedfrom

this definition pursuant to the termsof Schedule 2.7 shall be availablefor specification in any SOFRLoan

Notice or conversion or continuation notice. For purposeshereof, the date of aRevolving Loan initially

shall be the date onwhich such Revolving Loan is made and thereafter shall be the effectivedate of the

most recent conversion or continuationof such RevolvingLoan.

“Inventory Fees” has the meaningset forth in the definition of“Reserves.”

 

“Investment” means, with respectto any Person, any investmentby such Person in any other

Person (including Affiliates) in theform of loans, guarantees, advances,capital contributions (excluding

(a) commission, travel, andsimilar advances to officers and employeesof such Person made inthe

ordinary course of business,and (b) bona fide accountsreceivable arising in the ordinarycourse of

business), or acquisitions of Indebtedness,Equity Interests, or all orsubstantially all of the assetsof such

other Person (or of any divisionor business line of suchother Person), and any otheritems that are or

would be classified as investmentson a balance sheet preparedin accordance with GAA

P.

The amount of

any Investment shall be theoriginal cost of such Investmentplus the cost of all additions thereto, without

any adjustment for increases or decreases in value, or write-ups, write-downs, or write-offs with respect to means the Investment Policy attached hereto as Schedule 1.1(f) - Investment

such Investment.

Policy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“

n

v

es

t

m

ent

Polic

y

’’

“IRC” means the Internal RevenueCode of 1986, as in effect fromtime to time.

“John Cato” means John P. Derham Cato and any of his children andtrusts for their benefit.

“Joinder” means a joinder agreementsubstantially in the formof Exhibit C to this Agreement.

“Landlord Lien State” meansa State(s) in which a claimfor rent or other amounts at any time

owing to a landlord, owner, lessor or sublessorof Real Property (includingany Store) may be pari passu

or have priority over the Lienof Lender in any of the Collateral.

“Lender” has the meaning set forthin the preamble to this Agreement.

“Lender Expenses” has themeaning set forth in Section 5.12.

“Lender Payment Account”means such account of Lenderas Lender may fromtime to time

designate in writing to theAdministrative Borroweras the Lender PaymentAccount for purposes of the

Loan Documents.

“Letter of Credit” has the meaningset forth in Section 2.3.

“Letter of Credit Usage” means,as of any date, the sumof (a) the aggregate undrawnamount of all

outstanding Letters of Credit,and (b) the aggregateamount of outstanding reimbursementobligations

with respect to Letters of Creditwhich remain unreimbursedor which have not beenpaid through a

Revolving Loan.

“Lien” means any mortgage, deedof trust, pledge, hypothecation,assignment, charge, deposit

arrangement, encumbrance,easement, lien (statutory orother), security interest, or othersecurity

arrangement and any otherpreference, priority, or preferential arrangementof any kind or nature

whatsoever, including any conditional salecontract or other title retentionagreement, the interest of a

lessor under a Capital Lease and anysynthetic or other financinglease having substantially thesame

economic effect as any of the foregoing.

“Loan Account” has the meaningset forth in Section 2.4(e).

“Loan Cap” means, at any time, the lesser of (a) the Borrowing Base at such time and (b) the “Loan Documents” means this Agreement, the Control Agreements, each Borrowing Base

Maximum Credit.

 

 

 

 

 

 

 

 

 

Certificate, each Security Document,each Guaranty, the DDA Notifications, the Credit Card

Notifications, any note or notes executedby a Borrower in connectionwith this Agreementand payable

to Lender, any subordination agreement,and any other instrument or agreemententered into, now or in

the future, by any Loan Partyin connection with this Agreement(but specifically excluding agreements

for Bank Products).

“Loan Party” means any Borrower orany Guarantor.

“Loan Party Group” means (a) each LoanParty, (b) any Affiliate or Subsidiary of anyLoan

Party, (c) any guarantor of the Obligations, (d)the owner of any collateral securingany part of the

Obligations, and (e) any officer, or director actingon behalf of any of the partiesreferred to in items (a)

through (d) with respect to theCredit Facility.

“Margin Stock” as defined in RegulationU of the Board of Governorsof the Federal Reserve

System as in effect from timeto time.

“Material Adverse Effect” means(a) a material adverse effect in the business,operations, results of

operations, assets, liabilities orfinancial condition of theLoan Parties, taken as a whole,(b) a material

impairment of the ability ofLoan Parties to perform their obligationsunder the Loan Documentsto which

they are a party or of Lender’s abilityto enforce the Obligations orrealize upon the Collateral (otherthan

as a result of an action takenor not taken that is solely in thecontrol of Lender), or(c) a material

impairment of the enforceabilityor priority of the Liens of Lenderwith respect to all or a material portion

of the Collateral.

“Material Contract” means those materialdefinitive agreements disclosedor required to be

disclosed by the Parent pursuantto the rules and regulations ofthe Securities and Exchange Commission.

“MaterialIndebtedness” means Indebtedness(other than the RevolvingLoans) of a Loan Party in

an aggregate principal amountexceeding $5,000,000.For purposes of determiningMaterial

Indebtedness, the “principalamount” of the obligationsof a Loan Party in respect of anyHedge

Agreement at any time shall bethe maximum aggregate amount(giving effect to any netting agreements)

that a Loan Party would berequired to pay if such HedgeAgreement were terminated at suchtime.

“MaterialIntellectual Property” means(a) any Intellectual Property thatis material to the business

of the Loan Parties and (b)any Intellectual Property that is affixedto or incorporated or embeddedin any

inventory or other productmarketed, sold, licensed, ordistributed by a Loan Party or otherwisematerial in

connection with the enforcementof any rights or remedies of Lenderwith respect to the Collateral(other

than off-the-shelf, shrink-wrappedor “click to accept” software licensesor other licenses to generally

commercially available software).

“Maturity Date” means March 13,2028.

2.13.

 

 

 

“

Ma

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i

m

u

m

Credit

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$35,0

0

0,0

0

0, as

such

a

m

ount

m

ay

be inc

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as

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ided

in S

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ction

“Net Recovery Percentage” means,as of any date of determination, thefraction, expressed as a

percentage (a) the numerator of whichis the amount equal to the estimatedrecovery on the aggregate

amount of the applicable categoryof eligible inventory at such timebased on the appraised net orderly

liquidation value (on the basiscustomarily used for retailers), netof costs and expenses to beincurred in

connection with any such liquidation, as set forth in the most recent acceptable inventory appraisal received by Lender in accordance with the requirements of the Loan Documents, and (b) the denominator

 

 

 

 

 

 

of which is the estimated cost ofthe aggregate amountof the eligible inventorysubject to such appraisal.

“Obligations” means (a) all loans(including the RevolvingLoans), debts, principal, interest

(including any interest that accruesafter the commencementof an Insolvency Proceeding, regardlessof

whether allowedor allowable in whole or in partas a claim in any such InsolvencyProceeding),

premiums, liabilities (includingall amounts charged to anyLoan Account), obligations (including

reimbursement and indemnificationobligations with respectto Letters of Credit whether ornot

contingent), fees, expenses(and any fees or expenses that accrueafter the commencementof an

Insolvency Proceeding, regardlessof whether allowed or allowablein whole or in part as a claimin any

such Insolvency Proceeding),guaranties, and all covenants andduties of any other kindand description

owing by any Loan Party arisingout of, under, pursuant to, in connectionwith, or evidenced by anyLoan

Document and whether or notfor the payment of money,whether direct or indirect, absolute or contingent,

due or to become due, nowexisting or hereafter arising, and includingall interest not paid when due, and

all other expenses or otheramounts that any Loan Partyis required to pay or reimburseby the Loan

Documents or by law or otherwisein connection with the Loan Documents,and (b) all Bank Product

Obligations, provided, that,notwithstanding anythingto the contrary contained herein,the Obligations

shall exclude any Excluded SwapObligation.Without limiting the generality of the foregoing,the

Obligations include the obligationto pay (i) the principal ofthe Revolving Loans, (ii) interestaccrued on

the Revolving Loans, (iii) theamount necessary to reimburseLender for amounts paid or payablepursuant

to Letters of Credit, (iv) Letterof Credit commissions,fees (including frontingfees) and charges, (v)

Lender Expenses, (vi)fees payable under any Loan Document,and (vii) indemnities and

other amounts payable by anyLoan Party under any Loan Document.Any reference in this Agreementor

in the Loan Documents to the Obligationsshall includeall or any portion thereof andany extensions,

modifications, renewals, oralterations of the Obligations, bothprior and subsequent to any Insolvency

Proceeding.

“OFAC” means The Office of Foreign Assets Controlof the U.S. Department of the Treasury.

“Patriot Act” means the Unitingand Strengthening America byProviding AppropriateTools

Required to Intercept and ObstructTerrorism (USA Patriot Act of 2001, as amended).

“Payment Conditions” means, atthe time of determination withrespect to any specified

transaction or payment, thefollowing:

(a)

as of the date of any such transactionor payment, and after givingeffect thereto, no Default

or Event of Default shall exist;

(b)

as of the date of any such transactionor payment, and after givingeffectthereto, (i) there are

no Revolving Loans outstanding(provided, that, there maybe outstanding undrawn amountsunder

Letters of Credit) and (ii) the Loan Partieshave unrestricted cashof greater than $20,000,000;

(c)

Lender shall have receivednot less than three Business Days’prior written notice of the

proposed payment or transaction(or such shorter periodas determined by Lender),including (i) the

estimated date and amountof the payment and (ii) a reasonablydetailed description of thetransaction or

event giving rise to such payment;and

(d)

Lender shall have receiveda certificate of an Authorized Personof the Administrative

Borrowercertifying as to compliance withthe preceding clauses and demonstrating(in reasonable detail)

the calculations required thereby.

 

 

 

“Perfection Certificate” means the PerfectionCertificate, dated of evendate herewith, executed

by the Loan Parties.

“Permitted Acquisition” meansany Acquisition, provided,that, as to any such Acquisition,each

of the following conditionsis satisfied:

(a)

as of the date of such Acquisitionand after giving effect thereto,except as the parties may

otherwise agree, each of thePayment Conditions is satisfied;

(b)

the board of directors (or othercomparable governing body)of the person to be acquired shall

have duly approved such acquisitionand such person shallnot have announced that it willoppose such

Acquisition or shall not havecommenced any action whichalleges that such acquisition willviolate

applicable law;

(c)

the purchase considerationpayable in respect of all PermittedAcquisitions (includingthe

proposed Acquisition andincluding deferred paymentobligations) shall not exceed $75,000,000in the

aggregate in any fiscal yearand such consideration inany single transaction or in a seriesof related

transactions shall not exceed $50,000,000;

(d)

Administrative Borrowershall have furnished Lendernot less than 10 Business Daysprior to

the consummation of anyAcquisition where the considerationexceeds $10,000,000, (i) a current draftof

the acquisition documents orif a draft is not available, promptlyat such time as it is available (andfinal

copies thereof as and whenexecuted), (ii) a summaryof any due diligence undertakenby the Loan Parties

in connection with such Acquisition,(iii) appropriate financialstatements of the Person whichis the

subject of such Acquisition, and pro formaprojected financial statements forthe twelve (12) month

period following suchAcquisition after giving effectto suchAcquisition (including balance sheets, cash

flows and income statements by month for theacquired Person, individually, and on aconsolidated basis

with all Loan Parties), and such otherinformation as Lender mayreasonably request;

(e)

the assets being acquired orthe Person whose Equity Interests are beingacquired did not

have negative EBITDA duringthe 12 consecutive month period mostrecently ended prior to the dateof

the proposed Acquisition for whichfinancial statements are thenavailable;

(f)

the assets being acquired, orthe Person whose Equity Interests are beingacquired, are useful

in or engaged in, as applicable,the business of the Loan Parties ora business reasonably relatedthereto;

(g)

the assets being acquired are locatedwithin the United States,or the Person whose Equity

Interests are being acquiredis organized in a jurisdiction locatedwithin the United Statesor if the assets

are not located within the UnitedStates, or the Personwhose Equity interests are beingacquired is

organized in a jurisdiction outside ofthe United States, the purchaseconsideration payablein respect of

such Permitted Acquisition(including deferred paymentobligations) shall not exceed$3,000,000 in the

aggregate in any fiscal year;and

(h)

the subject assets or EquityInterests, as applicable, arebeing acquired directly bya Borrower

or other Loan Party, and, in connection therewith, theapplicable Loan Party shallhave complied with

Section 5.11 or 5.12, as applicable, and,in the case of an acquisition ofEquity Interests, the Personwhose

Equity Interests are acquired shallbecome a Loan Party, unless such Person isan Excluded Subsidiary.

“Permitted Discretion” meansa determination made inthe exercise of reasonable (fromthe

perspective of a secured asset-basedlender) business judgment.

 

“Permitted Dispositions” meanseach of the following:

(a)

sales of inventory to buyersin the ordinary course of business;

(b)

the sale, exchange or other dispositionof cash, cash equivalents and otherInvestments, to the

extent not prohibited by theterms of any Loan Document;

(c)

sales, abandonment, or otherdispositions of equipment that issubstantially worn, damaged,

or obsolete or no longer used oruseful in the ordinary course of business and leases or subleases of Real

Property not useful in the conductof the business of a Loan Party;

(d)

the licensing, on a non-exclusivebasis, of patents, trademarks,copyrights, and other

intellectual property rights inthe ordinary course of business;

(e)

the granting of Permitted Liens;

(f)

the sale or discount, in eachcase without recourse, of accountsreceivable (other than Credit

Card Receivables) arisingin the ordinary course of business,but only in connection withthe compromise

or collection thereof;

(g)

any involuntary loss, damageor destruction of property;

(h)

any involuntary condemnation,seizure or taking, byexercise of the power of eminentdomain

or otherwise, or confiscationor requisition of use of property;

(i)

the making of Restricted Paymentsthat are expressly permitted tobe made pursuant to this

Agreement;

(j)

the making of Permitted Investments;

(k)

the lapse, abandonment or other dispositionof patents, trademarks,copyrights, and other

intellectual property rights that arenot material and are no longerused or useful in any materialrespect in

the business of a Loan Partyand do not appear on and are not otherwiseaffixed to or incorporated in any

inventory or necessary in connectionwith the books and recordsof a Loan Party or do not haveany

material value;

(l)

bulk sales or other Dispositionsof the inventory of a LoanParty not in the ordinarycourse of

business in connection with Storeclosings, at arm’s length, provided,that, such Store closures andrelated

inventory dispositions shallnot exceed in any fiscal year of Parentand its Subsidiaries or in any12

consecutive fiscal month period, 15%of the number of the Loan Parties’Stores as of the beginningof

such fiscal year or such 12consecutive fiscal month period (in eachcase net of new Store openings)unless

within 30 days prior to suchsale, upon Lender’s request, it shallhave received a then currentappraisal of

the Inventory by an appraiser, and in scopeand methodologyacceptable to Lender, with respect to the

Inventory giving effect to such Storeclosings, at the expense ofBorrowers (and whichappraisal shall not

be considered in the limitationon the number of appraisalsprovided for in Section 5.7

hereof); provided, that, (A)all sales of Inventory in connectionwith Store closingsin any fiscal year or 12

consecutive fiscal month period that exceed15% of the number of theLoan Parties’ Stores as of the

beginning of such fiscal yearor such 12 consecutive fiscal monthperiod, as applicable (ineach case net

of new Store openings) shallbe in accordance with liquidationagreements and with professional

liquidators reasonably acceptableto Lender, (B) all net proceeds received in connectiontherewith are

applied to the Obligations and (C) in no event shall the number of Stores subject to such closures exceed in the aggregate from and after the Closing Date, 25% of the number of Stores of Loan Parties in

 

 

 

 

 

existence as of the Closing Date(net of new Store openings);

(m)

sales or other dispositions of assetsof a Loan Party not otherwisedescribed in the provisions

set forth in this definition, provided,that, as to any such sale or otherdisposition, each of the following

conditions is satisfied: (i) as of the dateof such sale or other disposition,and after giving effect thereto,

no Event of Default exists, (ii) eachsuch sale is an arms’ lengthtransaction and the applicable LoanParty

receives at least the fair marketvalue of the assets disposedof, (iii) the considerationreceived by the

applicable Loan Party consists of atleast 75% cash and is paidat the time of the consummationof the

transaction, (iv) the aggregate fair marketvalue of all assets disposedof in reliance on this clause(m)

during any fiscal year of Parentshall not exceed 10% of the totalassets of Parent and

its consolidated Subsidiaries, determinedon a consolidated basis, asset forth or reflected on the

most recent consolidated balancesheet of Parent and itsconsolidated Subsidiaries,at the end of the most

recent fiscal year of Parentimmediately preceding such fiscal year, (v)such transaction does not involve

the sale or other dispositionof any Credit Card Receivables,inventory, Material Intellectual Property or

Equity Interests, and (vi) the cashproceeds from any such sale orother disposition (net onlyof reasonable

and customary direct costsrelated thereto and amountsrequired to be applied to anyPermitted

Indebtedness secured by suchassets as a result of suchsale or other disposition) shall be paidto Lender

for application to the Obligations;and

(n)

Sale-Leaseback Transactions.

