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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2017
ULTA BEAUTY, INC.(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdictionof incorporation)
001-33764(CommissionFile Number)
38-4022268(IRS Employer
Identification No.)
1000 Remington Blvd., Suite 120Bolingbrook, Illinois 60440
(Address of principal executive offices, including zip code)
(630) 410-4800(Registrant’s telephone number, including area code)
ULTA SALON, COSMETICS & FRAGRANCE, INC.(Former name or former address, if changed since last report)
ChecktheappropriateboxbelowiftheForm8-Kfilingisintendedtosimultaneouslysatisfythefilingobligationoftheregistrantunderanyofthefollowingprovisions(seeGeneralInstructionA.2.below):
☐ WrittencommunicationspursuanttoRule425undertheSecuritiesAct(17CFR230.425)
☐ SolicitingmaterialpursuanttoRule14a-12undertheExchangeAct(17CFR240.14a-12)
☐ Pre-commencementcommunicationspursuanttoRule14d-2(b)undertheExchangeAct(17CFR240.14d-2(b))
☐ Pre-commencementcommunicationspursuanttoRule13e-4(c)undertheExchangeAct(17CFR240.13e-4(c))
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Explanatory Note
OnJanuary29,2017,UltaSalon,Cosmetics&Fragrance,Inc.,aDelawarecorporation(“Salon”),implementedaholdingcompanyreorganization(the“Reorganization”).FollowingtheReorganization,UltaBeauty,Inc.,aDelawarecorporation(“UltaBeauty”),becamethesuccessorissuertoSalon.ThisCurrentReportonForm8-KisbeingfiledforthepurposeofestablishingUltaBeautyasthesuccessorissuerpursuanttoRule12g-3(a)undertheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”),andtodisclosecertainrelatedmatters.PursuanttoRule12g-3(a)undertheExchangeAct,sharesofcommonstock,parvalue$0.01pershare,ofUltaBeauty,assuccessorissuer,aredeemedregisteredunderSection12(b)oftheExchangeAct.
Item 1.01. Entry into a Material Definitive Agreement.
OnJanuary27,2017,Salon,UltaBeautyandUltaMergerSub,Inc.,aDelawarecorporation(“MergerSub”),enteredintotheAgreementandPlanofMerger(the“Agreement”)whichresultedinUltaBeautyowningalloftheoutstandingcapitalstockofSalon.PursuanttotheReorganization,effectiveat12:01a.m.,EasternTime,onJanuary29,2017(the“EffectiveTime”),MergerSub,adirect,whollyownedsubsidiaryofUltaBeautyandanindirect,whollyownedsubsidiaryofSalon,mergedwithandintoSalon,withSalonsurvivingasadirect,whollyownedsubsidiaryofUltaBeauty.AttheEffectiveTime,eachshareofSaloncommonstockissuedandoutstandingimmediatelypriortotheReorganizationautomaticallyconvertedintoashareofUltaBeautycommonstock,havingthesamerights,powersandpreferences,andthequalifications,limitationsandrestrictions,asthecommonstockofSalonthatwasconverted.Accordingly,Salon’sstockholdersimmediatelypriortotheconsummationoftheReorganizationbecamestockholdersofUltaBeautyattheEffectiveTime.InaccordancewiththeStockholderRightsAgreement,asamended,onepreferredstockpurchaserightisattachedtoeachshareofUltaBeautycommonstock,justasitwasattachedtotheSaloncommonstockpriortotheReorganization.ThestockholdersofSalonwillnotrecognizegainorlossforU.S.federalincometaxpurposesasaresultoftheconsummationoftheReorganization.
TheReorganizationwasconductedpursuanttoSection251(g)oftheGeneralCorporationLawoftheStateofDelaware(the“DGCL”),whichprovidesfortheformationofaholdingcompanywithoutavoteofthestockholdersoftheconstituentcorporations.UltaBeautyhasaCertificateofIncorporationandBylawsthatareeachidenticaltothoseofSalonimmediatelypriortotheconsummationoftheReorganization,exceptforthechangeofthenameofthecorporationaspermittedbySection251(g)oftheDGCL.Furthermore,theconversionofstockintheReorganizationoccurredautomaticallywithoutanexchangeofstockcertificates.AftertheReorganization,stockcertificatesthatpreviouslyrepresentedsharesofSaloncommonstocknowrepresentthesamenumberofsharesofUltaBeautycommonstock.FollowingtheconsummationoftheReorganization,sharesofUltaBeauty’scommonstockcontinuetotradeontheNASDAQGlobalSelectMarket,onanuninterruptedbasis,underthesymbol“ULTA,”withthesameCUSIPnumber.ImmediatelyafterconsummationoftheReorganization,UltaBeautyhas,onaconsolidatedbasis,thesameassets,businessesandoperationsasSalonhadimmediatelypriortotheconsummationoftheReorganization.
AsaresultoftheReorganization,UltaBeautybecamethesuccessorissuertoSalonpursuantto12g-3(a)oftheExchangeActandsharesofUltaBeauty’scommonstockaredeemedregisteredunderSection12(b)oftheExchangeAct.
TheforegoingdescriptionsoftheReorganizationandtheAgreementdonotpurporttobecompleteandarequalifiedintheirentiretybyreferencetothefulltextoftheAgreement,whichisfiledasExhibit2andwhichisincorporatedbyreferenceherein.
Item 3.03. Material Modification of Rights of Security Holders.
TheinformationsetforthinItem1.01andItem5.03isherebyincorporatedbyreferenceinthisItem3.03.
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements ofCertain Officers.
ThedirectorsofUltaBeauty,whicharelistedbelow,areidenticaltothedirectorsofSalonimmediatelypriortotheEffectiveTimeoftheReorganization.
DIRECTORS
Director Audit Committee
Nominating andCorporate Governance
Committee Compensation
Committee CharlesJ.Philippin*
MichelleL.Collins ✓ †
MaryN.Dillon
RobertF.DiRomualdo †
DennisK.Eck
✓ ✓
CatherineA.Halligan
✓ †
CharlesHeilbronn
✓ ✓
MichaelR.MacDonald
✓
GeorgeR.Mrkonic ✓
LornaE.Nagler
✓ ✓
VanessaA.Wittman ✓
* Non-ExecutiveChairpersonoftheBoard.† CommitteeChairperson.
BiographicalinformationandinformationregardingthecompensationofUltaBeauty’sdirectorscanbefoundinSalon’sdefinitiveProxyStatementforthe2016AnnualMeetingofStockholdersfiledwiththeSecuritiesandExchangeCommissiononApril20,2016(the“2016ProxyStatement”)underthecaption“CorporateGovernanceandtheBoardofDirectors”andisincorporatedbyreferenceherein.
TheexecutiveofficersofUltaBeauty,whicharelistedbelow,areidenticaltotheexecutiveofficersofSalonimmediatelypriortotheEffectiveTimeoftheReorganization.
EXECUTIVE OFFICERS
Officer Position with Ulta BeautyMaryN.Dillon ChiefExecutiveOfficer
ScottM.Settersten ChiefFinancialOfficer,TreasurerandAssistantSecretary
JodiJ.Caro GeneralCounselandCorporateSecretary
JeffreyJ.Childs ChiefHumanResourcesOfficer
DavidC.Kimbell ChiefMerchandisingandMarketingOfficer
BiographicalinformationofUltaBeauty’sexecutiveofficerscanbefoundinSalon’sAnnualReportonForm10-KforthefiscalyearendedJanuary30,2016filedwiththeSecuritiesandExchangeCommissiononMarch30,2016underthecaption“ExecutiveOfficersoftheRegistrant”inPartI,andisincorporatedbyreferenceherein.InformationregardingthecompensationarrangementsofUltaBeauty’snamedexecutiveofficerscanbefoundinSalon’s2016ProxyStatementunderthecaption“CompensationCommitteeReportandCompensationDiscussionAndAnalysis”andisincorporatedbyreferenceherein.
InconnectionwiththeReorganization,onJanuary27,2017,SalonandUltaBeautyalsoenteredintotheCompensationPlanAgreementpursuanttowhich(1)SalontransferredtoUltaBeauty,andUltaBeautyassumed(includingsponsorshipof),asoftheEffectiveTime,theUltaSalon,Cosmetics&Fragrance,Inc.SecondAmendedandRestatedRestrictedStockOptionPlan,asfurtheramended,theUltaSalon,Cosmetics&Fragrance,Inc.2002EquityIncentivePlan,theUltaSalon,Cosmetics&Fragrance,Inc.2007IncentiveAwardPlanandtheAmendedandRestatedUltaSalon,Cosmetics&Fragrance,Inc.2011IncentiveAwardPlanandanysubplans,appendicesoraddendumsthereunder(together,the“SalonEquityCompensationPlans”),andallobligationsofSalonpursuanttoeachstockoption
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topurchaseashareofSaloncommonstock(a“SalonOption”)andeachrighttoacquireorvestinashareofSaloncommonstock,including,withoutlimitation,restrictedstockunitsandperformancebasedvestingshareunitawards(a“SalonUnit”andeachofaSalonOptionandaSalonUnit,a“SalonEquityAward”)thatwasoutstandingimmediatelypriortotheEffectiveTimeand(a)issuedundertheSalonEquityCompensationPlansandunderlyinggrantagreements(eachsuchgrantagreement,a“SalonEquityAwardGrantAgreement”andsuchgrantagreementstogetherwiththeSalonEquityCompensationPlans,the“SalonEquityCompensationPlansandAgreements”)or(b)grantedbySalonoutsideoftheSalonEquityCompensationPlansandAgreementspursuanttoNASDAQListingRule5635(c),and(2)eachsuchSalonEquityAwardwasconvertedinto(a)withrespecttoeachSalonUnit,arighttoacquireorvestinashareofUltaBeautycommonstockor(b)withrespecttoaSalonOption,anoptiontopurchaseashareofUltaBeautycommonstockatanexercisepricepershareequaltotheexercisepricepershareofSaloncommonstocksubjecttosuchSalonOptionimmediatelypriortotheEffectiveTime.AttheEffectiveTime,theSalonEquityAwards,theSalonEquityCompensationPlansandAgreementsandanyprovisionofanyothercompensatoryplan,agreementorarrangementprovidingforthegrantorissuanceofsharesofSaloncommonstockwereautomaticallydeemedtobeamended,totheextentnecessaryorappropriate,toprovidethatreferencestoSaloninsuchawards,documentsandprovisionsbereadtorefertoUltaBeautyandreferencestosharesofSaloncommonstockinsuchawards,documentsandprovisionsbereadtorefertosharesofUltaBeautycommonstock.
TheforegoingdescriptionoftheCompensationPlanAgreementdoesnotpurporttobecompleteandisqualifiedinitsentiretybyreferencetothefulltextoftheCompensationPlanAgreement,whichisfiledasExhibit10.1andwhichisincorporatedbyreferenceherein.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
InconnectionwiththeReorganization,UltaBeauty’sBoardofDirectorsapprovedand/oradoptedtheUltaBeautyCertificateofIncorporation(includingaCertificateofDesignationsofSeriesAJuniorParticipatingPreferredStock)andtheBylawsofUltaBeautythatareeachidenticaltothoseofSalonimmediatelypriortotheconsummationoftheReorganization,exceptforthechangeofthenameofthecorporationaspermittedbySection251(g)oftheDGCL.
TheforegoingdescriptionsoftheUltaBeautyCertificateofIncorporation,theUltaBeautyCertificateofDesignationsofSeriesAJuniorParticipatingPreferredStockandtheUltaBeautyBylawsdonotpurporttobecompleteandarequalifiedintheirentiretybyreferencetothefulltextoftheCertificateofIncorporation,theCertificateofDesignationsofSeriesAJuniorParticipatingPreferredStockandtheBylaws,whicharefiledasExhibits3.1,3.2and3.3hereto,respectively,andeachofwhichisincorporatedbyreferenceherein.
Item 8.01. Other Items.
SuccessorIssuer
InconnectionwiththeReorganizationandbyoperationofRule12g-3(a)promulgatedundertheExchangeAct,UltaBeautyisthesuccessorissuertoSalonandhassucceededtotheattributesofSalonastheregistrant.SharesofUltaBeautycommonstockaredeemedtoberegisteredunderSection12(b)oftheExchangeAct,andUltaBeautyissubjecttotheinformationalrequirementsoftheExchangeAct,andtherulesandregulationspromulgatedthereunder.UltaBeautyherebyreportsthissuccessioninaccordancewithRule12g-3(f)promulgatedundertheExchangeAct.
AmendmenttoSalonCreditAgreement
Inconnectionwith,andinordertoallowfortheimplementationof,theReorganization,Salonamendeditscreditagreement.
PressRelease
OnJanuary27,2017,SalonissuedapressreleaseannouncingtheReorganization.AcopyofthatpressreleaseisfiledherewithasExhibit99andincorporatedbyreferenceherein.
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Item 9.01. Financial Statements and Exhibits.
(a) Notapplicable.
(b) Notapplicable.
(c) Notapplicable.
(d) Exhibits.TheexhibitslistedintheaccompanyingIndextoExhibitsarefiledaspartofthisCurrentReportonForm8-K.
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SIGNATURE
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,asamended,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersignedhereuntodulyauthorized.
ULTA BEAUTY, INC.
Date:January30,2017 /s/JodiJ.Caro JodiJ.Caro GeneralCounselandCorporateSecretary
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INDEX TO EXHIBITSExhibit
No. Description
2
AgreementandPlanofMerger,datedasofJanuary27,2017,byandamongUltaSalon,Cosmetics&Fragrance,Inc.,UltaBeauty,Inc.andUltaMergerSub,Inc.
3.1 CertificateofIncorporationofUltaBeauty,Inc.
3.2 CertificateofDesignationsofSeriesAJuniorParticipatingPreferredStockofUltaBeauty,Inc.
3.3 BylawsofUltaBeauty,Inc.
4 AmendmenttoStockholderRightsAgreement,datedasofJanuary29,2017.
10.1 CompensationPlanAgreement,datedasofJanuary27,2017betweenUltaSalon,Cosmetics&Fragrance,Inc.andUltaBeauty,Inc.
10.2
AmendedandRestatedLoanandSecurityAgreement,datedOctober19,2011(asfurtheramendedthroughNovember22,2016),byandamongUltaSalon,Cosmetics&Fragrance,Inc.,WellsFargoBank,NationalAssociation,WellsFargoCapitalFinance,LLC,J.P.MorganSecuritiesLLC,JPMorganChaseBank,N.A.andPNCBank,NationalAssociation.
99 PressReleaseissuedonJanuary27,2017.
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Exhibit 2
AGREEMENT AND PLAN OF MERGER
ThisAGREEMENTANDPLANOFMERGER(the“Agreement”),enteredintoasofJanuary27,2017,byandamongUltaSalon,Cosmetics&Fragrance,Inc.,aDelawarecorporation(the“Company”),UltaBeauty,Inc.,aDelawarecorporationandadirect,whollyownedsubsidiaryoftheCompany(“Holdco”),andUltaMergerSub,Inc.,aDelawarecorporationandadirect,whollyownedsubsidiaryofHoldco(“MergerSub”).
RECITALS
WHEREAS,onthedatehereof,theCompanyhastheauthoritytoissue470,000,000shares,consistingof:(i)400,000,000sharesofcommonstock,parvalue$0.01pershare(the“CompanyCommonStock”),ofwhich,asofJanuary25,2017,62,139,326shareswereissuedandoutstandingand(ii)70,000,000sharesofpreferredstock,parvalue$0.01pershare(400,000sharesofwhicharedesignatedasSeriesAJuniorParticipatingPreferredStock)(the“CompanyPreferredStock”),ofwhichnosharesareissuedandoutstanding.
WHEREAS,asoftheEffectiveTime(asdefinedbelow),Holdcowillhavetheauthoritytoissue470,000,000shares,consistingof:(i)400,000,000sharesofcommonstock,parvalue$0.01pershare(the“HoldcoCommonStock”),and(ii)70,000,000sharesofpreferredstock,parvalue$0.01pershare(400,000sharesofwhichwillbedesignatedasSeriesAJuniorParticipatingPreferredStock)(the“HoldcoPreferredStock”).
WHEREAS,asofthedatehereof,MergerSubhastheauthoritytoissue100sharesofcommonstock,noparvaluepershare(the“MergerSubCommonStock”),ofwhichone(1)shareisissuedandoutstandingonthedatehereofandownedbyHoldco.
WHEREAS,asoftheEffectiveTime,thedesignations,rights,powersandpreferences,andthequalifications,limitationsandrestrictionsoftheHoldcoCommonStockandHoldcoPreferredStock(includingtheSeriesAJuniorParticipatingPreferredStock)willbethesameasthoseoftheCompanyCommonStockandCompanyPreferredStock(includingtheSeriesAJuniorParticipatingPreferredStock),respectively.
WHEREAS,theCertificateofIncorporationofHoldco,includingtheCertificateofDesignationsoftheSeriesAJuniorParticipatingPreferredStock(the“HoldcoCharter”),andtheBylawsofHoldco(the“HoldcoBylaws”),whichwillbeineffectimmediatelyfollowingtheEffectiveTime,containprovisionsidenticaltotheAmendedandRestatedCertificateofIncorporationoftheCompany,includingtheCertificateofDesignationsoftheSeriesAJuniorParticipatingPreferredStock(the“CompanyCharter”),andtheAmendedandRestatedBylawsoftheCompany(the“CompanyBylaws”),ineffectasofthedatehereofandthatwillbeineffectimmediatelypriortotheEffectiveTime,respectively(otherthanaspermittedbySection251(g)oftheGeneralCorporationLawoftheStateofDelaware(the“DGCL”)).
WHEREAS,HoldcoandMergerSubarenewlyformedcorporationsorganizedforthesolepurposeofparticipatinginthetransactionshereincontemplatedandactionsrelatedthereto,ownnoassets(otherthanHoldco’sownershipofMergerSubandnominalcapital)andhavetakennoactionsotherthanthosenecessaryoradvisabletoorganizethecorporationsandtoeffectthetransactionshereincontemplatedandactionsrelatedthereto.
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WHEREAS,theCompanyenteredintothatcertainStockholderRightsAgreement,datedasofOctober25,2007(the“RightsAgreement”),withAmericanStockTransfer&TrustCompany,asRightsAgent,pursuanttowhichaRighttoacquireafractionofashareofSeriesAJuniorParticipatingPreferredStockiscurrentlyattachedtoeachshareofCompanyCommonStock.
WHEREAS,theCompanydesirestoreorganizeintoaholdingcompanystructurepursuanttoSection251(g)oftheDGCL,underwhichHoldcowouldbecomeaholdingcompany,bythemergerofMergerSubwithandintotheCompany,andwitheachoutstandingshareofCompanyCommonStockbeingconvertedintheMerger(asdefinedbelow)intoashareofHoldcoCommonStock.
WHEREAS,onoraboutthedatehereof,theCompanyandHoldcowillenterorhaveenteredintoaCompensationPlanAgreement,pursuanttowhich,amongotherthings,theCompanywill,attheEffectiveTime,transfertoHoldco,andHoldcowillassume,sponsorshipofalloftheCompany’sEquityPlans(asdefinedbelow)andalloftheCompany’srightsandobligationsthereunder.
WHEREAS,theboardsofdirectorsofHoldcoandtheCompanyhaveapprovedanddeclaredadvisablethisAgreementandthetransactionscontemplatedhereby,including,withoutlimitation,theMerger.
WHEREAS,theboardofdirectorsofMergerSubhasapprovedanddeclaredadvisablethisAgreementandthetransactionscontemplatedhereby,including,withoutlimitation,theMerger,andthesolestockholderofMergerSubhasapprovedandadoptedthisAgreementandthetransactionscontemplatedhereby,including,withoutlimitation,theMerger.
WHEREAS,thepartiesintend,forUnitedStatesfederalincometaxpurposes,thattheMerger,togetherwithotherstepstakenpursuanttoaplanofreorganization,shallqualifyasareorganizationdescribedinSection368oftheInternalRevenueCode.
NOW,THEREFORE,inconsiderationofthepremisesandthecovenantsandagreementscontainedinthisAgreement,andintendingtobelegallyboundhereby,theCompany,HoldcoandMergerSubherebyagreeasfollows:
1. THE MERGER .InaccordancewithSection251(g)oftheDGCLandsubjectto,anduponthetermsandconditionsof,thisAgreement,MergerSubshallbemergedwithandintotheCompany(the“Merger”),theseparatecorporateexistenceofMergerSubshallcease,andtheCompanyshallcontinueasthesurvivingcorporationoftheMerger(the“SurvivingCorporation”).AttheEffectiveTime,theeffectsoftheMergershallbeasprovidedinthisAgreementandinSection259oftheDGCL.
2. EFFECTIVE TIME .Assoonaspracticableonorafterthedatehereof,theCompanyshallfileacertificateofmergerexecutedinaccordancewiththerelevantprovisionsoftheDGCL,withtheSecretaryofStateoftheStateofDelaware(the“SecretaryofState”)andshallmakeallotherfilingsorrecordingsrequiredundertheDGCLtoeffectuatetheMerger.TheMergershallbecomeeffectiveatsuchtimeasthecertificateofmergerisdulyfiledwiththeSecretaryofStateoratsuchlaterdateandtimeasthepartiesshallagreeandspecifyinthecertificateofmerger(thedateandtimetheMergerbecomeseffectivebeingreferredtohereinasthe“EffectiveTime”).
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3. CERTIFICATE OF INCORPORATION .AttheEffectiveTime,theCompanyChartershallbeamendedintheMergerassetforthbelow,andassoamended,shallbethecertificateofincorporationoftheSurvivingCorporation(the“SurvivingCorporationCharter”)untilthereafteramendedasprovidedthereinorbytheDGCL.
ARTICLEFOURoftheCompanyChartershallbedeletedinitsentiretyandreplacedwiththefollowing:
(a)AuthorizedShares.ThetotalnumberofsharesofcapitalstockwhichtheCorporationhastheauthoritytoissueis500sharesofcommonstock,parvalue$0.01pershare(the“CommonStock”).
ThenumberofauthorizedsharesoftheCommonStockmaybeincreasedordecreased(butnotbelowthenumberofsharesthereofthenoutstanding)bytheaffirmativevoteoftheholdersofatleastamajorityofthevotingpoweroftheissuedandoutstandingsharesofCommonStockoftheCorporation.
(b)CommonStock.ExceptasotherwiseprovidedinthisAmendedandRestatedCertificateofIncorporationorbyapplicablelaw,thevoting,dividendandliquidationrightsoftheholdersofCommonStockareasfollows:
(i)VotingRights.EachrecordholderofCommonStockshallbeentitledatanyannualorspecialmeetingofstockholders,withrespecttoeachshareofCommonStockheldbysuchholderasoftheapplicablerecorddate,toone(1)votepershareinpersonorbyproxyonallmatterssubmittedtoavoteofthestockholdersoftheCorporation.Thereshallbenocumulativevoting.
(ii)DividendsandDistributions.TheholdersofsharesofCommonStockshallbeentitledtoreceivesuchdividendsandotherdistributionsincash,propertyorsharesofstockoftheCorporationasmaybedeclaredthereonbytheBoardofDirectorsfromtimetotimeoutofassetsorfundsoftheCorporationlegallyavailabletherefor.
(iii)LiquidationRights.Intheeventofanydissolution,liquidationorwinding-upoftheaffairsoftheCorporation,whethervoluntaryorinvoluntary,afterpaymentorprovisionforpaymentofthedebtsandotherliabilitiesoftheCorporation,theremainingassetsandfundsoftheCorporation,ifany,shallbedividedamongandpaidratablytotheholdersofCommonStockinproportiontothenumberofsharesheldbythem.
(iv)PreemptiveRights.TheholdersofCommonStockshallhavenopreemptiverighttosubscribeforanysharesofanyclassorseriesofcapitalstockoftheCorporationwhethernoworhereafterauthorized.
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ARTICLESIXoftheCompanyChartershallbedeletedinitsentiretyandreplacedwiththefollowing:
ThenumberofdirectorsoftheCorporationshallbethree(3)orsuchotherspecificnumberasmaybedesignatedfromtimetotimebyresolutionoftheBoardofDirectorsoftheCorporation.
ARTICLENINEoftheCompanyChartershallbeamendedbyaddingaSection(b)immediatelyfollowinganewlydesignatedSection(a)sothatArticleNINEreadsinitsentiretyasfollows:
(a)ShareholderAction.NostockholderactionmaybetakenexceptatanannualorspecialmeetingofstockholdersoftheCorporationandstockholdersmaynottakeanyactionbywrittenconsentinlieuofameeting.
(b)ShareholderActionAsItRelatestoUltaBeauty.AnyactortransactionbyorinvolvingtheCorporation,otherthantheelectionorremovalofdirectorsoftheCorporation,thatrequiresforitsadoptionundertheGeneralCorporationLawoftheStateofDelawareorthisAmendedandRestatedCertificateofIncorporationtheapprovalofthestockholdersoftheCorporationshall,inaccordancewithSection251(g)oftheGeneralCorporationLawoftheStateofDelaware,require,inaddition,theapprovalofthestockholdersofUltaBeauty,Inc.(oranysuccessortheretobymerger),bythesamevoteasisrequiredbytheGeneralCorporationLawoftheStateofDelawareand/orthisAmendedandRestatedCertificateofIncorporation.
EXHIBITAoftheCompanyCharter(theCertificateofDesignationsoftheSeriesAJuniorParticipatingPreferredStock)shallbedeletedinitsentirety.
4. BYLAWS .FromandaftertheEffectiveTime,theCompanyBylaws,asineffectimmediatelypriortotheEffectiveTime,shallconstitutetheBylawsoftheSurvivingCorporation(the“SurvivingCorporationBylaws”)untilthereafteramendedasprovidedthereinorbyapplicablelaw.
5. DIRECTORS .ThedirectorsofMergerSubinofficeimmediatelypriortotheEffectiveTimeshallbethedirectorsoftheSurvivingCorporationandwillcontinuetoholdofficefromtheEffectiveTimeuntiltheearlieroftheirresignationorremovaloruntiltheirsuccessorsaredulyelectedorappointedandqualifiedinthemannerprovidedintheSurvivingCorporationCharterandSurvivingCorporationBylaws,orasotherwiseprovidedbylaw.
6. OFFICERS .TheofficersoftheCompanyinofficeimmediatelypriortotheEffectiveTimeshallbetheofficersoftheSurvivingCorporationandwillcontinuetoholdofficefromtheEffectiveTimeuntiltheearlieroftheirresignationorremovaloruntiltheirsuccessorsaredulyelectedorappointedandqualifiedinthemannerprovidedintheSurvivingCorporationCharterandSurvivingCorporationBylaws,orasotherwiseprovidedbylaw.
7. ADDITIONAL ACTIONS .If,atanytimeaftertheEffectiveTime,theSurvivingCorporationshallconsiderorbeadvisedthatanydeeds,billsofsale,assignments,assurancesoranyotheractionsorthingsarenecessaryordesirabletovest,perfectorconfirm,ofrecordorotherwise,intheSurvivingCorporationitsright,titleorinterestin,toorunderanyof
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therights,propertiesorassetsofeitherMergerSubortheCompanyacquiredortobeacquiredbytheSurvivingCorporationasaresultof,orinconnectionwith,theMergerorotherwisetocarryoutthisAgreement,theofficersanddirectorsoftheSurvivingCorporationshallbeauthorizedtoexecuteanddeliver,inthenameandonbehalfofeachofMergerSubandtheCompany,allsuchdeeds,billsofsale,assignmentsandassurancesandtotakeanddo,inthenameandonbehalfofeachofMergerSubandtheCompanyorotherwise,allsuchotheractionsandthingsasmaybenecessaryordesirabletovest,perfectorconfirmanyandallright,titleandinterestin,toandundersuchrights,propertiesorassetsintheSurvivingCorporationorotherwisetocarryoutthisAgreement.