“PermittedIndebtedness” means:

(a)

the Obligations;

(b)

Indebtedness as of the ClosingDate set forth on Schedule 6.1;

(c)

Indebtedness (includingunder any Capital Lease) arisingafter the Closing Date to the extent

secured by Liens on equipmentor Real Property acquired after the ClosingDate in an aggregate

outstanding principal amount notto exceed $15,000,000at any time; provided, that, (i) suchLiens do not

apply to any property of a LoanParty other than specific itemsof equipment or Real Property, (ii) the

Indebtedness secured therebydoes not exceed the cost of the applicableequipment or Real Property, as

the case may be and (iii) asof the date any such Indebtednessis incurred and after givingeffect thereto,

no Event of Default shall exist;

(d)

Indebtedness arising in connectionwith the endorsementof instruments or other payment

items for deposit and unsecured Indebtednessincurred in respect of nettingservices, overdraft protection,

and other like services, in eachcase, incurred in the ordinarycourse of business;

(e)

Indebtedness of a Loan Partyin respect of bid, paymentand performance bonds, workers

’

compensation claims, unemploymentinsurance, health, disability and otheremployee benefits or

property, casualty or liability insurance, or guaranteesof the foregoing types ofIndebtedness, in the

ordinary course of businessand consistent with currentpractices as of the ClosingDate;

(f)

the incurrence by any Loan Partyof Indebtedness under HedgeAgreements that is incurred

for the bona fide purpose of hedgingthe interest rate, commodity, or foreign currencyrisks associated

with such Loan Party’s operations and not for speculative purposes; Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card

 

 

 

 

(g)

processing services, debit cards,stored value cards, commercialcards (including so-called “purchase

cards”, “procurement cards”or “p-cards”), or any cashmanagement or related services;

(h)

Subordinated Indebtedness; provided,that, the aggregate principal amountof such

Indebtedness shall not exceed $10,000,000outstanding at any time;

(i)

contingent liabilities under suretybonds or similar instruments incurredin the ordinary

course of business in connectionwith the constructionor improvement of Stores;

(j)

unsecured Indebtedness arisingpursuant to Permitted IntercompanyAdvances;

(k)

Indebtedness of a Person whoseassets or Equity Interests are acquired bya Loan Party in a

Permitted Acquisition; provided,that, such Indebtedness (i) is eitherpurchase money Indebtednessor a

Capital Lease with respect to Equipmentor mortgage financingwith respect to Real Property, (ii) was in

existence prior to the date of suchPermitted Acquisition,and (iii) was not incurredin connection with, or

in contemplation of, such PermittedAcquisition; and

(l)

unsecured Indebtedness incurredafter the Closing Dateand not otherwise specifically

described in this definitionand guarantees of other Indebtednessconstituting Permitted Indebtednessso

long as each of the followingconditions is satisfied: (i) anysuch Indebtedness in excess of $5,000,000

shall have a maturity date thatis at least 91 days after the MaturityDate, and (ii) the aggregateprincipal

amount of all such Indebtednessoutstanding at any time shall notexceed $25,000,000.

“PermittedIntercompany Advances” meansloans made by (a) a Loan Partyto another Loan Party,

(b) a Subsidiary of a Loan Party that is nota Loan Party to another Subsidiaryof a Loan Party that is not a

Loan Party, (c) a Loan Party to a Foreign Subsidiaryformed or acquired after the ClosingDate, provided,

that, the aggregate amountof all such loans, together with PermittedInvestments under clause(r) of the

definition of such term,shall not exceed $5,000,000 at anytime outstanding, and (d) a Subsidiaryof a

Loan Party that is not a LoanParty to a Loan Party, so long as the parties theretoare party to the

Intercompany SubordinationAgreement.

“PermittedInvestments” means eachof the following:

(a)

cash and Investments made inaccordance with the InvestmentPolicy, as such Investment

Policy may be amended ormodified from time to time in AdministrativeBorrower’s commercially

reasonable judgment and uponnotice to Lender, provided, that, on and aftera Default or Event of Default

exists and is continuing ora Cash Dominion Event existsand is continuing, Loan Partiesshall not

withdraw any funds fromany securities account without the consent ofLender or take any otheractions

with respect to such securitiesaccounts except with the consent ofLender;

(b)

Investments in negotiable instrumentsdeposited or to be depositedfor collection in the

(c)

advances made in connectionwith purchases of goodsor services in the ordinarycourse of

business;

(d)

Investments received in settlement of amounts due toany Loan Party effected inthe ordinary

course of business or owing to any LoanParty as a result ofInsolvency Proceedings involving an account

debtor or upon the foreclosure orenforcement of any Lien in favorof a Loan Party;

(e)

Investments owned by anyLoan Party on the ClosingDate and set forth on Schedule 6.9;

(f)

Equity Interests or other securitiesacquired in connection with thesatisfaction or enforcement

of Indebtednessor claims due or owingto a Loan Party (in bankruptcyof customers or suppliers or

otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims; deposits of cash made in the ordinary course of business to secure performance of operating

leases;

 

 

(g)

(h)

loans and advances to employeesand officers of a Loan Partyin the ordinary course of

business for any business purposenot to exceed $500,000to any such employeeor officer, and in an

aggregate amount not to exceed$1,000,000 outstandingat any one time;

(i)

loans to officers, directors andemployees of a Loan Partyso that such officers, directors and

employees may acquire commonstock of Parent (so long as no cash isactually advanced by any Loan

Party in connection with suchloans);

(j)

Investments resulting fromBank Products permitted under clause(f) and clause (g) of the

definition of Permitted Indebtedness;

(k)

Investments consisting of realproperty and cash to payfor incidental expenses in connection

with the Fort Mill Land;

(l)

Permitted IntercompanyAdvances;

(m)

Permitted Acquisitions;

(n)

Investments (other than in respectof Permitted Acquisitions)made with cash after the

Closing Date by a Loan Partyin or to any Person not otherwisedescribed in the provisionsabove;

provided, that, (i) as of thedate of any such Investmentand after giving effect thereto, eachof the

Payment Conditions is satisfied,and (ii) the Investmentshall be in or to a Person that engagesin a line of

business substantially similarto, or ancillary or relatedto, or used in or useful to,the business that a Loan

Party is engaged in on the ClosingDate;

(o)

Investments by Cato West in Cedar Hill pursuantto the payment of the purchase price by

Cato West for the purchase of payment intangibles owedto Cedar Hill arising fromcharges by a customer

of a Loan Party on credit ordebit cards issued by Cedar Hillin connection with the sale of goodsby a

Loan Party, or services performed by a Loan Party, in each case in the ordinarycourse of its business;

(p)

credits issued by landlords or sellers of goods or services to aLoan Party or Subsidiary in

respect of amounts otherwise owing by such Loan Party or Subsidiary to such landlordor seller in the

(q)

Investments by Cato Land DevelopmentLLC so long as it is an ExcludedSubsidiary; and

(r)

Investments in the form ofcapital contributions bya Loan Party in, and the acquisitionby a

Loan Party of Equity Interests of,any Foreign Subsidiary, provided, that, the aggregateamount of all such

Investments, together withloans permitted under clause(c) of the definition of Permitted Intercompany

Advances, shall not exceed$5,000,000 at any time outstanding.

 

 

 

“Permitted Liens” means:

(a)

Liens granted to, or for the benefitof, Lender to secure the Obligations;

(b)

Liens for unpaid taxes, assessments,or other governmental chargesor levies that either (i) are

not yet past due, or (ii) do nothave priority over the Liensof Lender and the underlyingtaxes,

assessments, or charges or levies arebeing contested in goodfaith by appropriate proceedingsdiligently

pursued and available to aLoan Party, which proceedings (or orders enteredin connection with such

proceedings) have the effectof preventing the forfeitureor sale of the property subjectto any such Lien

and with respect to which adequatereserves have been set aside onits books in accordance with GAAP;

(c)

judgment Liens in connection with courtproceedings that do not constitute anEvent of

Default; provided, that, (i) suchLiens are being contestedin good faith by appropriate proceedings

diligently pursued and available to a LoanParty, in each case prior to the commencement of foreclosure

or other similar proceedings,which proceedings (or orders enteredin connection with such proceeding)

have the effect of preventing the forfeiture orsale of the property subjectto any such Lien, and (ii)

adequate reserves or other appropriateprovision, if any, as are required by GAAPhave been made

therefor;

(d)

Liens set forth on Schedule 6.2;

(e)

the interests of lessors underoperating leases and non-exclusivelicensors under license

agreements;

(f)

Liens on equipment and Real Propertyarising after the Closing Date tosecure Indebtedness

permitted under clause (c) ofthe definition of PermittedIndebtedness, whether such Indebtednessis

assumed or incurred by a LoanParty;

(g)

Liens arising by operation of lawin favor of warehousemen,landlords, carriers, mechanics,

materialmen, laborers, or suppliers,incurred in the ordinary courseof business and not in connectionwith

the borrowing of money, and which Liens either(i) are for sums not yet past due,or (ii) are being

contested in good faith byappropriate proceedings diligentlypursued and available to a Loan Party, in

each case prior to the commencementof foreclosure or other similar proceedings,which proceedings (or

orders entered in connectionwith such proceeding) havethe effect of preventing the forfeitureor sale of

the property subject to anysuch Lien and with respect to whichadequate reserves or other appropriate

provision, if any, as are required by GAAP havebeen made therefor;

(h)

Liens on cash deposited tosecure a Loan Party’s obligations in connectionwith worker’s

compensation or other unemployment insurance,or to secure obligations inconnection with the making

or entering into of bids, tenders,or leases in the ordinarycourse of business and not in connectionwith

the borrowing of moneyor Liens on cash deposited tosecure its reimbursement obligationswith respect

to surety or appeal bonds obtainedin the ordinary course of business;

(i)

with respect to any Real Property, easements,rights of way, and zoning restrictions that do

not materiallyinterfere with or impair the useor operation thereof;

(j)

non-exclusive licenses ofpatents, trademarks, copyrights,and other intellectual property

rights in the ordinary course of business;

(k)

Liens securing any obligationsand liabilities arisingunder or in connection withany cash

management arrangements entered into in the ordinary course of business prior to, on or after the date hereof, including, without limitation, any netting or set-off system for the calculation of interest with

 

 

 

 

 

 

respect to debit balances andcredit balances under such arrangements;provided that the assets subjectto

any such Lien shall be limited tothe assets held from timeto time at the financial institution providing

such cash management arrangements;

(l)

Liens in favor of customsand revenue authorities arisingas a matter of law to secure

payment of customs duties in connectionwith the importation of goods;

(m)

[reserved];

(n)

Liens arising in the ordinarycourse of business solely withrespect to cash, cash equivalents

and Investments permittedby clause (a) of the definitionof Permitted Investments in favorof a creditor

depositary institution solely byvirtue of any statutory or commonlaw provision relating to banker’s liens,

rights of set-off or similar rights andremedies as to deposit accounts orother funds maintained withsuch

creditor depository institution;

(o)

Liens assumed by anyLoan Party in connection witha Permitted Acquisitionthat secure

Indebtedness of a Person whose assetsor Equity Interests areacquired by a Loan Party in a Permitted

Acquisition which Indebtednessis permitted under clause (k)of the definition of Permitted Indebtedness;

(p)

Liens arising out of conditionalsale, title retention, consignmentor similar arrangements for

sale of goods entered into byany Loan Party in the ordinary courseof business to the extent such Liens

do not attach to any assets other thanthe goods subject to such arrangementsand are not intended as

security for financing transactions;and

(q)

Liens not described in subclauses(a) through (p) above that do notsecure Indebtedness for

borrowed money or lettersof credit, and as to which theaggregate amount of the obligationssecured

thereby does not exceed $2,500,000in the aggregate.

“Person” means natural persons,corporations, limitedliability companies, limited partnerships,

general partnerships, limitedliability partnerships, joint ventures,trusts, land trusts, business trusts,or

other organizations, irrespective of whetherthey are legal entities, and governmentsand agencies and

political subdivisions thereof.

“Projections” means forecastedbalance sheets, profit and lossstatements, and cashflow

statements with respect to the Loan Parties,all prepared on a basisconsistent with its historicalfinancial

statements, and projected amountsavailable under the BorrowingBase, together with appropriate

supporting details and a statementof underlying assumptions.

“QFC” has the meaning assignedto the term “qualified financialcontract” in, and shall be

interpreted in accordance with,12 U.S.C. § 5390(c)(8)(D).

“QFC Credit Support” has the meaningset forth in Section 11.7.

“Real Property” means any estatesor interests inreal property nowowned or hereafteracquired

by any Loan Partyand the improvements located thereonand all licenses, easements andappurtenances

relating thereto, wherever located.

“Reserves” means, as of anydate of determination, those reservesthat Lender deems necessaryor

appropriate, in its Permitted Discretionand subject to Section 2.1(b), toestablish and maintain, including

reserves with respect to (a) sums that any Loan Party is required to pay under any Loan Document (such as taxes, assessments, insurance premiums, freight, duties, tariffs, and fees or, in the case of leased assets,

 

rents or other amounts payableunder such leases) (all suchpayments, individuallyand collectively,

“Inventory Fees”) and has not yet paid,(b) all Inventory Fees in respectof Inventory located in an FTZ

which are required to be paid, orwhich Lender estimates will berequired to be paid, when such Inventory

arrives in, or leaves from, anFTZ and have not been paid(all such payments, individuallyand collectively,

“FTZ Fees”), (c) amounts owingby any Loan Party to any Personto the extent secured bya Lien on, or

trust over, any of the Collateral, which Lienor trust, in the Permitted Discretionof Lender likely would be

pari passu or have a prioritysuperior to Lender’s Liens (such as Liensor trusts in favor of landlords,

warehousemen, carriers, mechanics,materialmen, laborers, orsuppliers, or Liens or trustsfor

ad valorem, excise, sales, orother taxes where given priorityunder applicable law) in and to suchitem of

the Collateral, (d) amounts to theextent dilution calculatedby Lender in its Permitted Discretionexceeds

five percent, (e) obligationsin respect of Bank Products, (f) reservesas may be established fromtime to

time by Lender in its discretion withrespect to the determination ofthe saleability, at retail, of the Eligible

Inventory, or which reflect such other factorsas affect the market value ofthe Eligible Inventory or which

reflect claims and liabilities thatLender determines will needto be satisfied in connection withthe

realization upon the inventory, including reserves basedon: (i) obsolescence;(ii) seasonality; (iii) shrink;

(iv) imbalance; (v) change ininventory character; (vi) changein inventory composition; (vii)change in

inventory mix;(viii) markdowns (both permanentand point of sale); (ix) markupsinconsistent with prior

period practice and performance,industry standards, current businessplans or advertising

calendar and planned advertisingevents, (f) amounts for (i)salaries, wages and benefitsdue to employees

of any Borrower, (ii) customer credit liabilitiesconsisting of the aggregateremaining value at such time

of (A) outstanding gift certificatesand gift cards of the Borrowersentitling the holder thereof to useall or

a portion of the certificate or giftcard to pay all or a portion ofthe purchase price for any inventory, (B)

outstanding merchandise credits of Borrowers,and (C) liabilities in connection withfrequent shopping

programs of Borrowers, (iii) depositsmade by customers withrespect to the purchase of goodsor the

performance of services andlayaway obligations of Borrowers,(iv) reserves for reasonablyanticipated

changes in the appraised valueof Eligible Inventorybetween appraisals and (v) royaltiespayable in

respect of licensed merchandise.

“Restricted Payment” meansany (a) dividend or otherdistribution (whether in cash, securitiesor

other property) with respectto any Equity Interests of a Loan Party, or any payment(whether in cash,

securities or other property),including any sinking fundor similar deposit, on accountof the purchase,

redemption, retirement, acquisition,cancellation or termination ofany such Equity Interests or onaccount

of any return of capital to the stockholders,partners or members (orthe equivalent Person thereof) ofa

Loan Party, or payment made to redeem, purchase,repurchase or retire, or to obtainthe surrender of, any

outstanding warrants, options or otherrights to acquire any Equity Interestsof a Loan Party, or any

setting apart of funds or propertyfor any of the foregoing,or (b) the payment by a Loan Partyof any

management, advisory or consultingfee to any Person or the paymentof any extraordinary salary, bonus

or other form of compensationto any Person who is directlyor indirectly a significant partner,

shareholder, owner or executive officer of any such Person,to the extent such extraordinarysalary, bonus

or other form of compensationis not included in the corporateoverhead of a Loan Party.In no event

shall any payments madeby a Loan Party to any ForeignSubsidiary of Parent for servicesprovided by

such Subsidiary as a buyingagent for the purchase of inventoryby such Loan Party outside ofthe United

States in the ordinary courseof business that are the sameor substantially similar or ancillary to thetypes

of services with respect to suchpurchases of inventoryas are provided for in the SourcingAgreement,

dated as of July 31, 2014, betweenCato Overseas Limited and Parentas such agreement is in effect on

the date hereof (but includingservices that are substantially similaror ancillary to those providedfor in

the agreement and whetheror not pursuant to such agreementor any other agreement with respectto such

services) be construed to constituteRestricted Payments.

 

 

 

 

 

 

 

 

 

 

 

 

“Revolving Loans” means the revolvingloans made by Lender to a Borrowerunder this

Agreement.

“Sale and Leaseback Transaction” means, withrespect to any Loan Party or anySubsidiary, any

arrangement, directly or indirectly, with any Personwhereby the Loan Partyor such Subsidiary shall sell

or transfer any Real Propertyused or useful in its business, whethernow owned or hereafter acquired,and

thereafter rent or lease such propertythat it intends to use for substantiallythe same purpose or purposesas

the property being sold ortransferred.

“Sanction” or “Sanctions”means any and all economic orfinancial sanctions, sectoral sanctions,

secondary sanctions, trade embargoesand anti-terrorism laws imposed,administered or enforcedfrom

time to time by:(a) the United States of America,including those administered by OFAC, the U.S. State

Department, the U.S. Department of Commerce,or through any existing or futureExecutive Order, (b)

the United Nations SecurityCouncil, (c) the European Union,(d) the United Kingdom,or (e) any other

Governmental Authority inany jurisdiction in which (i)any member of the Loan Party Groupis located

or conducts business, (ii) in whichany of the proceeds of theCredit Facility will be used,or (iii) from

which repayment of the Credit Facilitywill be derived.

“Sanctioned Target” means any target of Sanctions, including: (a) Personson any list of targets

identified or designated pursuantto any Sanctions, (b) Persons,countries, or territories thatare the target

of any territorial or country-basedSanctions program, (c) Personsthat are a target of Sanctions dueto

their ownership or control byany Sanctioned Target(s), or (d) otherwise a target of Sanctions, including

vessels, planes and ships, that aredesignated under anySanctions program.

“Security Agreement” means the SecurityAgreement, dated of even date herewith,by and among

each Loan Party and Lender.

“Security Documents” means theSecurity Agreementand any other agreement or instrumentat

any time executed by a Loan Partyor any other Person in connectionwith this Agreement thatis intended

to (or purports to) create, perfect orevidence a Lien to secure the Obligations.

“SOFR” means a rate per annumequal to the secured overnightfinancing rate as administeredby

the SOFR Administrator.

“SOFR Administrator” means the FederalReserve Bankof New York (or a successor

administrator of the securedovernight financing rate).

“SOFR Loan” means each portionof a Revolving Loan that bearsinterest at a rate determined by

reference to Adjusted Term SOFR (other than pursuantto clause (c) of the definition of “BaseRate”).

“SOFR Loan Notice” means a written noticein the form of Exhibit D to this Agreement.

“Solvent” means, with respectto any Person as of any date ofdetermination, that (a) at fair

valuations, the sum of such Person’s debts (includingcontingent liabilities) is lessthan all of such Person’s

assets, (b) such Person is notengaged or about to engagein a business or transaction forwhich the

remaining assets of such Personare unreasonably smallin relation to the business or transactionor for

which the property remainingwith such Person is an unreasonablysmall capital, (c) such Personhas not

incurred and does not intendto incur, or reasonably believe that it willincur, debts beyond its ability to

pay such debts as they becomedue (whether at maturity or otherwise),and (d) such Person is “solvent”or

not “insolvent”, as applicable withinthe meaning giventhose terms and similar termsunder applicable

laws relating to voidable transfers, fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of

 

 

 

 

 

 

 

 

the facts and circumstancesexisting at such time, representsthe amount that can reasonablybe expected

to become an actual or matured liability(irrespective of whether such contingentliabilities meet the

criteria for accrual under Statementof Financial Accounting StandardNo. 5).

“Store” means any retail store (whichmay include any real property, fixtures, equipment,

inventory and other propertyrelated thereto) operated, or to be operated,by any Loan Party.

“Store Accounts” shall mean thedeposit accounts listed on Schedule4.18(a) under the heading

“Store Deposit Accounts”which are used only for thedeposit of receipts by a Storeand any other deposit

accounts established after thedate hereof in accordancewith Section 5.9 and that are usedonly for such

purpose by a Store.

“SubordinatedIndebtedness” means any Indebtednessof any Loan Party incurredfrom time to

time that is subordinated inright of payment to the Obligationsand is subject to a subordination

agreement in form and substancesatisfactory to Lender, and is otherwiseon terms (including maturity,

interest, fees, repayment, covenantsand subordination) satisfactoryto Lender.

“Subsidiary” means, with respectto any Person, a corporation,partnership, limited liability

company, or other entity in which that Person directlyor indirectly owns or controlsthe Equity Interests

having ordinary voting powerto elect a majority of theboard of directors (or equivalent) ofsuch

corporation, partnership, limitedliability company, or other entity.

“Supported QFC” has the meaningset forth in Section 11.7.

“Swap Obligation” means,with respect to any Loan Party, any obligationto pay or perform under

any agreement, contract ortransaction that constitutes a “swap”within the meaningof section 1a(47) of

the Commodity ExchangeAct.

“Termination Date” means the earliest to occur of (a)the Maturity Date, (b) the date on whichthe

maturity of the Obligationsis accelerated (or deemed accelerated)and the Commitmentis terminated (or

deemed terminated), or (c)the termination of the Commitmentin accordance with the provisions of

Section 3.5.

“Term SOFR” means,

(a)

for any calculation with respectto a SOFR Loan, the Term SOFR Reference Rate for atenor

comparable to the applicable InterestPeriod on the day (suchday, the “Periodic Term SOFR

Determination Day”) that istwo U.S. Government SecuritiesBusiness Days prior tothe first day of such

Interest Period, as such rate is publishedby the Term SOFR Administrator; provided,that, if as of 5:00

p.m. (New York City time) on any Periodic Term SOFR Determination Day theTerm SOFR Reference

Rate for the applicable tenorhas not been published bythe Term SOFR Administrator and a Benchmark

Replacement Date with respect tothe Term SOFR Reference Rate has not occurred, thenTerm SOFR

will be the Term SOFR Reference Rate for such tenoras published by the Term SOFR Administrator on

the first preceding U.S. GovernmentSecurities Business Day for whichsuch

Te

rm SOFR Reference Rate

for such tenor was publishedby the Term SOFR Administrator so long as such firstpreceding U.S.

Government Securities Business Dayis not more than three U.S. GovernmentSecurities Business Days

prior to such Periodic Term SOFR Determination Day, and

(b)

for any calculation with respectto a Base Rate Loan on anyday, the Term SOFR Reference

Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two U.S. Government Securities Business Days prior to such day, as such rate is published by the Term

 

 

 

 

 

 

 

 

 

 

 

SOFR Administrator; provided,however, that if as of 5:00 p.m. (NewYork City time) on any Base Rate

Term SOFR Determination Day the Term SOFR Reference Rate for the applicabletenor has not been

published by the Term SOFR Administrator and a BenchmarkReplacement Date with respectto the Term

SOFR Reference Rate has not occurred,then Term SOFR will be the Term SOFR Reference Rate for

such tenor as published by theTerm SOFR Administrator on the first preceding U.S. Government

Securities Business Day for which suchTerm SOFR Reference Rate for such tenor was publishedby the

Term SOFR Administrator so long as such first precedingU.S. Government Securities BusinessDay is

not more than three U.S. GovernmentSecurities Business Days priorto such Base Rate Term SOFR

Determination Day.

“Term SOFR Adjustment” means a percentage equal to 0.10%per annum.

“Term SOFR Administrator” means CME Group BenchmarkAdministration Limited (CBA) (ora

successor administrator ofthe Term SOFR Reference Rate selected by Lenderin its reasonable

discretion).

“Term SOFR Reference Rate” means the forward-lookingterm rate based on SOFR.

“UCC” means the UniformCommercial Code as in effect in the Stateof New York and any

successor statute, as in effect fromtime to time (except that termsused herein which are not otherwise

defined herein and definedin the Uniform CommercialCode as in effect in the State of New York on the

Closing Date shall continue to havethe same meaning notwithstandingany replacement or amendmentof

such statute except as Lender mayotherwise determine).

“U.S. Government SecuritiesBusiness Day” means anyday except for (a) a Saturday, (b) a Sunday

or (c) a day on which the SecuritiesIndustry and Financial MarketsAssociation recommendsthat the fixed

income departments of its membersbe closed for the entire dayfor purposes of tradingin United States

government securities.

“U.S. Special Resolution Regimes”has the meaning set forth in Section11.7.

“Value” means, the lower of (a) costcomputed on a first-infirst-out basis in accordance with

GAAPor (b) market value; provided,that, for purposes of the calculationof the BorrowingBase, (i) the

Valueof the inventory shall notinclude:(A) the portion of the valueof inventory equal to the profit

earned by any Affiliate on the sale thereofto a Borrower or (B) write-upsor write-downs in value with

respect to currency exchangerates and (ii) notwithstandinganything to the contrarycontained herein, the

cost of the inventory shall be computedin the same manner and consistentwith the most recent appraisal

of the inventory that is receivedby, and acceptable to, Lender prior to the ClosingDate, if any.

1.2

Accounting Terms

. All accounting termsnot specifically defined herein shallbe construed

in accordance with GAAP;provided, that, if the AdministrativeBorrower notifies Lender that Borrowers

request an amendment to anyprovision hereof to eliminatethe effect of any Accounting Changes

occurring after the Closing Dateor in the application thereofon the operation of such provision(or if

Lender requests an amendmentto any provision hereof for such purpose),regardless of whether any such

notice is given before or aftersuch Accounting Changeor in the application thereof, thenLender and

Borrowers agree that theywill negotiate in good faith amendmentsto the provisions of this Agreement

that are directly affected by such AccountingChange with the intent of havingthe respective positions of

Lender and Borrowers after such change conformas nearly as possible to their respectivepositions

immediately before such AccountingChange took effect and, until anysuch amendments have been

agreed upon and agreed to by Lender, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred.

 

 

A Loan Party shall deliver to Lender at the same time as the delivery of

any financial statements givenin accordance with the provisionsof Section 5.1, (a) a descriptionin

reasonable detail of any material changein the application of accountingprinciples employed in the

preparation of such financial statementsfrom those applied in the mostrecently preceding monthly,

quarterly or annual financial statementsand (b) a reasonable estimateof the effect on the financial

statements on account of suchchanges in application.When used herein, the term“financial statements”

shall include the notes and schedules thereto.Notwithstanding anythingto the contrary contained herein,

(i) all financial statements delivered hereundershall be prepared, and all financialcovenants contained

herein shall be calculated,without giving effect to any election underthe Statement of Financial

Accounting Standards Board’s Accounting StandardsCodification Topic 825 (or any similar accounting

principle) permitting a Personto value its financial liabilitiesor Indebtedness at thefair value thereof, and

(ii) the term “unqualified opinion” asused herein to refer to opinionsor reports provided by accountants

shall mean an opinion or report thatis (A) unqualified, and (B)does not include anyexplanation,

supplemental comment, orother comment concerning the abilityof the applicable Person to continueas a

going concern or concerningthe scope of the audit.

1.3

UCC Terms

.Any terms used in this Agreementthat are defined in the UCC shallbe

construed and defined as set forthin the UCC unless otherwisedefined herein; provided,that, to the extent

that the UCC is used to define anyterm herein and such termis defined differently in different Articles of

the UCC, the definition ofsuch term contained in Article9 of the UCC shall govern.

1.4

Construction

.The definitions of termsherein shall applyequally to the singular and plural

forms of the terms defined.Whenever the context mayrequire, any pronoun shall includethe

corresponding masculine, feminineand neuter forms.The words “include,” “includes” and “including”

shall be deemed to be followedby the phrase “without limitation.”The word “will” shall be construedto

have the same meaning andeffect as the word “shall” and vice-versa.Unless the context requires

otherwise, (a) any definitionof or reference to any agreement,instrument or other document shallbe

construed as referring to such agreement,instrument or other documentas from time to time amended,

modified, supplemented, extended, renewed,restated or replaced (subjectto any restrictions on such

amendments, supplementsor modifications set forth inany Loan Document), (b) anyreference herein to

any Person shall be construedto include such Person’s successors and assigns,(c) the words “herein,”

“hereof” and “hereunder,” and wordsof similar import when usedin any Loan Document, shall be

construed to refer to such Loan Documentin its entirety and not to anyparticular provision thereof,(d) all

references in a Loan Documentto Sections, Exhibits and Schedules shallbe construed to refer to Sections

of, and Exhibits and Schedules to, the LoanDocument in which suchreferences appear, (e) any reference

to any law shall include all statutoryand regulatory provisions consolidating,amending, replacing,

recodifying, supplementingor interpreting such law andany reference to any law or regulationshall,

unless otherwise specified, refer tosuch law or regulation as amended,modified or supplementedfrom

time to time, and (f) the words “asset”and “property” shall be construedto have the same meaningand

effect and to refer to any and all tangibleand intangible assets and properties,including cash, securities,

accounts and contract rights.Section headings in anyLoan Document are included for convenienceof

reference only and shall notaffect the interpretation of this Agreementor any other Loan Document.