8. CONVERSION OF SECURITIES .AttheEffectiveTime,byvirtueoftheMergerandwithoutanyactiononthepartofHoldco,MergerSub,theCompanyoranyholderofanysecuritiesthereof:
(a)ConversionofCompanyCommonStock.EachshareofCompanyCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTimeshallbeconvertedintoonevalidlyissued,fullypaidandnon-assessableshareofHoldcoCommonStock.
(b)RightsAttachedtoCompanyCommonStock.EachRightundertheRightsAgreementthatiscurrentlyattachedtoeachshareofCompanyCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTimeshallbedeemedtobeattachedtoeachshareofHoldcoCommonStock.
(c)ConversionofCompanyStockHeldasTreasuryStock.EachshareofCompanyCommonStockheldintheCompany’streasuryshallbeconvertedintoonevalidlyissued,fullypaidandnon-assessableshareofHoldcoCommonStock,tobeheldimmediatelyaftercompletionoftheMergerinthetreasuryofHoldco.
(d)ConversionofCapitalStockofMergerSub.EachshareofMergerSubCommonStockissuedandoutstandingimmediatelypriortotheEffectiveTimeshallbeconvertedintoonevalidlyissued,fullypaidandnon-assessableshareofcommonstock,parvalue$0.01pershare,oftheSurvivingCorporation.
(e)RightsofCertificateHolders.UponconversionthereofinaccordancewiththisSection8,allsharesofCompanyCommonStockshallnolongerbeoutstandingandshallceasetoexist,andeachholderofacertificaterepresentinganysuchsharesofCompanyCommonStockshallceasetohaveanyrightswithrespecttosuchsharesofCompanyCommonStock,except,inallcases,assetforthinSection9herein.Inaddition,eachoutstandingbook-entrythat,immediatelypriortotheEffectiveTime,evidencedsharesofCompanyCommonStockshall,fromandaftertheEffectiveTime,bedeemedandtreatedforallcorporatepurposestoevidencetheownershipofthesamenumberofsharesofHoldcoCommonStock.
9. CERTIFICATES .AtandaftertheEffectiveTimeuntilthereaftersurrenderedfortransferorexchangeintheordinarycourse,eachoutstandingcertificatewhichimmediatelypriortheretorepresentedsharesofCompanyCommonStockshallbedeemedforallpurposestoevidenceownershipofandtorepresentthesharesofHoldcoCommonStock,intowhichthesharesofCompanyCommonStockrepresentedbysuchcertificatehavebeenconvertedasherein
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providedandshallbesoregisteredonthebooksandrecordsofHoldcoanditstransferagent.AtandaftertheEffectiveTime,thesharesofcapitalstockofHoldcoshallbeuncertificated;provided,that,anysharesofcapitalstockofHoldcothatarerepresentedbyoutstandingcertificatesoftheCompanypursuanttotheimmediatelyprecedingsentenceshallcontinuetoberepresentedbycertificatesasprovidedthereinandshallnotbeuncertificatedunlessanduntilavalidcertificaterepresentingsuchsharespursuanttotheimmediatelyprecedingsentenceisdeliveredtoHoldcoatitsregisteredofficeintheStateofDelaware,itsprincipalplaceofbusiness,oranofficeroragentofHoldcohavingcustodyofbooksandrecordsofHoldco,atwhichtimesuchcertificateshallbecanceledandinlieuofthedeliveryofacertificaterepresentingtheapplicablesharesofcapitalstockofHoldco,Holdcoshall(i)issuetosuchholdertheapplicableuncertificatedsharesofcapitalstockofHoldcobyregisteringsuchsharesinHoldco’sbooksandrecordsasbook-entryshares,uponwhichsuchsharesshallthereafterbeuncertificatedand(ii)takeallactionnecessarytoprovidesuchholderwithevidenceoftheuncertificatedbook-entryshares,includinganyactionnecessaryunderapplicablelawinaccordancetherewith,includinginaccordancewithSections151(f)and202oftheDGCL.IfanycertificatethatpriortotheEffectiveTimerepresentedsharesofCompanyCommonStockshallhavebeenlost,stolenordestroyed,then,uponthemakingofanaffidavitofsuchfactbythepersonorentityclaimingsuchcertificatetobelost,stolenordestroyedandtheprovidingofanindemnitybysuchpersonorentitytoHoldco,informandsubstancereasonablysatisfactorytoHoldco,againstanyclaimthatmaybemadeagainstitwithrespecttosuchcertificate,Holdcoshallissuetosuchpersonorentity,inexchangeforsuchlost,stolenordestroyedcertificate,uncertificatedsharesrepresentingtheapplicablesharesofHoldcoCommonStockinaccordancewiththeproceduressetforthintheprecedingsentence.
10. ASSUMPTION OF EQUITY PLANS AND AWARDS .
AttheEffectiveTime,pursuanttothisAgreementandtheCompensationPlanAgreemententeredintobetweenHoldcoandtheCompanyonoraboutthedatehereof(the“CompensationPlanAgreement”),theCompanywilltransfertoHoldco,andHoldcowillassume,sponsorshipofalloftheCompany’sEquityPlans(asdefinedbelow),alongwithalloftheCompany’srightsandobligationsundertheEquityPlans.
AttheEffectiveTime,pursuanttothisAgreementandtheCompensationPlanAgreement,theCompanywilltransfertoHoldco,andHoldcowillassume,itsrightsandobligationsundereachstockoptiontopurchaseashareofCompanyCommonStock(each,a“StockOption”)andeachrighttoacquireorvestinashareofCompanyCommonStock,including,withoutlimitation,restrictedstockunitsandperformancebasedvestingshareunitawards(each,a“Unit”andtogetherwiththeStockOptions,the“Awards”)issuedundertheEquityPlansorgrantedbytheCompanyoutsideoftheEquityPlanspursuanttoNasdaqListingRule5635(c)thatisoutstandingandunexercised,unvestedandnotyetpaidorpayableimmediatelypriortotheEffectiveTime,whichAwardsshallbeconvertedintoastockoptiontopurchaseorarighttoacquireorvestin,respectively,ashareofHoldcoCommonStockwiththesamerightsandprivilegesrelativetoHoldcothatsuchshareunderlyingsuchStockOptionorUnithadrelativetotheCompanyimmediatelypriortotheEffectiveTimeonotherwisethesametermsandconditionsaswereapplicableimmediatelypriortotheEffectiveTime,including,forStockOptions,atanexercisepricepershareequaltotheexercisepricepersharefortheapplicableshareofCompanyCommonStock.ForpurposesofthisAgreement,“EquityPlans”
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shallmean,collectively,theCompanyRestrictedStockOptionPlan,theCompany2002EquityIncentivePlan,theCompany2007IncentiveAwardPlanandtheCompanyAmendedandRestated2011IncentiveAwardPlanandanyandallsubplans,appendicesoraddendumsthereto,andanyandallagreementsevidencingAwards.
11. HOLDCO SHARES .PriortotheEffectiveTime,theCompanyandHoldcoshalltakeanyandallactionsasarenecessarytoensurethateachshareofcapitalstockofHoldcothatisownedbytheCompanyimmediatelypriortotheEffectiveTimeshallbecancelledandceasetobeoutstandingattheEffectiveTime,andnopaymentshallbemadetherefor,andtheCompany,byexecutionofthisAgreement,agreestoforfeitsuchsharesandrelinquishanyrightstosuchshares.
12. NO APPRAISAL RIGHTS .InaccordancewiththeDGCL,noappraisalrightsshallbeavailabletoanyholderofsharesofCompanyCommonStockinconnectionwiththeMerger.
13. TERMINATION .ThisAgreementmaybeterminated,andtheMergerandtheothertransactionsprovidedforhereinmaybeabandoned,whetherbeforeoraftertheadoptionofthisAgreementbythesolestockholderofMergerSub,atanytimepriortotheEffectiveTime,byactionoftheboardofdirectorsoftheCompany.IntheeventofterminationofthisAgreement,thisAgreementshallforthwithbecomevoidandhavenoeffect,andneithertheCompany,Holdco,MergerSubnortheirrespectivestockholders,directorsorofficersshallhaveanyliabilitywithrespecttosuchterminationorabandonment.
14. AMENDMENTS .AtanytimepriortotheEffectiveTime,thisAgreementmaybesupplemented,amendedormodified,whetherbeforeoraftertheadoptionofthisAgreementbythesolestockholderofMergerSub,bythemutualconsentofthepartiestothisAgreementbyactionbytheirrespectiveboardsofdirectors;provided,however,that,noamendmentshallbeeffectedsubsequenttotheadoptionofthisAgreementbythesolestockholderofMergerSubthatbylawrequiresfurtherapprovalorauthorizationbythesolestockholderofMergerSuborthestockholdersoftheCompanywithoutsuchfurtherapprovalorauthorization.NoamendmentofanyprovisionofthisAgreementshallbevalidunlessthesameshallbeinwritingandsignedbyallofthepartieshereto.
15. GOVERNING LAW .ThisAgreementshallbegovernedby,andconstruedinaccordancewith,thelawsoftheStateofDelaware,regardlessofthelawsthatmightotherwisegovernunderapplicableprinciplesofconflictsoflaws.
16. COUNTERPARTS .ThisAgreementmaybeexecutedinoneormorecounterparts,eachofwhichwhenexecutedshallbedeemedtobeanoriginalbutallofwhichshallconstituteoneandthesameagreement.
17. ENTIRE AGREEMENT .ThisAgreement,includingthedocumentsandinstrumentsreferredtoherein,constitutestheentireagreementandsupersedesallotherprioragreementsandundertakings,bothwrittenandoral,amongtheparties,oranyofthem,withrespecttothesubjectmatterhereof.
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18. SEVERABILITY .TheprovisionsofthisAgreementareseverable,andintheeventanyprovisionhereofisdeterminedtobeinvalidorunenforceable,suchinvalidityorunenforceabilityshallnotinanywayaffectthevalidityorenforceabilityoftheremainingprovisionshereof.
[SignaturePageFollows]
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IN WITNESS WHEREOF ,theCompany,HoldcoandMergerSubhavecausedthisAgreementtobeexecutedasofthedatefirstwrittenabovebytheirrespectiveofficersthereuntodulyauthorized.
ULTA SALON, COSMETICS & FRAGRANCE, INC.
By: /s/MaryDillon MaryDillon ChiefExecutiveOfficer
ULTA BEAUTY, INC.
By: /s/ScottSettersten ScottSettersten ChiefFinancialOfficer,TreasurerandAssistantSecretary
ULTA MERGER SUB, INC.
By: /s/JodiCaro JodiCaro GeneralCounsel,VicePresidentandCorporateSecretary
[SignaturePagetoAgreementandPlanofMerger]
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Exhibit 3.1
CERTIFICATE OF INCORPORATIONOF
ULTA BEAUTY, INC.
ARTICLE ONE
ThenameoftheCorporationisUltaBeauty,Inc.
ARTICLE TWO
TheaddressoftheregisteredofficeoftheCorporationintheStateofDelawareis2711CentervilleRoad,Suite400,Wilmington,NewCastleCounty,Delaware,19808.ThenameofitsregisteredagentatsuchaddressisThePrentice-HallCorporationSystem,Inc.
ARTICLE THREE
ThepurposeoftheCorporationistoengageinanylawfulactoractivityforwhichcorporationsmaybeorganizedundertheGeneralCorporationLawoftheStateofDelaware(the“DGCL”).
ARTICLE FOUR
(a)AuthorizedShares.ThetotalnumberofsharesofcapitalstockwhichtheCorporationhastheauthoritytoissueis470,000,000shares,consistingof:
(i)400,000,000sharesofcommonstock,parvalue$.01pershare(the“CommonStock”);and
(ii)70,000,000sharesofpreferredstock,parvalue$.01pershare(the“PreferredStock”).
NotwithstandingtheprovisionsofSection242(b)(2)oftheDGCL(oranysuccessorprovisionthereto),thenumberofauthorizedsharesofPreferredStockandCommonStockmay,withoutaclassorseriesvote,beincreasedordecreased(butnotbelowthenumberofsharesthereofthenoutstanding)fromtimetotimebytheaffirmativevoteoftheholdersofamajorityinvotingpoweroftheoutstandingsharesoftheCorporation’sstockentitledtovote,votingtogetherasasingleclass.
(b)PreferredStock.TheBoardofDirectorsisherebyexpresslyauthorized,subjecttolimitationsprescribedbylaw,toprovidebyresolutionorresolutionsfortheissuanceofthesharesofPreferredStockinoneormoreseriesand,byfilingacertificateofdesignationpursuanttotheDGCLsettingforthacopyofsuchresolutionorresolutions,toestablishfromtimetotimethenumberofsharestobeincludedineachsuchseries,andtofixthedesignation,powers(includingvotingpowers,ifany),preferences,andrightsofthesharesofeachsuchseriesandthequalifications,limitations,andrestrictionsthereof.TheauthorityoftheBoardofDirectors
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withrespecttoeachseriesofPreferredStockshallinclude,butnotbelimitedto,determinationofthefollowing:
(i)thenumberofsharesconstitutingsuchseriesandthedistinctivedesignationofthatseries;
(ii)thedividendrate,ifany,onthesharesofsuchseries,whetherdividendsshallbecumulative,and,ifso,fromwhichdateordates,andtherelativerightsofpriority,ifany,ofpaymentofdividendsonsharesofthatseries;
(iii)whethersuchseriesshallhavevotingrights,inadditiontothevotingrightsprovidedbylaw,and,ifso,thetermsofsuchvotingrights;
(iv)whethersuchseriesshallhaveconversionprivilegesand,ifso,thetermsandconditionsofconversion,includingprovisionforadjustmentoftheconversionrateuponsucheventsastheBoardofDirectorsshalldetermine;
(v)whetherornotthesharesofsuchseriesshallberedeemable,and,ifso,thetermsandconditionsofsuchredemption,includingthedateordatesuponorafterwhichtheyshallberedeemableandtheamountpersharepayableincaseofredemption,whichamountmayvaryunderdifferentconditionsandatdifferentredemptiondates;
(vi)whethersuchseriesshallhaveasinkingfundfortheredemptionorpurchaseofsharesoftheseries,and,ifso,thetermsandamountofsuchsinkingfund;
(vii)therightsofthesharesofsuchseriesintheeventofvoluntaryorinvoluntarydissolutionorwindingupoftheCorporation,andtherelativerightsofpriority,ifany,ofpaymentofsharesofthatseries;and
(viii)anyotherpowers,preferences,rights,qualifications,limitations,andrestrictionsofsuchseries.
(c)CommonStock.ExceptasotherwiseprovidedinthisCertificateofIncorporation(includinganycertificateofdesignationwithrespecttoanyseriesofPreferredStock)orbyapplicablelaw,thevoting,dividendandliquidationrightsoftheholdersofCommonStockareasfollows:
(i)VotingRights.EachrecordholderofCommonStockshallbeentitledatanyannualorspecialmeetingofstockholders,withrespecttoeachshareofCommonStockheldbysuchholderasoftheapplicablerecorddate,toone(1)votepershareinpersonorbyproxyonallmatterssubmittedtoavoteofthestockholdersoftheCorporation.Thereshallbenocumulativevoting.
(ii)DividendsandDistributions.Subjecttotherights,ifany,oftheholdersofanyoutstandingseriesofPreferredStock,theholdersofsharesofCommonStockshallbeentitledtoreceivesuchdividendsandotherdistributionsincash,propertyorsharesofstockoftheCorporationasmaybedeclaredthereonbytheBoardofDirectorsfromtimetotimeoutofassetsorfundsoftheCorporationlegallyavailabletherefor.
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(iii)LiquidationRights.Intheeventofanydissolution,liquidationorwinding-upoftheaffairsoftheCorporation,whethervoluntaryorinvoluntary,afterpaymentorprovisionforpaymentofthedebtsandotherliabilitiesoftheCorporationandsubjecttotherights,ifany,oftheholdersofanyoutstandingseriesofPreferredStock,theremainingassetsandfundsoftheCorporation,ifany,shallbedividedamongandpaidratablytotheholdersofCommonStockinproportiontothenumberofsharesheldbythem.
(iv)PreemptiveRights.TheholdersofCommonStockshallhavenopreemptiverighttosubscribeforanysharesofanyclassorseriesofcapitalstockoftheCorporationwhethernoworhereafterauthorized.
ARTICLE FIVE
TheCorporationistohaveperpetualexistence.
ARTICLE SIX
AtthetimethisCertificateofIncorporationbecomeseffective,theBoardofDirectorsoftheCorporationshallconsistofthree(3)directors,butmaybeincreasedordecreasedfromtimetotimebyresolutionadoptedbytheaffirmativevoteofamajorityofdirectorstheninoffice;providedthatthenumberofdirectorswhichshallconstitutethewholeBoardofDirectorsshallbenotlessthanthree(3).TheBoardofDirectorsshallbedividedintothreeclasses,designatedClassI,ClassIIandClassIII.Eachclassshallconsist,asnearlyasmaybepossible,ofone-thirdofthetotalnumberofdirectorsconstitutingtheentireBoardofDirectors,initiallywithClassIdirectorsbeingelectedforaone-yearterm,ClassIIdirectorsforatwo-yeartermandClassIIIdirectorsforathree-yearterm.Ateachsucceedingannualmeetingofstockholders,beginningin2017,successorstotheclassofdirectorswhosetermexpiresatthatannualmeetingshallbeelectedforathree-yearterm.Ifthenumberofdirectorsischanged,anyincreaseordecreaseshallbeapportionedamongtheclassessoastomaintainthenumberofdirectorsineachclassasnearlyequalaspossible,andanyadditionaldirectorofanyclasselectedtofillavacancyresultingfromanincreaseinsuchclassshallholdofficeforatermthatshallcoincidewiththeremainingtermofthatclass,butinnocasewilladecreaseinthenumberofdirectorsshortenthetermofanyincumbentdirector.UnlessandexcepttotheextentthattheBy-LawsoftheCorporationshallsorequire,theelectionofdirectorsoftheCorporationneednotbebywrittenballot.
ARTICLE SEVEN
Infurtheranceandnotinlimitationofthepowersconferredbystatute,theBoardofDirectorsoftheCorporationisexpresslyauthorizedtomake,alterorrepealtheBy-LawsoftheCorporation.
ARTICLE EIGHT
MeetingsofstockholdersmaybeheldwithinorwithouttheStateofDelaware,astheBy-LawsoftheCorporationmayprovide.ThebooksoftheCorporationmaybekeptoutsidetheStateofDelawareatsuchplaceorplacesasmaybedesignatedfromtimetotimebytheBoardofDirectorsorintheBy-LawsoftheCorporation.
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ARTICLE NINE
NostockholderactionmaybetakenexceptatanannualorspecialmeetingofstockholdersoftheCorporationandstockholdersmaynottakeanyactionbywrittenconsentinlieuofameeting.
ARTICLE TEN
SpecialmeetingsofthestockholdersoftheCorporation,foranypurposeorpurposes,mayonlybecalledatanytimebyamajorityoftheentireBoardofDirectorsorbyeithertheChairmanorthePresidentoftheCorporation.
ARTICLE ELEVEN
TheCorporationshallbegovernedbySection203oftheDGCL(oranysuccessorprovisionthereto)(“Section203”),andtheprovisionscontainedinSection203shallapplytofullestextentpermittedthereunder.
ARTICLE TWELVE
NodirectoroftheCorporationshallbeliabletotheCorporationoritsstockholdersformonetarydamagesforbreachoffiduciarydutyasadirector,excepttotheextentsuchexemptionfromliabilityorlimitationthereofisnotpermittedundertheDGCL,asthesameexistsormayhereafterbeamended.Anyamendment,modificationorrepealoftheforegoingsentenceshallnotadverselyaffectanyrightorprotectionofadirectoroftheCorporationexistingatthetimeof,orincreasetheliabilityofanydirectoroftheCorporationwithrespecttoanyactsoromissionsofsuchdirectoroccurringpriorto,suchamendment,modificationorrepeal.
ARTICLE THIRTEEN
Tothefullestextentpermittedbyapplicablelawasitpresentlyexistsormayhereafterbeamended,theCorporationshallindemnifyandholdharmless,andadvanceexpensestoanypersonwhowasorismadeoristhreatenedtobemadeapartyorisotherwiseinvolvedinanyaction,suitorproceeding,whethercivil,criminal,administrativeorinvestigative,byreasonofthefactthatheorshe,orapersonforwhomheorsheisthelegalrepresentative,isorwasadirectororofficeroftheCorporationor,whileadirectororofficeroftheCorporation,isorwasservingattherequestoftheCorporationasadirector,officer,employeeoragentofanothercorporationorofapartnership,jointventure,trust,enterpriseornonprofitentity,includingservicewithrespecttoemployeebenefitplansmaintainedorsponsoredbytheCorporation(a“CoveredPerson”),againstallliabilityandlosssufferedandexpenses(includingattorneys’fees)reasonablyincurredbysuchCoveredPerson.Notwithstandingtheprecedingsentence,exceptasotherwiseprovidedintheBy-Laws(asthesamemayprovidefromtimetotime),theCorporationshallberequiredtoindemnifyaCoveredPersoninconnectionwithaproceeding(orapartthereof)commencedbysuchCoveredPersononlyifthecommencementofsuchproceeding(orpartthereof)bytheCoveredPersonwasauthorizedbytheBy-Laws,inanywrittenagreementwiththeCorporation,orinthespecificcasebytheBoardofDirectors;provided,however,thatif
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aclaimforindemnification(followingthefinaldispositionofanaction,suitorproceeding)oradvancementofexpensesisnotpaidinfullwithinthirty(30)daysafterawrittendemandthereforbytheCoveredPersonhasbeenreceivedbytheCorporation,theCoveredPersonmayfilesuittorecovertheunpaidamountofsuchclaim,and,ifsuccessfulinwholeorinpart,shallbeentitledtobepaidtheexpenseofprosecutingsuchclaim.NothingcontainedinthisARTICLETHIRTEENshallaffectanyrightstoindemnificationoradvancementofexpensestowhichdirectors,officers,employeesoragentsoftheCorporationotherwisemaybeentitledundertheBy-Laws,anywrittenagreementwiththeCorporationorotherwise.TheCorporationmay,totheextentauthorizedfromtimetotimebytheBoardofDirectors,grantrightstoindemnificationandtotheadvancementofexpensestoanyemployeeoragentoftheCorporationtothefullestextentoftheprovisionsofthisARTICLETHIRTEENwithrespecttotheindemnificationandadvancementofexpensesofdirectorsandofficersoftheCorporation.Anyamendment,modificationorrepealofthisARTICLETHIRTEENshallnotadverselyaffectanyrightorprotectionofaCoveredPersonexistingatthetimeof,orincreasetheliabilityofanyCoveredPersonwithrespecttoanyactsoromissionsofsuchCoveredPersonoccurringpriorto,suchamendment,modificationorrepeal.
ARTICLE FOURTEEN
TheCorporationreservestherighttoamend,alter,change,waiveorrepealanyprovisionofthisCertificateofIncorporation,inthemannernoworhereafterprescribedbythelawsoftheStateofDelawareandthisCertificateofIncorporation,andallrights,preferencesandprivilegesconferredonstockholders,directors,officers,employees,agentsandotherpersonsinthisCertificateofIncorporation,ifany,aregrantedsubjecttothisreservation.NotwithstandinganyotherprovisionsofthisCertificateofIncorporationortheBy-LawsoftheCorporation(andnotwithstandingthefactthatalesserpercentageorseparateclassvotemaybespecifiedorpermittedbylaw,thisCertificateofIncorporationortheBy-LawsoftheCorporation),anyproposaltoamendorrepeal,ortoadoptanyprovisionofthisCertificateofIncorporationinconsistentwithARTICLESSIX,NINE,TEN,ELEVENandFOURTEENshallrequiretheaffirmativevoteoftheholdersofnotlessthan662/3%ofthevotesentitledtobecastbytheholdersofallthethenoutstandingsharesofstockthenentitledtovotegenerallyintheelectionofdirectors,votingtogetherasasingleclass.
*****
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Thenameandaddressofthesoleincorporatorare:RussellE.Ryba,Foley&LardnerLLP,777EastWisconsinAvenue,Milwaukee,Wisconsin53202-5306.
Theundersigned,beingthesoleincorporatoroftheCorporation,forthepurposeofformingacorporationundertheDGCL,domake,fileandrecordthisCertificate,anddocertifythatthefactshereinstatedaretrue,andIhaveaccordinglyhereuntosetmyhandthis16thdayofDecember,2016.
/s/RussellE.RybaRussellE.Ryba
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Exhibit 3.2
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ULTA BEAUTY, INC.
(PursuanttoSection151oftheDelawareGeneralCorporationLaw)
UltaBeauty,Inc.,acorporationorganizedandexistingundertheGeneralCorporationLawoftheStateofDelaware(hereinaftercalledthe“Corporation”),herebycertifiesthatthefollowingresolutionwasadoptedbytheBoardofDirectorsoftheCorporationasrequiredbySection151oftheGeneralCorporationLawatameetingdulycalledandheld.
RESOLVED,thatpursuanttotheauthoritygrantedtoandvestedintheBoardofDirectorsofthisCorporation(hereinaftercalledthe“BoardofDirectors”orthe“Board”)inaccordancewiththeprovisionsoftheCertificateofIncorporationofthisCorporation,asamended,theBoardofDirectorsherebycreatesaseriesofPreferredStock,parvalue$0.01pershare(the“PreferredStock”),oftheCorporationandherebystatesthedesignationandnumberofshares,andfixestherelativerights,powersandpreferences,andqualifications,limitationsandrestrictionsthereofasfollows:
Section1.DesignationandAmount.Thesharesofsuchseriesshallbedesignatedas“SeriesAJuniorParticipatingPreferredStock”(the“SeriesAPreferredStock”)andthenumberofsharesconstitutingtheSeriesAPreferredStockshallbe400,000.SuchnumberofsharesmaybeincreasedordecreasedbyresolutionoftheBoardofDirectors;provided,thatnodecreaseshallreducethenumberofsharesofSeriesAPreferredStocktoanumberlessthanthenumberofsharesthenoutstandingplusthenumberofsharesreservedforissuanceupontheexerciseofoutstandingoptions,rightsorwarrantsorupontheconversionofanyoutstandingsecuritiesissuedbytheCorporationconvertibleintoSeriesAPreferredStock.
Section2.DividendsandDistributions.