Each schedule and exhibit tothis Agreement is incorporatedby reference herein andis made a part of this

Agreement.Any capitalized term used in anyschedule or exhibit to this Agreementshall have the

meaning assigned to such termherein, unless otherwise defined insuch schedule or exhibit. An Eventof

Default shall exist or continueuntil such Event of Default is waivedin accordance with Section 9.5in

accordance with the terms hereof.Each Loan Party shallhave the burden of establishingany alleged

negligence, misconduct orlack of good faith by Lenderunder any Loan Document.Any reference to an

obligation of a Borrower ora Loan Party or to Borrowers or LoanParties, or to anyBorrower or any Loan

Party, as the case may be, shall mean that each Borroweror each Loan Party, as the case may be, is

jointly and severally liable with each other Borrower or Loan Party in respect of such obligation. In connection with any division or plan of division under Delaware law (or any comparable event under a

 

 

different jurisdiction’s laws): (i) if any asset, right, obligation orliability of any Person becomesthe asset,

right, obligation or liabilityof a different Person, then it shall be deemedto have been transferred from

the original Person to the subsequentPerson, and (ii) if anynew Person comes into existence,such new

Person shall be deemed tohave been organized on the first date ofits existence by the holders ofits

Equity Interests at such time.Any reference in any LoanDocument to a merger, transfer, consolidation,

assignment, sale, dispositionor transfer, or similar term,shall be deemed to apply to a division ofor by a

limited liability company, or an allocation of assetsto a series of a limited liabilitycompany (or the

unwinding of such a divisionor allocation), as if it werea merger, transfer, consolidation, assignment,

sale, disposition or transfer, or similar term,as applicable, to, of or with a separatePerson.No provision

of any Loan Documents shall be construedagainst any party by reasonof such party having,or being

deemed to have, drafted the provision.Any reference to an agreementor other matter being “reasonably

satisfactory” to Lender shall meana determination made in the exerciseof reasonable judgmentfrom the

perspective of a secured asset-basedlender.Any reference to expenses of Lenderin any Loan Document

shall include all Lender Expenses.Reference to a Loan Party’s “knowledge”or similar concept means

actual knowledge of an AuthorizedPerson, or knowledgethat an Authorized Person wouldhave obtained

if he or she had engaged ingood faith and diligent performanceof his or her duties, includingreasonably

specific inquiries of employeesor agents and a good faithattempt to ascertain the matter.

1.5

Time References

.Unless the context of this Agreementor any other Loan Document

clearly requires otherwise,all references to time of dayrefer to Eastern Time, as in effect in New York on

such day.For purposes of the computation ofa period of time froma specified date to a later specified

date, unless otherwise expresslyprovided, the word “from” means“from and including” and the words

“to” and “until” each means “to andincluding”; provided, that, withrespect to a computation of feesor

interest payable to Lender, such period shallin any event consist of at leastone full day.

1.6

Payment in Full

. Any reference in any Loan Documentto the satisfaction, repayment,or

payment in full of the Obligationsshall mean (a) the paymentin full in cash of the principal and accrued

and unpaid interest with respect to the RevolvingLoans, (b) the payment in fullin cash of all fees,

charges and expenses that haveaccrued and are unpaid regardlessof whether payment has been

demanded or is otherwise due,(c) the delivery to Lender of cashcollateral, or at Lender’s option,a letter

of credit payable to Lender issued bya bank acceptable to Lenderand in form and substancesatisfactory

to Lender, in either case in respect of (i) 105% ofthe then existing Letter of CreditUsage, (ii) contingent

Obligations for which a claimor demand for payment has been madeat such time or in respect ofmatters

or circumstances known toLender at the time, and which arereasonably expected to resultin any loss,

cost, damage or expense (includingattorneys’ fees and legal expenses)to Lender for which Lender would

be entitled to indemnification bya Loan Party hereunder and (iii) an amountdetermined by Lender equal

to the reasonably estimated creditexposure, operational riskor processing risk with respectto the then

existing Bank Product Obligations,and (d) the termination of the Commitmentand the financing

arrangements provided byLender to each Borrower hereunder.

1.7

[Reserved]

.

1.8

Resolution of Drafting Ambiguities

.Each Loan Party acknowledgesand agrees that it

was represented by counsel in connectionwith the execution and deliveryof the Loan Documents, thatit

and its counsel reviewed and participatedin the preparation and negotiationof the Loan Documents and

that any rule of construction tothe effect that ambiguities areto be resolved against Lenderas the drafting

party shall not be applicable inthe interpretation of the Loan Documents.

1.9

Rates

.Lender does not warrantor accept any responsibilityfor, and shall not have any

liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other

 

 

 

 

Benchmark, any component definitionthereof or rates referred to in the definitionthereof, or with respect

to any alternative, successor orreplacement rate thereto (includingany then-current Benchmarkor any

Benchmark Replacement), includingwhether the compositionor characteristics of any such alternative,

successor or replacement rate (includingany Benchmark Replacement), asit may or may not be adjusted

pursuant to the terms of Schedule2.7, will be similar to, or producethe same value or economic

equivalence of, or have thesame volume or liquidity as,the Term SOFR Reference Rate, Adjusted Term

SOFR, Term SOFR or any other Benchmark,prior to its discontinuance or unavailability, or (b) the

effect, implementation or compositionof any ConformingChanges.Lender and its affiliates orother

related entities may engagein transactions that affect the calculationof the Term SOFR Reference Rate,

Adjusted Term SOFR, Term SOFR, any alternative, successor or replacementrate (including any

Benchmark Replacement) orany relevant adjustmentsthereto and such transactions maybe adverse to a

Borrower.Lender may select informationsources or services in its reasonablediscretion to ascertain the

Term SOFR Reference Rate, Adjusted Term SOFR, or Term SOFR, or any other Benchmark,any

component definition thereof orrates referred to in the definitionthereof, in each case pursuantto the

terms of this Agreement, andshall have no liability to anyBorrower or any other person orentity for

damages of any kind, includingdirect or indirect, special, punitive,incidental or consequential damages,

costs, losses or expenses (whetherin tort, contract or otherwise andwhether at law or in equity),for any

error or calculation of anysuch rate (or component thereof) providedby any such information sourceor

service.

1.10

Schedules and Exhibits

.All of the schedules and exhibitsattached to this Agreement

shall be deemed incorporated herein byreference.

1.11

Divisions

.For all purposes under the LoanDocuments, in connectionwith any division or

plan of division under Delawarelaw (or any comparable eventunder a different jurisdiction’s laws): (a) if

any asset, right, obligationor liability of any Person becomesthe asset, right, obligation or liabilityof a

different Person, then it shall be deemedto have been transferred fromthe original Person to the

subsequent Person, and (b) if anynew Person comes into existence,such new Person shall be deemedto

have been organized on the first dateof its existence by the holdersof its Equity Interests at such time.

2.

2.1

Revolving Loans.

(a)

Subject to, and upon theterms and conditions containedherein, on and after the ClosingDate

until the Termination Date, Lender agrees to makeRevolving Loans to a Borrowerfrom time to time in

amounts requested by or onbehalf of such Borrower, provided, that, aftergiving effect to any such

Revolving Loan, the aggregateprincipal amount of theRevolving Loans outstandingplus the Letter of

Credit Usage shall not exceedthe lesser of the BorrowingBase at such time or the MaximumCredit.

(b)

Lender shall have the right(but not the obligation) at any time,in its Permitted Discretion, to

establish and increase or decreaseReserves, provided, that, theamount of any Reserveestablished by

Lender shall have a reasonablerelationship to the event, condition,other circumstance, or fact thatis the

basis for such Reserve. To the extent that an event, conditionor circumstance as to anyeligible asset is

addressed pursuant to the treatmentthereof within the applicable definitionof suchterms, Lender shall

not also establish a Reserveto address the same event, conditionor circumstance.Lender shall provide

prior written notice to the AdministrativeBorrowerof the establishment ofany new categories of

Reserves, or any change inthe methodology for the calculationof an existing Reserve(in each case after

the Closing Date except thatsuch notice shall not be requiredat any time an Event of Defaultexists or at

any time if Lender, in its Permitted Discretion, determines that it is necessary to act sooner to preserve or protect the Collateral or its value or the rights of Lender therein).

In such event, Lender shall be available

to discuss the change. A Borrowermay take such action as maybe required so that the event, condition,

circumstance, or fact that is the basisfor such Reserve no longerexists.If Lender determines in its

Permitted Discretion that the event,condition, other circumstanceor fact that is the basisfor the

establishment or change tosuch Reserve no longer existsor has otherwise been adequatelyaddressed by a

Borrower, Lender shall adjust or eliminate the Reserveaccordingly.At any time that the Maximum

Credit is less than the amount ofthe Borrowing Base, Reservesin respect of amounts that maybe payable

to third parties may be deductedfrom the MaximumCredit.

2.2

Borrowing Procedures.

(a)

Each Revolving Loan shallbe made by a written request byan Authorized Person delivered

to Lender (which maybe delivered through Lender’s electronicplatform or portal) and receivedby

Lender no later than 11:00 a.m.(provided, that Lender may, in its sole discretion, electto accept as timely

requests that are received laterthan 11:00 a.m.) (i) on the BusinessDay that is one Business Dayprior to

the requested Funding Datein the case of a request fora Base Rate Loan, and (ii) on the U.S.Government

Securities Business Day that is three U.S. GovernmentSecurities Business Days prior tothe requested

Funding Date in the case of a requestfor a SOFR Loan (or the continuationthereof or the conversion

thereof to a Base Rate Loan), specifying(A) the amount of such RevolvingLoan (which in the case of a

SOFR Loan shall be in a principalamount of $1,000,000 or a wholemultiple of $1,000,000 inexcess

thereof), (B) the requestedFunding Date (which shallbe a Business Day); and (C) in the caseof a SOFR

Loan, the duration of the InterestPeriod with respect thereto.In addition, each requestfor a SOFR Loan

(or the continuation thereof orthe conversion thereofto a Base Rate Loan) shall bemade pursuant to the

delivery to Lender of a SOFRLoan Notice. If the AdministrativeBorrowerfails to specify an Interest

Period, it will be deemedto have specified an Interest Periodof one month.If the Administrative

Borrowerfails to give a timely notice withrespect to any continuation of a SOFRLoan, then the applicable

SOFR Loan shall be convertedto a Base Rate Loans effective as ofthe last day of the Interest Periodthen

in effect with respect to the applicable SOFRLoans.All requests for RevolvingLoans

which are not made on-line viaLender’s electronic platform or portalshall be subject to (and unless

Lender elects otherwise in theexercise of its sole discretion, such RevolvingLoans shall not be made

until the completion of) Lender’s authenticationprocess (with results satisfactoryto Lender) prior to the

funding of any such requestedRevolving Loan.

(b)

Except as otherwise providedherein, a SOFR Loan maybe continued or converted only on

the last day of an Interest Periodfor such SOFR Loan.During the existence of aDefault or an Event of

Default, no Revolving Loans maybe requested as, converted to or continuedas SOFR Loans withoutthe

consent of Lender.

(c)

Each SOFR Loan Notice shallbe irrevocable and bindingon Borrowers.In connection with

each SOFR Loan, each Borrowershall indemnify, defend, and hold Lender harmlessagainst any loss,

cost, or expense actuallyincurred by Lender as a resultof (i) the payment or required assignmentof any

principal of any SOFR Loanother than on the last day of an InterestPeriod applicable thereto(including

as a result of an Event of Default),(ii) the conversion of anySOFR Loan other than on thelast day of the

Interest Period applicable thereto, or(iii) the failure to borrow, convert, continue orprepay any SOFR

Loan on the date specified in anySOFR Loan Notice delivered pursuanthereto.A certificate of Lender

delivered to the Administrative Borrowersetting forth in reasonable detailany amount or amounts that

Lender is entitled to receivepursuant to this Section 2.2(c) shallbe conclusive absent manifesterror.

Borrowers shall pay such amountto Lender within 30 days of thedate of its receipt of such certificate.

(d)

After giving effect to all SOFR Loans, thereshall not be more than fiveInterest Periods in

effect with respect to SOFR Loans.

 

 

 

 

 

 

 

(e)

All Revolving Loans shall be conclusivelypresumed to have been madeto, and at the request

of and for the benefit of, a Borrowerwhen deposited to the creditof a Borrower or otherwise disbursedor

established in accordance withthe instructions of the AdministrativeBorrowerto the deposit account

specified to Lender for suchpurpose (which shall be ata bank acceptable to Lender) orin accordance

with the terms and conditionsof this Agreement.

2.3

Letter of Credit Facility

.As a subfacility under the Credit Facility, subject to, andupon

the terms and conditions containedherein, on and after the ClosingDate until the Termination Date,

Lender agrees to issue or cause an Affiliate toissue standby letters of creditor sight commercial letters of

credit for the account of a Borrowerfor purposes acceptable to Lender(each a “Letter of Credit” and

collectively, “Letters of Credit”); provided, that, (a) theaggregate Letter of CreditUsage will not at any

time exceed $5,000,000 and(b) as of the date of the issuanceof any Letter of Credit, and aftergiving

effect thereto, the aggregate amountof the Revolving Loans and the Letterof Credit Usage will not

exceed the lesser of the BorrowingBase or the MaximumCredit.Loan Parties and Lender hereby

acknowledge and agree that theExisting Letter of Credit shallconstitute a Letter of Credit underthis

Agreement on and after the ClosingDate with the same effect as if such ExistingLetter of Credit was

issued by Lender at the requestof Administrative Borroweron the Closing Date.The form and substance

of each Letter of Credit willbe subject to approval byLender and each Borrower shallexecute and

deliver such additional letter of creditagreements, applications andother documents required byLender

as a condition to the issuance, amendment,extension or renewal of anyLetter of Credit. Each Letter of

Credit will be issued for a termnot to exceed 365 days, as designatedby the Administrative Borrower;

provided, that, (x) a Letterof Credit may provide for automaticextensions of its expiration datefor one or

more successive 365-dayperiods provided that upon not lessthan thirty (30) days written noticeto

Administrative Borrower, Lender has the right to terminatesuch Letter of Credit oneach such annual

expiration date and there shall be noextension of the term of the Letter ofCredit to a date that is later

than the fifth Business Day prior to thescheduled Termination Date and (y) no Letterof Credit will have

an expiration date after the MaturityDate. Each Letter of Credit will beissued under, and subject to, the

additional terms and conditionsof the letter of credit agreements,applications and any related documents

required by Lender. Each drawing paid undera Letter of Credit will bedeemed a RevolvingLoan and

will be repaid by Borrowers inaccordance with the termsand conditions of this Agreement applicableto

Revolving Loans; provided,that, if Revolving Loans are not availablefor any reason at the time any

drawing is paid by Lender, then Borrowers willimmediately pay to Lenderthe full amount drawn,

together with interest on suchamount from the date suchdrawing is paid to the date suchamount is fully

repaid by Borrowers, at therate of interest then applicableto Revolving Loans. Insuch event Borrowers

agree that Lender maycharge the Loan Account or debit any depositaccount maintained byany Loan

Party for the amount of anysuch drawing.