(A)SubjecttothepriorandsuperiorrightsoftheholdersofanysharesofanyclassorseriesofstockofthisCorporationrankingpriorandsuperiortotheSeriesAPreferredStockwithrespecttodividends,theholdersofsharesofSeriesAPreferredStock,inpreferencetotheholdersofCommonStock,parvalue$.01pershare(the“CommonStock”),oftheCorporation,andofanyotherstockrankingjuniortotheSeriesAPreferredStock,shallbeentitledtoreceive,when,asandifdeclaredbytheBoardofDirectorsoutoffundslegallyavailableforthepurpose,quarterlydividendspayableincashonthefirstdayofMarch,June,SeptemberandDecemberineachyear(eachsuchdatebeingreferredtohereinasa“QuarterlyDividendPaymentDate”),commencingonthefirstQuarterlyDividendPaymentDateafterthefirstissuanceofashareorfractionofa
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shareofSeriesAPreferredStock,inanamountpershare(roundedtothenearestcent)equaltothegreaterof(a)$1.00or(b)subjecttotheprovisionforadjustmenthereinaftersetforth,1,000timestheaggregatepershareamountofallcashdividends,and1,000timestheaggregatepershareamount(payableinkind)ofallnon-cashdividendsorotherdistributions,otherthanadividendpayableinsharesofCommonStockorasubdivisionoftheoutstandingsharesofCommonStock(byreclassificationorotherwise),declaredontheCommonStocksincetheimmediatelyprecedingQuarterlyDividendPaymentDateor,withrespecttothefirstQuarterlyDividendPaymentDate,sincethefirstissuanceofanyshareorfractionofashareofSeriesAPreferredStock.IntheeventtheCorporationshallatanytimedeclareorpayanydividendontheCommonStockpayableinsharesofCommonStock,oreffectasubdivision,combinationorconsolidationoftheoutstandingsharesofCommonStock(byreclassificationorotherwisethanbypaymentofadividendinsharesofCommonStock)intoagreaterorlessernumberofsharesofCommonStock,thenineachsuchcasetheamounttowhichholdersofsharesofSeriesAPreferredStockwereentitledimmediatelypriortosucheventunderclause(b)oftheprecedingsentenceshallbeadjustedbymultiplyingsuchamountbyafraction,thenumeratorofwhichisthenumberofsharesofCommonStockoutstandingimmediatelyaftersucheventandthedenominatorofwhichisthenumberofsharesofCommonStockthatwereoutstandingimmediatelypriortosuchevent.
(B)TheCorporationshalldeclareadividendordistributionontheSeriesAPreferredStockasprovidedinparagraph(A)ofthisSection2immediatelyafteritdeclaresadividendordistributionontheCommonStock(otherthanadividendpayableinsharesofCommonStock);providedthat,intheeventnodividendordistributionshallhavebeendeclaredontheCommonStockduringtheperiodbetweenanyQuarterlyDividendPaymentDateandthenextsubsequentQuarterlyDividendPaymentDate,adividendof$1.00pershareontheSeriesAPreferredStockshallneverthelessbepayableonsuchsubsequentQuarterlyDividendPaymentDate.
(C)DividendsshallbegintoaccrueandbecumulativeonoutstandingsharesofSeriesAPreferredStockfromtheQuarterlyDividendPaymentDatenextprecedingthedateofissueofsuchshares,unlessthedateofissueofsuchsharesispriortotherecorddateforthefirstQuarterlyDividendPaymentDate,inwhichcasedividendsonsuchsharesshallbegintoaccruefromthedateofissueofsuchshares,orunlessthedateofissueisaQuarterlyDividendPaymentDateorisadateaftertherecorddateforthedeterminationofholdersofsharesofSeriesAPreferredStockentitledtoreceiveaquarterlydividendandbeforesuchQuarterlyDividendPaymentDate,ineitherofwhicheventssuchdividendsshallbegintoaccrueandbecumulativefromsuchQuarterlyDividendPaymentDate.Accruedbutunpaiddividendsshallnotbearinterest.DividendspaidonthesharesofSeriesAPreferredStockinanamountlessthanthetotalamountofsuchdividendsatthetimeaccruedandpayableonsuchsharesshallbeallocatedprorataonashare-by-sharebasisamongallsuchsharesatthetimeoutstanding.TheBoardofDirectorsmayfixarecorddateforthedeterminationofholdersofsharesofSeriesAPreferredStockentitledtoreceivepaymentofadividendordistributiondeclaredthereon,whichrecorddateshallbenotmorethan60(sixty)dayspriortothedatefixedforthepaymentthereof.
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Section3.VotingRights.TheholdersofsharesofSeriesAPreferredStockshallhavethefollowingvotingrights:
(A)Subjecttotheprovisionforadjustmenthereinaftersetforth,eachshareofSeriesAPreferredStockshallentitletheholderthereofto1,000votesonallmatterssubmittedtoavoteofthestockholdersoftheCorporation.IntheeventtheCorporationshallatanytimedeclareorpayanydividendontheCommonStockpayableinsharesofCommonStock,oreffectasubdivision,combinationorconsolidationoftheoutstandingsharesofCommonStock(byreclassificationorotherwisethanbypaymentofadividendinsharesofCommonStock)intoagreaterorlessernumberofsharesofCommonStock,thenineachsuchcasethenumberofvotespersharetowhichholdersofsharesofSeriesAPreferredStockwereentitledimmediatelypriortosucheventshallbeadjustedbymultiplyingsuchnumberbyafraction,thenumeratorofwhichisthenumberofsharesofCommonStockoutstandingimmediatelyaftersucheventandthedenominatorofwhichisthenumberofsharesofCommonStockthatwereoutstandingimmediatelypriortosuchevent.
(B)Exceptasotherwiseprovidedherein,inanyotherCertificateofDesignationscreatingaseriesofPreferredStockoranysimilarstock,orbylaw,theholdersofsharesofSeriesAPreferredStockandtheholdersofsharesofCommonStockandanyothercapitalstockoftheCorporationhavinggeneralvotingrightsshallvotetogetherasoneclassonallmatterssubmittedtoavoteofstockholdersoftheCorporation.
(C)Exceptassetforthherein,orasotherwiseprovidedbylaw,holdersofSeriesAPreferredStockshallhavenospecialvotingrightsandtheirconsentshallnotberequired(excepttotheextenttheyareentitledtovotewithholdersofCommonStockassetforthherein)fortakinganycorporateaction.
Section4.CertainRestrictions.
(A)WheneverquarterlydividendsorotherdividendsordistributionspayableontheSeriesAPreferredStockasprovidedinSection2areinarrears,thereafteranduntilallaccruedandunpaiddividendsanddistributions,whetherornotdeclared,onsharesofSeriesAPreferredStockoutstandingshallhavebeenpaidinfull,theCorporationshallnot:
(i)declareorpaydividends,ormakeanyotherdistributions,onanysharesofstockrankingjunior(eitherastodividendsoruponliquidation,dissolutionorwindingup)totheSeriesAPreferredStock;
(ii)declareorpaydividends,ormakeanyotherdistributions,onanysharesofstockrankingonaparity(eitherastodividendsoruponliquidation,dissolutionorwindingup)withtheSeriesAPreferredStock,exceptdividendspaidratablyontheSeriesAPreferredStockandallsuchparitystockonwhichdividendsarepayableorinarrearsinproportiontothetotalamountstowhichtheholdersofallsuchsharesarethenentitled;
(iii)redeemorpurchaseorotherwiseacquireforconsiderationsharesofanystockrankingjunior(eitherastodividendsoruponliquidation,dissolutionorwindingup)totheSeriesAPreferredStock,providedthattheCorporationmayatanytimeredeem,purchaseorotherwiseacquiresharesofanysuchjuniorstockinexchangeforsharesofanystockoftheCorporationrankingjunior(bothastodividendsandupondissolution,liquidationorwindingup)totheSeriesAPreferredStock;or
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(iv)redeemorpurchaseorotherwiseacquireforconsiderationanysharesofSeriesAPreferredStock,oranysharesofstockrankingonaparitywiththeSeriesAPreferredStock,exceptinaccordancewithapurchaseoffermadeinwritingorbypublication(asdeterminedbytheBoardofDirectors)toallholdersofsuchsharesuponsuchtermsastheBoardofDirectors,afterconsiderationoftherespectiveannualdividendratesandotherrelativerightsandpreferencesoftherespectiveseriesandclasses,shalldetermineingoodfaithwillresultinfairandequitabletreatmentamongtherespectiveseriesorclasses.
(B)TheCorporationshallnotpermitanysubsidiaryoftheCorporationtopurchaseorotherwiseacquireforconsiderationanysharesofstockoftheCorporationunlesstheCorporationcould,underparagraph(A)ofthisSection4,purchaseorotherwiseacquiresuchsharesatsuchtimeandinsuchmanner.
Section5.ReacquiredShares.AnysharesofSeriesAPreferredStockpurchasedorotherwiseacquiredbytheCorporationinanymannerwhatsoevershallberetiredandcanceledpromptlyaftertheacquisitionthereof.AllsuchsharesshallupontheircancellationbecomeauthorizedbutunissuedsharesofPreferredStockandmaybereissuedaspartofanewseriesofPreferredStocksubjecttotheconditionsandrestrictionsonissuancesetforthherein,intheCertificateofIncorporation,asamended,orinanyotherCertificateofDesignationscreatingaseriesofPreferredStockoranysimilarstockorasotherwiserequiredbylaw.
Section6.Liquidation,DissolutionorWindingUp.
(A)Uponanyliquidation,dissolutionorwindingupoftheCorporation,voluntaryorotherwise,nodistributionshallbemade(i)totheholdersofsharesofstockrankingjunior(eitherastodividendsoruponliquidation,dissolutionorwindingup)totheSeriesAPreferredStockunless,priorthereto,theholdersofsharesofSeriesAPreferredStockshallhavereceivedanamountpershare(the“SeriesALiquidationPreference”)equalto$1,000pershare,plusanamountequaltoaccruedandunpaiddividendsanddistributionsthereon,whetherornotdeclared,tothedateofsuchpayment,providedthattheholdersofsharesofSeriesAPreferredStockshallbeentitledtoreceiveanaggregateamountpershare,subjecttotheprovisionforadjustmenthereinaftersetforth,equalto1,000timestheaggregateamounttobedistributedpersharetoholdersofsharesofCommonStock,or(ii)totheholdersofsharesofstockrankingonaparity(eitherastodividendsoruponliquidation,dissolutionorwindingup)withtheSeriesAPreferredStock,exceptdistributionsmaderatablyontheSeriesAPreferredStockandallsuchparitystockinproportiontothetotalamountstowhichtheholdersofallsuchsharesareentitleduponsuchliquidation,dissolutionorwindingup.IntheeventtheCorporationshallatanytimedeclareorpayanydividendontheCommonStockpayableinsharesofCommonStock,oreffectasubdivision,combinationorconsolidationoftheoutstandingsharesofCommonStock(byreclassificationorotherwisethanbypaymentofadividendinsharesofCommonStock)intoagreaterorlessernumberofsharesofCommonStock,thenineachsuchcasetheaggregateamounttowhichholdersofsharesofSeriesAPreferredStockwereentitledimmediatelypriortosucheventundertheprovisoinclause(i)oftheprecedingsentenceshallbeadjustedby
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multiplyingsuchamountbyafractionthenumeratorofwhichisthenumberofsharesofCommonStockoutstandingimmediatelyaftersucheventandthedenominatorofwhichisthenumberofsharesofCommonStockthatareoutstandingimmediatelypriortosuchevent.
(B)Intheevent,however,thattherearenotsufficientassetsavailabletopermitpaymentinfulloftheSeriesALiquidationPreferenceandtheliquidationpreferencesofallotherclassesandseriesofstockoftheCorporation,ifany,thatrankonaparitywiththeSeriesAPreferredStockinrespectthereof,thentheassetsavailableforsuchdistributionshallbedistributedratablytotheholdersoftheSeriesAPreferredStockandtheholdersofsuchparitysharesinproportiontotheirrespectiveliquidationpreferences.
(C)NeitherthemergerorconsolidationoftheCorporationintoorwithanothercorporationnorthemergerorconsolidationofanyothercorporationintoorwiththeCorporationshallbedeemedtobealiquidation,dissolutionorwindingupoftheCorporationwithinthemeaningofthisSection6.
Section7.Consolidation,Merger,etc.IncasetheCorporationshallenterintoanyconsolidation,merger,combinationorothertransactioninwhichthesharesofCommonStockareexchangedfororchangedintootherstockorsecurities,cashand/oranyotherproperty,theninanysuchcaseeachshareofSeriesAPreferredStockshallatthesametimebesimilarlyexchangedorchangedintoanamountpershare,subjecttotheprovisionforadjustmenthereinaftersetforth,equalto1,000timestheaggregateamountofstock,securities,cashand/oranyotherproperty(payableinkind),asthecasemaybe,intowhichorforwhicheachshareofCommonStockischangedorexchanged.IntheeventtheCorporationshallatanytimedeclareorpayanydividendontheCommonStockpayableinsharesofCommonStock,oreffectasubdivision,combinationorconsolidationoftheoutstandingsharesofCommonStock(byreclassificationorotherwisethanbypaymentofadividendinsharesofCommonStock)intoagreaterorlessernumberofsharesofCommonStock,thenineachsuchcasetheamountsetforthintheprecedingsentencewithrespecttotheexchangeorchangeofsharesofSeriesAPreferredStockshallbeadjustedbymultiplyingsuchamountbyafraction,thenumeratorofwhichisthenumberofsharesofCommonStockoutstandingimmediatelyaftersucheventandthedenominatorofwhichisthenumberofsharesofCommonStockthatwereoutstandingimmediatelypriortosuchevent.
Section8.NoRedemption.ThesharesofSeriesAPreferredStockshallnotberedeemablebytheCorporation.
Section9.Rank.TheSeriesAPreferredStockshallrank,withrespecttothepaymentofdividendsandthedistributionofassetsuponliquidation,dissolutionorwindingup,juniortoallseriesofanyotherclassoftheCorporation’sPreferredStock,excepttotheextentthatanysuchotherseriesspecificallyprovidesthatitshallrankonaparitywithorjuniortotheSeriesAPreferredStock.
Section10.Amendment.AtanytimeanysharesofSeriesAPreferredStockareoutstanding,theCertificateofIncorporationoftheCorporation,asamended,shallnotbefurtheramendedinanymannerwhichwouldmateriallyalterorchangethepowers,preferencesorspecialrightsoftheSeriesAPreferredStocksoastoaffectthemadverselywithouttheaffirmativevoteoftheholdersofatleasttwo-thirdsoftheoutstandingsharesofSeriesAPreferredStock,votingseparatelyasasingleclass.
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Section11.FractionalShares.SeriesAPreferredStockmaybeissuedinfractionsofasharethatshallentitletheholder,inproportiontosuchholder’sfractionalshares,toexercisevotingrights,receivedividends,participateindistributionsandtohavethebenefitofallotherrightsofholdersofSeriesAPreferredStock.
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INWITNESSWHEREOF,thisCertificateofDesignationsisexecutedonbehalfoftheCorporationbytheundersignedauthorizedofficerthis16thdayofDecember,2016.
/s/JodiCaroName:JodiCaroTitle:GeneralCounselandSecretary
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Exhibit 3.3
BY-LAWSOF
ULTA BEAUTY, INC.
ADOPTED ONDECEMBER 16, 2016
ARTICLE I.OFFICES
1.RegisteredOffice.TheregisteredofficeofUltaBeauty,Inc.(the“Corporation”)intheStateofDelawareshallbelocatedat2711CentervilleRoad,Suite400,Wilmington,NewCastleCounty,Delaware,19808.ThenameoftheCorporation’sregisteredagentatsuchaddressshallbeThePrentice-HallCorporationSystem,Inc.Theregisteredofficeand/orregisteredagentoftheCorporationmaybechangedfromtimetotimebyactionoftheBoardofDirectors(the“Board”).
2.OtherOffices.TheCorporationmayalsohaveofficesatsuchotherplaces,bothwithinandwithouttheStateofDelaware,astheBoardmayfromtimetotimedetermineorthebusinessoftheCorporationmayrequire.
ARTICLE II.MEETINGS OF STOCKHOLDERS
1.AnnualMeetings.Anannualmeetingofthestockholdersshallbeheldeachyearasandtotheextentrequiredunderapplicablelawforthepurposeofelectingdirectorsandconductingsuchotherproperbusinessasmaycomebeforethemeeting.Thedate,timeandplaceoftheannualmeetingshallbedeterminedbytheBoard.
2.SpecialMeetings.Specialmeetingsofstockholdersmaybecalledforanypurposeorpurposesandmaybeheldatsuchtimeandplaceasshallbestatedinanoticeofmeetingorinadulyexecutedwaiverofnoticethereof.SuchmeetingsmaybecalledatanytimebyamajorityoftheentireBoard,theChairmanoftheBoardorthePresidentoftheCorporation.Theonlymattersthatmaybeconsideredatanyspecialmeetingofthestockholdersarethemattersspecifiedinthenoticeofthemeeting.
3.PlaceofMeetings.TheBoardmaydesignateanyplace,eitherwithinorwithouttheStateofDelaware,astheplaceofmeetingforanyannualmeetingorforanyspecialmeeting.Ifnodesignationismade,theplaceofmeetingshallbetheprincipalexecutiveofficeoftheCorporation.
4.Notice.Wheneverstockholdersarerequiredorpermittedtotakeactionatameeting,writtenorprintednoticestatingtheplace,time,and,inthecaseofspecialmeetings,thepurposeorpurposes,ofsuchmeeting,shallbegiventoeachstockholderentitledtovoteatsuchmeetingnotlessthen10normorethan60daysbeforethedateofthemeeting.Allsuchnoticesshallbedelivered,eitherpersonally,bymail,or,exceptasotherwiseprovidedbylaw,byaform
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ofelectronictransmission(consentedtobythestockholdertowhomthenoticeisbeinggiven),byoratthedirectionoftheBoard,thePresidentortheSecretary.Anystockholderconsenttoelectronictransmissionshallberevocablebythestockholderbywrittennoticetothecorporation.Ifmailed,suchnoticeshallbedeemedtobedeliveredwhendepositedintheUnitedStatesmail,postageprepaid,addressedtothestockholderathis,heroritsaddressasthesameappearsontherecordsoftheCorporation.Noticegivenbyaformofelectronictransmissionshallbedeemedgiven(i)ifbyfacsimiletelecommunication,whendirectedtoanumberatwhichthestockholderhasconsentedtoreceivenotice,(ii)ifbyelectronicmail,whendirectedtoreceivenotice,(iii)ifbypostingonanelectronicnetworktogetherwithseparatenoticetothestockholderofsuchspecificposting,uponthelaterof(A)suchpostingand(B)thegivingofsuchseparatenotice,and(iv)ifbyanyotherformofelectronictransmission,whendirectedtothestockholder.
5.StockholdersList.TheofficerhavingchargeofthestockledgeroftheCorporationshallmake,atleast10daysbeforeeverymeetingofthestockholders,acompletelistofthestockholdersentitledtovoteatsuchmeetingarrangedinalphabeticalorder,showingtheaddressofeachstockholderandthenumberofsharesregisteredinthenameofthestockholder.Suchlistshallbeopentotheexaminationofanystockholder,foranypurposegermanetothemeeting,duringordinarybusinesshours,foraperiodofatleast10daysbeforethedateofthemeeting,eitherataplacewithinthecitywherethemeetingistobeheld,whichplaceshallbespecifiedinthenoticeofthemeetingor,ifnotspecified,attheplacewherethemeetingistobeheld.Thelistshallalsobeproducedandkeptatthetimeandplaceofthemeetingduringthewholetimethereof,andmaybeinspectedbyanystockholderwhoispresent.
6.Quorum.Theholdersofamajorityoftheoutstandingsharesofcapitalstock,presentinpersonorrepresentedbyproxy,shallconstituteaquorumatallmeetingsofthestockholders,exceptasotherwiseprovidedbystatuteorbytheCertificateofIncorporation.Aquorum,onceestablished,shallnotbebrokenbythewithdrawalofenoughvotestoleavelessthanaquorumandthevotespresentmaycontinuetotransactbusinessuntiladjournment.Ifaquorumisnotpresent,theholdersofamajorityofthesharespresentinpersonorrepresentedbyproxyatthemeeting,andentitledtovoteatthemeeting,mayadjournthemeetingtoanothertimeand/orplace.Whenaspecifieditemofbusinessrequiresavotebyclassorseries(iftheCorporationshallthenhaveoutstandingsharesofmorethanoneclassorseries)votingasaclass,theholdersofamajorityofthesharesofsuchclassorseriesshallconstituteaquorum(astosuchclassorseries)forthetransactionofsuchitemofbusiness.
7.AdjournedMeetings.Whenameetingisadjournedtoanothertimeandplace,noticeneednotbegivenoftheadjournedmeetingifthetimeandplacethereofareannouncedatthemeetingatwhichtheadjournmentistaken.AttheadjournedmeetingtheCorporationmaytransactanybusinesswhichmighthavebeentransactedattheoriginalmeeting.Iftheadjournmentisformorethan30days,orifaftertheadjournmentanewrecorddateisfixedfortheadjournedmeeting,anoticeoftheadjournedmeetingshallbegiventoeachstockholderofrecordentitledtovoteatthemeeting.
8.VoteRequired.Unlessotherwiserequiredbylaw,theCertificateofIncorporation,theseBy-LawsortherulesorregulationsofanystockexchangesapplicabletotheCorporationoritssecurities,anyquestionbroughtbeforeanymeetingofstockholdersshallbedecidedbythevoteoftheholdersofamajorityofthestockwhicharepresentinpersonorby
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proxyandentitledtovotethereat.Whereaseparatevotebyclassisrequired,theaffirmativevoteofthemajorityofsharesofsuchclasspresentinpersonorrepresentedbyproxyatthemeetingshallbetheactofsuchclass.
9.VotingRights.ExceptasotherwiseprovidedbytheGeneralCorporationLawoftheStateofDelaware(“DGCL”)orbytheCertificateofIncorporationoftheCorporationoranyamendmentsthereto,everystockholdershallateverymeetingofthestockholdersbeentitledtoonevoteinpersonorbyproxyforeachshareofcommonstockheldbysuchstockholder.TheBoardmaybyresolutionestablishamethodforstockholderstocasttheirvotesbyasecureelectronicmethod.
10.Proxies.Eachstockholderentitledtovoteatameetingofstockholdersortoexpressconsentordissenttocorporateactioninwritingwithoutameetingmayauthorizeanotherpersonorpersonstoactforhimorherbyproxy,butnosuchproxyshallbevotedoracteduponafter3yearsfromitsdate,unlesstheproxyprovidesforalongerperiod.
11.BusinessBroughtBeforeaMeeting.Atanannualmeetingofthestockholders,onlysuchbusinessshallbeconductedasshallhavebeenproperlybroughtbeforethemeeting.Tobeproperlybroughtbeforeanannualmeeting,businessmustbe(i)specifiedinthenoticeofmeeting(oranysupplementthereto)givenbyoratthedirectionoftheBoard,(ii)broughtbeforethemeetingbyoratthedirectionoftheBoard,or(iii)otherwiseproperlybroughtbeforethemeetingbyastockholder.Forbusinesstobeproperlybroughtbeforeanannualmeetingbyastockholder,thestockholdermusthavegiven“TimelyNotice”(ashereinafterdefined)thereofinwritingtotheSecretaryoftheCorporation.Tobetimely,astockholder’snoticemustbedeliveredtoormailedandreceivedattheprincipalexecutiveofficesoftheCorporationnotlessthanninety(90)daysnormorethanonehundredtwenty(120)dayspriortothefirstanniversaryoftheprecedingyear’sannualmeeting;provided,however,thatintheeventthatthedateoftheannualmeetingismorethanthirty(30)daysbeforeormorethanseventy(70)daysaftersuchanniversarydate,noticebythestockholdertobetimelymustbereceivednotearlierthanthecloseofbusinessontheonehundredtwentieth(120)daypriortosuchannualmeetingandnotlaterthanthecloseofbusinessonthelateroftheninetieth(90)daypriortosuchannualmeetingorthetenth(10)dayfollowingthedayonwhichnoticeofthedateofthemeetingwasmailedorpublicdisclosureofthemeetingwasmade,whicheverfirstoccurs(suchnoticewithinsuchtimeperiods,“TimelyNotice”).Astockholder’snoticetotheSecretaryshallsetforthastoeachmatterthestockholderproposestobringbeforetheannualmeeting(i)abriefdescriptionofthebusinessdesiredtobebroughtbeforetheannualmeeting,(ii)thenameandrecordaddressofthestockholderproposingsuchbusiness,(iii)theclassandnumberofsharesofcapitalstockoftheCorporationwhicharebeneficiallyownedbythestockholder,and(iv)anymaterialinterestofthestockholderinsuchbusiness.NotwithstandinganythingintheseBy-Lawstothecontrary,nobusinessshallbeconductedatanannualmeetingexceptinaccordancewiththeproceduressetforthinthisSection11ofArticleII.Thepresidingofficerofanannualmeetingshall,ifthefactswarrant,determinethatthebusinesswasnotproperlybroughtbeforethemeetingandinaccordancewiththeprovisionsofthisSection11ofArticleII;andifheshouldsodetermine,heshallsodeclaretothemeetingandanysuchbusinessnotproperlybroughtbeforethemeetingshallnotbetransacted.
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ARTICLE III.DIRECTORS
1.GeneralPowers.ThebusinessandaffairsoftheCorporationshallbemanagedbyorunderthedirectionoftheBoard.
2.NominationofDirectors.NominationsofpersonsforelectiontotheBoardattheannualmeetingmaybemadeatsuchmeetingbyoratthedirectionoftheBoard,byanycommitteeorpersonsappointedbytheBoardorbyanystockholderoftheCorporationentitledtovotefortheelectionofdirectorsatthemeetingwhocomplieswiththenoticeproceduressetforthinthisArticleIII,Section2.SuchnominationsbyanystockholdershallbemadepursuanttoTimelyNoticeinwritingtotheSecretaryoftheCorporation.Suchstockholder’snoticetotheSecretaryshallsetforth(i)astoeachpersonwhomthestockholderproposestonominateforelectionorreelectionasadirector,(A)thename,age,businessaddressandresidenceaddressoftheperson,(B)theprincipaloccupationoremploymentoftheperson,(C)theclassandnumberofsharesofcapitalstockoftheCorporationwhicharebeneficiallyownedbytheperson,and(D)anyotherinformationrelatingtothepersonthatisrequiredtobedisclosedinsolicitationsforproxiesforelectionofdirectorspursuanttotheRulesandRegulationsoftheSecuritiesandExchangeCommissionunderSection14oftheSecuritiesExchangeActof1934,asamended;and(ii)astothestockholdergivingthenotice(A)thenameandrecordaddressofthestockholderand(B)theclassandnumberofsharesofcapitalstockoftheCorporationwhicharebeneficiallyownedbythestockholder.TheCorporationmayrequireanyproposednomineetofurnishsuchotherinformationasmayreasonablyberequiredbytheCorporationtodeterminetheeligibilityofsuchproposednomineetoserveasadirectoroftheCorporation.NopersonshallbeeligibleforelectionasadirectoroftheCorporationunlessnominatedinaccordancewiththeproceduressetforthherein.TheofficeroftheCorporationpresidingatanannualmeetingshall,ifthefactswarrant,determineanddeclaretothemeetingthatanominationwasnotmadeinaccordancewiththeforegoingprocedure,andifheshouldsodetermine,heshallsodeclaretothemeetingandthedefectivenominationshallbedisregarded.
3.Number,ElectionandTermofOffice.ThenumberofdirectorswhichshallconstitutethewholeBoardshallbenotlessthanthree(3).TheexactnumberofdirectorsshallbedeterminedfromtimetotimebyresolutionoftheBoardpursuanttotheCertificateofIncorporation.Thedirectorsneednotbestockholders.ExceptasotherwiseprovidedinSection3ofthisArticleIII,directorsshallbeelectedattheannualmeetingofthestockholdersandeachdirectorelectedshallholdofficeuntilsuchdirector’ssuccessoriselectedandqualifiedoruntiltheearlierofsuchdirector’sresignationorremoval.AnydirectormayresignatanytimeuponnoticegiveninwritingorbyelectronictransmissiontotheCorporationasprovidedinArticleVIII,Section4oftheseBylaws.Whenoneormoredirectorssoresigns,vacanciesshallbefilledasprovidedinSection4ofthisArticleIII.UnlessotherwiserestrictedbyorprovidedintheDGCLortheCertificateofIncorporation,anydirectorortheentireBoardmayberemovedfromofficeatanytime,butonlyforcauseandonlybytheaffirmativevoteoftheholdersof662/3%ofvotingpowerofthesharesofstockoftheCorporationthenentitledtovoteatanelectionofdirectors.