2.4

Payments; Prepayments.

(a)

Payments by Borrowers.Except as otherwise expresslyprovided herein, all payments bya

Borrowershall be made to the Lender PaymentAccount or such other place as Lendermay designate in

writing to the AdministrativeBorrower from time to timeand shall be made in immediately available

funds, no later than 1:30 p.m.on the date specified herein.Any payment receivedby Lender later than

1:30 p.m. shall be deemed tohave been received (unless Lender, in its discretion,elects to credit it on the

date received) on the followingBusiness Day and any applicableinterest or fee shall continueto accrue

until such following Business Day. All payments of Obligationsshall be made in Dollars, withoutoffset,

counterclaim or defense ofany kind, free and clear of (and withoutdeduction for) any taxes, levies,

imposts, duties, fees, assessmentsor other charges of whatever naturenow or hereafter imposedby any

jurisdiction or by any politicalsubdivision or taxing authoritythereof or therein, and allinterest, penalties

or similar liabilities with respectthereto.No Loan Party will fundany repayment of the Credit Facility

with proceeds, or provide as Collateral any property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, Anti-Money Laundering Laws or Anti-Corruption

 

 

 

Laws, or that could otherwise causeLender or any other party toany Loan Document to be inbreach of

Sanctions, Anti-MoneyLaundering Laws or Anti-CorruptionLaws.

(b)

Application of Payments.Subject to the other termsand conditions contained herein, Lender

shall apply payments receivedor collected from a Borrower or forthe account of a Borrower (including

the monetary proceeds of collectionsor of realization upon anyCollateral) as follows, so longas no Event

of Default exists: first, to the paymentin full of any fees, indemnities, orexpense reimbursementsthen

due to Lender; second, to thepayment in full of interestdue in respect of any RevolvingLoans; third, to

the payment in full of principalin respect of the RevolvingLoans, whether or not then due; andfourth, at

any time an Event of Default (or an eventwhich with notice or passageof time or both would constitute

an Event of Default) exists, as cash collateralin an amount up to 105% of theLetter of Credit Usage; and

fifth, to pay or prepay anyother Obligations, whether or notthen due, in such order and manneras Lender

directs. Such payments shallbe applied as Lender determinesat any time an Event of Default exists,

including to be used as cashcollateral in respect of Obligationsrelated to Letters of Credit(in an amount

up to 105% of the Letter ofCredit Usage) or such other Obligationsas Lender may determine,on such

terms as Lender mayrequire.

(c)

Optional Prepayments.Each Borrower mayprepay the principal of any RevolvingLoan at

any time in whole or in part,without premium or penalty, upon irrevocable noticefrom Administrative

Borrowerto Lender, at any time or from time to time;provided, that, (i) such noticemust be received by

Lender not later than 11:00 a.m. (provided,that Lender may, in its sole discretion, elect to acceptas timely

notices that are received later than 11:00a.m.) (A) one U.S. GovernmentSecurities Business Daysprior to

any date of prepaymentof SOFR Loans and (B) on the date ofprepayment of Base RateLoans; (ii) any

prepayment of SOFR Loans shallbe in a principal amount of $1,000,000or a whole multiple of

$1,000,000 in excess thereof; and(iii) unless a Cash DominionEvent has occurred and is continuing,any

prepayment of Base Rate Loans shall bein a principal amount of $500,000or a whole multiple of

$100,000 in excess thereof or, in each case,if less, the entire principal amountthereof then outstanding.

Each such notice shall specifythe date and amount of such prepaymentand whether the RevolvingLoans

to be prepaid are SOFR Loansor Base Rate Loans and,if SOFR Loans, the Interest Period(s) ofsuch

SOFR Loans.If such notice is givenby Administrative Borrower, Borrowers shallmake such

prepayment and the paymentamount specified in suchnotice shall be due and payable onthe date

specified therein.Any prepayment of a SOFR Loanshall be accompanied byall accrued interest on the

amount prepaid, together withany additional amountsrequired pursuant to Section2.8.

(d)

Mandatory Prepayments.

(i)

If, at any time, the aggregate principalamount of the RevolvingLoans outstanding

plus the Letter of Credit Usage exceedsthe lesser of the BorrowingBase or the Maximum Credit, then a

Borrowershall promptly, but in any event, within one BusinessDay prepay the Obligationsin an

aggregate amount equal to theamount of such excess (orafter the prepayment of all RevolvingLoans,

upon Lender’s demand, immediatelyprovide cash collateral up to 105%of the Letter of Credit Usageas

required to address such excess,even if amounts greater thansuch excess are required asa result of the

amount of any Letters of Creditthen outstanding).

(ii)

After the occurrence and duringthe continuance of a Cash DominionEvent, Borrowers

shall prepay the RevolvingLoans (and after the prepaymentof all Revolving Loans, upon Lender’s

demand, amounts receivedthereafter may be held as cashcollateral up to 105% of the Letterof Credit

Usage) with the proceeds and collectionsreceived by the Loan Parties tothe extent so required under

Section 5.9. In no event shall the foregoing be construed to limit any of the rights of Lender on or after Maintenance of Loan Account; Statements of Obligations.

an Event of Default.

 

 

 

 

 

 

 

 

(e)

Lender shall maintain an account on

its books in the name ofeach Borrower (the “Loan Account”)evidencing the Obligations, including

Revolving Loans, Letters ofCredit, interest, fees and Lender Expenses.Any such records shall be

presumptively correct, absent manifesterror, provided, that, the failure to makeany such entry or the

existence of any error in such records,shall not affect any of the Obligations.Lender shall make

available to the AdministrativeBorrowermonthly statements regardingthe Loan Account, includingthe

principal amount of the RevolvingLoans, interest, fees and Lender Expenses.Each such statement,

absent manifest error, shall be conclusivelypresumed to be correct and accurateand constitute an account

stated between each Borrower andLender unless, within 30 daysafter Lender first makessuch a

statement available to the AdministrativeBorrower, the Administrative Borrowershall deliver to Lender

written objection thereto describingany error contained in suchstatement.

(f)

Evidence of Debt.Lender may request that RevolvingLoans made by it be evidenced bya

promissory note.In such event, each Borrower shallexecute and deliver to Lendera promissory note

payable to the order of Lender(or, if requested by Lender, to Lender and its registeredassigns) and in a

form approved by Lender.Thereafter, the Revolving Loans evidencedby such promissorynote and

interest thereon shall at all timesbe represented by one or morepromissory notes in such formpayable to

the order of the payee namedtherein (or, if such promissory note is aregistered note, to such payeeand its

registered assigns).

(g)

Charges to Loan Account.At the election of Lender, all payments of principal,interest, fees,

expenses and other amountspayable under the Loan Documentsmay be paid from the proceedsof

Revolving Loans madehereunder whether made followinga request by a Borrower or a deemedrequest

as provided in this Section or maybe deducted from any deposit accountof any Borrowermaintained

with Lender, provided, that, payments of interestand fees that may be chargedto the Loan Account based

on the foregoing shall not bedeemed to be Revolving Loansfor a period of three Business Days,but if

not paid by Borrowers at the end ofsuch period shall automaticallyand without further action of the

parties be deemed RevolvingLoans as provided herein and shall bearinterest at the rate applicableto

Revolving Loans that are Base RateLoans.Each Borrower is herebyirrevocably deemed to requestthat

Lender, and Lender is hereby authorized to,(i) make a RevolvingLoan for the purpose of payingeach

payment of principal, interest, fees,expenses and other amountsas it becomes due under anyLoan

Document and agrees that all suchamounts charged shall constituteRevolving Loans as providedabove,

(ii) make a RevolvingLoan to preserve or protect the Collateral,or any portion thereof and(iii) charge

any deposit account of any Borrowermaintained with Lenderfor each payment of principal,interest, fees,

expenses and other amountsdue under any Loan Document.

(h)

Repayment on Termination Date.Each Borrowershall make paymentin full of the

Obligations on the MaturityDate or if earlier, any other Termination Date.

(i)

Indemnity for Returned Payments.If after any payment, or proceedsof Collateral, are applied

to the payment of any of theObligations, Lender is requiredto surrender or return such payment

or proceeds to any Person forany reason, then the Obligationsintended to be satisfied bysuch payment or

proceeds shall be reinstatedand continue and this Agreementshall continue in full force and effect asif

such payment or proceeds hadnot been received by Lender.Each Loan Party shall beliable to pay to

Lender, and does hereby agree to indemnifyand hold Lender harmless for, the amount ofany payments

or proceeds surrendered orreturned.This Section shall remain effective notwithstandingany contrary

action which may be taken byLender in reliance upon such paymentor proceeds.This Section shall

survive the payment in fullof the Obligations and the terminationof this Agreement.

(j)

Crediting Payments.The receipt of any paymentitem by Lender shall not be requiredto be

considered a payment on account unless such payment item is a wire transfer of immediately available funds made to the Lender Payment Account or unless and until such payment item is honored when

 

 

 

presented for payment.Should any payment itemnot be honored when presentedfor payment, then a

Loan Party shall be deemednot to have made such payment.Notwithstanding anything to the contrary

contained herein, any payment item shall bedeemed received by Lenderonly if it is received into the

Lender Payment Account on a BusinessDay on or before 1:30 p.m.If any payment item is receivedinto

the Lender Payment Account on anon-Business Day or after 1:30p.m. on a Business Day(unless Lender,

in its discretion, elects to credit it on the date received),it shall be deemed to havebeen received by Lender

as of the opening of business onthe immediately followingBusiness Day.

2.5

Interest and Fees.

(a)

Rates and Payment ofInterest.

(i)

Subject to the provisions ofSection 2.5(a)(ii), 2.7 and2.8, (A) each SOFR Loan shall

bear interest on the outstandingprincipal amount thereof foreach Interest Period at a rate perannum

equal to Adjusted Term SOFR for the Interest Periodthereof plus the ApplicableMargin; and (B) each

Base Rate Loan shall bear interest onthe outstanding principal amountthereof from the applicable

Funding Date at a rate per annumequal to the Base Rate plus the ApplicableMargin.

(ii)

If any principal or interest payableunder any Loan Documentis not paid when due

(without regard to any applicable graceperiods), whether at stated maturity, byacceleration or otherwise,

such amount shall thereafter bearinterest at a fluctuatinginterest rate per annum at all times equal tothe

Default Rate to the fullest extentpermitted by applicable Laws.If any other Event of Defaultexists, then

Lender may notify AdministrativeBorrower that all outstandingRevolving Loans shall thereafterbear

interest at a fluctuating interest rate perannum at all times equal to the DefaultRate and thereafter such

Revolving Loans shall bear interestat the Default Rate to the fullestextent permitted by applicableLaws.

(iii)

Accrued and unpaid interest onpast due amounts (includinginterest on past due

interest) shall be due and payableupon demand.

(iv)

Interest on each RevolvingLoan shall be due and payable inarrears on each Interest

Payment Date applicable thereto andin each case, in anyevent on the Termination Date or at such other

times as may be specified herein.If no payment date isotherwise specified, such interestshall be due and

payable on earlier of the first day ofthe calendar month afterincurred or demand or theTermination

Date.Notwithstanding theforegoing, interest accruedat the Default Rate shall be due andpayable on

demand.Interest hereunder shall be dueand payable in accordance withthe terms hereof before and after

judgment, and before and afterthe commencement ofany Insolvency Proceeding.

(b)

Computation of Interest and Fees.Interest and fees calculated on a perannum basis shall be

calculated on the basis of a 360-dayyear (or in the case of a Base Rate Loan,365 or 366 days, as the case

may be) and actual days elapsed.If at any time there are BaseRate Loans, the interest rate withrespect

thereto shall increase or decreasein an amount equal to each increaseor decrease in the Base Rate

effective on the date of any changein the Base Rate.Each determination by Lenderof any interest, fees

or interest rate hereunder shallbe final, conclusive andbinding for all purposes, absent manifesterror.

All fees shall be fully earned whendue and shall not besubject to rebate, refund orproration.

(c)

Fees; Expenses.Each Borrower shall pay to Lenderthe fees and Lender Expensesin the

amounts and at the time specifiedin Schedule 2.5.

2.6

Intent to Limit Charges to MaximumLawful Rate

.In no event shall the interest rate or

rates payable under any Loan Document, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final

determination, deem applicable.If at any time the interest rateset forth in any of the Loan Documents

exceeds the maximuminterest rate allowable under applicable law, the interest rate will bedeemed to be

such maximum interest rate allowableunder applicable law.

2.7

Illegality; Market Conditions

.Notwithstanding anythingto the contrary contained herein, subject

to the occurrence of a BenchmarkTransition Event, as such terms are definedin Schedule 2.7, if (a) any

Change in Law has madeit unlawful, or any GovernmentalAuthority has assertedthat it is unlawful, for

Lender to make or maintaina SOFR Loan or to maintainthe Commitment with respectto a SOFR Loan, or

to determine or charge interest ratesbased on Term SOFR or SOFR or (b) Lenderdetermines in good faith

(which determination shall, absentmanifest error, be final and conclusiveand binding upon all parties

hereto) that Term SOFR cannot be determined pursuantto the definition thereof other than asa result of a

Benchmark Transition Event, then Lender shallgive notice thereof to the AdministrativeBorrowerand may

(A) declare that SOFR Loans will notthereafterbe made by Lender, such that any requestfor a SOFR Loan

from Lender shall be deemedto be a request for a Base Rate Loanunless Lender’s declaration has been

withdrawn (and it shall bewithdrawn promptly uponthe cessation of the circumstancesdescribed in clause

(a) or (b) above) and (B) requirethat all outstanding SOFRLoans made by Lender be converted to Base

Rate Loansimmediately, in which event all outstanding SOFRLoans shall be so converted and all

Obligations (except for theundrawn amount of any issuedand outstanding Letters of Credit)shall bear

interest at the Base Rate in effect fromtime to time, plus the

Applicable Margin.

2.8

Increased Costs

.If any Change in Law shall:(a) impose, modify or deemapplicable any

reserve, special deposit, compulsoryloan, insurance charge or similar requirementagainst assets of,

deposits with or for the accountof, or credit extendedor participated in by, Lender; (b) subject Lender to

any taxes, levies, imposts, duties,fees, assessments or other chargesof whatever nature now orhereafter

imposed by any jurisdictionor by any political subdivision ortaxing authority thereof or therein(other

than (i) Indemnified Taxes and (ii) U.S. federalwithholding taxes imposed on amountspayable to or for

the account of any assigneeof Lender with respect to anapplicable interest in a Loan or Commitment

pursuant to a law in effect on the dateon which (A) such Lenderacquires such interest inthe Loan or

Commitment (other than pursuantto an assignment consentedto by AdministrativeBorroweror (B) such

Lender changes its lendingoffice), and all interest, penalties or similarliabilities with respect thereto of

any kind whatsoever with respectto any Loan Document or anySOFR Loan made byit, or change the

basis of taxation of paymentsto Lender in respect thereof; or(c) impose on Lender anyother condition,

cost or expense affecting anyLoan Document or SOFR Loans, andthe result of anyof the foregoing shall

be to increase the cost to Lender of makingor maintaining any SOFR Loan (or ofmaintaining its

obligation to make anysuch Revolving Loan), or to increasethe cost to Lender or to reduce theamount of

any sum received or receivable byLender hereunder (whether of principal,interest or any other amount)

then, upon request of Lender, each Borrowerwill pay to Lender, such additional amountor amounts as

will compensate Lender, as the case maybe, for such additional costs incurredor reduction suffered.