4.Vacancies.UnlessotherwiseprovidedintheCertificateofIncorporationortheseBy-Laws,vacanciesontheBoardbyreasonofdeath,resignation,retirement,disqualification,
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removalfromofficeorotherwise,andnewlycreateddirectorshipsresultingfromanyincreaseintheauthorizednumberofdirectors,shallbefilledbyamajorityofthedirectorstheninoffice,althoughlessthanaquorum,orbyasoleremainingdirector.Eachdirectorsochosenshallholdofficeuntilthenextannualelectionofdirectorsanduntilsuchdirector’ssuccessorisdulyelectedandqualified,oruntilsuchdirector’searlierresignationorremoval.
5.AnnualMeetings.TheannualmeetingofeachnewlyelectedBoardshallbeheldwithoutothernoticethanthisby-lawafter,andatthesameplaceas,theannualmeetingofstockholders.
6.OtherMeetingsandNotices.Regularmeetings,otherthantheannualmeeting,oftheBoardmaybeheldwithoutnoticeatsuchtime,onceeveryfiscalquarter,andatsuchplaceasshallfromtimetotimebedeterminedbyresolutionoftheboard.SpecialmeetingsoftheBoardmaybecalledbyorattherequestoftheChairmanoftheBoard,ChiefExecutiveOfficer,thePresidentortwodirectorsonatleast24hoursnoticetoeachdirector,eitherpersonally,bytelephone,bymail,bytelegraphorbyelectronictransmission.
7.Quorum,RequiredVoteandAdjournment.Amajorityofthetotalnumberofdirectorsshallconstituteaquorumforthetransactionofbusiness.ThevoteofamajorityofdirectorspresentatameetingatwhichaquorumispresentshallbetheactoftheBoard.IfaquorumshallnotbepresentatanymeetingoftheBoard,thedirectorspresentthereatmayadjournthemeetingfromtimetotime,withoutnoticeotherthanannouncementatthemeeting,untilaquorumshallbepresent.
8.Committees.TheBoardmaydesignateoneormorecommittees,eachsuchcommitteetoconsistofoneormoreofthedirectorsoftheCorporation.TheBoardmaydesignateoneormoredirectorsasalternatemembersofanycommittee,whomayreplaceanyabsentordisqualifiedmemberatanymeetingofthecommittee.Intheabsenceordisqualificationofamemberofacommittee,thememberormembersthereofpresentatanymeetingandnotdisqualifiedfromvoting,whetherornotsuchmemberormembersconstituteaquorum,mayunanimouslyappointanothermemberoftheBoardtoactatthemeetingintheplaceofanysuchabsentordisqualifiedmember.Notwithstandingtheforegoing,thecompositionanddutiesofanycommitteeshallcomplywiththerulesandregulationsofanystockexchangeorquotationsystemapplicabletotheCorporationoranyregulationorlawapplicabletotheCorporationoritssecurities.ThedelegationofanydecisiontoacommitteeoftheBoard,andthevotesrequiredforthemakingofsuchdecisionbysuchcommittee,shallhavethesameapprovalrequirementsasthetakingofsuchactionbytheBoard.Anysuchcommittee,totheextentpermittedbylawandtotheextentprovidedintheresolutionoftheBoard,anycommitteecharterorintheseBy-Laws,shallhaveandmayexerciseallthepowersandauthorityoftheBoardinthemanagementofthebusinessandaffairsoftheCorporation,andmayauthorizethesealoftheCorporationtobeaffixedtoallpaperswhichmayrequireit.
9.CommitteeRules.EachcommitteeoftheBoardmayfixitsownrulesofprocedureandshallholditsmeetingsasprovidedbysuchrules,exceptasmayotherwisebeprovidedbyaresolutionoftheBoarddesignatingsuchcommittee.Intheeventthatamemberandthatmember’salternate,ifalternatesaredesignatedbytheBoardasprovidedinSection8ofthisArticleIII,ofsuchcommitteeisorareabsentordisqualified,thememberormembers
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thereofpresentatanymeetingandnotdisqualifiedfromvoting,whetherornotsuchmemberormembersconstituteaquorum,mayunanimouslyappointanothermemberoftheBoardtoactatthemeetinginplaceofanysuchabsentordisqualifiedmember.
10.MinutesofCommitteeMeetings.EachcommitteeshallkeepregularminutesofitsmeetingsandreportthesametotheBoardwhenrequired.
11.MeetingsandActionofCommittees.UnlesstheBoardotherwiseprovides,eachcommitteedesignatedbytheBoardmaymake,alterandrepealrulesfortheconductofitsbusiness.Intheabsenceofsuchrules,eachcommitteeshallconductitsbusinessinthesamemannerastheBoardconductsitsbusinesspursuanttotheapplicablesectionsofArticleIIIoftheseBy-Laws.
12.CommunicationsEquipment.MembersoftheBoardoranycommitteethereofmayparticipateinandactatanymeetingofsuchBoardorcommitteethroughtheuseofaconferencetelephoneorothercommunicationsequipmentbymeansofwhichallpersonsparticipatinginthemeetingcanheareachother,andparticipationinthemeetingpursuanttothissectionshallconstitutepresenceinpersonatthemeeting.
13.WaiverofNoticeandPresumptionofAssent.AnymemberoftheBoardoranycommitteethereofwhoispresentatameetingshallbeconclusivelypresumedtohavewaivednoticeofsuchmeetingexceptwhensuchmemberattendsfortheexpresspurposeofobjectingatthebeginningofthemeetingtothetransactionofanybusinessbecausethemeetingisnotlawfullycalledorconvened.SuchmembershallbeconclusivelypresumedtohaveassentedtoanyactiontakenunlesshisorherdissentshallbeenteredintheminutesofthemeetingorunlesshisorherwrittendissenttosuchactionshallbefiledwiththepersonactingasthesecretaryofthemeetingbeforetheadjournmentthereoforshallbeforwardedbyregisteredmailtotheSecretaryoftheCorporationimmediatelyaftertheadjournmentofthemeeting.Suchrighttodissentshallnotapplytoanymemberwhovotedinfavorofsuchaction.
14.ActionbyWrittenConsent.UnlessotherwiserestrictedbytheCertificateofIncorporation,anyactionrequiredorpermittedtobetakenatanymeetingoftheBoard,orofanycommitteethereof,maybetakenwithoutameetingifallmembersoftheboardorcommittee,asthecasemaybe,consenttheretoinwriting,andthewritingorwritingsarefiledwiththeminutesofproceedingsoftheboardofcommittee.
ARTICLE IV.OFFICERS
1.Number.TheofficersoftheCorporationshallbeelectedbytheBoardandshallconsistofaChiefExecutiveOfficer,aPresident,aChiefOperatingOfficer,aChiefFinancialOfficer,oneormoreVice-Presidents,aSecretary,aTreasurer,andsuchotherofficersandassistantofficersasmaybedeemednecessaryordesirablebytheBoard.Anynumberofofficesmaybeheldbythesameperson.Initsdiscretion,theBoardmaychoosenottofillanyofficeforanyperiodasitmaydeemadvisable,exceptthattheofficesofChiefExecutiveOfficer,PresidentandSecretaryshallbefilledasexpeditiouslyaspossible.
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2.ElectionandTermofOffice.TheofficersoftheCorporationshallbeelectedannuallybytheBoardatitsfirstmeetingheldaftereachannuallymeetingofstockholdersorassoonthereafterasconvenientlymaybe.VacanciesmaybefilledornewofficescreatedandfilledatanymeetingoftheBoard.TheChairmanoftheBoard,theChiefExecutiveOfficerandtheChiefOperatingOfficer,actingunanimously(andinconsultationwiththeCompensationCommittee)maymakeinterimappointmentsofofficersbetweenmeetingsoftheBoard,butsuchappointmentshallonlybeeffectiveuntilthenextBoardmeeting.EachofficerelectedbytheBoardshallholdofficeuntilasuccessorisdulyelectedandqualifiedoruntilhisorherearlierdeath,resignationorremovalashereinafterprovided.
3.Removal.AnyofficeroragentelectedbytheBoardmayberemovedbytheBoardwheneverinitsjudgmentthebestinterestsoftheCorporationwouldbeservedthereby,butsuchremovalshallbewithoutprejudicetothecontractrights,ifany,ofthepersonsoremoved.
4.Vacancies.Anyvacancyoccurringinanyofficebecauseofdeath,resignation,removal,disqualificationorotherwise,maybefilledbytheBoardfortheunexpiredportionofthetermbytheBoardtheninoffice.
5.Compensation.CompensationofallofficersshallbefixedbytheBoard,andnoofficershallbepreventedfromreceivingsuchcompensationbyvirtueofhisorheralsobeingadirectoroftheCorporation.
6.ChairmanoftheBoard.TheChairmanoftheBoardshallhavethepowersandperformthedutiesasmaybeprescribedbytheBoardorprovidedintheseBy-Laws.WhenevertheChiefExecutiveOfficerorthePresidentisunabletoserve,byreasonofsickness,absenceorotherwise,theChairmanoftheBoardshallperformallthedutiesandfunctionsandexerciseallthepowersoftherespectiveoffice.
7.ChiefExecutiveOfficer.TheChiefExecutiveOfficeroftheCorporationshallbeingeneralandactivechargeoftheentirebusinessandalloftheaffairsoftheCorporation,shallbeitschiefpolicy-makingofficerandshallberesponsibleforimplementingalldecisionsoftheBoard.SubjecttothefurtherdirectionfromtimetotimefromtheBoard,theChiefExecutiveOfficershallhavetheauthoritytoexecuteanyandalldocumentationonbehalfoftheCorporationandshallhaveallofthepowersandperformallthedutiesincidenttothepositionaswellassuchotherdutiesasmaybeprescribedbytheBoardorasmaybeprescribedintheseBy-Laws.
8.President.ThePresidentshallbetheChiefExecutiveOfficerifthatpositionisnotfilledbyanotherindividualandshallhavethepowersandperformthedutiesincidenttothatparticularposition;iftheChiefExecutiveOfficerpositionhasbeenfilledbyanotherindividual,thePresidentshallassisttheChiefExecutiveOfficerintheperformanceofthedutiesofChiefExecutiveOfficerandshall,attherequestoftheChiefExecutiveOfficer,representsuchChiefExecutiveOfficeratpublicorprivatefunctionsandceremoniesandperformsuchotherfunctionsasmaybereasonablyrequestedbytheChiefExecutiveOfficer.ThePresidentshallserveasthedirectsupervisorforvariousoperatingdepartmentsoftheCorporationasdeterminedfromtimetotimebytheChairmanoftheBoard,theChiefExecutiveOfficerortheBoard.Subjecttothe
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furtherdirectionfromtimetotimeoftheBoard,thePresidentshallhavetheauthoritytoexecuteanyandalldocumentationonbehalfoftheCorporationandshallhaveallofthepowersandperformallthedutiesincidenttothepositionaswellassuchotherdutiesasmaybeprescribedbytheBoardorasmaybeprescribedintheseBy-Laws.
9.ChiefOperatingOfficer.TheChiefOperatingOfficeroftheCorporationshallalsobeaVice-PresidentoftheCorporationandshallsubjecttospecificdirectionbythedirectionoftheChairmanoftheBoard,theChiefExecutiveOfficerandtheBoard,beingeneralandactivechargeofthebusinessoperationsoftheCorporation.TheChiefOperatingOfficershallconsultandcoordinateregularlywiththeChiefExecutiveOfficerandthePresidentandshallserveasthedirectsupervisorforvariousoperatingdepartmentsoftheCorporationasdeterminedfromtimetotimebytheChairmanoftheBoard,theChiefExecutiveOfficer,thePresidentortheBoard.SubjecttothefurtherdirectionfromtimetotimefromtheBoard,theChiefOperatingOfficershallhavetheauthoritytoexecuteanyandalldocumentationonbehalfoftheCorporationandshallhaveallofthepowersandperformallthedutiesincidenttothepositionaswellassuchotherdutiesasmaybeprescribedbytheBoardorasmaybeprescribedintheseBy-Laws.
10.ChiefFinancialOfficer.TheChiefFinancialOfficeroftheCorporationshallresponsibleforthefinancialoperationsoftheCorporation,includingthemaintenanceoffinancialrecords,thepreparationandreportingoffinancialresultsandrelatedtaxreturns,theco-ordinationofthereportingpracticesoftheCorporationwithoutsideauditors,thenegotiationofcreditarrangementswiththeCorporations’lendersandinvestorsandrelatedbudgeting,tax-planningandforecastingfunctions.SubjecttothefurtherdirectionfromtimetotimefromtheBoard,theChiefFinancialOfficershallhavetheauthoritytoexecutedocumentationonbehalfoftheCorporationandshallhavesuchotherpowersandperformsuchotherdutiesincidenttothepositionaswellassuchotherdutiesasmaybeprescribedbytheBoardorasmaybeprescribedintheseBy-Laws.
11.Vice-Presidents.TheVice-President,orifthereshallbemorethanone,theVice-PresidentsintheorderandwiththeresponsibilitiesandstatusdeterminedbytheBoard,shall,beresponsibleforspecificdepartmentsorfunctionsoftheCorporationandintheeventofthedeath,ordisabilityoftheseniorexecutiveofficersdescribedinSections6,7,8,9and10ofthisArticleIV(“SeniorExecutiveOfficers”)actwithallofthepowersandbesubjecttoalltherestrictionsofsuchSeniorExecutiveOfficers.Vice-Presidentsmaybedesignated(inorderofseniority)asExecutiveVice-President,SeniorVice-PresidentorVice-President,withsuchadditionoradditionstothetitle(e.g.Vice-President–Finance)asmaybedeemedappropriatetoindicatetheareaofresponsibilitywithintheCorporation.SubjecttothefurtherdirectionfromtimetotimeoftheBoard,eachVice-PresidentshallhavetheauthoritytoexecuteanyandalldocumentationonbehalfoftheCorporationrelatingtotheareaoftheirresponsibilityandshallhaveallofthepowersandperformallthedutiesincidenttothepositionaswellassuchotherdutiesasmaybeprescribedbytheBoardorasmaybeprescribedintheseBy-Laws.
12.TheSecretaryandAssistantSecretaries.TheSecretaryshallattendallmeetingsoftheBoard,allmeetingsofthecommitteesthereofandallmeetingsofthestockholdersandrecordalltheproceedingsofthemeetingsinabookorbookstobekeptforthatpurpose.TheSecretary:shallgive,orcausetobegiven,allnoticesrequiredtobegivenbytheseBy-Lawsor
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bylawandshallhavesuchpowersandperformsuchdutiesastheBoardortheseBy-Lawsmay,fromtimetotime,prescribe;andshallhavecustodyofthecorporatesealoftheCorporation.TheSecretary,oranAssistantSecretary,shallhaveauthoritytoaffixthecorporatesealtoanyinstrumentrequiringitandwhensoaffixed,itmaybeattestedbyhisorhersignatureorbythesignatureofsuchAssistantSecretary.TheBoardmaygivegeneralauthoritytoanyotherofficertoaffixthesealoftheCorporationandtoattesttheaffixingbyhisorhersignature.TheAssistantSecretary,oriftherebemorethanone,theassistantsecretariesintheorderdeterminedbytheBoard,shall,intheabsenceordisabilityoftheSecretary,performthedutiesandexercisethepowersoftheSecretaryandshallperformsuchotherdutiesandhavesuchotherpowersastheBoardmay,fromtimetotime,prescribe.
13.TheTreasurerandAssistantTreasurer.TheTreasurershallhavethecustodyofthecorporatefundsandsecurities;shallkeepfullandaccurateaccountsofreceiptsanddisbursementsinbooksbelongingtotheCorporation;shalldepositallmoniesandothervaluableeffectsinthenameandtothecreditoftheCorporationasmaybeorderedbytheBoard;shallcausethefundsoftheCorporationtobedisbursedwhensuchdisbursementshavebeendulyauthorized,takingpropervouchersforsuchdisbursements;andshallrendertotheChiefFinancialOfficerandtheBoard,atitsregularmeetingorwhentheBoardsorequires,anaccountoftheCorporation;shallhavesuchpowersandperformsuchdutiesastheBoardortheseBy-Lawsmay,fromtimetotime,prescribe.IfrequiredbytheBoard,theTreasurershallgivetheCorporationabond(whichshallberenderedevery6years)insuchsumsandwithsuchsuretyorsuretiesasshallbesatisfactorytotheBoardforthefaithfulperformanceofthedutiesoftheofficeofTreasurerandfortherestorationtotheCorporation,incaseofdeath,resignation,retirement,orremovalfromoffice,ofallbooks,papers,vouchers,money,andotherpropertyofwhateverkindinthepossessionorunderthecontroloftheTreasurerbelongingtotheCorporation.TheassistantTreasurer,orifthereshallbemorethanone,theassistantTreasurersintheorderdeterminedbytheBoard,shallintheabsenceordisabilityoftheTreasurer,performthedutiesandexercisethepowersoftheTreasurer.TheassistantTreasurersshallperformsuchotherdutiesandhavesuchotherpowersastheBoardmay,fromtimetotime,prescribe.
14.OtherOfficers,AssistantOfficersandAgents.Officers,assistantofficersandagents,ifany,otherthanthosewhosedutiesareprovidedforintheseBy-Laws,shallhavesuchauthorityandperformsuchdutiesasmayfromtimetotimebeprescribedbyresolutionoftheBoard.
15.AbsenceorDisabilityofOfficers.InthecaseoftheabsenceordisabilityofanyofficeroftheCorporationandofanypersonherebyauthorizedtoactinsuchofficer’splaceduringsuchofficer’sabsenceordisability,theBoardmayberesolutiondelegatethepowersanddutiesofsuchofficertoanyotherofficerortoanydirector,ortoanyotherpersonwhomitmayselect.
ARTICLE V.INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
1.RighttoIndemnification.TheCorporationshallindemnifyandholdharmless,tothefullestextentpermittedbyapplicablelawasitpresentlyexistsormayhereafterbeamended,anyperson(a“CoveredPerson”)whowasorismadeoristhreatenedtobemadeapartyoris
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otherwiseinvolvedinanyaction,suitorproceeding,whethercivil,criminal,administrativeorinvestigative(a“proceeding”),byreasonofthefactthatheorshe,orapersonforwhomheorsheisthelegalrepresentative,isorwasadirectororofficeroftheCorporationor,whileadirectororofficeroftheCorporation,isorwasservingattherequestoftheCorporationasadirector,officer,employee,agentormanagerofanothercorporationorofapartnership,limitedliabilitycompany,jointventure,trust,enterpriseornonprofitentity,includingservicewithrespecttoemployeebenefitplans,againstallliabilityandlosssufferedandexpenses(includingattorneys’fees)reasonablyincurredbysuchCoveredPerson.Notwithstandingtheprecedingsentence,exceptasotherwiseprovidedinthisArticleV,theCorporationshallberequiredtoindemnifyaCoveredPersoninconnectionwithaproceeding(orpartthereof)commencedbysuchCoveredPersononlyifthecommencementofsuchproceeding(orpartthereof)bytheCoveredPersonwasauthorizedinthespecificcasebytheBoardoftheCorporation.
2.PrepaymentofExpense.TheCorporationshall,tothefullestextentnotprohibitedbyapplicablelaw,paytheexpenses(includingattorneys’fees)incurredbyaCoveredPersonindefendinganyproceedinginadvanceofitsfinaldisposition;provided,however,that,totheextentrequiredbylaw,suchpaymentofexpensesinadvanceofthefinaldispositionoftheproceedingshallbemadeonlyuponreceiptofanundertakingbytheCoveredPersontorepayallamountsadvancedifitshouldbeultimatelydeterminedthattheCoveredPersonisnotentitledtobeindemnifiedunderthisArticleVorotherwise.
3.Claims.Ifaclaimforindemnification(followingthefinaldispositionofsuchaction,suitorproceeding)oradvancementofexpensesunderthisArticleVisnotpaidinfullwithinthirtydays(30)afterawrittenclaimthereforbytheCoveredPersonhasbeenreceivedbytheCorporation,theCoveredPersonmayfilesuittorecovertheunpaidamountofsuchclaimand,ifsuccessfulinwholeorinpart,shallbeentitledtobepaidtheexpenseofprosecutingsuchsuit.InanysuchactiontheCorporationshallhavetheburdenofprovingthattheCoveredPersonisnotentitledtotherequestedindemnificationand/oradvancementofexpensesunderapplicable.
4.NonexclusivityofRights.TherightsconferredonanyCoveredPersonbythisArticleVshallnotbeexclusiveofanyotherrightswhichsuchCoveredPersonmayhaveorhereafteracquireunderanylaw,theCertificateofIncorporation,theseBylaws,agreement,voteofstockholdersordisinteresteddirectors,orotherwise.
5.OtherSources.TheCorporation’sobligation,ifany,toindemnifyortoadvanceexpensestoanyCoveredPersonwhowasorisservingatitsrequestasadirector,officer,employee,agentormanagerofanothercorporation,partnership,limitedliabilitycompany,jointventure,trust,enterpriseornonprofitentityshallbereducedbyanyamountsuchCoveredPersonmaycollectasindemnificationoradvancementofexpensesfromsuchothercorporation,partnership,limitedliabilitycompany,jointventure,trust,enterpriseornon-profitenterprise.
6.Amendment,ModificationorRepeal.Anyamendment,modificationorrepealoftheforegoingprovisionsofthisArticleVshallnotadverselyaffectanyrightorprotectionhereunderofanyCoveredPersoninrespectofanyactoromissionoccurringpriortothetimeofsuchrepealormodification.
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7.OtherIndemnificationandPrepaymentofExpenses.ThisArticleVshallnotlimittherightoftheCorporation,totheextentandinthemannerpermittedbylaw,toindemnifyandtoadvanceexpensestopersonsotherthanCoveredPersonswhenandasauthorizedbyappropriatecorporateaction.
ARTICLE VI.CERTIFICATES OF STOCK
1.Certificates.ThesharesofthestockoftheCorporationshallberepresentedbycertificates,providedthattheBoardmayprovidebyresolutionthatsomeorallsharesofanyorallseriesofitsstockshallbeuncertificatedshares.AnysuchresolutionshallnotapplytosharesrepresentedbyacertificateuntilsuchcertificateissurrenderedtotheCorporation.EveryholderofsharesofstockoftheCorporationrepresentedbycertificatesshallbeentitledtohaveacertificatesignedby,orinthenameoftheCorporationby(i)thechairpersonorvicechairpersonoftheBoard,orthepresidentoravicepresident,and(ii)theSecretaryoranAssistantSecretary,orthetreasureroranassistanttreasureroftheCorporation,certifyingthenumberofsharesrepresentedbythecertificateownedbysuchstockholderintheCorporation.
2.SignaturesonCertificates.Anyorallofthesignaturesonthecertificatemaybeafacsimile.Incaseanyofficer,transferagentorregistrarwhohassignedorwhosefacsimilesignaturehasbeenplaceduponacertificateshallhaveceasedtobesuchofficer,transferagentorregistrarbeforesuchcertificateisissued,itmaybeissuedbytheCorporationwiththesameeffectasifsuchpersonweresuchofficer,transferagentorregistraratthedateofissue.
3.Lost,StolenorDestroyedStockCertificates.TheCorporationmayissueanewcertificateofstockintheplaceofanycertificatetheretoforeissuedbyit,allegedtohavebeenlost,stolenordestroyed,andtheCorporationmayrequiretheownerofthelost,stolenordestroyedcertificate,orsuchowner’slegalrepresentative,togivetheCorporationabondsufficienttoindemnifyitagainstanyclaimthatmaybemadeagainstitonaccountoftheallegedloss,theftordestructionofanysuchcertificateortheissuanceofsuchnewcertificate.
4.FixingDateforDeterminationofStockholdersofRecord.InorderthattheCorporationmaydeterminethestockholders(a)entitledtonoticeofortovoteatanymeetingofstockholdersoranyadjournmentthereof,(b)toreceivepaymentofanydividendorotherdistributionorallotmentofanyrights,(c)toexerciseanyrightsinrespectofanychange,conversionorexchangeofstockor(d)forthepurposeofanyotherlawfulaction,theBoardmayfixarecorddate,whichrecorddateshallnotprecedethedateuponwhichtheresolutionfixingtherecorddateisadoptedbytheBoard,andwhichrecorddate:(i)inthecaseofdeterminationofstockholdersentitledtovoteatanymeetingofstockholdersoradjournmentthereof,shall,unlessotherwiserequiredbylaw,notbemorethansixty(60)norlessthanten(10)daysbeforethedateofsuchmeetingand(ii)inthecaseofanyotheraction,shallnotbemorethansixty(60)dayspriortosuchotheraction.Ifnorecorddateisfixed:(1)therecorddatefordeterminingstockholdersentitledtonoticeofortovoteatameetingofstockholdersshallbeatthecloseofbusinessonthedaynextprecedingthedayonwhichnoticeisgiven,or,ifnoticeiswaived,atthecloseofbusinessonthedaynextprecedingthedayonwhichthemeetingisheldand(2)therecorddatefordeterminingstockholdersforanyotherpurposeshallbeatthecloseofbusinessonthedayonwhichtheBoardadoptstheresolutionrelatingthereto.Adeterminationof
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stockholdersofrecordentitledtonoticeofortovoteatameetingofstockholdersshallapplytoanyadjournmentofthemeeting;provided,however,thattheBoardmayfixanewrecorddatefortheadjournedmeeting.
5.RegisteredStockholders.TheCorporationshallbeentitledtotreattheholderofrecordofanyshareorsharesofstockastheholderinfactthereofandaccordinglyshallnotbeboundtorecognizeanyequitableorotherclaimorinterestinsuchshareonthepartofanyotherperson,whetherornotitshallhaveexpressorothernoticethereof,saveasexpresslyprovidedbytheDGCL.
ARTICLE VII.GENERAL PROVISIONS
1.Dividends.DividendsuponthecapitalstockoftheCorporation,subjecttotheprovisionsoftheCertificateofIncorporation,ifany,maybedeclaredbytheBoardatanyregularorspecialmeeting,pursuanttolaw.Dividendsmaybepaidincash,inproperty,orinsharesofthecapitalstock,subjecttotheprovisionsoftheCertificateofIncorporation.Beforepaymentofanydividend,theremaybesetasideoutofanyfundsoftheCorporationavailablefordividendssuchsumorsumsasthedirectorsfromtimetotime,intheirabsolutediscretion,thinkproperasareserveorreservestomeetcontingencies,orforequalizingdividends,orforrepairingormaintaininganypropertyoftheCorporation,oranyotherpurposeandthedirectorsmaymodifyorabolishanysuchreserveinthemannerinwhichitwascreated.
2.Checks,DraftsorOrders.Allchecks,drafts,orotherordersforthepaymentofmoneybyortotheCorporationandallnotesandotherevidencesofindebtednessissuedinthenameoftheCorporationshallbesignedbysuchofficerorofficers,agentoragentsoftheCorporation,andinsuchmanner,asshallbedeterminedbyresolutionoftheBoardoradulyauthorizedcommitteethereof.
3.Contracts.TheBoardmayauthorizeanyofficerorofficers,oranyagentoragents,oftheCorporationtoenterintoanycontractortoexecuteanddeliveranyinstrumentinthenameofandonbehalfofthecompany,andsuchauthoritymaybegeneralorconfinedtospecificinstances.
4.Loans.NoloansshallbemadeorcontractedonbehalfoftheCorporationandnoevidencesofindebtednessshallbeissuedinitsnameunlessauthorizedbyresolutionorotherspecificapprovaloftheBoard.Suchauthoritymaybegeneralorconfinedtospecificinstances.