2.9

Capital Requirements

.If Lender determines that anyChange in Law affecting Lender or

any lending office of Lender or Lender’s holdingcompany, if any,regarding capital requirementshas or

would have the effect of reducing therate of return on Lender’s capitalor on the capital of Lender’s

holding company, if any, as a consequence of any Loan Document,the Commitment or the Revolving

Loans, to a level below that whichLender or Lender’s holdingcompany could have achievedbut for such

Change in Law (taking intoconsideration Lender’s policies and thepolicies of Lender’s holdingcompany

with respect to capital adequacy),then from time to timeeach Borrowerwill pay to Lender such

additional amount or amounts as willcompensate Lender or Lender’s holdingcompany for any such

reduction suffered.

2.10

Certificates for Reimbursement

.A certificate of Lender settingforth the amount or

amounts necessary to compensateLender or its holdingcompany, as the case may be, as specified in

Sections 2.8 or 2.9 and deliveredto any Borrowershall be conclusive absent manifesterror.Each

Borrowershall pay Lender the amountshown as due on any such certificatewithin 30 days after receipt

thereof.

2.11

Delay in Requests

.Failure or delay onthe part of Lender to demand compensation

pursuant to Sections 2.8 or2.9 shall not constitute a waiverof Lender’s right to demandsuch

compensation, provided that a Borrowershall not be required to compensateLender pursuant to this

Section for any increased costs incurredor reductions occurring morethan 180 days prior to the datethat

Lender becomes aware of the eventgiving rise to Lender’s claim for compensationtherefor (except that,

if the Change in Law givingrise to such increased costs or reductionsis retroactive, then the 180 day

period referred to above shall be extendedto include the period of retroactiveeffect thereof).

2.12

Term SOFR Conforming Changes

.In connection with the useor administration of

Adjusted Term SOFR, Lender will have the rightto make Conforming Changesfrom time to time and,

notwithstanding anything tothe contrary herein or in anyother Loan Document, any amendments

implementing such ConformingChanges will become effective without any furtheraction or consent of

any other party to this Agreementor any other Loan Document.Lender will promptly notify

Administrative Borrowerof the effectiveness of anyConforming Changes in connectionwith the use or

administration of AdjustedTerm SOFR.

2.13

Increase in Maximum Credit.

(a)

At any time during the periodfrom and after the ClosingDate, Administrative Borrowermay

from time to time request anincrease in the Maximum Creditby an amount (for allsuch requests) not to

exceed $15,000,000 (each a “CommitmentIncrease” and collectivelythe “Commitment Increases”),

provided, that, (i) any such requestfor an increase shall be in a minimumamount of $5,000,000 and in

integral multiples of $1,000,000 inexcess thereof, (ii) AdministrativeBorrowermay make a maximumof

three (3) such requests, and(iii) the amount of the MaximumCredit, as the same may be increased

pursuant to this Section 2.13,shall not exceed $50,000,000 atany time.If the Maximum Credit is to be

increased, Lender, in consultation with AdministrativeBorrower, shall determine the effective date (the

“Increase Effective Date”).In no event shall Lender haveany obligation to agree to anyCommitment

Increase.Any such CommitmentIncrease, including the amountand conditions thereto, shall bein the

discretion of Lender.

(b)

Without limitation of the rights of Lender providedfor above, each of the followingshall be

conditions precedent to any CommitmentIncrease:

(i)

Administrative Borrowershall deliver to Lender a certificateof each Loan Party dated

as of the Increase Effective Date signedby an Authorized Person of suchLoan Party (A) certifying and

attaching the resolutions adoptedby such Loan Party approvingor consenting to such Commitment

Increase, and (B) certifying that, beforeand after giving effect to such CommitmentIncrease, (1) the

representations and warrantiescontained herein and theother Loan Documents are true andcorrect in all

material respects (except that such materialityqualifier shall not be applicable toany representations and

warranties that already are qualifiedor modified by materialityin the text thereof) on and as ofthe

Increase Effective Date, except to the extentthat such representations and warrantiesspecifically refer to

an earlier date, in which casethey are true and correct inall material respects (except thatsuch materiality

qualifier shall not be applicableto any representations and warrantiesthat already are qualified or modified

by materiality in the text thereof) as of suchearlier date, and (2) as ofthe Increase Effective

Date and after giving effect to such CommitmentIncrease, no Default or Eventof Default exists;

(ii)

Borrowers shall have paid such feesand other compensationto Lender as

Administrative Borrowerand Lender shall agree;

(iii)

if requested by Lender, Borrowers shall deliverto Lender an opinion or opinions,in

form and substance reasonablysatisfactory to Lender, from counsel to Borrowersreasonably satisfactory

to Lender and dated such date;

(iv)

Loan Parties shall have deliveredsuch other instruments, documentsand agreements as

Lender may reasonably have requested;

(v)

as of the Increase Effective Date and aftergiving effect to such CommitmentIncrease,

no Default or Event of Defaultexists;

(vi)

if any Loan Party or any of its Subsidiariesowns any Margin Stock, Borrowersshall

deliver to Lender an updated FormU-1duly executed and deliveredby Loan Parties, togetherwith such

other documentation as Lendershall reasonably request, in orderto enable Lender to complywith any of

the requirements under RegulationsT,U or X of the Board of Governorsof the Federal Reserve System

of the United States (or anysuccessor); and

(vii)

each of the conditions precedentset forth in Section 3.2 aresatisfied.

(c)

Unless otherwise specifically providedherein, all references inthis Agreement and any other

Loan Document to RevolvingLoans shall be deemed, unless thecontext otherwise requires,to include

Revolving Loans madepursuant to the increased Commitmentsand Maximum Credit pursuantto this

Section 2.13.

(d)

The Revolving Loans, the Commitment,and Maximum Credit establishedpursuant to this

Section 2.13 shall constituteRevolving Loans, the Commitment,and Maximum Credit under, and shall

be entitled to all the benefits afforded by, this Agreementand the other Loan Documents,and shall,

without limiting the foregoing,benefit equally and ratably fromany guarantees and the securityinterests

created by the Loan Documents.Borrowers shall takeany actions reasonably required byLender to

ensure and demonstrate that the Liens andsecurity interests granted bythe Loan Documents continueto

be perfected under the UCCor otherwise after givingeffect to the establishment of any Commitment

Increase and increase in the MaximumCredit.

2.14

Joint and Several Liability ofBorrowers.

(a)

Each Borrower is acceptingjoint and several liabilityhereunder and under the otherLoan

Documents in consideration of thefinancial accommodations to beprovided by Lender under this

Agreement, for the mutualbenefit, directly and indirectly, of each Borrowerand in consideration of the

undertakings of the other Borrowersto accept joint and several liabilityfor the Obligations.

(b)

Each Borrower, jointly and severally, hereby irrevocablyand unconditionally accepts, not

merely as a surety but alsoas a co-debtor, joint and several liability with theother Borrowers, with

respect to the payment and performance of allof the Obligations (including any Obligations arising under

this Section 2.14), itbeing the intention of theparties hereto that all theObligations shall be the jointand

several obligations of eachBorrowerwithout preferences ordistinction amongthem.Accordingly, each

Borrowerhereby waives anyand all suretyship defenses that wouldotherwise be available to such

Borrowerunder applicable law.

(c)

If and to the extent thatany Borrower shall fail to makeany payment with respect to any of

the Obligations as and whendue, whether upon maturity, acceleration, or otherwise,or to perform any of

the Obligations in accordance withthe terms thereof, then in eachsuch event the other Borrowerswill

make such payment with respectto, or perform, such Obligationsuntil such time as all of the Obligations

are paid in full, and without theneed for demand, protest, orany other notice or formality.

(d)

The Obligations of each Borrowerunder the provisions of this Section2.14 constitute the

absolute and unconditional, full recourseObligations of each Borrowerenforceable against each

Borrowerto the full extent of its propertiesand assets, irrespectiveof the validity, regularity or

enforceability of the provisionsof this Agreement (otherthan this Section 2.14(d))or any other

circumstances whatsoever.

(e)

Without limiting the generality of the foregoingand except as otherwise expresslyprovided in

this Agreement, each Borrowerhereby waives presentments,demands for performance,protests and

notices, including notices ofacceptance of its joint and severalliability, notice of any Revolving Loans,

any portion or any Letters of Creditissued under or pursuant tothis Agreement, notice ofthe occurrence

of any Default, Event of Default,notices of nonperformance,notices of protest, notices ofdishonor,

notices of acceptance of this Agreement,notices of the existence, creation,or incurring of new or

additional Obligations or otherfinancial accommodationsor of any demand for anypayment under this

Agreement, notice of any actionat any time taken or omittedby Lender under or in respectof any of the

Obligations, any right to proceedagainst any other Borroweror any other Person,to proceed against or

exhaust any security held fromany other Borrower or any other Person, toprotect, secure, perfect, or

insure any security interestor Lien on any property subjectthereto or exhaust any right to takeany action

against any other Borrower, any other Person,or any collateral, to pursue anyother remedy in Lender’s

power whatsoever, any requirement of diligenceor to mitigate damagesand, generally, to the extent

permitted by applicable law, all demands, notices andother formalities of everykind in connection with

this Agreement (except as otherwiseprovided in this Agreement),any right to assert against Lender, any

defense (legal or equitable),set-off, counterclaim, or claim whicheach Borrower maynow or at any time

hereafter have against anyother Borrower or any otherparty liable to Lender, any defense, set-off,

counterclaim, or claim, of anykind or nature, arising directly orindirectly from the present orfuture lack

of perfection, sufficiency, validity, or enforceability of the Obligations or anysecurity therefor, and any

right or defense arising byreason of any claim or defensebased upon an election of remediesby Lender

including any defense basedupon an impairment or eliminationof such Borrower’s rights ofsubrogation,

reimbursement, contribution,or indemnity of such Borroweragainst any other Borrower.Without

limiting the generality of theforegoing, each Borrowerhereby assents to, and waivesnotice of, any

extension or postponementof the time for the paymentof any of the Obligations, the acceptanceof any

payment of any of the Obligations,the acceptance of any partial paymentthereon, any waiver, consent or

other action or acquiescence byLender at any time or times in respect ofany default by any Borrowerin

the performance or satisfaction of anyterm, covenant, condition orprovision of this Agreement,any and

all other indulgences whatsoeverby Lender in respect of anyof the Obligations, and the taking,addition,

substitution or release, in wholeor in part, at any time or times,of any security for any of theObligations

or the addition, substitutionor release, in whole or in part,of any Borrower.Without limiting the

generality of the foregoing,each Borrowerassents to any other action or delayin acting or failure to act on

the part of Lender with respectto the failure by any Borrowerto comply with any of its respective

Obligations, including anyfailure strictly or diligently to assertany right or to pursue anyremedy or to

comply fully with applicablelaws or regulations thereunder, which might,but for the provisions of this

Section 2.14 afford grounds forterminating, dischargingor relieving any Borrower, in whole or in part,

from any of its Obligationsunder this Section 2.14, it beingthe intention of each Borrowerthat, so long

as any of the Obligations hereunderremain unsatisfied, the Obligationsof each Borrower under this

Section 2.14 shall not be dischargedexcept by performance andthen only to the extent of such

performance. The Obligations of each Borrower under this Section 2.14 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or

similar proceeding with respectto any other Borrower or Lender.Each Borrowerwaives, to the fullest

extent permitted by law, the benefit of any statute oflimitations affecting its liability hereunderor the

enforcement hereof.Any payment by anyBorrower or other circumstance whichoperates to toll any

statute of limitations as to anyBorrower shall operate to toll the statuteof limitations as to each ofthe

Borrowers.Each of the Borrowers waives anydefense based on or arising outof any defense of any

Borroweror any other Person, other thanpayment of the Obligationsto the extent of such payment,based

on or arising out of the disabilityof any Borrower or anyother Person, or the validity, legality, or

unenforceability of the Obligations orany part thereof fromany cause, or the cessation fromany cause of

the liability of any Borrowerother than payment of theObligations to the extent of such payment.Lender

may foreclose upon any Collateralheld by Lender by one or morejudicial or nonjudicial sales or other

dispositions, whether or not everyaspect of any such sale is commerciallyreasonable or otherwise fails to

comply with applicable law or mayexercise any other right or remedyLender may have against any

Borroweror any other Person, or anysecurity, in each case, without affecting or impairingin any way the

liability of any of the Borrowershereunder except to theextent the Obligations havebeen paid.

(f)

Each Borrower represents andwarrants to Lender that such Borroweris currently informed of

the financial condition of Borrowersand of all other circumstanceswhich a diligent inquirywould reveal

and which bear upon the riskof nonpayment of the Obligations.Each Borrower furtherrepresents and

warrants to Lender that such Borrowerhas read and understandsthe terms and conditions of theLoan

Documents.Each Borrower herebycovenants that such Borrowerwill continue to keepinformed of

Borrowers’ financial conditionand of all other circumstances whichbear upon the risk of nonpaymentor

nonperformance of the Obligations.

(g)

The provisions of this Section 2.14are made for the benefit ofLender and it successors and assigns,

and may be enforced by it orthem from time to time againstany or all Borrowers as often as occasion

therefor may arise and withoutrequirement on the part ofLender, or any of its successors or assignsfirst to

marshal any of its or their claimsor to exercise any of its or theirrights against any Borroweror to exhaust

any remedies available to itor them against any Borroweror to resort to any other sourceor means of

obtaining paymentof any of the Obligations hereunderor to elect any other remedy. The provisions ofthis

Section 2.14 shall remainin effect until all of the Obligationsshall have been paid in full or otherwisefully

satisfied.If at any time, any payment,or any part thereof, madein respect of any of the Obligations,is

rescinded or must otherwisebe restored or returned byLender upon the insolvency, bankruptcy or

reorganization of any Borrower, or otherwise,the provisions of this Section 2.14will forthwith be

reinstated in effect, as though suchpayment had not been made.

(h)

Each Borrower herebyagrees that it will not enforce anyof its rights that arise fromthe existence,

payment, performanceor enforcement of the provisionsof this Section 2.14,including rights of

subrogation, reimbursement,exoneration, contributionor indemnification and anyright to participate in

any claim or remedy ofLender against any Borrower, whether or notsuch claim, remedyor right arises in

equity or under contract, statuteor common law, including the right to take or receivefrom any Borrower,

directly or indirectly, in cash or other property or byset-off or in any other manner, payment or security

solely on account of such claim,remedy or right, unless and untilsuch time as all of the Obligationshave

been paid in full in cash.Any claim which any Borrowermay have against any otherBorrowerwith

respect to any payments toLender hereunder or underany agreement related to BankProducts are hereby

expressly made subordinate andjunior in right of payment, withoutlimitation as to any increasesin the

Obligations arising hereunderor thereunder, to the prior payment in full in cashof the Obligations and, in

the event of any insolvency, bankruptcy, receivership, liquidation, reorganizationor other similar

proceeding under the laws ofany jurisdiction relatingto any Borrower, its debts or its assets, whether

voluntary or involuntary, all such Obligationsshall be paid in full in cash beforeany payment or

distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

If any amount shall be paid to any Borrower in violation of the immediately preceding

sentence, such amount shallbe held in trust for the benefitof Lender, and shall forthwith be paidto Lender

to be credited and applied tothe Obligations andall other amounts payable underthis Agreement, whether

matured or unmatured,in accordance with the terms ofthis Agreement, or to be held as Collateralfor any

Obligations or other amountspayable under this Agreementthereafter arising. Notwithstandinganything

to the contrary contained inthis Agreement, no Borrowermay exercise any rights of subrogation,

contribution, indemnity, reimbursementor other similar rights against, andmay not proceed or seek

recourse against or with respectto any property or asset of, anyother Borrower, including after payment

in full of the Obligations, if all orany portion of the Obligationshave been satisfied inconnection with an

exercise of remedies in respect ofthe Equity Interests of such otherBorrower whether pursuantto this

Agreement or otherwise.