5.FiscalYear.ThefiscalyearoftheCorporationshallbefixedbyresolutionoftheBoard.
6.CorporateSeal.TheBoardmayprovideacorporatesealwhich,ifprovided,shallbeintheformofacircleandshallhaveinscribedthereonthenameoftheCorporationandthewords“CorporateSeal,Delaware”.Thesealmaybeusedbycausingitorafacsimilethereoftobeimpressedoraffixedorreproducedorotherwise.
7.VotingSecuritiesOwnedByCorporation.VotingsecuritiesinanyothercorporationheldbytheCorporationshallbevotedbythePresident,unlesstheBoardspecifically
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confersauthoritytovotewithrespectthereto,whichauthoritymaybegeneralorconfinedtospecificinstances,uponsomeotherpersonorofficer.Anypersonauthorizedtovotesecuritiesshallhavethepowertoappointproxies,withgeneralpowerofsubstitution.
8.InspectionofBooksandRecords.Anystockholderofrecord,inpersonorbyattorneyorotheragent,shall,uponwrittendemandunderoathstatingthepurposethereof,havetherightduringtheusualhoursforbusinesstoinspectforanyproperpurposetheCorporation’sstockledger,alistofitsstockholders,anditsotherbooksandrecords,andtomakecopiesorextractstherefrom.Aproperpurposeshallmeananypurposereasonablyrelatedtosuchperson’sinterestasastockholder.Ineveryinstancewhereanattorneyorotheragentshallbethepersonwhoseekstherighttoinspection,thedemandunderoathshallbeaccompaniedbyapowerofattorneyorsuchotherwritingwhichauthorizestheattorneyorotheragenttosoactonbehalfofthestockholder.ThedemandunderoathshallbedirectedtotheCorporationatitsregisteredofficeintheStateofDelawareoratitsprincipalplaceofbusiness.
9.SectionHeadings.SectionheadingsintheseBy-Lawsareforconvenienceofreferenceonlyandshallnotbegivenanysubstantiveeffectinlimitingorotherwiseconstruinganyprovisionherein.
10.InconsistentProvisions.IntheeventthatanyprovisionoftheseBy-LawsisorbecomesinconsistentwithanyprovisionoftheCertificateofIncorporation,theDGCLoranyotherapplicablelaw,theprovisionoftheseBy-Lawsshallnotbegivenanyeffecttotheextentofsuchinconsistencybutshallotherwisebegivenfullforceandeffect.
ARTICLE VIII.AMENDMENTS
TheseBy-Lawsmaybeamended,altered,orrepealedandnewby-lawsadoptedatanymeetingoftheBoardbyamajorityvote.NotwithstandingtheforegoingoranyotherprovisionsoftheseBy-LawsortheCertificateofIncorporationoftheCorporation(andnotwithstandingthefactthatalesserpercentageorseparateclassvotemaybespecifiedorpermittedbylaw,theseBy-LawsortheCertificateofIncorporationoftheCorporation),anyproposaltoamendorrepeal,ortoadoptanyprovisionoftheseBy-LawsinconsistentwithSections2and11ofArticleII,Sections2and3ofArticleIIIandArticleVIIIoftheseBy-Lawsshallrequiretheaffirmativevoteoftheholdersofnotlessthan662/3%ofthevotesentitledtobecastbytheholdersofallthethenoutstandingsharesofstockthenentitledtovotegenerallyintheelectionofdirectors,votingtogetherasasingleclass.
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Exhibit 4
AMENDMENT TO STOCKHOLDER RIGHTS AGREEMENT
ThisAMENDMENT(this“Amendment”)totheStockholderRightsAgreement,datedasofOctober25,2007(the“Agreement”),byandbetweenUltaSalon,Cosmetics&Fragrance,Inc.(the“Company”)andAmericanStockTransfer&TrustCompany,asRightsAgent(“RightsAgent”),ismadeandenteredintoasofJanuary29,2017.CapitalizedtermsusedbutnotexpresslydefinedinthisAmendmentshallhavethemeaningsascribedtosuchtermsintheAgreement.
RECITALS
WHEREAS, Section25oftheAgreementprovidesthat,aslongastheRightsarethenredeemable(whichtheyarecurrently),theCompanymayinitssoleandabsolutediscretion,andtheRightsAgentshall,iftheCompanysodirects,supplementoramendanyprovisionoftheAgreementinanyrespectwithouttheapprovalofanyholdersofRightsorCommonShares;
WHEREAS, onJanuary29,2017,theCompanyimplementedaholdingcompanyreorganization(the“HoldingCompanyReorganization”)pursuanttowhich,amongotherthings,UltaBeauty,Inc.,aDelawarecorporation(“UltaBeauty”),replacedtheCompanyasthepublicly-tradedentityandeachoutstandingshareofcommonstockoftheCompanyautomaticallyconvertedintoashareofthecommonstockofUltaBeauty,havingthesamerights,powersandpreferences,andqualifications,limitationsandrestrictions(accordingly,uponconsummationoftheHoldingCompanyReorganization,theCompany’sthencurrentstockholdersbecamestockholdersofUltaBeauty);and
WHEREAS, inconnectionwith,andasaresultof,theHoldingCompanyReorganization,theBoardofDirectorsoftheCompanyhasdeterminedthatitisinthebestinterestsoftheCompanyanditsstockholderstoamendthetermsoftheAgreementassetforthbelowanddirectstheRightsAgenttoalsoexecutethisAmendment.
NOW, THEREFORE, inconsiderationofthepremisesandmutualcovenantshereinaftersetforthandforothergoodandvaluableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,theCompany,UltaBeautyandtheRightsAgentherebyamendtheAgreementasfollows:
SECTION1.AmendmenttoCertainDefinitions.AllreferencesintheAgreementto“UltaSalon,Cosmetics&Fragrance,Inc.”shallbedeletedandreplacedwith“UltaBeauty,Inc.”Asaresult,amongotherthings,thedefinedtermthe“Company”shallmeanUltaBeauty,Inc.,thedefinedterm“CommonShares”whenusedwithreferencetotheCompanyshallmeanthesharesofcommonstock,parvalue$.01pershare,ofUltaBeauty,Inc.andthedefinedterm“PreferredShares”shallmeantheSeriesAJuniorParticipatingPreferredStockofUltaBeauty,Inc.havingtherights,powersandpreferencessetforthintheCertificateofDesignationsofSeriesAJuniorParticipatingPreferredStockfiledwiththeDelawareSecretaryofStateonDecember16,2016.
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SECTION2.LegendinSection3.3oftheAgreement.ThestockcertificatelegendsetforthinSection3.3oftheAgreementisherebydeletedinitsentiretyandreplacedwiththefollowing:
ThiscertificatealsoevidencesandentitlestheholderhereoftocertainrightsassetforthinanAgreementbetweenUltaBeauty,Inc.(the“Company”)andAmericanStockTransfer&TrustCompany,asRightsAgent,datedasofOctober25,2007,asamendedasofJanuary29,2017,andasthesamemaybefurtheramendedfromtimetotime(the“Agreement”),thetermsofwhichareherebyincorporatedhereinbyreferenceandacopyofwhichisonfileattheprincipalexecutiveofficesoftheCompany.Undercertaincircumstances,assetforthintheAgreement,suchRightswillbeevidencedbyseparatecertificatesandwillnolongerbeevidencedbythiscertificate.TheCompanywillmailtotheholderofthiscertificateacopyoftheAgreementwithoutchargeafterreceiptofawrittenrequesttherefor.As described in the Agreement, Rights which are owned by, transferred to orhave been owned by Acquiring Persons or Associates or Affiliates thereof (as defined in the Agreement) shall become null and void and will nolonger be transferable.
SECTION3.RatificationofAgreement;EffectofAmendment.Excepttotheextentexpresslymodifiedherein,alloftheterms,covenantsandotherprovisionsoftheAgreementareherebyratifiedandconfirmedandshallcontinuetobeinfullforceandeffectinaccordancewiththeirrespectiveterms.IntheeventofanyconflictorinconsistencybetweenthetermsofthisAmendmentandthetermsoftheAgreement,thetermsofthisAmendmentwillcontrol.FromandafterthedateofthisAmendment,allreferencestotheAgreement(whetherintheAgreement,inthisAmendmentorotherwise)shallrefertotheAgreementasamendedbythisAmendment.
SECTION4.GoverningLaw.ThisAmendmentwillbegovernedbyandconstruedandenforcedinaccordancewiththelawsoftheStateofDelawarewithoutregardtoprinciplesofconflictsoflaw.
SECTION5.Counterparts.ThisAmendmentmaybeexecutedinoneormorecounterparts,andcounterpartsmaybeexchangedbyelectronictransmission,eachofwhichwillbedeemedanoriginal,butallofwhichtogetherconstituteoneandthesameinstrument.
SECTION6.Headings.TheheadingscontainedinthisAmendmentareincludedforpurposesofconvenienceonly,andwillnotaffectthemeaningorinterpretationofthisAmendment.
[SignaturePageFollows]
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IN WITNESS WHEREOF ,theundersignedhaveexecutedthisAmendmentasofthedayandyearfirstabovewritten.
ULTA SALON, COSMETICS & FRAGRANCE, INC.
By: /s/JodiJ.Caro JodiJ.Caro GeneralCounselandCorporateSecretary
ULTA BEAUTY, INC.
By: /s/JodiJ.Caro JodiJ.Caro GeneralCounselandCorporateSecretary
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/JenniferDonovan JenniferDonovan
SeniorVicePresident,RegionalManager,RelationshipManagement
[SignaturePagetoAmendmenttoStockholderRightsAgreement]
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Exhibit 10.1
COMPENSATION PLAN AGREEMENT
ThisCOMPENSATIONPLANAGREEMENT(this“Agreement”)datedasofJanuary27,2017isbetweenUltaSalon,Cosmetics&Fragrance,Inc.,aDelawarecorporation(“Salon”)(whichwillbethesurvivingentityfollowingthemergerinwhichUltaMergerSub,Inc.,aDelawarecorporation(“MergerSub”),willbemergedwithandintoSalon),andUltaBeauty,Inc.,aDelawarecorporation(“UltaBeauty”).AllcapitalizedtermsusedinthisAgreementandnotdefinedhereinhavetherespectivemeaningsascribedtothemintheAgreementandPlanofMerger,datedasofJanuary27,2017(the“MergerAgreement”),byandamongSalon,UltaBeautyandMergerSub.
RECITALS
WHEREAS,pursuanttotheMergerAgreement,attheEffectiveTime,MergerSubwillbemergedwithandintoSalon,withSaloncontinuingasthesurvivingentityinsuchmergerandeachoutstandingshareofcommonstockofSalon(“SalonStock”)willbeconvertedintooneshareofcommonstockofUltaBeauty(“UltaBeautyStock”)withthesamerightsandprivilegesrelativetoUltaBeautythatsuchsharehadrelativetoSalonpriortothemerger(the“Reorganization”);
WHEREAS,inconnectionwiththeReorganization,(1)Salonwilltransfer(includingsponsorshipof)toUltaBeauty,andUltaBeautywillassume(includingsponsorshipof),Salon’sequitycompensationplanslistedinExhibitAandanysubplans,appendicesoraddendumsthereto(the“SalonEquityCompensationPlans”)andallobligationsofSalonpursuanttoeachstockoptiontopurchaseashareofSalonStock(a“SalonOption”)andeachrighttoacquireorvestinashareofSalonStock,including,withoutlimitation,restrictedstockunitsandperformancebasedvestingshareunitawards(a“SalonUnit”andeachofaSalonOptionandaSalonUnit,a“SalonEquityAward”)thatisoutstandingimmediatelypriortotheEffectiveTimeand(a)issuedundertheSalonEquityCompensationPlansandunderlyinggrantagreements(eachsuchgrantagreement,a“SalonEquityAwardGrantAgreement”andsuchgrantagreementstogetherwiththeSalonEquityCompensationPlans,the“SalonEquityCompensationPlansandAgreements”)or(b)grantedbySalonoutsideoftheSalonEquityCompensationPlansandAgreementspursuanttoNasdaqListingRule5635(c),alluponthetermsandsubjecttotheconditionssetforthintheMergerAgreementandthisAgreement,and(2)eachsuchSalonEquityAwardwillbeconvertedinto(a)withrespecttoeachSalonUnit,arighttoacquireorvestinashareofUltaBeautyStockor(b)withrespecttoaSalonOption,anoptiontopurchaseashareofUltaBeautyStockatanexercisepricepershareequaltotheexercisepricepershareofSalonStocksubjecttosuchSalonOptionimmediatelypriortotheEffectiveTime;
WHEREAS,theBoardofDirectorsofSalonhasdeterminedthatitisinthebestinterestsofSalonforSalontoenterintothisAgreement;
WHEREAS,theBoardofDirectorsofUltaBeautyhasdeterminedthatitisinthebestinterestsofUltaBeautyanditsshareholdersforUltaBeautytoenterintothisAgreement;
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WHEREAS,theBoardofDirectorsofSalonandtheBoardofDirectorsofUltaBeautyhavedeterminedthattheReorganizationdoesnotconstitutea“ChangeinControl”undertheSalonEquityCompensationPlansandAgreementsortheSalonEquityAwards,assuchtermisdefinedtherein.
NOW,THEREFORE,forgoodandvaluableconsideration,thereceipt,adequacyandsufficiencyofwhichareherebyacknowledged,SalonandUltaBeautyherebyagreeasfollows:
I.EQUITY PLANS AND AWARDS
1.SubjecttoandasoftheEffectiveTime,UltaBeautywillassumeandwillperform,fromandaftertheEffectiveTime,alloftheobligationsofSalonpursuanttotheSalonEquityCompensationPlansandAgreements.
2.SubjecttoandasoftheEffectiveTime,(a)UltaBeautywillassumeeachSalonEquityAwardthatisoutstandingandunexercised,unvestedandnotyetpaidorpayableimmediatelypriortotheEffectiveTime(i)issuedundertheSalonEquityCompensationPlansandAgreementsor(ii)grantedbySalonoutsideoftheSalonEquityCompensationPlansandAgreementspursuanttoNasdaqListingRule5635(c)and(b)eachsuchSalonEquityAwardshallbeconvertedinto(i)withrespecttoeachSalonUnit,arighttoacquireorvestin,onotherwisethesametermsandconditionsaswereapplicableundertheapplicableSalonEquityCompensationPlanand/orSalonEquityAwardGrantAgreement(asmodifiedherein),ashareofUltaBeautyStockwiththesamerightsandprivilegesapplicabletotheshareofSalonStocksubjecttosuchSalonUnitimmediatelypriortotheEffectiveTimeand(ii)withrespecttoaSalonOption,anoptiontopurchase,onotherwisethesametermsandconditionsaswereapplicableundertheapplicableSalonEquityCompensationPlanand/orSalonEquityAwardGrantAgreement(asmodifiedherein),ashareofUltaBeautyStockwiththesamerightsandprivilegesapplicabletotheshareofSalonStocksubjecttosuchSalonOptionimmediatelypriortotheEffectiveTime,atanexercisepricepershareequaltotheexercisepricepershareofSalonStocksubjecttosuchSalonOptionimmediatelypriortotheEffectiveTime.AllSalonOptionsshallbeadjustedandconvertedinaccordancewiththerequirementsofSection424oftheUnitedStatesInternalRevenueCodeof1986,asamended,andregulationsthereunder.
3.AttheEffectiveTime,theSalonEquityAwards,theSalonEquityCompensationPlansandAgreementsandanyprovisionofanyothercompensatoryplan,agreementorarrangementprovidingforthegrantorissuanceofSalonStockshalleachbeautomaticallydeemedtobeamended,totheextentnecessaryorappropriate,toprovidethatreferencestoSaloninsuchawards,documentsandprovisionsshallbereadtorefertoUltaBeautyandreferencestoSalonStockinsuchawards,documentsandprovisionsshallbereadtorefertoUltaBeautyStock.UltaBeautyandSalonagreeto(i)prepareandexecuteallamendmentstotheSalonEquityCompensationPlansandAgreements,SalonEquityAwardsandotherdocumentsnecessarytoeffectuateUltaBeauty’sassumptionoftheSalonEquityCompensationPlansandAgreementsandoutstandingSalonEquityAwards,(ii)providenoticeoftheassumptiontoholdersofsuchSalonEquityAwards,and(iii)submitanyrequiredfilingswiththeSecuritiesandExchangeCommissioninconnectionwithsame.
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4.OnorpriortotheEffectiveTime,UltaBeautyshallreservesufficientsharesofUltaBeautyStocktoprovidefortheissuanceofUltaBeautyStocktosatisfyUltaBeauty’sobligationsunderthisAgreementwithrespecttotheSalonEquityCompensationPlansandAgreementsandSalonEquityAwards.
5.SalonandUltaBeautyagreethattheReorganizationdoesnotconstitutea“ChangeinControl”or“SaleoftheCompany”undertheSalonEquityCompensationPlansandAgreementsortheSalonEquityAwards,assuchtermisdefinedtherein.
II.MISCELLANEOUS
1.EachofSalonandUltaBeautywill,fromtimetotimeandatalltimeshereafter,uponeveryreasonablerequesttodosobyanyotherpartyhereto,make,do,executeanddeliver,orcausetobemade,done,executedanddelivered,allsuchfurtheracts,deeds,assurancesandthingsasmaybereasonablyrequiredornecessaryinordertofurtherimplementandcarryouttheintentandpurposeofthisAgreement.
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IN WITNESS WHEREOF ,theundersignedhaveexecutedthisCompensationPlanAgreementasofthedatefirstwrittenabove.
ULTA SALON, COSMETICS & FRAGRANCE, INC.
By: /s/ScottSettersten
ScottSetterstenChiefFinancialOfficer,TreasurerandAssistantSecretary
ULTA BEAUTY, INC.
By: /s/ScottSettersten
ScottSetterstenChiefFinancialOfficer,TreasurerandAssistantSecretary
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Exhibit A
EquityPlans• UltaSalon,Cosmetics&Fragrance,Inc.SecondAmendedandRestatedRestrictedStockOptionPlan,asfurtheramended
• UltaSalon,Cosmetics&Fragrance,Inc.2002EquityIncentivePlan
• UltaSalon,Cosmetics&Fragrance,Inc.2007IncentiveAwardPlan
• AmendedandRestatedUltaSalon,Cosmetics&Fragrance,Inc.2011IncentiveAwardPlan
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Exhibit 10.2
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
WELLS FARGO BANK, NATIONAL ASSOCIATION,as Administrative Agent, Collateral Agent and LC Issuer,
WELLS FARGO CAPITAL FINANCE, LLCJ.P. MORGAN SECURITIES LLC
as Joint Lead Arrangers and Joint Bookrunners
JPMORGAN CHASE BANK, N.A.,as Syndication Agent
PNC BANK, NATIONAL ASSOCIATION,
as Documentation Agent,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO,as Lenders,
and
ULTA SALON, COSMETICS & FRAGRANCE, INC.as Borrower
Dated: as of October 19, 2011
As Further Amended through November 22, 2016
Page 52
TABLE OF CONTENTS Page
SECTION1. DEFINITIONS 2
SECTION2. CREDITFACILITIES 21
2.1RevolvingLoans 212.2LetterofCreditAccommodations 232.3AvailabilityReserves 282.4Commitments 292.5SwingLineFacility 29
SECTION3. INTERESTANDFEES 31
3.1Interest 313.2OtherFees 333.3ChangesinLawsandIncreasedCostsofLoans 33
SECTION4. CONDITIONSPRECEDENT 35
4.1ConditionsPrecedenttoInitialLoansandLetterofCreditAccommodations 354.2ConditionsPrecedenttoAllLoansandLetterofCreditAccommodations 35
SECTION5. GRANTANDPERFECTIONOFSECURITYINTEREST 36
5.1GrantofSecurityInterest 365.2ExceptionfromSecurityInterest 375.3PerfectionofSecurityInterest 38
SECTION6. COLLECTIONANDADMINISTRATION 42
6.1Borrower’sLoanAccount 426.2Statements 436.3CollectionofAccounts 436.4Payments 466.5AuthorizationtoMakeLoans 476.6UseofProceeds 486.7ProRataTreatment 486.8SharingofPayments,Etc. 486.9SettlementProcedures 49
SECTION7. COLLATERALREPORTINGANDCOLLATERALCOVENANTS 50
7.1CollateralReporting 507.2AccountsCovenants 51
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7.3InventoryCovenants 527.4PowerofAttorney 537.5RighttoCure 547.6AccesstoPremises 54
SECTION8. REPRESENTATIONSANDWARRANTIES 55
8.1CorporateExistence;PowerandAuthority 558.2Name;StateofOrganization;ChiefExecutiveOffice;CollateralLocations 558.3FinancialStatements;NoMaterialAdverseChange 568.4PriorityofLiens;TitletoProperties 568.5TaxReturns 568.6Litigation 578.7CompliancewithOtherAgreementsandApplicableLaws 578.8EnvironmentalCompliance 588.9[intentionallydeleted] 588.10EmployeeBenefits 588.11BankAccounts 598.12RegulationU 598.13InvestmentCompanyAct 598.14OFAC 598.15AccuracyandCompletenessofInformation 608.16SurvivalofWarranties;Cumulative 608.17ExemptionfromIllinoisInterestAct 608.18UnrestrictedSubsidiaries 60
SECTION9. AFFIRMATIVEANDNEGATIVECOVENANTS 61
9.1MaintenanceofExistence 619.2NewCollateralLocations 619.3CompliancewithLaws,Regulations,Etc. 619.4PaymentofTaxesandClaims 629.5Insurance 639.6FinancialStatementsandOtherInformation 639.7SaleofAssets,Consolidation,Merger,Dissolution,Etc. 659.8Encumbrances 679.9Indebtedness 699.10Loans,Investments,Etc. 729.11DividendsandRedemptions 739.12TransactionswithAffiliates 769.13CreditCardAgreements 769.14MinimumExcessAvailability 769.15CompliancewithERISA 769.16CostsandExpenses 779.17FurtherAssurances 779.18UnrestrictedSubsidiaries 78
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SECTION10. EVENTSOFDEFAULTANDREMEDIES 78
10.1EventsofDefault 7810.2Remedies 80
SECTION11. JURYTRIALWAIVER;OTHERWAIVERSANDCONSENTS;GOVERNINGLAW 83
11.1GoverningLaw;ChoiceofForum;ServiceofProcess;JuryTrialWaiver 8311.2WaiverofNotices 8411.3AmendmentsandWaivers 8411.4WaiverofCounterclaims 8511.5Indemnification 86
SECTION12. THEAGENTS 86
12.1Appointment,PowersandImmunities 8612.2ReliancebyAgents 8712.3EventsofDefault 8712.4WellsFargoinitsIndividualCapacity 8712.5Indemnification 8812.6Non-RelianceonAgentsandOtherLenders 8812.7FailuretoAct 8912.8AdditionalLoans 8912.9ConcerningtheCollateralandtheRelatedFinancingAgreements 9012.10FieldAudit,ExaminationReportsandotherInformation;DisclaimerbyLenders 9012.11CollateralMatters 9012.12AgencyforPerfection 9212.13SuccessorAgent 9312.14HedgingAgreements;BankProducts;CashManagementServices 9312.15DefaultingLender 9412.16OtherAgents;ArrangersandManagers 95
SECTION13. TERMOFAGREEMENT;MISCELLANEOUS 95
13.1Term 9513.2InterpretativeProvisions 9613.3Notices 9713.4PartialInvalidity 9913.5Successors 9913.6Assignments;Participations 9913.7Confidentiality 10313.8EntireAgreement 10313.9Counterparts,Etc. 10413.10NoAdvisoryorFiduciaryResponsibility 10413.11CustomerIdentification-USAPatriotActNotice 105
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13.12ForeignAssetControlRegulations 10513.13WaiverofConsequentialDamages,Etc. 10513.14PressReleases 10513.15AmendmentandRestatement 106
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INDEX TOEXHIBITS AND SCHEDULES
ExhibitA AssignmentandAcceptance
ExhibitB InformationCertificate
ExhibitC FormofSwapAcknowledgmentAgreement
ExhibitD NoticeofConversion/Continuation
ExhibitE ClosingChecklist
ExhibitF NoticeofBorrowing
ExhibitG Reserved
ExhibitH Reserved
ExhibitI FormofBorrowingBaseCertificate
ExhibitJ InvestmentPolicy
ExhibitK FormofCreditCardNotification
ScheduleI LoanCommitments
ScheduleII CashManagementServicesandBankProducts
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
ThisAmendedandRestatedLoanandSecurityAgreement(asamended,restatedorotherwisemodifiedfromtimetotime,the“Agreement”)datedasofOctober19,2011isenteredintobyandamongULTASALON,COSMETICS&FRAGRANCE,INC.,aDelawarecorporation(“Borrower”),thefinancialinstitutionsfromtimetotimepartiesheretoaslenders(“Lenders”),WELLSFARGOBANK,NATIONALASSOCIATION, initscapacitiesasadministrativeagentforLenders(“AdministrativeAgent”),ascollateralagentforLenders(“CollateralAgent,”)andinitsindividualcapacity,(“WellsFargo”),WELLSFARGOBANKNATIONALASSOCIATION,asLCIssuer(“LCIssuer”)andJPMORGANCHASEBANK,N.A.,initscapacityasSyndicationAgent(“SyndicationAgent”);andPNCBANK,NATIONALASSOCIATION,initscapacityasdocumentationagentforLenders(“DocumentationAgent”)andinitsindividualcapacity(“PNC”).
W I T N E S S E T H:
WHEREAS,Borrower,WachoviaCapitalFinanceCorporation,(f/k/aCongressFinancialCorporation(Central)andindividually,“Wachovia”),asagent,andeachofWachoviaandBankofAmerica,N.A.(assuccessortoLaSalleNationalBank,NationalAssociation)(“BankofAmerica”),individuallyareeachpartytothatcertainLoanandSecurityAgreementdatedasofMay29,1997(the“1997LoanAgreement”)whichwasamendedandrestatedbythatcertainAmendedandRestatedLoanandSecurityAgreementdatedasofDecember20,2001(asamendedorotherwisemodifiedpriortoMay31,2005,the“2001LoanAgreement”),andwhichwasfurtheramendedbytheSecondAmendedandRestatedLoanandSecurityAgreementdatedasofMay31,2005(asamendedorotherwisemodifiedpriortoJune29,2007,the“2005LoanAgreement”andwhichwasfurtheramendedbythatcertainThirdAmendedandRestatedLoanandSecurityAgreementdatedasofJune29,2007(asamendedorotherwisemodifiedpriortoAugust31,2010,the“2007LoanAgreement”and,collectivelywiththe1997LoanAgreement,the2001LoanAgreementandthe2005LoanAgreement,the“PriorLoanAgreements”),pursuanttowhich,amongotherthings,thelendersthereundermadeavailabletoBorrowervarioussecuredfinancings;
WHEREAS,thepartiesheretoenteredintothatcertainLoanandSecurityAgreementdatedasofAugust31,2010(asamendedpriortothedatehereof,the“ExistingLoanAgreement”),pursuanttowhichBorrowerterminatedthePriorLoanAgreementsandsubjecttothetermsandconditionssetforththerein,replacedthefinancingunderthe2007LoanAgreementwithanewcreditfacilityasevidencedthereby;and
WHEREAS,theBorrowerhasrequested,andtheAdministrativeAgentandLendershaveagreedtoamendandrestatetheExistingLoanAgreementpursuanttothetermsandconditionssetforthinthisAgreement;
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NOW,THEREFORE,inconsiderationofthemutualconditionsandagreementssetforthherein,andforothergoodandvaluableconsideration,thereceiptandsufficiencyofwhichisherebyacknowledged,thepartiesheretoagreeasfollows:
SECTION 1. DEFINITIONS
ForpurposesofthisAgreement,thefollowingtermsshallhavetherespectivemeaningsgiventothembelow:
1.1“Accounts”shallmeanallpresentandfuturerightsofBorrowertopaymentofamonetaryobligation,whetherornotearnedbyperformance,whichisnotevidencedbychattelpaperoraninstrument,(a)forpropertythathasbeenoristobesold,leased,licensed,assigned,orotherwisedisposedof,(b)forservicesrenderedortoberendered,(c)forasecondaryobligationincurredortobeincurred,or(d)arisingoutoftheuseofacreditorchargecardorinformationcontainedonorforusewiththecard.
1.2“Acquisition”means,withrespecttoanyPerson(a)apurchaseofaControllinginterestintheCapitalStockofanyotherPerson,(b)apurchaseorotheracquisitionofallorsubstantiallyalloftheassetsorpropertiesof,anotherPersonorofanybusinessunitofanotherPerson,or(c)anymergerorconsolidationofsuchPersonwithanyotherPersonorothertransactionorseriesoftransactionsresultingintheacquisitionofallorsubstantiallyalloftheassets,oraControllinginterestintheCapitalStock,ofanyotherPerson,ineachcaseinanytransactionorgroupoftransactionswhicharepartofacommonplan.
1.3“AdditionalCredit”means$50,000,000.
1.4“AdditionalCreditAssumptionAgreement”meansanAdditionalCreditAssumptionAgreement,informandsubstancesatisfactorytotheAdministrativeAgent,amongtheBorrower,theAdministrativeAgentandoneormoreLendersprovidingadditionalCommitmentspursuanttoSection2.1(d).
1.5“AdjustedLIBORate”means:
(a)foranyInterestPeriodwithrespecttoanyLIBORateLoan,aninterestrateperannum(roundedupwards,ifnecessary,tothenext1/100ofonepercent)equalto(i)theLIBORateforsuchInterestPeriodmultipliedby(ii)theStatutoryReserveRate;and
(b)foranyinterestratecalculationwithrespecttoanyPrimeRateLoan,aninterestrateperannum(roundedupwards,ifnecessary,tothenext1/100ofonepercent)equalto(i)theLIBORateforanInterestPeriodcommencingonthedateofsuchcalculationandendingonthedatethatisthirty(30)daysthereaftermultipliedby(ii)theStatutoryReserveRate.
TheAdjustedLIBORatewillbeadjustedautomaticallyasoftheeffectivedateofanychangeintheStatutoryReserveRate.
1.6“Affiliate”shallmean,withrespecttoaspecifiedPerson,anyotherPersonwhichdirectlyorindirectly,throughoneormoreintermediaries,controlsoriscontrolledbyorisundercommoncontrolwithsuchPerson,andwithoutlimitingthegeneralityoftheforegoing,includes(a)anyPersonwhichbeneficiallyownsorholdsten(10%)percentormoreofanyclassofVotingStockofsuchPersonorotherequityinterestsinsuchPerson,(b)anyPersonofwhichsuchPersonbeneficiallyownsorholdsten(10%)percentormoreofanyclassofVotingStockorinwhichsuchPersonbeneficiallyownsorholdsten(10%)percentormoreoftheequity
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interestsand(c)anydirectororexecutiveofficerofsuchPerson.Forthepurposesofthisdefinition,theterm“control”(includingwithcorrelativemeanings,theterms“controlledby”and“undercommoncontrolwith”),asusedwithrespecttoanyPerson,meansthepossession,directlyorindirectly,ofthepowertodirectorcausethedirectionofthemanagementandpoliciesofsuchPerson,whetherthroughtheownershipofVotingStock,byagreementorotherwise.
1.7“Agents”shallmeaneachofAdministrativeAgentandCollateralAgent,oreachsuchentityasthecontextsoprovidesandanysuccessoragentshereunder.
1.8“ArmoredCarCompanies”shallmean,collectively,thearmoredcarservicescompaniessetforthonSchedule6.3oftheInformationCertificateoranyotherarmoredcarserviceselectedbyBorrowerafterthedatehereofwhichisreasonablyacceptabletoAdministrativeAgent.
1.9“AssignmentandAcceptance”shallmeananAssignmentandAcceptancesubstantiallyintheformofExhibitAattachedhereto(withblanksappropriatelycompleted)deliveredtotheAdministrativeAgentinconnectionwithanassignmentdescribedunderSection13.6hereoftotheextentsuchassignmentisnototherwiseprohibitedasbetweenoramongtheLenders.
1.10“AvailabilityReserves”shallhavethemeaningsetforthinSection2.3hereof.
1.11“BankProducts”meansanyservicesorfacilitiesprovidedtotheBorroweroranyObligorbyaLenderoranyofitsAffiliates(butexcludingCashManagementServices)onaccountof(a)HedgingAgreements,(b)purchasecards,(c)merchantservicesconstitutingalineofcredit(d)factoring,(e)commercialcreditcards,and(f)leasing.
1.12“BankProductReserves”means,ifandonlytotheextentdisclosedtotheAdministrativeAgentinwriting,suchreservesastheLender(oritsAffiliate)providingaBankProductandtheBorroweragreeinwritingfromtimetotimetoreflecttheliabilitiesandobligationsoftheBorroweroranyObligorwithrespecttosuchBankProductsthenprovidedoroutstanding.
1.13“BlockedAccounts”shallhavethemeaningsetforthinSection6.3hereof.
1.14“BusinessDay”shallmeananydayotherthanaSaturday,Sunday,orotherdayonwhichcommercialbanksareauthorizedorrequiredtocloseunderthelawsoftheStateofNewYork,IllinoisortheStateofNorthCarolina,andadayonwhichAdministrativeAgentisopenforthetransactionofbusiness,exceptthatifadeterminationofaBusinessDayshallrelatetoanyLIBORateLoans,thetermBusinessDayshallalsoexcludeanydayonwhichbanksareclosedfordealingsindollardepositsintheLondoninterbankmarketorotherapplicableLIBORatemarket.
1.15“CapitalStock”shallmean,withrespecttoanyPerson,anyandallshares,interests,participationsorotherequivalents(howeverdesignated)ofsuchPerson’scapitalstockorpartnership,limitedliabilitycompanyorotherequityinterestsatanytimeoutstanding,and
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anyandallrights,warrantsoroptionsexchangeablefororconvertibleintosuchcapitalstockorotherinterests(butexcludinganydebtsecuritythatisexchangeablefororconvertibleintosuchcapitalstock).
1.16“CashEquivalents”shallmean,atanytime,investmentsconsistentwiththeBorrower’sinvestmentpolicyattachedheretoasExhibitJ,assuchExhibitmaybemodifiedfromtimetotimewiththepriorwrittenconsentoftheAdministrativeAgent(nottobeunreasonablywithheld),totheextentsuchinvestmentpolicyismodifiedbytheBorrower’sboardofdirectors.
1.17“CashManagementReserves”means,ifandonlytotheextentdisclosedtotheAdministrativeAgentinwriting,suchreservesastheLender(oritsAffiliate)providingCashManagementServicesandtheBorroweragreeinwritingfromtimetotimetoreflecttheliabilitiesandobligationsoftheBorroweroranyObligorwithrespecttosuchCashManagementServicesthenprovidedoroutstanding.
1.18“CashManagementServices”meansanyoneormoreofthefollowingtypesorservicesorfacilitiesprovidedtotheBorroweroranyObligorbyaLenderoranyofitsAffiliates:(a)ACHtransactions,(b)cashmanagementservices,including,withoutlimitation,controlleddisbursementservices,treasury,depository,overdraft,andelectronicfundstransferservices,(c)foreignexchangefacilities,(d)creditordebitcards,(e)creditcardprocessingservices,(f)purchasecardsand(g)merchantservicesnotconstitutingaBankProduct.
1.19“ChangeinLaw”shallmeantheoccurrence,afterthedateofthisAgreement,ofanyofthefollowing:(a)theadoptionortakingeffectofanylaw,(b)anychangeinanylaw,orintheadministration,interpretation,implementationorapplicationthereof,byanyGovernmentalAuthorityor(c)themakingorissuanceofanyrequest,rule,guidelineordirective(whetherornothavingtheforceoflaw)byanyGovernmentalAuthority;providedthatnotwithstandinganythinghereintothecontrary,(x)theDodd-FrankWallStreetReformandConsumerProtectionActandallrequests,rules,regulations,guidelines,interpretationsordirectivesthereunderorissuedinconnectiontherewith(whetherornothavingtheforceoflaw)and(y)allrequests,rules,regulations,guidelines,interpretationsordirectivespromulgatedbytheBankforInternationalSettlements,theBaselCommitteeonBankingSupervision(oranysuccessororsimilarauthority)ortheUnitedStatesorforeignregulatoryauthorities(whetherornothavingtheforceoflaw),ineachcasepursuanttoBaselIII,shallineachcasebedeemedtobeaChangeinLawregardlessofthedateenacted,adopted,issued,promulgatedorimplemented.
1.20“ChangeofControl”shallbedeemedtohaveoccurredifaneventorseriesofevents(whetherastockpurchase,amalgamation,merger,consolidationorotherbusinesscombinationorotherwise)shallhaveoccurredbywhich(a)anyPersonorGroup(assuchtermisusedinSections14(d)(2)and13(d)(3),respectively,oftheSecuritiesExchangeAct)otherthananyofthePermittedHoldersisorbecomesthe“beneficialowner”(asdefinedinRule13d-3undertheSecuritiesExchangeAct)directlyorindirectlyofthirty-fivepercent(35%)ormoreofthecombinedvotingpowerofthethenoutstandingsecuritiesofHoldingsordinarily(andapartfromrightsaccruingundercertaincircumstances)havingtherighttovoteinelectionofdirectorsor(b)Holdingsshallnolongerdirectlyorindirectlybethebeneficialownerof100%oftheCapitalStockofeachofBorrowerandUltaInc.(subjecttoSection9.7(a)herein).
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1.21“ClosingDate”shallmeanOctober19,2011.
1.22“Code”shallmeantheInternalRevenueCodeof1986,asthesamenowexistsormayfromtimetotimehereafterbeamended,modified,recodifiedorsupplemented,togetherwithallrules,regulationsandinterpretationsthereunderorrelatedthereto.
1.23“Collateral”shallhavethemeaningsetforthinSection5hereof.
1.24“CollateralAccessAgreement”shallmeananagreementinwriting,informandsubstancesatisfactorytoAgents,fromanylessorofpremisestoBorrower,oranyotherpersontowhomanyCollateral(includingInventory,Equipment,billsofladingorotherdocumentsoftitle)isconsignedorwhohascustody,controlorpossessionofanysuchCollateralorisotherwisetheowneroroperatorofanypremisesonwhichanyofsuchCollateralislocated,pursuanttowhichsuchlessor,consigneeorotherperson,interalia,acknowledgesthefirstprioritysecurityinterestofCollateralAgentinsuchCollateral,agreestowaiveanyandallclaimssuchlessor,consigneeorotherpersonmay,atanytime,haveagainstsuchCollateral,whetherforprocessing,storageorotherwise,andagreestopermitCollateralAgentaccessto,andtherighttoremainon,thepremisesofsuchlessor,consigneeorotherpersonsoastoexerciseCollateralAgent’srightsandremediesandotherwisedealwithsuchCollateraland,inthecaseofanyconsigneeorotherpersonwhoatanytimehascustody,controlorpossessionofanyCollateral,acknowledgesthatitholdsandwillholdpossessionoftheCollateralforthebenefitofCollateralAgentandagreestofollowallinstructionsofCollateralAgentwithrespectthereto.
1.25“Commitments”shallmean,astoanyLender,theaggregatecommitmentofsuchLendertomakeLoansortoincurLetterofCreditAccommodationsinthemaximumprincipalamountssetforthonScheduleIheretonexttosuchLender’sname,orontheAssignmentandAcceptanceAgreementpursuanttowhichsuchLenderbecameaLenderhereunderinaccordancewiththeprovisionsofSection13.6hereof,orontheAdditionalCreditAssumptionAgreementpursuanttowhichsuchLenderbecameaLenderhereunderinaccordancewiththeprovisionsofSection2.1(d)hereof,assuchamountmaybeadjusted,ifatall,inaccordancewiththisAgreement.
1.26“Control”meansthepossession,directlyorindirectly,ofthepowertodirectorcausethedirectionofthemanagementorpoliciesofaPerson,whetherthroughtheabilitytoexercisevotingpower,bycontractorotherwise.“Controlling”and“Controlled”havemeaningscorrelativethereto.
1.27“ControlEvent”shallmeananyofthefollowing:(a)anEventofDefaulthasoccurredandiscontinuing;or(b)ExcessAvailabilityislessthanfortypercent(40%)ofthelesserof(i)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereofor(ii)theMaximumCreditforten(10)consecutiveBusinessDays;or(c)ExcessAvailabilityatanytimeislessthanthirtypercent(30%)ofthelesserof(i)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereofor(ii)theMaximumCredit.
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1.28“Cost”shallmean,astotheInventoryasofanydate,thecostofsuchInventoryasofsuchdate,determinedprincipallyontheaveragecostbasisinaccordancewithGAAP.
1.29“CreditCardAgreements”shallmeanallagreementsnoworhereafterenteredintobyBorroweranyCreditCardIssueroranyCreditCardProcessor,asthesamenowexistormayhereafterbeamended,modified,supplemented,extended,renewed,restatedorreplaced,including,butnotlimitedto,theagreementslistedandschedulesoftermslistedonSchedule8.9totheInformationCertificate.
1.30“CreditCardIssuer”shallmeananyperson(otherthanBorrower)whoissuesorwhosemembersissuecreditcards,including,withoutlimitation,MasterCardorVISAbankcreditordebitcardsorotherbankcreditordebitcardsissuedthroughMasterCardInternational,Inc.,Visa,U.S.A.,Inc.orVisaInternationalandAmericanExpress,Discover,DinersClub,CarteBlancheandothernon-bankcreditordebitcards,including,withoutlimitation,creditcardsissuedbyorthroughAmericanExpressTravelRelatedServicesCompany,Inc.andNovusServices,Inc.
1.31“CreditCardNotifications”shallmean,individuallyandcollectively,notificationsintheformofExhibitKfurnishedtoCreditCardProcessorsnotifyingsuchCreditCardProcessorsoftheCollateralAgent’sfirstprioritysecurityinterestinthemoniesdueortobecomesduetotheBorrower(including,withoutlimitation,creditsandreserves)undertheCreditCardAgreementsandfurnishinginstructionsforthetransferofsuchmoniestoaBlockedAccount.
1.32“CreditCardProcessor”shallmeananyservicingorprocessingagentoranyfactororfinancialintermediarywhofacilitates,services,processesormanagesthecreditauthorization,billingtransferand/orpaymentprocedureswithrespecttoanyofBorrower’ssalestransactionsinvolvingcreditcardordebitcardpurchasesbycustomersusingcreditcardsordebitcardsissuedbyanyCreditCardIssuer(including,butnotlimitedto,FirstDataMerchantServicesCorporation).
1.33“CreditFacilities”shallmeantheLoansandLetterofCreditAccommodationsprovidedtoorforthebenefitofBorrowerpursuanttoSections2.1and2.2.
1.34“Default”shallmeananact,conditionoreventwhichwithnoticeorpassageoftimeorbothwouldconstituteanEventofDefault.
1.35“DefaultingLender”shallhavethemeaningsetforthinSection12.15hereof.
1.36“DepositAccountControlAgreement”shallmeananagreementinwriting,informandsubstancesatisfactorytoAgents,byandamongAgents,BorrowerandanybankatwhichanydepositaccountofBorrowerisatanytimemaintainedwhichprovidesthatsuchbankwillcomplywithinstructionsoriginatedbytheAgentsdirectingdispositionofthefundsinthe
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depositaccountwithoutfurtherconsentbyBorrowerandsuchothertermsandconditionsasAgentsmayrequire,includingastoanysuchagreementwithrespecttoanyBlockedAccount,providingthatallitemsreceivedordepositedintheBlockedAccountsarethepropertyofCollateralAgent,thatthebankhasnolienupon,orrighttosetoffagainst,theBlockedAccounts,theitemsreceivedfordeposittherein,orthefundsfromtimetotimeondepositthereinandthatthebankwillwire,orotherwisetransfer,inimmediatelyavailablefunds,onadailybasistothePaymentAccountallfundsreceivedordepositedintotheBlockedAccounts.
1.37“DeterioratingLender”meansanyDefaultingLenderoranyLenderastowhich(a)theLCIssuerortheSwingLineLenderhasagoodfaithbeliefthatsuchLenderhasdefaultedinfulfillingitsobligationsunderoneormoreothersyndicatedcreditfacilities,or(b)aPersonthatcontrolssuchLenderhasbeendeemedinsolventorbecomethesubjectofabankruptcy,insolvencyorsimilarproceeding.
1.38“EligibleInventory”shallmeanInventoryconsistingoffinishedgoodsheldforresaleintheordinarycourseofthebusinessofBorrowerthatareacceptabletoAgentsbasedonthecriteriasetforthbelow.Ingeneral,EligibleInventoryshallnotinclude(a)packagingandshippingmaterials;(b)suppliesusedorconsumedinBorrower’sbusiness;(c)Inventoryatpremisesotherthanthoseowned,controlledorleasedbyBorrower,providedthatforInventoryatanynewlocationswhichtheBorrowerleasesafterthedatehereof(i)consistingofdistributioncentersorwarehousesor(ii)inVirginia,Pennsylvania,Washingtonandsuchotherstatesinwhichalandlord’sclaimforrentmayhavepriorityovertheLienoftheCollateralAgentinanyoftheCollateral(A)AgentsshallhavereceivedaLandlordAgreementdulyauthorized,executedanddeliveredbytheownerandlessorofsuchpremisesor(B)ifAgentshavenotreceivedsuchLandlordAgreement,thenAgentsshallhaveestablishedanAvailabilityReserveinrespectofamountsdueortobecomeduetotheownerandlessorofsuchretailstorelocation(withoutlimitinganyotherrightsandremediesofAgentsunderthisAgreementorundertheotherFinancingAgreementswithrespecttotheestablishmentofAvailabilityReservesorotherwise)andaftergivingeffecttosuchAvailabilityReserves,thereisExcessAvailability;provided,that,(1)BorrowershalluseitsbesteffortstoobtaintheLandlordAgreementwithrespecttoeachsuchnewlocation,and(2)theAvailabilityReservesestablishedpursuanttothisSectionshallnotexceedatanytime(x)one(1.0)timesthebasicmonthlyrentpayabletosuchownersandlessorsofsuchleasedlocationsplus(y)amounts,ifany,thenoutstandingandunpaidowedbyBorrowertosuchownersandlessors,provided,that,suchlimitationontheamountoftheAvailabilityReservespursuanttothisSectionshallonlyapplysolongas:(aa)noDefaultorEventofDefaultshallexistorhaveoccurred,(bb)BorrowerorAgentsshallnothavereceivednoticeofanydefaultoreventofdefaultundertheleasewithrespecttosuchretailstorelocationand(cc)Agentsshallhavereceivedevidence,informandsubstancesatisfactorytotheAgents,thatBorrowerhasnotgrantedtotheownerandlessorasecurityinterestinorlienuponanyassetsofBorrower;and(3)forclarity,theBorrowershallnotbeobligatedtoobtainanysuchLandlordAgreementsfordistributioncenters,warehousesorstorelocationsexistingonthedatehereof,(d)InventorysubjecttoasecurityinterestorlieninfavorofanypersonotherthanCollateralAgentexceptthosepermittedinthisAgreement;(e)billandholdgoods;(f)unserviceable,obsoleteorslowmovingInventory;(g)Inventorywhichisnotsubjecttothefirstpriority,validandperfectedsecurityinterestofCollateralAgent.(h)damagedand/ordefectiveInventory(i)returnedInventorythatisnotheldforresale;(j)Inventorytobereturnedtovendors;(k)InventorysubjecttodepositsmadebycustomersforsalesofInventorythathasnotbeendelivered;(1)Inventory
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heldaftertheapplicableexpirationdatethereof;(m)samples(excepttotheextentapprovedfromtimetotimebyAgents)and(n)Inventorypurchasedorsoldonconsignment.GeneralcriteriaforEligibleInventorymaybeestablishedandrevisedfromtimetotimebyAgentsingoodfaithbasedonanevent,conditionorothercircumstancearisingafterthedatehereof,orexistingonthedatehereoftotheextentneitherAgenthasanynoticethereofinwritingfromeitherBorroweroranyinventoryappraiser,whichadverselyaffectsorcouldreasonablybeexpectedtoadverselyaffecttheInventoryinanymaterialrespectinthegoodfaithdeterminationofAgents.AnyInventorywhichisnotEligibleInventoryshallneverthelessbepartoftheCollateral.TotheextentanySubsidiaryoftheBorrowerorofHoldingsisanObligororbecomesanObligorpursuanttoSection9.7(c),thenreferencesto“Borrower”setforthinthisdefinition(andanycomponentdefinitionusedinthisdefinition)shallbedeemedtoalsoincludereferencestosuchObligorforpurposesofincludingtheInventoryofsuchObligorasEligibleInventorysubjecttotheforegoingcriteria.
1.39“EligibleLetterofCreditInventory”means,asofanydateofdetermination(withoutduplicationofotherEligibleInventory),Inventory:
(a)whichhasbeendeliveredtoacarrierinaforeignportorforeignairportforreceiptbytheBorrowerintheUnitedStateswithinsixty(60)daysofthedateofdetermination,butwhichhasnotyetbeenreceivedbytheBorrower;
(b)thepurchaseorderforwhichisinthenameoftheBorrower,titlehaspassedtotheBorrowerandthepurchaseofwhichissupportedbyaLetterofCreditAccommodationmadeunderthisAgreementhavinganinitialexpiry,subjecttotheprovisohereto,within120daysafterthedateofinitialissuanceofsuchLetterofCreditAccommodation;
(c)exceptasotherwiseagreedbytheAgents,forwhichtheBorrowerisdesignatedas“shipper”and/orconsignorandthedocumentoftitleorwaybillreflectstheBorrowerasconsignee(alongwithdeliverytotheBorroweroritscustomsbrokerofthedocumentsoftitle,totheextentapplicable,withrespectthereto);
(d)astowhichanAgenthascontroloverthedocumentsoftitle,totheextentapplicable,whichevidenceownershipofthesubjectInventory;
(e)whichisinsuredinaccordancewiththeprovisionsofthisAgreementandtheotherFinancingAgreements,including,withoutlimitationmarinecargoinsurance;
(f)exceptasotherwiseagreedbytheAgents,astowhichanagreementwithanyPersonprovidingfreight,warehousingandconsolidationservicestotheBorrowerhasbeenexecutedanddeliveredinfavoroftheAgents,and
(g)whichotherwiseisnotexcludedfromthedefinitionofEligibleInventory;
providedthattheAdministrativeAgentmay,uponnoticetotheBorrower,excludeanyparticularInventoryfromthedefinitionof“EligibleLetterofCreditInventory”intheeventthattheAdministrativeAgentdeterminesthatsuchInventoryissubjecttoanyPerson’srightorclaimwhichis(oriscapableofbeing)seniorto,orparipassuwith,theLienoftheCollateralAgent(suchas,withoutlimitation,arightofstoppageintransit),asapplicable,ormayotherwiseadverselyimpacttheabilityoftheAdministrativeAgentortheCollateralAgenttorealizeuponsuchInventory.
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1.40“EligibleTransferee”shallmean(a)anyLender;(b)anyAffiliateofaLenderand(c)anyothercommercialbank,financialinstitutionor“accreditedinvestor”(asdefinedinRegulationDundertheSecuritiesActof1933)approvedbyAdministrativeAgent;provided,that,neithertheBorrowernoranyofitsAffiliatesshallqualifyasanEligibleTransferee.
1.41“EnvironmentalLaws”shallmeanallforeign,Federal,Stateandlocallaws(includingcommonlaw),legislation,rules,codes,licenses,permits(includinganyconditionsimposedtherein),authorizations,judicialoradministrativedecisions,injunctionsoragreementsbetweenBorrowerandanyGovernmentalAuthority,(a)relatingtopollutionandtheprotection,preservationorrestorationoftheenvironment(includingair,watervapor,surfacewater,groundwater,drinkingwater,drinkingwatersupply,surfaceland,subsurfaceland,plantandanimallifeoranyothernaturalresource),ortohumanhealthorsafety,(b)relatingtotheexposureto,ortheuse,storage,recycling,treatment,generation,manufacture,processing,distribution,transportation,handling,labeling,production,releaseordisposal,orthreatenedrelease,ofHazardousMaterials,or(c)relatingtoalllawswithregardtorecordkeeping,notification,disclosureandreportingrequirementsrespectingHazardousMaterials.Theterm“EnvironmentalLaws”includes(i)theFederalComprehensiveEnvironmentalResponse,CompensationandLiabilityActof1980,theFederalSuperfundAmendmentsandReauthorizationAct,theFederalWaterPollutionControlActof1972,theFederalCleanWaterAct,theFederalCleanAirAct,theFederalResourceConservationandRecoveryActof1976(includingtheHazardousandSolidWasteAmendmentsthereto),theFederalSolidWasteDisposalandtheFederalToxicSubstancesControlAct,theFederalInsecticide,FungicideandRodenticideAct,andtheFederalSafeDrinkingWaterActof1974,(ii)applicablestatecounterpartstosuchlaws,and(iii)anycommonlaworequitabledoctrinethatmayimposeliabilityorobligationsforinjuriesordamagesdueto,orthreatenedasaresultof,thepresenceoforexposuretoanyHazardousMaterials.
1.42“Equipment”shallmeanallofBorrower’snowownedandhereafteracquiredequipmentandfixtures,whereverlocated,includingmachinery,dataprocessingandcomputerequipmentandcomputerhardwareandsoftware,whetherownedorlicensed,andincludingembeddedsoftware,vehicles,tools,furniture,allattachments,accessionsandpropertynoworhereafteraffixedtheretoorusedinconnectiontherewith,andsubstitutionsandreplacementsthereof,whereverlocated.
1.43“ERISA”shallmeantheUnitedStatesEmployeeRetirementIncomeSecurityActof1974,togetherwithallrules,regulationsandinterpretationsthereunderorrelatedthereto.
1.44“ERISAAffiliate”shallmeananypersonrequiredtobeaggregatedwithBorroweroranyofitsSubsidiariesunderSections414(b),414(c),414(m)or414(o)oftheCode.
1.45“EventofDefault”shallmeantheoccurrenceorexistenceofanyeventorconditiondescribedinSection10.1hereof.
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1.46“ExcessAvailability”shallmeantheamount,asdeterminedbyAgents,calculatedatanytime,equalto:(a)thelesserof(i)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(ii)theMaximumCredit,minus(b)thesumof:(i)theamountofallthenoutstandingandunpaidprincipalamountoftheLoansandoutstandingLetterofCreditAccommodations,plus(ii)attheoptionofeitherAgent,theaggregateamountofalltradepayablesofBorrowerwhicharemorethansixty(60)dayspastdueasofsuchtime(andforwhichchecksincludedinclause(iii)belowhavenotbeenissued)plus(iii)theamountofchecksissuedbyBorrowertopaytradepayables,butnotyetsentandthebookoverdraftofBorrower.