(i)

In the event that in any actionor proceeding involvingany state or foreign corporate law, or in any

Insolvency Proceedingor other law affecting the rightsof creditors generally, the obligations of any

Borrower under this Agreementshall be held or determined to be void,voidable, avoidable, invalidor

unenforceable (including, without limitation,because of any applicable stateor federal law relatingto

fraudulent conveyances or transfers),then, notwithstanding anyother provision of this Agreementto the

contrary, the amount of such liability of a Borrowershall, without any furtheraction by any Loan Party or

Lender be automatically limitedand reduced to the highest amountthat is valid and enforceable without

rendering such Borrower’s obligations hereundervoid, voidable, avoidable,invalid or unenforceable. This

Section 2.14(i) with respectto the maximum liability of eachBorroweris intended solely to preserve the

rights of Lender to the maximumextent not subject to avoidance underapplicable law, and no Loan Party

nor any other person or entityshall have any right or claimunder this Section with respectto such

maximum liability, except to the extent necessaryso that the obligations of anyBorrower hereunder shall

not be rendered void, voidable, avoidable,invalid or unenforceable underapplicable law.

3.

3.1

Conditions Precedent to the Initial RevolvingLoan

.The obligation of Lender tomake

the initial Revolving Loan or issuethe initial Letter of Credit issubject to the satisfaction ofeach of the

conditions precedent set forth on Schedule3.1.

3.2

Conditions Precedent to all Revolving Loans

.The obligation of Lender to makeany

Revolving Loans or issue, amend,renew or extend any Letter of Creditat any time shall be subject to the

following conditions precedent:

(a)

the representations and warrantiesof each Loan Party contained inthe Loan Documents shall

be true and correct in all materialrespects (except that such materialityqualifier shall not be applicableto

any representations and warrantiesthat already are qualified or modifiedby materiality in the textthereof)

on and as of the date of suchRevolving Loan, as thoughmade on and as of such date(except to the extent

that such representations and warrantiesrelate solely to an earlier date, in whichcase such representations

and warranties shall be true and correctin all material respects as of suchearlier date (except that such

materiality qualifier shall notbe applicable to any representationsand warranties that alreadyare qualified

or modified by materiality inthe text thereof));

(b)

as of the date of any such RevolvingLoan or the issuance, amendment, renewal orextension

of such Letter of Credit, as applicable,or the use of the proceedsthereof, and after givingeffect to any of

the foregoing, no Event of Default,or event or condition whichwith notice, or passageof time, or both,

would constitute an Event ofDefault, shall exist;

(c)

Lender shall have receiveda request for such RevolvingLoan or such Letter of Credit (or for

the amendment, renewal orextension thereof) in accordance withthe requirements of the Loan

Documents; and

(d)

as of the date of any such RevolvingLoan or the issuance, amendment, renewal orextension

of such Letter of Credit, as applicable,or the use of the proceedsthereof, and after givingeffect to any of

the foregoing, the aggregateprincipal amount of the RevolvingLoans and the Letter of Credit Usageshall

not exceed the lesser of theMaximum Credit or the BorrowingBase.

Each request for a RevolvingLoan or the issuance, amendment,renewal or extension of anyLetter of Credit

delivered by a Borrower shallbe deemed to be a representationand warranty byeach Borrowerthat the

conditions specified in Section 3.2have been satisfied on andas of the date of the applicable Revolving

Loan or issuance, amendment, renewalor extension of a Letter of Creditand after giving effect thereto.

The making of any RevolvingLoan or the issuance, amendment,renewal or extension of anyLetter of

Credit shall not be deemeda modification or waiver byLender of any of the terms ofany Loan Document

or any Event of Default or eventor condition which withnotice, or passage of time,or both, would

constitute an Event of Default.

3.3

Maturity

.The Commitment shall continuein full force and effect for a termending on

the Maturity Date (unless terminatedearlier in accordance withthe terms hereof).

3.4

Effect of Maturity

.On the Maturity Date, the Commitmentshall automatically terminate

and all of the Obligations shallbecome due and payablewithout notice or demandand each Borrower

shall be required to pay in fullall of the Obligations.No termination of the Commitmentshall relieve or

discharge any Loan Party of its duties, obligations,or covenants under anyLoan Document and the Liens

of Lender in the Collateralshall continue to secure the Obligationsand shall remain in effect until

payment in full of all Obligations.

3.5

Early

Te

rmination by Borrowers

.Borrowers have the option,at any time upon 10

Business Days prior writtennotice to Lender, to make payment in full ofall of the Obligations and

terminate the Commitments; provided,however, that(a) Borrowers may rescindsuch written notice if it

states that the proposed paymentin full is to be made with the proceedsof third party Indebtedness andif

the closing for such incurrence doesnot happen on or beforethe date of the proposed terminationset forth

in such notice (in which case,a new notice shall be requiredto be sent in connection withany subsequent

termination), and (b) for theavoidance of doubt, nothingin this Section 3.5 shall effect a terminationof any

Hedge Agreement, which HedgeAgreements may only be terminatedin accordance with their respective

terms.

4.

Each Loan Party representsand warrants to Lender thefollowing:

4.1

Due Organization and Qualification

.Each Loan Party (a) is dulyorganized and existing and in

good standing under thelaws of the jurisdiction of its organization,(b) is qualified to do businessin any

State where the failure to be soqualified could reasonablybe expected to have a MaterialAdverse Effect,

and (c) has all requisite powerand authority to own and operateits assets, to carry on its businessas now

conducted and as proposedto be conducted, to enter into the LoanDocuments to which it isa party and

to carry out the transactions contemplatedthereby.

4.2

Due Authorization; No Conflict

.The execution, delivery, and performance by each Loan

Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Loan Party.

The execution, delivery, and performance by each Loan Party of

the Loan Documents to whichit is a party do not and will not (a)violate any material provisionof

Federal, State, or local law or regulationapplicable to any Loan Party, the GoverningDocuments of any

Loan Party, or any order, judgment, or decree of any courtor other GovernmentalAuthority binding on

any Loan Party, (b) resultin or require the creation orimposition of any Lien of anynature whatsoever

upon any assets of any LoanParty, other than Permitted Liens, or (c) requireany approval of any holder

of Equity Interests of a Loan Party, other than consentsor approvals that have beenobtained and that are

still in force and effect.

4.3

Binding Obligations; Perfected Liens.

(a)

Each Loan Document has beenduly executed and deliveredby each Loan Party that is a party

thereto and is the legally valid andbinding obligation of such LoanParty, enforceable against such Loan

Party in accordance with itsrespective terms, except asenforcement may be limitedby equitable principles

or by bankruptcy, insolvency, reorganization, moratorium, or similar lawsrelating to or

limiting creditors’ rights generally.

(b)

As of the Closing Date, theLiens of Lender are validlycreated, perfected and first priority

Liens, subject as to priority, only to Permitted Lienswhich are non-consensualPermitted Liens, permitted

purchase money Liens, orthe interests of lessors underCapital Leases, except for Liensin respect of (i)

motor vehicles that are subjectto a certificate of title, (ii) money, (iii) letter-of-credit rights (otherthan

supporting obligations), (iv)commercial tort claims (otherthan those that, by the termsof any Loan

Document, are required tobe perfected), and (v) any depositaccounts and securities accounts notsubject

to a Control Agreement aspermitted by any Loan Document,and subject only to the filingof financing

statements in the appropriate filingoffices.

4.4

Title to Assets; No Encumbrances

.Each Loan Party has (a) good,sufficient and legal

title to (in the case of fee interestsin Real Property), (b) validleasehold interests in (in the caseof

leasehold interests in real orpersonal property), and (c)good and marketable title to (inthe case of all

other personal property), allof its assets reflected in its mostrecent financial statements deliveredto

Lender, in each case except for assets disposedof since the date of such financialstatements to the extent

permitted by any Loan Document.All of such assets are free and clearof Liens except for Permitted

Liens.

4.5

Litigation

.Except as set forth on Schedule4.5, there are no actions, suits, proceedingsor

investigations pending or, to the knowledgeof a Loan Party, threatened in writing against a LoanParty,

that (a) relate to any LoanDocument or transaction contemplatedthereby or (b) either individuallyor in

the aggregate has or could reasonablybe expected to have a MaterialAdverse Effect.

4.6

Compliance with Laws

.No Loan Party (a) is in violationof any applicable laws,rules,

regulations, executive orders,or codes that, individuallyor in the aggregate, could reasonablybe expected

to have a Material AdverseEffect, or (b) is subject to or in default with respectto any final judgments,

writs, injunctions, decrees, rulesor regulations of anycourt or any GovernmentalAuthority that,

individually or in the aggregate,could reasonably be expectedto have a Material Adverse Effect.No

inventory has been producedin violation of the Fair LaborStandards Act of 1938.

4.7

No Material Adverse Effect

.All historical financial statementsrelating to each Loan

Party that have been deliveredby a Loan Party to Lender have beenprepared in accordance withGAA

(except, in the case of unaudited financialstatements, for the lack of footnotesand being subject to year-

end audit adjustments) andpresent fairly in all materialrespects, the financial condition ofsuch Loan

Party as of the date thereof and results of operations for the period then ended. Since November 2, 2024, no event, circumstance, or change has occurred that has or could reasonably be expected to have a

4.8

Solvency

.Loan Parties, takenas a whole, are Solvent.

4.9

Environmental Condition

.Each Loan Party and its Subsidiariesare in compliance in all

respects with all applicableFederal, State and local environmental,hazardous waste, healthand safety

statutes, and any rules or regulationsrelated to such statutes, which governor affect the operations or

properties of such Loan Partyand its Subsidiaries, except wherethe failure to comply could,individually

or in the aggregate, not reasonablybe expected to have a Material AdverseEffect. None of the operations

of any Loan Party or its Subsidiariesis the subject of anyFederal, State or local investigationevaluating

whether any remedial actioninvolving a material expenditureis needed to respond to a releaseof any

toxic or hazardous waste orsubstance into the environment.No Loan Party has any contingentliability in

connection with any release of anytoxic or hazardous waste or substanceinto the environment that hasor

could, individually or in theaggregate, reasonably be expectedto have a Material AdverseEffect.

4.10

Complete Disclosure; Projections

.All factual information takenas a whole (other than

forward-looking informationand projections and informationof a general economic natureand general

information about each LoanParty) furnished by or onbehalf of any Loan Party in writingto Lender in

connection with any Loan Document,and all other such factualinformation taken as a whole(other than

forward-looking informationand projections and informationof a general economic natureand general

information about any LoanParty) hereafter furnishedby or on behalf of a Loan Partyin writing to

Lender will be true and accurate, inall material respects, on the dateas of which such information is

dated or certified and not incompleteby omitting to state anyfact necessary to makesuch information

(taken as a whole) not misleadingin any material respect at suchtime in light of the circumstancesunder

which such information was provided.Projections deliveredto Lender represent the goodfaith estimate

of each Loan Party, on the date such Projectionsare delivered, of the futureperformance of such Loan

Party for the periods coveredthereby based upon assumptionsbelieved by such Loan Partyto be

reasonable at the time of thedelivery thereof to Lender(it being understood that suchProjections are

subject to significant uncertaintiesand contingencies, manyof which are beyond the control of a Loan

Party, and no assurances can be given that such Projectionswill be realized).

4.11

Taxes

.Except as otherwisepermitted under Section 5.5,all tax returns and reports of each

Loan Party required to be filed byit have been timelyfiled, and all taxes shown onsuch tax returns to be

due and payable and all other taxesupon a Loan Party and uponits assets, income, businessesand

franchises that are due andpayable have been paid whendue and payable.Each Loan Party has made

adequate provision in accordance withGAA

for all taxes not yet due and payable.To the knowledge of

any Loan Party, there is no proposed tax assessmentagainst a Loan Party thatis not being contested in

good faith by appropriate proceedingsdiligently pursued andavailable to a Loan Party, in each case prior

to the commencement of foreclosureor other similar proceedings,which proceedings (or ordersentered

in connection with such proceeding),and adequate reserves or otherappropriate provision, if any, as are

required by GAAP havebeen made therefor.

4.12

Margin Stock; InvestmentCompany Act, Etc

. No Loan Party owns anyMargin Stock or

engages principally, or as one of its important activities,in the business of extendingcredit for the purpose

of purchasing or carryingany Margin Stock.No Loan Party is subject to regulationunder the Federal

Power Act or the InvestmentCompany Act of 1940 or under anyother Federal or State statute or

regulation which may limit its abilityto incur Indebtedness or whichmay otherwise render all orany

portion of the Obligations unenforceable.No Loan Party is a “registered investment company”or a

company “controlled” by a“registered investment company”or a “principal underwriter” of a“registered

investment company” as such termsare defined in the InvestmentCompany Act of 1940.

4.13

OFAC; Sanctions; Anti-Corruption Laws; Anti-MoneyLaundering Laws;Patriot

Act

.(a) No member of theLoan Party Group is a SanctionedTarget or is owned or controlled by, or is

acting on behalf of, a SanctionedTarget, (b) each member of the Loan Party Grouphas instituted,

maintains and complies with policies,procedures and controls reasonablydesigned to assure compliance

with Sanctions, Anti-Money LaunderingLaws and Anti-CorruptionLaws, and (c) to the knowledgeof

any Loan Party, no member of the Loan Party Groupis under investigation bya Governmental Authority

for non-compliance with Sanction(s),Anti-Money LaunderingLaws or Anti-Corruption Laws.As of the

Closing Date, the informationincluded in the Beneficial OwnershipCertificate regardingbeneficial

ownership as required by theBeneficial Ownership Regulationreceived by Lender from anyLoan Party

that is a “legal entity customer”as defined in such regulation, is true andcorrect in all respects.

4.14

Employee and Labor Matters

.There is (a) no unfair labor practicecomplaint pending

or, to the knowledge of any Loan Party, threatened against anyLoan Party or its Subsidiaries beforeany

Governmental Authority andno grievance or arbitration proceedingpending or threatened against any

Loan Party or its Subsidiarieswhich arises out of or underany collective bargainingagreement and that

could, individually or in theaggregate, reasonably be expectedto result in a Material AdverseEffect and

(b) no strike, labor dispute,slowdown, stoppage or similaraction or grievance pendingor threatened in

writing against any Loan Party orits Subsidiaries that could,individually or in the aggregate,reasonably

be expected to result in a MaterialAdverse Effect. Except as describedon Schedule 4.14, as ofthe

Closing Date, no Loan Partyor its Subsidiaries is party to or boundby any collective bargaining

agreement, management agreementor consulting agreement.No Loan Party or its Subsidiaries has

incurred any liability or obligationunder the Worker Adjustment and RetrainingNotification Act or

similar State law, which remains unpaid or unsatisfiedand that could, individuallyor in the aggregate,

reasonably be expected to resultin a Material Adverse Effect.The hours worked and paymentsmade to

employees of each Loan Partyand its Subsidiaries have not beenin violation of the Fair LaborStandards

Act or any other applicable legal requirements,except to the extent such violationscould not, individually

or in the aggregate, reasonablybe expected to result in a MaterialAdverse Effect.All material payments

due from any Loan Party or its Subsidiarieson account of wages and employeehealth and welfare

insurance and other benefits havebeen paid or accrued as a liabilityon the books of Borrowers, except

where the failure to do so could not,individually or in the aggregate,reasonably be expected to resultin a

4.15

.No Loan Party, nor any of its Subsidiaries, norany of its ERISA Affiliates,

maintains or contributes to anyBenefit Plan.