1.47“FederalFundsRate”means,foranyday,therateperannumequaltotheweightedaverageoftheratesonovernightFederalfundstransactionswithmembersoftheFederalReserveSystemarrangedbyFederalfundsbrokersonsuchday,aspublishedbytheFederalReserveBankofNewYorkontheBusinessDaynextsucceedingsuchday;providedthat(a)ifsuchdayisnotaBusinessDay,theFederalFundsRateforsuchdayshallbesuchrateonsuchtransactionsonthenextprecedingBusinessDayassopublishedonthenextsucceedingBusinessDay,and(b)ifnosuchrateissopublishedonsuchnextsucceedingBusinessDay,theFederalFundsRateforsuchdayshallbetheaveragerate(roundedupward,ifnecessary,toawholemultipleof1/100of1%)chargedtoWellsFargoonsuchdayonsuchtransactionsasdeterminedbytheAdministrativeAgent.TheAdministrativeAgent’sdeterminationofsuchrateshallbebindingandconclusiveabsentmanifesterror.
1.48“FeeLetter”shallmeantheletteragreement,datedonoraboutAugust31,2010,byandbetweenBorrowerandAdministrativeAgent,asthesameexistsormayhereafterbeamended,modified,supplemented,extended,renewed,restatedorreplaced.
1.49“FinancingAgreements”shallmean,collectively,thisAgreementandallnotes,guarantees,securityagreementsandotheragreements,documentsandinstrumentsatanytimeexecutedand/ordeliveredbyBorroweroranyObligorinconnectionwiththisAgreement(totheextentnotsupersededorreplacedbyanyotherFinancingAgreement),asthesamenowexistormayhereafterbeamended,modified,supplemented,extended,renewed,restatedorreplaced.
1.50“FourthAmendmentEffectiveDate”shallmeanthedateonwhichalloftheconditionsprecedentsetforthinthatcertainAmendmentNo.4toAmendedandRestatedLoanandSecurityAgreementhavebeensatisfied.
1.51“GAAP”shallmeangenerallyacceptedaccountingprinciplesintheUnitedStatesofAmericaasineffectfromtimetotimeassetforthintheopinionsandpronouncementsoftheAccountingPrinciplesBoardandtheAmericanInstituteofCertifiedPublicAccountantsandthestatementsandpronouncementsoftheFinancialAccountingStandardsBoardwhichareapplicabletothecircumstancesasofthedateofdeterminationconsistentlyapplied,exceptthat,forpurposesofSections9.11and9.14hereof,GAAPshallbedeterminedonthebasisofsuchprinciplesineffectonthedatehereofandconsistentwiththoseusedinthepreparationofthemostrecentauditedfinancialstatementsdeliveredtoAdministrativeAgentpriortothedatehereof.
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1.52“GovernmentalAuthority”shallmeananynationorgovernment,anystate,province,orotherpoliticalsubdivisionthereof,anycentralbank(orsimilarmonetaryorregulatoryauthority)thereof,anyentityexercisingexecutive,legislative,judicial,regulatoryoradministrativefunctionsoforpertainingtogovernment,andanycorporationorotherentityownedorcontrolled,throughstockorcapitalownershiporotherwise,byanyoftheforegoing.
1.53“HazardousMaterials”shallmeananyhazardous,toxicordangeroussubstances,materialsandwastes,includinghydrocarbons(includingnaturallyoccurringorman-madepetroleumandhydrocarbons),flammableexplosives,asbestos,ureaformaldehydeinsulation,radioactivematerials,biologicalsubstances,polychlorinatedbiphenyls,pesticides,herbicidesandanyotherkindand/ortypeofpollutantsorcontaminants(includingmaterialswhichincludehazardousconstituents),sewage,sludge,industrialslag,solventsand/oranyothersimilarsubstances,materials,orwastesandincludinganyothersubstances,materialsorwastesthatareorbecomeregulatedunderanyEnvironmentalLaw(includinganythatareorbecomeclassifiedashazardousortoxicunderanyEnvironmentalLaw).
1.54“HedgingAgreements”shallmeananyandalltransactions,agreementsordocuments,nowexistingorhereafterenteredintowithaLenderoranAffiliateofaLendersubjecttoSection9.9(g)hereofandontermsandconditionsreasonablysatisfactory(inlightofstandardISDAdocumentationpractices)toAdministrativeAgentandBorroweroranyObligor,asapplicable,which(a)providesforaninterestrateswap,cap,floororcollarorsimilartransactionforthepurposeofhedgingBorrower’soranObligor’sexposuretofluctuationsininterestratesinrespectoftheObligations,(b)arenotenteredintoforspeculativepurposes,(c)arewithafinancialinstitutionhavingcombinedcapitalandsurplusandundividedprofitsofnotlessthan$250,000,000,(d)areunsecuredexcepttotheextentanyindebtednessofBorroweroranObligorthereunderconstitutesObligationssecuredherebyortotheextentsecuredbypledgesordepositspermittedunderSection9.8(i)hereofand(e)andforwhichthecounterpartytotheHedgingAgreementandtheBorroweroranyObligor,asapplicable,haveexecutedaSwapAcknowledgementAgreement.
1.55“HedgingBalance”shallmeanwithrespecttoanyHedgingAgreementsasofanydateofdetermination,anamountequalto(a)theaggregateamountowingbythecounterpartiesundertheHedgingAgreementstotheBorrowerless(b)theaggregateamountowingbytheBorrowertosuchcounterpartiesundersuchHedgingAgreementsplus(c)theaggregateamount,ifany,ofallcash,CashEquivalentsandinvestmentsecuritiespledgedordepositedtosecuretheobligationsofBorrowerundersuchHedgingAgreementspursuanttoSection9.8(i)hereof.
1.56“Holdings”meansUltaBeauty,Inc.,aDelawarecorporation.
1.57“InformationCertificate”shallmeantheInformationCertificateofBorrowerconstitutingExhibitBhereto(assupplementedfromtimetotimewithrevisedornewaccountnumbersorotherinformationprovidedtotheAgents)containingmaterialinformationwithrespecttoBorrower,itsbusinessandassetsprovidedbyoronbehalfofBorrowertoAdministrativeAgentinconnectionwiththepreparationofthisAgreementandtheotherFinancingAgreementsandthefinancingarrangementsprovidedforherein.
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1.58“IntellectualProperty”shallmeanBorrower’snowownedandhereafterarisingoracquired:patents,patentrights,patentapplications,copyrights,workswhicharethesubjectmatterofcopyrights,copyrightregistrations,trademarks,tradenames,tradestyles,trademarkandservicemarkapplications,andlicensesandrightstouseanyoftheforegoing;allextensions,renewals,reissues,divisions,continuations,andcontinuations-in-partofanyoftheforegoing;allrightstosueforpast,presentandfutureinfringementofanyoftheforegoing;inventions,tradesecrets,formulae,processes,compounds,drawings,designs,blueprints,surveys,reports,manuals,andoperatingstandards;goodwill(includinganygoodwillassociatedwithanytrademarkorthelicenseofanytrademark);customerandotherlistsinwhateverformmaintained;andtradesecretrights,copyrightrights,rightsinworksofauthorship,domainnamesanddomainnameregistrations;softwareandcontractrightsrelatingtosoftware,inwhateverformcreatedormaintained.
1.59“InterestPeriod”shallmeanforanyLIBORateLoan,aperiodofapproximatelyone(1),two(2),three(3)orsix(6)monthsdurationasBorrowermayelect,theexactdurationtobedeterminedinaccordancewiththecustomarypracticeintheapplicableLIBORatemarket;provided,that,BorrowermaynotelectanInterestPeriodwhichwillendaftertheTerminationDate.
1.60“InterestRate”shallmean,astoPrimeRateLoans,arateequaltothePrimeRateand,astoLIBORateLoans,arateofoneandone-halfpercent(1.50%)perannuminexcessoftheAdjustedLIBORate(basedontheLIBORateapplicablefortheInterestPeriodselectedbyBorrowerasineffecttwo(2)BusinessDaysafterthedateofreceiptbyAdministrativeAgentoftherequestofBorrowerforsuchLIBORateLoansinaccordancewiththetermshereof,whethersuchrateishigherorlowerthananyratepreviouslyquotedtoBorrower);provided,that,notwithstandinganythingtothecontrarycontainedherein,theInterestRateshallmeantherateoftwo(2%)percentperannuminexcessoftheratesotherwiseprovidedinthisdefinition(i)withoutnotice,atanytimeanEventofDefaultexistspursuanttoanyofSections10.1(f),10.1(g)and/or10.1(h)and/or(ii)uponthewrittenrequestofRequiredLenders,andotherwisewithoutnotice,fortheperiodfromandafterthedateoftheoccurrenceofanyEventofDefault,otherthananEventofDefaultdescribedintheimmediatelyprecedingclause(i),andforsolongassuchEventofDefaultiscontinuingasreasonablydeterminedbyAdministrativeAgent.
1.61“Inventory”shallmeanallofBorrower’snowownedandhereafterexistingoracquiredgoods,whereverlocated,which(a)areleasedbyBorroweraslessor;(b)areheldbyBorrowerforsaleorleaseortobefurnishedunderacontractofservice;(c)arefurnishedbyBorrowerunderacontractofservice;or(d)consistofrawmaterials,workinprocess,finishedgoodsormaterialsusedorconsumedinitsbusiness.
1.62“InvestmentPropertyControlAgreement”shallmeananagreementinwriting,informandsubstancesatisfactorytoAgents,byandamongtheAgents,Borrowerandanysecuritiesintermediary,commodityintermediaryorotherpersonwhohascustody,controlorpossessionofanyinvestmentpropertyofBorroweracknowledgingthatsuchsecuritiesintermediary,commodityintermediaryorotherpersonhascustody,controlorpossessionofsuchinvestmentpropertyonbehalfofAgents,thatitwillcomplywithentitlementordersoriginatedbytheAgentswithrespecttosuchinvestmentproperty,orotherinstructionsoftheAgents,or(as
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thecasemaybe)applyanyvaluedistributedonaccountofanycommoditycontractasdirectedbytheAgents,ineachcase,withoutthefurtherconsentofBorrowerandincludingsuchothertermsandconditionsastheAgentsmayrequire.
1.63“JPMControlAgreement”shallmeanthatcertainBlockedAccountControlAgreementdatedasofOctober28,2010enteredintoamongBorrower,JPMorganChaseBank,N.A.andtheAgents,asthesamemaybeamended,supplementedorotherwisemodifiedfromtimetotime.
1.64“LandlordAgreement”shallmeananagreementinwritingfromtheownerandlessorofpremises(including,distributioncenters,warehouses,andretailstorestotheextentrequiredinthedefinitionofEligibleInventory)leasedbyBorrowerafterthedatehereofinformandsubstancereasonablysatisfactorytotheAgents.
1.65“LCApplication”shallmean,withrespecttoanyrequestfortheissuanceofaLetterofCreditAccommodation,aletterofcreditapplicationintheformbeingusedbytheLCIssueratthetimeofsuchrequestforthetypeofletterofcreditbeingrequested.
1.66“LCIssuer”shallmeanWellsFargo,initscapacityastheissuerofLetterofCreditAccommodationsoranyAffiliateofWellsFargothatmayfromtimetotimeissueLetterofCreditAccommodations,andtheirsuccessorsandassignsinsuchcapacity.
1.67“Lenders”shallmeanthefinancialinstitutionswhoaresignatoriesheretoasLendersandotherpersonsmadeapartytothisAgreementasaLenderinaccordancewithSection13.6hereof,andtheirrespectivesuccessorsandassigns(andwithrespecttoBankProductsandCashManagementServices,includestheirrespectiveAffiliates);eachsometimesbeingreferredtohereinindividuallyasa“Lender”.
1.68“LetterofCreditAccommodations”shallmean,collectively,thelettersofcredit,merchandisepurchaseorotherguarantieswhicharefromtimetotimeeither(a)issuedoropenedbyAdministrativeAgent,anyLenderoranyAffiliateofLenderfortheaccountofBorroweroranyObligoror(b)withrespecttowhichAdministrativeAgent,anyLenderoranyAffiliateofLenderhasagreedtoindemnifytheLCIssuerorguaranteedtotheLCIssuertheperformancebyBorrowerofitsobligationstosuchLCIssuer,ineachcaseinaccordancewiththetermsofthisAgreement:sometimesbeingreferredtohereinindividuallyasa“LetterofCreditAccommodation”.
1.69“LIBORate”meansforanyInterestPeriodwithrespecttoaLIBORateLoan,therateperannumequaltotheBritishBankersAssociationLIBORRate(“BBALIBOR”),aspublishedbyReuters(orothercommerciallyavailablesourceprovidingquotationsofBBALIBORasdesignatedbytheAdministrativeAgentfromtimetotime)atapproximately11:00a.m.,Londontime,twoBusinessDayspriortothecommencementofsuchInterestPeriod,forDollardeposits(fordeliveryonthefirstdayofsuchInterestPeriod)withatermequivalenttosuchInterestPeriod.Ifsuchrateisnotavailableatsuchtimeforanyreason,thenthe“LIBORate”forsuchInterestPeriodshallbetherateperannumdeterminedbytheAdministrativeAgenttobetherateatwhichdepositsinDollarsfordeliveryonthefirstdayofsuchInterestPeriodinsamedayfundsintheapproximateamountoftheLIBORateLoanbeingmade,
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continuedorconvertedbyWellsFargoandwithatermequivalenttosuchInterestPeriodwouldbeofferedtoWellsFargobymajorbanksintheLondoninterbankeurodollarmarketinwhichWellsFargoparticipatesattheirrequestatapproximately11:00a.m.(Londontime)twoBusinessDayspriortothecommencementofsuchInterestPeriod.
1.70“LIBORateLoan”meansaRevolvingLoanthatbearsinterestataratebasedontheAdjustedLIBORate.
1.71“Loans”shallmeantheRevolvingLoansandtheSwingLineLoans.
1.72“MaterialAdverseEffect”shallmeanamaterialadverseeffecton(a)thecondition(financialorotherwise),business,performance,operationsorpropertiesofBorrower,(b)thelegality,validityorenforceabilityofthisAgreementoranyoftheotherFinancingAgreements;(c)thelegality,validity,enforceability,perfectionorpriorityofthesecurityinterestorliensofCollateralAgentonamaterialportionoftheCollateraloranyothermaterialpropertywhichissecurityfortheObligations;(d)amaterialportionoftheCollateraloranyothermaterialpropertywhichissecurityfortheObligations,orthevalueofamaterialportionoftheCollateralorsuchothermaterialproperty,or(e)theabilityofBorrowertorepaytheObligationsorofBorroweroranyObligortoperformitsobligationsunderthisAgreementoranyoftheotherFinancingAgreements.
1.73“MarginStock”shallmeanany“marginstock”asdefinedinRegulationUoftheBoardofGovernorsoftheFederalReserveSystem.
1.74“MasterLetterofCreditAgreement”shallmeanaLetterofCreditAgreement(tobeenteredintoupontherequestofWellsFargo)betweenBorrowerandWellsFargo,reasonablyacceptableinformandsubstancetotheBorrowerandWellsFargo,asthesamemaybeamended,supplementedorotherwisemodifiedfromtimetotime.
1.75“MaximumCredit”shallmean,asofanydateofdetermination,theaggregateamountoftheCommitmentsofallLendersonsuchdateofdetermination.
1.76“NetIncome”shallmean,withrespecttoanyPerson,foranyperiod,theaggregateofthenetincome(loss)ofsuchPersonanditsSubsidiaries,onaconsolidatedbasis,forsuchperiod(excludingtotheextentincludedthereinanyextraordinarygains)afterdeductingallchargeswhichshouldbedeductedbeforearrivingatthenetincome(loss)forsuchperiodandafterdeductingtheProvisionforTaxesforsuchperiod,allasdeterminedinaccordancewithGAAP,provided,that,(a)thenetincomeofanyPersonthatisnotawholly-ownedSubsidiaryorthatisaccountedforbytheequitymethodofaccountingshallbeincludedonlytotheextentoftheamountofdividendsordistributionspaidorpayabletoBorrowerorawholly-ownedSubsidiaryofsuchperson;(b)theeffectofanychangeinaccountingprinciplesadoptedbysuchPersonoritssubsidiariesafterthedatehereofshallbeexcluded;and(c)thenetincome(ifpositive)ofanywholly-ownedSubsidiarytotheextentthatthedeclarationorpaymentofdividendsorsimilardistributionsbysuchwholly-ownedSubsidiarytoBorrowerortoanyotherwholly-ownedSubsidiaryofBorrowerisnotatthetimepermittedbyoperationofthetermsofitscharteroranyagreement,instrument,judgment,decree,order,statute,ruleofgovernmentregulationapplicabletosuchwholly-ownedSubsidiaryshallbeexcluded.Forthepurposeofthis
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definition,netincomeexcludesanygain(butnotloss),togetherwithanyrelatedProvisionofTaxesforsuchgain(butnotloss)realizeduponthesaleorotherdispositionofanyassetsthatarenotsoldintheordinarycourseofbusiness(including,withoutlimitation,dispositionspursuanttosaleandleasebacktransactions),orofanyCapitalStockofsuchPersonoraSubsidiaryofsuchPersonandanynetincomerealizedasaresultofchangesinaccountingprinciplesortheapplicationthereoftosuchPerson.
1.77“NetRecoveryCostPercentage”shallmeanthefraction,expressedasapercentage,(a)thenumeratorofwhichistheamountequaltotherecoveryontheaggregateamountoftheInventoryatsuchtimeona“goingoutofbusinesssale”basisassetforthinthemostrecentacceptableappraisalofInventoryreceivedbytheAgentsinaccordancewithSection7.3,netofoperatingexpenses,liquidationexpensesandcommissions,and(b)thedenominatorofwhichistheoriginalCostoftheaggregateamountoftheInventorysubjecttosuchappraisal.
1.78“Obligations”shallmean(a)anyandallLoans,LetterofCreditAccommodationsandallotherobligations,liabilitiesandindebtednessofeverykind,natureanddescription(exceptthosedescribedinclause(b)ofthisdefinition)owingbyBorroweroranyObligortoanyAgentoranyLenderand/ortheirAffiliates,includingprincipal,interest,charges,fees,costsandexpenses,howeverevidenced,whetherasprincipal,surety,endorser,guarantororotherwise,whetherarisingunderthisAgreement,anyotherFinancingAgreementorotherwise,whethernowexistingorhereafterarising,whetherarisingbefore,duringoraftertheinitialoranyrenewaltermofthisAgreementorafterthecommencementofanycasewithrespecttoBorroweroranyObligorundertheUnitedStatesBankruptcyCodeoranysimilarstatute(includingthepaymentofinterestandotheramountswhichwouldaccrueandbecomeduebutforthecommencementofsuchcase,whetherornotsuchamountsareallowedorallowableinwholeorinpartinsuchcase),whetherdirectorindirect,absoluteorcontingent,jointorseveral,dueornotdue,primaryorsecondary,liquidatedorunliquidated,securedorunsecured,andhoweveracquiredbyanyAgentoranyLenderand(b)forpurposesonlyofSection5.1andSection9.9hereofandsubjecttopriorityandrightofpaymentunderSection6.4(a)hereof,anyandallobligations,liabilitiesandindebtednessofanykind,natureanddescriptionowingbyBorroweroranyObligorarisingunderorinconnectionwithCashManagementServices,HedgingAgreementsandotherBankProducts;provided,that,withrespecttoHedgingAgreements,theAgentsshallhaveenteredintoanagreementsubstantiallyintheformofExhibitCheretowiththecounterpartytosuchHedgingAgreement,asacknowledgedandagreedtobyBorroweroranObligor,asapplicable(the“SwapAcknowledgmentAgreement”);providedfurther,that,obligationsarisingunderorinconnectionwithCashManagementServicesorBankProductsotherthanHedgingAgreementsshallonlybeconsidered“Obligations”hereunderifsuchLenderprovidingsuchservicestoBorroweroranObligorhasprovidedwrittennoticeofsametotheAdministrativeAgentwithinten(10)daysofthedatesuchproductbecomeseffective.Thepartiesacknowledgethat,asoftheClosingDate,theCashManagementServicesandBankProductsdescribedonScheduleIIheretoshallconstitute“Obligations”hereunder.
1.79“Obligor”shallmeananyguarantor,endorser,acceptor,suretyorotherpersonliableonorwithrespecttotheObligationsorwhoistheownerofanypropertywhichissecurityfortheObligations,otherthanBorrower.
1.80“OFAC”shallmeantheOfficeofForeignAssetsControl.
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1.81“OtherHedgingAgreements”shallmeananyandalltransactions,agreementsordocumentsnowexistingorhereafterenteredintowithaPersonotherthanaLenderoranAffiliateofaLendersubjecttoSection9.9(g)(B)hereofwhich(a)providesforaninterestrateorforeignexchangeswap,cap,floororcollarorsimilartransactionforthepurposeofhedgingBorrower’soranyObligor’sexposuretofluctuationsininterestratesorcurrency,(b)arenotenteredintoforspeculativepurposes,(c)arewithafinancialinstitutionhavingcombinedcapitalandsurplusandundividedprofitsofnotlessthan$250,000,000,and(d)areunsecured.
1.82“Participant”shallmeananyfinancialinstitutionthatacquiresandholdsaparticipationintheinterestofanyLenderinanyoftheLoansandLetterofCreditAccommodationsinconformitywiththeprovisionofSection13.6ofthisAgreementgoverningparticipationsanditssuccessorsandassigns.
1.83“PaymentAccount”shallhavethemeaningsetforthinSection6.3hereof.
1.84“Permits”shallhavethemeaningsetforthinSection8.7hereto.
1.85“PermittedAcquisition”meansanAcquisitioninwhichallofthefollowingconditionsaresatisfied:
(a)NoDefaultorEventofDefaultthenexistsorwouldarisefromtheconsummationofsuchAcquisition;
(b)SuchAcquisitionshallhavebeenapprovedbytheBoardofDirectorsofthePerson(orsimilargoverningbodyifsuchPersonisnotacorporation)whichisthesubjectofsuchAcquisitionandsuchPersonshallnothaveannouncedthatitwillopposesuchAcquisitionorshallnothavecommencedanyactionwhichallegesthatsuchAcquisitionshallviolateapplicablelaw;and
(c)TheBorrowershallhavefurnishedtheAdministrativeAgentwithatleastten(10)days’priorwrittennoticeofsuchintendedAcquisitionandshallhavefurnishedtheAdministrativeAgentwith(i)noticeoftheanticipatedclosingdateforsuchAcquisition,togetherwithacurrentdraftoftheacquisitiondocuments(andfinalcopiesthereofasandwhenexecuted,whichdocumentsshallbemadeavailablebytheAdministrativeAgenttotheLenders),(ii)asummaryofanyduediligenceundertakenbyoronbehalfoftheBorrowerinconnectionwithsuchAcquisition(subjecttotheAdministrativeAgent’sexecutionofcustomarynon-relianceandconfidentialityagreements),whichsummarytheBorrowerauthorizestheAdministrativeAgenttomakeavailabletotheLenders(subjecttotheLenders’executionofcustomarynon-relianceandconfidentialityagreements),(iii)themostrecentfinancialstatementsreceivedbyBorrowerforthePersonwhichisthesubjectofsuchAcquisition,whichfinancialstatementsshallbemadeavailablebytheAdministrativeAgenttotheLendersand(iv)proformaprojectedfinancialstatementsforthetwelve(12)monthperiodfollowingsuchAcquisitionaftergivingeffecttosuchAcquisition(includingbalancesheets,cashflowsandincomestatementsbymonthonaconsolidatedbasisfortheBorrowerandObligors(includingtheacquiredPerson)),whichproformaprojectedfinancialstatementsshallbemadeavailablebytheAdministrativeAgenttotheLenders.
1.86“PermittedHolders”shallmeananyStrategicPurchaser.
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1.87“Person”or“person”shallmeananyindividual,soleproprietorship,partnership,corporation(includinganycorporationwhichelectssubchapterSstatusundertheCode),limitedliabilitycompany,limitedliabilitypartnership,businesstrust,unincorporatedassociation,jointstockcorporation,trust,jointventureorotherentityoranygovernmentoranyagencyorinstrumentalityorpoliticalsubdivisionthereof.
1.88“PrimeRate”means,foranyday,afluctuatingrateperannumequaltothehighestof(a)theFederalFundsRate,asineffectfromtimetotime,plusone-halfofonepercent(0.50%),(b)theAdjustedLIBORateplusonepercent(1.00%),or(c)therateofinterestineffectforsuchdayaspubliclyannouncedfromtimetotimebyWellsFargoasits“primerate.”The“primerate”isaratesetbyWellsFargobaseduponvariousfactorsincludingWellsFargo’scostsanddesiredreturn,generaleconomicconditionsandotherfactors,andisusedasareferencepointforpricingsomeloans,whichmaybepricedat,above,orbelowsuchannouncedrate.AnychangeinsuchrateannouncedbyWellsFargoshalltakeeffectattheopeningofbusinessonthedayspecifiedinthepublicannouncementofsuchchange,providedthattheAdministrativeAgentshallnotbeobligatedtogivenoticeofanychangeinthePrimeRate.
1.89“PrimeRateLoans”shallmeananyLoansorportionthereofonwhichinterestispayablebasedonthePrimeRateinaccordancewiththetermsthereof.
1.90“ProRataShare”shallmeanwithrespecttoallmattersrelatingtoanyLender,(a)withrespecttoallLoansandLetterofCreditAccommodationspriortothedateonwhichtheCommitmentshavebeenterminated,thepercentageobtainedbydividing(i)theCommitmentsofthatLender(aftersettlementandrepaymentofallSwingLineLoansbytheLenders)by(ii)theCommitmentsofallLenders,and(b)withrespecttoallLoansandLetterofCreditAccommodationsonandafterthedateonwhichtheCommitmentshavebeenterminated,thepercentageobtainedbydividing(i)theaggregateoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsheldbythatLender(aftersettlementandrepaymentofallSwingLineLoansbytheLenders),by(ii)theoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsheldbyallLenders.
1.91“ProvisionforTaxes”shallmean,withrespecttoafiscalyearofanyPersonanditsSubsidiaries,anamountequaltoalltaxesimposedonormeasuredbynetincome,whetherFederal,Stateorlocal,andwhetherforeignordomestic,thatarepaidorpayablebysuchPersonanditsSubsidiariesinrespectofsuchfiscalyearonaconsolidatedbasisinaccordancewithGAAP.
1.92“QualifiedPublicOffering”shallmean(i)anypublicofferingbyHoldingsofitsCapitalStockor(ii)anacquisitionofsharesofHoldingsinoneoraseriesofrelatedtransactionsbyaStrategicPurchaser,ineachcase,aslongastheaggregatecashproceedsreceivedbyHoldingsforthesharessoldinsuchofferingoracquisition,asthecasemay,isatleast$15,000,000.
1.93“Receivables”shallmeanallofthefollowingnowownedorhereafterarisingoracquiredpropertyofBorrower:(a)allAccounts;(b)allinterest,fees,latecharges,penalties,collectionfeesandotheramountsdueortobecomedueorotherwisepayableinconnectionwithanyAccount;(c)allpaymentintangiblesofBorrowerandothercontractrights,
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chattelpaper,instruments,notes,andotherformsofobligationsowingtoBorrower,whetherfromthesaleandleaseofgoodsorotherproperty,licensingofanyproperty(includingIntellectualPropertyorothergeneralintangibles),renditionofservicesorfromloansoradvancesbyBorrowerortoorforthebenefitofanythirdperson(includingloansoradvancestoanyAffiliatesorSubsidiariesofBorrower)orotherwiseassociatedwithanyAccounts,InventoryorgeneralintangiblesofBorrower(including,withoutlimitation,chosesinaction,causesofaction,taxrefunds,taxrefundclaims,anyfundswhichmaybecomepayabletoBorrowerinconnectionwiththeterminationofanyemployeebenefitplanandanyotheramountspayabletoBorrowerfromanyemployeebenefitplan,rightsandclaimsagainstcarriersandshippers,rightstoindemnification,businessinterruptioninsuranceandproceedsthereof,casualtyoranysimilartypesofinsuranceandanyproceedsthereofandproceedsofinsurancecoveringthelivesofemployeesonwhichBorrowerisabeneficiary).