4.16

.Schedule 4.16 sets forth,as of the Closing Date, (a) a

correct and complete list of the nameand entity type of each Subsidiaryof each Loan Party, its parent

company or companies (otherthan for Parent)and its Subsidiaries and (b)a true and complete list of each

class of the authorized EquityInterests of each Loan Party (otherthan the Parent), all of whichissued

Equity Interests are validlyissued, outstanding, fully paid andnon-assessable, and owned beneficiallyand

of record by the Persons identifiedon Schedule 4.16.

4.17

Intellectual Property; Licenses

.Each Loan Party and its Subsidiariesown, or possess

the right to use, all of the IntellectualProperty, licenses, permits and other authorizationsthat are

reasonably necessary for theoperation of its businesses, withoutconflict with the rights ofany other

Person.To the best knowledge of any Loan Party, no slogan or other advertisingdevice, product,

process, method, substance,part or other material nowemployed, or now contemplatedto be employed,

by any Loan Party or anySubsidiary infringes upon anyrights held by any other Person.No claim or

litigation regarding any of the foregoingis pending or, to the best knowledge ofthe Administrative

Borrower, threatened, which, either individuallyor in the aggregate, couldreasonably be expected to

have a Material Adverse Effect.

4.18

Deposit Accounts; Credit Card Arrangements.

(a)

Schedule 4.18(a) hereto sets forth alldeposit accounts maintainedby Loan Parties as of the

Closing Date, which Scheduleincludes, with respect toeach deposit account (i) the nameof the Loan

Party that is the owner andcustomer with respect to such depositaccount, (ii) the nameof the depository

bank where such deposit accountis maintained, (iii) the accountnumber(s) of such depositaccounts, (iv)

the purpose and type of suchdeposit account, and (v)whether such deposit account is an Excluded

Deposit Account or not, andif so the basis on whichit is an Excluded Deposit Account.

(b)

Schedule 4.18(b) hereto setsforth all arrangements as ofthe Closing Date to whichany Loan

Party is a party with any Credit CardIssuer or Credit Card Processoror otherwise with respectto the

processing and/or paymentto such Loan Party of the proceedsof any credit card charges and debitcard

charges for sales made by such Loan Party.

4.19

.Schedule 4.19 sets forth allMaterial Contracts to which anyLoan

Party is a party or is bound as of the ClosingDate.Loan Parties have deliveredtrue, correct and complete

copies of such Material Contractsto Lender on or before the ClosingDate.Loan Parties are notin breach

or in default in any material respectof or under any Material Contractand have not receivedany notice of

the intention of any other party theretoto terminate any Material Contract.

4.20

[Reserved].

4.21

Eligible Credit Card Receivables

.As to each Credit Card Receivablethat is identified by

Borrowers as an Eligible Credit CardReceivable in a BorrowingBase Certificate submitted to Lender,

such Credit Card Receivable is(i) a bona fide existing paymentobligation of the applicable accountdebtor

created by the sale and deliveryof inventory in the ordinary courseof a Borrower’s business, (ii) owed to a

Borrower without any knowndefenses, disputes, offsets, counterclaims,or rights of return or cancellation,

and (iii) not excluded as ineligibleby virtue of one or moreof the excluding criteria (otherthan any

Lender-discretionary criteria) set forthin the definition of EligibleCredit Card Receivable.

4.22

Eligible Inventory

.As to each item of inventorythat is identified by Borrowers as Eligible

Inventory in a BorrowingBase Certificate submitted toLender, such inventory is (a) of good and

merchantable quality, free from known defects, and(b) not excluded as ineligibleby virtue of one or more

of the excluding criteria (other than anyLender-discretionary criteria) set forth in the definitionof Eligible

Inventory, as applicable.

4.23

Brokers

.There are no brokeragecommissions, finder’s fees or investmentbanking fees

payable in connection withany transactions contemplatedby the Loan Documents.

5.

Unless otherwise hereafteragreed in writing by Lender:

5.1

Financial Statements; BorrowingBase Certificate; Other Information

.The Loan

Parties (a) will deliver to Lendereach of the financial statements,reports, and other items set forthon

Schedule 5.1 no later than the timesspecified therein, (b) will maintaina system of accounting that

enables each Loan Party to producefinancial statements inaccordance with GAAP, and (c) will (i) keep a

reporting system that is substantially similarto the reporting systemof Loan Parties in effect as of the

Closing Date, and (ii) maintainits billing systems and practicessubstantially as in effect as of the Closing

Date and will only make material modificationsthereto with notice to Lender.

 

 

 

 

5.2

Notices of Material Events

.A Loan Party will promptly (but in any eventwithin three

Business Days) notify Lender inwriting of: (a)any event, condition or circumstancethat, with the giving

of notice, the passage of time,or both, would be an Event of Default or theoccurrence of any Eventof

Default, (b) any matter thathas, or could reasonably beexpected to have, a Material AdverseEffect, (c)

any breach of Section 4.13or Section 6.11, (d) any dispute, litigation,investigation, proceedingor

suspension between a Loan Partyand any Governmental Authorityor the commencement of, orany

material development in, anylitigation or proceeding affecting a Loan Partyseeking to recover $2,500,000

or more in damages, (e) anymaterial change in accountingpolicies or financial reporting practicesof a

Loan Party, (f) any change in the senior executiveofficers of a Loan Party, (g) the discharge by a Loan

Party of its independent accountantsor any withdrawal or resignationby such accountants, (h) any

collective bargaining agreementor other labor contract to which a LoanParty becomes a party, or the

application for the certification ofa collective bargaining agent,(i) the filing of any Lien for unpaidtaxes

against any Loan Party in excess of$500,000, (j) any terminationor cancellation of insurancewhich a

Loan Party is required to maintainunder the Loan Documents(other than insurance which is replacedas of

the date of termination or cancellation),or any loss, damage,or destruction to, or commencementof any

action or proceeding for the takingunder eminent domain, condemnationor similar proceeding, of

Collateral in the amount of $2,500,000or more, whether or not coveredby insurance, (k) anydispute or

claims by any customers ofa Loan Party exceeding $2,500,000individually or in the aggregate duringany

fiscal year or any inventory returnedto or recovered by a Loan Partyoutside of the ordinary course of

business with a fair marketvalue that exceeds $2,500,000 individuallyor in the aggregate, and (l) any

transaction occurring after the ClosingDate consisting of: (i) theincurrence of Material Indebtedness,and

(ii) mergers or acquisitions permitted underSection 6.3;provided, that, each suchnotice under these

clauses (i) and (ii) will be received byLender not less than 10 BusinessDays prior thereto, togetherwith

such other information withrespect thereto as Lender mayreasonably request.Each notice pursuant to

this Section will be accompaniedby a statement of an AuthorizedPerson of the AdministrativeBorrower

setting forth details of the occurrencereferred to therein and statingwhat action each Loan Partyhas taken

and proposes to take with respectthereto.

5.3

Existence

.Each Loan Party will, and willcause its Subsidiaries to, preserveand keep in

full force and effect such Person’s valid existence andgood standing in its jurisdiction oforganization

and, except as could not reasonablybe expected to have a MaterialAdverse Effect, good standingwith

respect to all other jurisdictions in whichit is qualified to do business and anyrights, franchises, permits,

licenses, accreditations, authorizations,or other approvals materialto their businesses.

5.4

Maintenance of Properties

.Each Loan Party will, andwill cause its Subsidiariesto,

maintain and preserve all ofits assets that are necessary or usefulin the proper conduct of itsbusiness in

good working order and condition,ordinary wear, tear, casualty, and condemnation and Permitted

Dispositions excepted.

5.5

Taxes

.Each Loan Party will, and will causeits Subsidiaries to,pay in full before

delinquency or before the expirationof any extension period all materialtaxes imposed, levied,or

assessed against it, or any ofits assets or in respect of anyof its income, businesses, or franchises

(including taxes, levies, imposts,duties, fees, assessmentsor other charges of whatevernature now or

subsequently imposed by anyGovernmental Authority and allrelated interest, penalties orsimilar

liabilities), except where (a) the validityor amount thereof is being contestedin good faith by appropriate

proceedings, (b) such LoanParty or Subsidiary has set aside on its booksadequate reserves with respect

thereto in accordance with GAAP,and (c) any such contest is instituted promptlyand prosecuted

diligently by such Loan Partyor its Subsidiary, as applicable, in good faith; provided,that, each Loan

Party will make timelypayment or deposit of all withholdingtaxes and other payroll taxes to the

appropriate Governmental Authority as and when claimed to be due, notwithstanding the foregoing exceptions, and will, upon request, furnish Lender with proof reasonably satisfactory to Lender indicating

 

 

 

 

that such Loan Party has made suchpayments or deposits.

5.6

Insurance

.Each Loan Party will, and willcause its Subsidiaries to, maintainwith

financially sound and reputable carriers(a) insurancein such amounts (with no greaterrisk retention) and

against such risks and suchother hazards, as is customarilymaintained by companies of establishedrepute

engaged in the same or similarbusinesses operating in the sameor similar locations and (b) allinsurance

required pursuant to the LoanDocuments.Each Loan Party will fromtime to time upon Lender’s request

furnish to Lender correct and completecopies of any insurance policiesand such other informationin

reasonable detail as to the insuranceso maintained as Lender mayrequest.

5.7

Field Examinations; Appraisals

.Upon the request of Lenderafter reasonable prior notice

to any Borrower, each Borrowerwill permit Lender or a firmengaged by Lender for such purposeto (a)

conduct field examinations,including with respect to such Borrower’s practicesin the calculation of the

Borrowing Base and the assetsincluded in the BorrowingBase and related financial informationsuch as,

but not limited to, sales, gross margins,payables, accruals and reserves, provided,that, commencing after

the Closing Date, (i) Lender shallnot conduct, at the expense ofa Borrower, more than (A) one field

examinations in any 12 monthperiod (commencingafter the Closing Date) so longas Excess Availability

during such 12 month periodis at all times not less than the greaterof (1) 15.0% of the Loan Cap or(2)

$10,000,000, or (B) two field examinationsin any 12 month period (commencingafter the Closing Date)

if Excess Availability during such 12 month periodis at any time less thanthe greater of such amounts, (ii)

Lender may conduct, at theexpense of a Borrower, such other field examinationsas Lender may request at

any time as may be requiredby law or regulation or whenan Event of Default exists and (iii) Lender may

conduct additional field examinationsat any time at its own expense and(b) conduct appraisals of the

Collateral in form, scope andmethodology acceptableto Lender, provided, that, (i) Lender shall not

conduct, at the expense of a Borrower, morethan (A) one appraisal of the inventoryin any 12 month

period (commencing after the ClosingDate) so long as Excess Availability during such 12 monthperiod is

at all times not less than the greaterof (1) 15.0% of theLoan Cap or (2) $10,000,000, or(B) two appraisals

in any 12 month period (commencingafter the Closing Date) if Excess Availability during such 12 month

period is at any time less thanthe greater of such amounts, (ii) Lendermay conduct, at the expenseof a

Borrower, such other appraisals as Lender mayrequest at any time as required bylaw or regulation or

when an Event of Default exists and(iii) Lender may conduct additionalappraisals at any time at its own

expense.Upon the request of Lender, after reasonableprior notice to the Administrative Borrowerwhen

no Event of Default exists,as part of any field examination orat otherreasonable times during normal

business hours when no Eventof Default exists or such othertimes as Lender mayrequest otherwise, each

Loan Party will permit representativesand other professionals (includinginvestment bankers, consultants,

accountants, and lawyers) engagedby Lender for such purpose to visit andinspect any of its properties

and to discuss its affairs, business valuations,finances and accounts with its directors,officers, and

accountants, at the expense of a Borrower.

5.8

Compliance with Laws; OFAC;Sanctions, Etc

.Each Loan Party will, andwill cause its

Subsidiaries to, subject to the termsbelow, comply with the requirements of all applicablelaws, rules,

regulations, and orders of anyGovernmental Authority, other than laws, rules, regulations,and orders the

non-compliance with which, individuallyor in the aggregate, could notreasonably be expected to havea

Material Adverse Effect. Each LoanParty will, and will causeeach other member of the LoanParty Group

to, (a) comply with Sanctionsand (b) comply with Anti-MoneyLaundering Laws and Anti- Corruption

Laws in all material respects.

5.9

Cash Management; Collectionof Proceeds of Collateral.

(a)

Each Loan Party will establishand maintain, at its expense,deposit accounts and cash

management services of a typeand on terms, and with the banks,set forth on Schedule 4.18(a)and,

subject to Section 5.9(b), such otherbanks as a Loan Party mayhereafter select (such other banks,

together with the banks set forth onSchedule 4.18(a), collectively, the “Cash ManagementBanks” and

individually, a “Cash Management Bank”); provided,that, on or before the date that is 60 daysafter the

Closing Date (or such longerperiod as Lender mayhereafter agree), Loan Parties shall establishdeposit

accounts and the transfer of fundsbetween such deposit accountssubstantially consistent withthe Cash

Management Structure set forth onExhibit F hereto, as the samemay be amended or supplementedfrom

time to time with the consentof Lender and AdministrativeBorrower.

(b)

Each Loan Party will deliver, or causeto be delivered to Lender, a Control Agreementwith

respect to each of its deposit accountsduly authorized, executedand delivered by each CashManagement

Bank where a deposit account is maintained,such Loan Party and Lender; provided,that, a Loan Party

will not be required to deliver a ControlAgreement with a Cash ManagementBank as to any Excluded

Deposit Account or any StoreAccount (provided, that,if any of such Store Accounts at anyCash

Management Bank are usedfor receipts of more than 10Stores, upon Lender’s request, LoanParties will

obtain a Control Agreementas to such Store Accounts).Each Loan Party will cause all amountsin each

Collection Account (other than a CollectionAccount at Lender), andall other amounts otherwise

constituting, or received in respect of,proceeds of Collateral receivedin any deposit account otherthan a

deposit account at Lender, to be transferredat least one time each week(or more frequently as Lender may

from time to time request) to a ConcentrationAccount.All amounts in each CollectionAccount at

Lender, and all other amounts otherwise constituting,or received in respect of, proceedsof Collateral

received in any deposit account atLender shall be transferred each BusinessDay to the Concentration

Account. Upon the request of Lender, Loan Partiesshall deliver to Lender notifications(each, a “DD

Notification”), in formand substance reasonably satisfactoryto Lender, which have been executed on

behalf of such Loan Party and deliveredto each Cash ManagementBank (other than Lender) listed on

Schedule 4.18(a) with respect to eachdeposit account (other thanExcluded Deposit Accounts)at such

Cash Management Bankused by one or more Stores thatis not subject to a ControlAgreement, which

notifications shall provide that allamounts in such deposit accountsare to be transferred to a

Concentration Account as required hereunder.

(c)

Each Loan Party will directall Credit Card Issuers andCredit Card Processorsto make

payments to a Concentration Accountand all other account debtors or otherobligors in respect of any

amounts payable to a Loan Partyto make payment of all such amountsto a Collection Account and

otherwise take all reasonable actionsto cause such payments to be madeto a Collection Account.Each