1.94“Records”shallmeanallofBorrower’spresentandfuturebooksofaccountofeverykindornature,purchaseandsaleagreements,invoices,ledgercards,billsofladingandothershippingevidence,statements,correspondence,memoranda,creditfilesandotherdatarelatingtotheCollateraloranyaccountdebtor,togetherwiththetapes,disks,diskettesandotherdataandsoftwarestoragemediaanddevices,filecabinetsorcontainersinoronwhichtheforegoingarestored(includinganyrightsofBorrowerwithrespecttotheforegoingmaintainedwithorbyanyotherperson).
1.95“RefundedSwingLineLoan”shallhavethemeaningsetforthinSection2.5(c)hereof.
1.96“Register”shallhavethemeaningsetforthinSection13.6(b)hereof.
1.97“RequiredLenders”shallmeanLendershaving(i)morethan50%oftheCommitmentsofallLendersor(ii)iftheCommitmentshavebeenterminated,morethan50%oftheaggregateoutstandingamountofallLoansandLetterofCreditAccommodations;provided,however,thatintheeventthattherearethree(3)orfewerLenderspartyhereto,RequiredLendersmustconsistofatleasttwo(2)Lenders.
1.98“RevolvingLoans”shallmeantheloansnoworhereaftermadebyoronbehalfofanyLenderorbyAdministrativeAgenttoorforthebenefitofBorroweronarevolvingbasis(involvingadvances,repaymentsandreadvances)pursuanttoSection2.1hereof.
1.99“SanctionedCountry”meansacountrysubjecttoasanctionsprogramidentifiedonthelistmaintainedbyOFACandavailableathttp://www.treas.gov/offices/eotffc/ofac/sanctions/index.html,orasotherwisepublishedfromtimetotime.
1.100“SanctionedPerson”means(a)apersonnamedonthelistofSpeciallyDesignatedNationalsorBlockedPersonsmaintainedbyOFACavailableathttp://www.treas.gov/offices/eotffc/ofac/sdn/index.html,orasotherwisepublishedfromtimetotime,or(b)(i)anagencyofthegovernmentofaSanctionedCountry,(ii)anorganizationcontrolledbyaSanctionedCountry,or(iii)apersonresidentinaSanctionedCountry,totheextentsubjecttoasanctionsprogramadministeredbyOFAC.
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1.101“SecondAmendment”meanstheAmendmentNo.2toAmendedandRestatedLoanandSecurityAgreementdatedasofDecember6,2013enteredintoamongBorrower,theAgentsandtheLenders.
1.102“SecondAmendmentEffectiveDate”meansDecember6,2013.
1.103“SecuritiesAct”shallmeantheSecuritiesActof1933,asthesamenowexistsormayhereafterbeamended,modified,recodifiedorsupplemented,togetherwithallrules,regulationsandinterpretationsthereunderorrelatedthereto.
1.104“SecuritiesExchangeAct”shallmeantheSecuritiesExchangeActof1934,asthesamenowexistsormayhereafterfromtimetotimebeamended,modified,recodifiedorsupplemented,togetherwithallrules,regulationsandinterpretationsthereunderorrelatedthereto.
1.105“SpecialAgentAdvances”shallhavethemeaningsetforthinSection12.11.
1.106“StatedAmount”shallmean(i)inthecaseofterminationoftheAgreement,theMaximumCreditonsuchdateofdeterminationand(ii)inthecaseofaCommitmentreductionpursuanttoSection2.4(b),theamountofsuchCommitmentreduction.
1.107“StatutoryReserveRate”meansafraction(expressedasadecimal),thenumeratorofwhichisthenumberoneandthedenominatorofwhichisthenumberoneminustheaggregateofthemaximumreservepercentages(includinganymarginal,special,emergencyorsupplementalreserves)expressedasadecimalestablishedbytheFederalReserveBoardtowhichtheAdministrativeAgentissubjectwithrespecttotheAdjustedLIBORate,foreurocurrencyfunding(currentlyreferredtoas“EurocurrencyLiabilities”inRegulationDoftheFederalReserveBoard).SuchreservepercentagesshallincludethoseimposedpursuanttosuchRegulationD.LIBOLoansshallbedeemedtoconstituteeurocurrencyfundingandtobesubjecttosuchreserverequirementswithoutbenefitoforcreditforproration,exemptionsoroffsetsthatmaybeavailablefromtimetotimetoanyLenderundersuchRegulationDoranycomparableregulation.TheStatutoryReserveRateshallbeadjustedautomaticallyonandasoftheeffectivedateofanychangeinanyreservepercentage.
1.108“StoreBankAccounts”shallhavethemeaningsetforthinSection6.3(a)hereof.
1.109“StrategicPurchaser”shallmeanaPerson(i)whichhasitsshareslistedontheAmericanStockExchangeortheNewYorkStockExchangeorquotedontheNASDAQGlobalSelectMarkets,(ii)whichhasashorttermunsecureddebtratingscurrentlyassignedtothemofA-1orbetterbyStandardandPoor’sRatingsServices,adivisionofTheMcGrawHillCompanies,Inc.orP-1byMoody’sInvestorsService,Inc.(orintheabsencethereof,theequivalentlongtermunsecuredseniordebtratings)and(iii)whicheither(A)owns,operatesormanagesabusinesssimilartotheExistingBusinessor(B)owns,operatesormanagesaretailbusiness,orisasuppliertotheExistingBusiness,andhasmadeitsinvestmentinthesharesoftheBorrowerasapartofthestrategytoentertheExistingBusinessthroughtheBorrowerordeveloporstrategicallyintegratetheExistingBusinessinconjunctionwithitsownexisting
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business.Asusedherein,“ExistingBusiness”shallmeanthebusinessofprovidinghairdressing,beautysalonandotherspaservicesandsellingperfume,fragrances,cosmetics,salonproducts,beautyaidsandrelatedgoodsandservicesatretail(includingsalesofsuchgoodsovertheWorldWideWeb/Internet),oranycombinationofanyoftheforegoing.
1.110“Subsidiary”or“subsidiary”shallmean,withrespecttoanyPerson,anycorporation,limitedliabilitycompany,limitedliabilitypartnershiporotherlimitedorgeneralpartnership,trust,associationorotherbusinessentityofwhichanaggregateofatleastamajorityoftheoutstandingCapitalStockorotherinterestsentitledtovoteintheelectionoftheboardofdirectorsofsuchcorporation(irrespectiveofwhether,atthetime,CapitalStockofanyotherclassorclassesofsuchcorporationshallhaveormighthavevotingpowerbyreasonofthehappeningofanycontingency),managers,trusteesorothercontrollingpersons,oranequivalentcontrollinginteresttherein,ofsuchPersonis,atthetime,directlyorindirectly,ownedbysuchPersonand/oroneormoresubsidiariesofsuchPerson.NotwithstandinganythinginthisdefinitionorthisAgreementtothecontrary,theterm“Subsidiary”asusedintheFinancingAgreementsshallexcludetheUnrestrictedSubsidiariesexcept(a)asusedinthedefinitionof“UnrestrictedSubsidiaries”and(b)asusedinSection9.6(a)inwhichcasetheterm“Subsidiary”shallincludeUnrestrictedSubsidiariesonlyunderclause(b)ofsuchdefinition.
1.111“SwapAcknowledgmentAgreement”shallhavethemeaningsetforthinthedefinitionof“Obligations”.
1.112“SwingLineAvailability”shallmean,asofanydateofdetermination,thelesserof(a)theSwingLineCommitmentAmountonsuchdateand(b)ExcessAvailabilityonsuchdate.
1.113“SwingLineCommitmentAmount”means$10,000,000,orifless,theMaximumCreditonsuchdate,whichcommitmentconstitutesasubfacilityoftheCommitmentoftheSwingLineLender.
1.114“SwingLineLender”shallmeanWellsFargo.
1.115“SwingLineLoan”shallhavethemeaningsetforthinSection2.5(a)hereof.
1.116“TerminationDate”shallthemeaningsetforthinSection13.1hereof.
1.117“UCC”shallmeantheUniformCommercialCodeasineffectintheStateofIllinois,andanysuccessorstatute,asineffectfromtimetotime(exceptthattermsusedhereinwhicharedefinedintheUniformCommercialCodeasineffectintheStateofIllinoisonthedatehereofshallcontinuetohavethesamemeaningnotwithstandinganyreplacementoramendmentofsuchstatuteexceptasAdministrativeAgentmayotherwisedetermine).
1.118“UnrestrictedSubsidiary”meanseachdirectorindirectSubsidiaryoftheBorrower(a)thatisa“not-for-profit”Personwhoseprincipalactivitiesinvolvefacilitatingcharitablefundraising,donationsandothercharitableactivitiesor(b)thathasnotownedassetshavingavalueofmorethan$1,000,000foranyperiodofthirty(30)consecutivedays.
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1.119“Value”shallmean,asdeterminedbytheAgentsingoodfaith,withrespecttoInventory,thelowerof(a)Costor(b)marketvalue.
1.120“VotingStock”shallmeanwithrespecttoanyPerson,(a)one(1)ormoreclassesofCapitalStockofsuchPersonhavinggeneralvotingpowerstoelectatleastamajorityoftheboardofdirectors,managersortrusteesofsuchPerson,irrespectiveofwhetheratthetimeCapitalStockofanyotherclassorclasseshaveormighthavevotingpowerbyreasonofthehappeningofanycontingency,and(b)anyCapitalStockofsuchPersonconvertibleorexchangeablewithoutrestrictionattheoptionoftheholderthereofintoCapitalStockofsuchPersondescribedinclause(a)ofthisdefinition.
1.121“WellsFargo”shallmeanWellsFargoBank,NationalAssociation.
SECTION 2. CREDIT FACILITIES
2.1RevolvingLoans.
(a)Subjecttoanduponthetermsandconditionscontainedherein,eachLenderseverally(andnotjointly)agreestofunditsProRataShareofRevolvingLoanstoBorrowerfromtimetotimeinamountsrequestedbyBorroweruptotheamountequaltoninetypercent(90%)oftheNetRecoveryCostPercentagemultipliedbytheCostofEligibleInventoryorEligibleLetterofCreditInventory,asapplicable,lesstheamountofanyAvailabilityReserves.
(b)TheAgentsmayfromtimetotime,andineachcaseuponnotlessthanten(10)dayspriornoticetoBorrower,reducethelendingformulawithrespecttoEligibleInventorytotheextentthattheAgentsdeterminethat:(i)thenumberofdaysoftheturnoveroftheInventoryforanyperiodhaschangedinanymaterialrespector(ii)thenature,qualityormixoftheInventoryhasdeterioratedinanymaterialrespect.Indeterminingwhethertoreducethelendingformula(s),theAgentsmayconsiderevents,conditions,contingenciesorriskswhicharealsoconsideredindeterminingEligibleInventoryorinestablishingAvailabilityReserves.TotheextenttheAgentsshallhaveestablishedanAvailabilityReservewhichissufficienttoaddressanyevent,conditionormatterinamannersatisfactorytotheAgentsingoodfaith,theAgentsshallnotexerciseitsrightsunderthisSection2.1(b)toreducethelendingformulas,toaddresssuchevent,conditionormatter.TheamountofanyreductioninthelendingformulabytheAgentspursuanttothisSection2.1(b)shallhaveareasonablerelationshiptothematterwhichisthebasisforsuchareduction.
(c)ExceptinAdministrativeAgent’sdiscretion,withtheconsentofallLenders,theaggregateamountoftheLoansandtheLetterofCreditAccommodationsoutstandingatanytimeshallnotexceedtheMaximumCredit.IntheeventthattheoutstandingamountofanycomponentoftheLoans,ortheaggregateamountoftheoutstandingLoansandLetterofCreditAccommodations,exceedtheamountsavailableunderthelendingformulas,sublimitsforLetterofCreditAccommodationssetforthinSection2.2(d)ortheMaximumCredit,asapplicable,sucheventshallnotlimit,waiveorotherwiseaffectanyrightsofAgentsorLendersinthatcircumstanceoronanyfutureoccasionsandBorrowershall,upondemandbyAdministrativeAgent,whichmaybemadeatanytimeorfromtimetotime,immediatelyrepaytoAdministrativeAgenttheentireamountofanysuchexcess(es)forwhichpaymentisdemanded.
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(d)UncommittedIncreasesinMaximumCredit.
(i)ProvidednoDefaultorEventofDefaultthenexistsorwouldarisetherefrom,theBorrowermay,bywrittennoticetoAdministrativeAgentfromtimetotime,requestanincreaseintheMaximumCredit(bywayofanincreasetoanyexistingCommitmentor,inaccordancewithclause(iii)below,additionalCommitments)inanamount(forallsuchrequests)nottoexceedtheAdditionalCreditprovidedthat(i)anysuchrequestforanincreaseshallbeinminimumincrementsof$5,000,000andaminimumamountof$10,000,000orsuchlesseramountequaltotheremainingAdditionalCredit),and(ii)theBorrowermaymakeamaximumofthree(3)suchrequests.Atthetimeofsendingsuchnotice,theBorrower(inconsultationwiththeAdministrativeAgent)shallspecifythetimeperiodwithinwhicheachLenderisrequestedtorespond(whichshallinnoeventbelessthanten(10)BusinessDaysfromthedateofdeliveryofsuchnoticetotheLenders).
(ii)EachLendershallnotifytheAdministrativeAgentwithinsuchtimeperiodwhetherornotitagreestoincreaseitsCommitmentand,ifso,whetherbyanamountequalto,greaterthan,orlessthanitsProRataShareofsuchrequestedincrease.AnyLendernotrespondingwithinsuchtimeperiodshallbedeemedtohavedeclinedtoincreaseitsCommitment.
(iii)TheAdministrativeAgentshallnotifytheBorrowerandeachLenderoftheLenders’responsestoeachrequestmadehereunder.ToachievethefullamountofarequestedincreaseintheMaximumCreditandsubjecttotheapprovaloftheAdministrativeAgent,theLCIssuerandtheSwingLineLender(whichapprovalsshallnotbeunreasonablywithheld),totheextentthattheexistingLendersdeclinetoincreasetheirCommitments,ordeclinetoincreasetheirCommitmentstotheamountrequestedbytheBorrower,theAdministrativeAgent,inconsultationwiththeBorrower,willuseitsreasonableeffortstoarrangeforotherEligibleTransfereessatisfactorytoBorrowerorPersonsdescribedinSection13.6(a)(i)(A)or(C)tobecomeaLenderhereunder(eachsuchLender,an“AdditionalCommitmentLender”)andtoissuecommitmentsinanamountequaltotheamountoftheincreaseintheCommitmentsrequestedbytheBorrowerandnotacceptedbytheexistingLenders(andtheBorrowermayalsoinviteadditionalotherEligibleTransfereesorPersonsdescribedinSection13.6(a)(i)(A)or(C)tobecomeLenders),provided,however,thatwithouttheconsentoftheAdministrativeAgent,atnotimeshalltheCommitmentofanyAdditionalCommitmentLenderbelessthan$10,000,000.ThetermsandprovisionsofsuchadditionalCommitmentsandLoansmadeundersuchadditionalCommitmentsshallbeidenticaltothoseoftheexistingCommitmentsandLoans,respectively.
(iv)IftheMaximumCreditisincreasedinaccordancewiththisSection2.1(d),theAdministrativeAgent,inconsultationwiththeBorrower,shall
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determinetheeffectivedate(the“IncreaseEffectiveDate”)andthefinalallocationofsuchincrease.TheAdministrativeAgentshallpromptlynotifytheBorrowerandtheLendersofthefinalallocationofsuchincreaseandtheIncreaseEffectiveDateandontheIncreaseEffectiveDate(i)theMaximumCreditunder,andforallpurposesof,thisAgreementshallbeincreasedbytheaggregateamountofsuchCommitmentincreases,and(ii)ScheduleIheretoshallbedeemedmodified,withoutfurtheraction,toreflecttherevisedCommitmentsandProRataShareoftheLenders.Eachofthepartiesheretoherebyagreesthat,upontheeffectivenessofanyAdditionalCreditAssumptionAgreement,thisAgreementshallbedeemedamendedtotheextent(butonlytotheextent)necessarytoreflecttheexistenceoftheadditionalCommitmentandadditionalLoansevidencedthereby,andtheAdministrativeAgentandtheBorrowermayrevisethisAgreementtoevidencesuchamendments.
(v)AsaconditionprecedenttoanysuchincreasetotheMaximumCredit,(i)theBorrowershalldelivertotheAdministrativeAgentacertificatedatedasoftheIncreaseEffectiveDatesignedbyanauthorizedcorporateofficeroftheBorrower(A)certifyingthattheresolutionspreviouslyadoptedbytheBorrowerauthorizingtheincreaseintheMaximumCredithavenotbeenamended,modifiedorrepealedandremaininfullforceandeffect,(B)certifyingthat,beforeandaftergivingeffecttosuchincrease,(1)therepresentationsandwarrantiescontainedinSection8andintheotherFinancingDocumentsaretrueandcorrectonandasoftheIncreaseEffectiveDate,excepttotheextentthatsuchrepresentationsandwarrantiesspecificallyrefertoanearlierdate,inwhichcasetheyaretrueandcorrectasofsuchearlierdate,andexceptthatforpurposesofthisSection2.1(d),therepresentationsandwarrantiescontainedinSection8.3shallbedeemedtorefertothemostrecentstatementsfurnishedpursuanttoclause(a)ofSection9.6,and(2)noDefaultorEventofDefaultexistsorwouldarisefromsuchincreasetotheMaximumCredit,(ii)theBorrower,theAdministrativeAgent,andanyAdditionalCommitmentLendershallhaveexecutedanddeliveredanAdditionalCreditAssumptionAgreement;(iii)theBorrowershallhavepaidsuchfeesandothercompensationtotheAdditionalCommitmentLendersastheBorrowerandsuchAdditionalCommitmentLendersshallagree;(iv)theBorrowershallhavepaidsucharrangementfeestotheAdministrativeAgentastheBorrowerandtheAdministrativeAgentmayagree;(v)theBorrowersshallhaveexecutedanddeliveredanynotesrequestedbyLenderstoevidencetheirCommitmentsaftergivingeffecttoanyincreasesinCommitments;and(vi)noDefaultorEventofDefaultexists.
2.2LetterofCreditAccommodations.
(a)UpontherequestoftheLCIssuer,BorrowershallexecuteanddelivertotheLCIssueraMasterLetterofCreditAgreement.BorrowershallgivenoticetoAdministrativeAgentandtheLCIssueroftheproposedissuanceofeachLetterofCreditAccommodationonaBusinessDaywhichisatleastthree(3)BusinessDays(orsuchlessernumberofdaysasAdministrativeAgentandtheLCIssuershallagreeinanyparticularinstanceintheirsolediscretion)priortotheproposeddateofissuanceofsuchLetterofCreditAccommodationEach
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suchnoticeshallbeaccompaniedbyanLCApplication,dulyexecutedbyBorrowerandinallrespectssatisfactorytoAdministrativeAgentandtheLCIssuer,togetherwithsuchotherdocumentationasAdministrativeAgentortheLCIssuermayrequestinsupportthereof,itbeingunderstoodthateachLCApplicationshallspecify,amongotherthings,thedateonwhichtheproposedLetterofCreditAccommodationistobeissued,theexpirationdateofsuchLetterofCreditAccommodation(whichshallnotbelaterthantheTerminationDate(unlesssuchLetterofCreditAccommodationiscashcollateralizedpursuanttoSection10.2(b))andwhethersuchLetterofCreditAccommodationistobetransferableinwholeorinpart.AnyLetterofCreditAccommodationoutstandingaftertheTerminationDatewhichiscashcollateralizedforthebenefitoftheLCIssuershallbethesoleresponsibilityoftheLCIssuer.SolongastheLCIssuerhasnotreceivedwrittennoticethattheconditionsprecedentsetforthinSection4withrespecttotheissuanceofsuchLetterofCreditAccommodationhavenotbeensatisfied,andsubjecttotheprovisionsofSection2.2(h)hereof,theLCIssuershallissuesuchLetterofCreditAccommodationandofanyamendmentthereto,extensionthereoforeventorcircumstancechangingtheamountavailablefordrawingthereunder.IntheeventofanyinconsistencybetweenthetermsoftheMasterLetterofCreditAgreement,anyapplicationforaLetterofCreditAccommodationandthetermsofthisAgreement,thetermsofthisAgreementshallcontrol.
(b)TheLCIssuerherebyagrees,uponrequestofAdministrativeAgentoranyLender,todelivertoAdministrativeAgentorsuchLenderalistofalloutstandingLetterofCreditAccommodationsissuedbytheLCIssuer,togetherwithsuchinformationrelatedtheretoasAdministrativeAgentorsuchLendermayreasonablyrequest.
(c)TheLCIssuershallnotifyBorrowerandAdministrativeAgentwheneveranydemandforpaymentismadeunderanyLetterofCreditAccommodationbythebeneficiarythereunder;providedthatthefailureoftheLCIssuertosonotifyBorrowerorAdministrativeAgentshallnotaffecttherightsoftheLCIssuerortheLendersinanymannerwhatsoever.BorrowerherebyunconditionallyandirrevocablyagreestoreimbursetheLCIssuerforeachpaymentordisbursementmadebytheLCIssuerunderanyLetterofCreditAccommodationhonoringanydemandforpaymentmadebythebeneficiarythereunder,ineachcaseonthedatethatsuchpaymentordisbursementismade.IfBorrowerdoesnotpayanyreimbursementobligationwhendue,BorrowershallbedeemedtohaveimmediatelyrequestedthattheLendersmakeaRevolvingLoanwhichisaPrimeRateLoaninaprincipalamountequaltosuchreimbursementobligations(suchRevolvingLoanshallbereferredtohereinasan“LCReimbursementLoan”).AdministrativeAgentshallpromptlynotifysuchLendersofsuchdeemedrequestand,withoutthenecessityofcompliancewiththerequirementsofSection4,Section6.5orotherwisesuchLendershallmakeavailabletoAdministrativeAgentitsProRataShareofsuchLoan.TheproceedsofsuchLoanshallbepaidoverbyAdministrativeAgenttotheLCIssuerfortheaccountofBorrowerinsatisfactionofsuchreimbursementobligations.
(d)Borrower’sreimbursementobligationshereundershallbeirrevocableandunconditionalunderallcircumstances,including(i)anylackofvalidityorenforceabilityofanyLetterofCreditAccommodation,thisAgreementoranyotherFinancingAgreement,(ii)theexistenceofanyclaim,set-off,defenseorotherrightwhichBorrowermayhaveatanytimeagainstabeneficiarynamedinaLetterofCreditAccommodation,anytransfereeofanyLetterofCreditAccommodation(oranyPersonforwhomanysuchtransfereemaybeacting),
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AdministrativeAgent,theLCIssuer,anyLenderoranyotherPerson,whetherinconnectionwithanyLetterofCreditAccommodation,thisAgreement,anyotherFinancingAgreement,thetransactionscontemplatedhereinoranyunrelatedtransactions(includinganyunderlyingtransactionbetweenBorrowerandthebeneficiarynamedinanyLetterofCreditAccommodation),(iii)thevalidity,sufficiencyorgenuinenessofanydocumentwhichtheLCIssuerhasdeterminedcompliesonitsfacewiththetermsoftheapplicableLetterofCreditAccommodation,evenifsuchdocumentshouldlaterprovetohavebeenforged,fraudulent,invalidorinsufficientinanyrespectoranystatementthereinshallhavebeenuntrueorinaccurateinanyrespect,or(iv)thesurrenderorimpairmentofanysecurityfortheperformanceorobservanceofanyofthetermshereof.Withoutlimitingtheforegoing,noactionoromissionwhatsoeverbyAdministrativeAgentoranyLender(excludinganyLenderinitscapacityastheLCIssuer)underorinconnectionwithanyLetterofCreditAccommodationoranyrelatedmattersshallresultinanyliabilityoftheAdministrativeAgentoranyLendertoBorrower,orrelieveBorrowerofanyofitsobligationshereundertoanysuchPerson.
(e)ConcurrentlywiththeissuanceofeachLetterofCreditAccommodation,theLCIssuershallbedeemedtohavesoldandtransferredtoeachLenderwithaCommitment,andeachsuchLendershallbedeemedirrevocablyandunconditionallytohavepurchasedandreceivedfromtheIssuingLender,withoutrecourseorwarranty,anundividedinterestandparticipation,totheextentofsuchLender’sProRataShare,insuchLetterofCreditAccommodationandBorrower’sreimbursementobligationswithrespectthereto.IftheLCIssuermakesanypaymentordisbursementunderanyLetterofCreditAccommodationand(a)(x)BorrowerhasnotreimbursedtheLCIssuerinfullforsuchpaymentordisbursementby11:00A.M.onthedateofsuchpaymentordisbursementand(y)anLCReimbursementLoanmaynotbemadeinaccordancewithSection2.1or(b)anyreimbursementreceivedbytheLCIssuerfromBorrowerisormustbereturnedorrescindeduponorduringanybankruptcyorreorganizationofBorrowerorotherwise,eachotherLendershallbeobligatedtopaytoAdministrativeAgentfortheaccountoftheLCIssuer,infullorpartialpaymentofthepurchasepriceofitsparticipationinsuchLetterofCreditAccommodation,itsProRataShareofsuchpaymentordisbursement(butnosuchpaymentshalldiminishtheobligationsofBorrowerunderSection2.2(c)and(d)),and,uponnoticefromtheLCIssuer,AdministrativeAgentshallpromptlynotifyeachotherLenderthereof.EachotherLenderirrevocablyandunconditionallyagreestosopaytoAdministrativeAgentinimmediatelyavailablefundsfortheLCIssuer’saccounttheamountofsuchotherLender’sProRataShareofsuchpaymentordisbursement.IfandtotheextentanyLendershallnothavemadesuchamountavailabletoAdministrativeAgentby2:00P.M.ontheBusinessDayonwhichsuchLenderreceivesnoticefromAdministrativeAgentofsuchpaymentordisbursement(itbeingunderstoodthatanysuchnoticereceivedafter12:00noononanyBusinessDayshallbedeemedtohavebeenreceivedonthenextfollowingBusinessDay),suchLenderagreestopayinterestonsuchamounttoAdministrativeAgentfortheLCIssuer’saccountforthwithondemand,foreachdayfromthedatesuchamountwastohavebeendeliveredtoAdministrativeAgenttothedatesuchamountispaid,atarateperannumequalto(a)forthefirstthreedaysafterdemand,theFederalFundsRatefromtimetotimeineffectand(b)thereafter,thePrimeRatefromtimetotimeineffect.AnyLender’sfailuretomakeavailabletoAdministrativeAgentitsProRataShareofanysuchpaymentordisbursementshallnotrelieveanyotherLenderofitsobligationhereundertomakeavailabletoAdministrativeAgentsuchotherLender’sProRataShareofsuchpayment,butnoLendershallberesponsibleforthefailureofanyotherLendertomakeavailabletoAdministrativeAgentsuchotherLender’sProRataShareofanysuchpaymentordisbursement.
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(f)ExceptasotherwiseprovidedinSections2.5and2.2(e),noLendershallhaveanobligationtomakeanyLoan,ortopermitthecontinuationoforanyconversionintoanyLIBORateLoan,andtheLCIssuershallnothaveanyobligationtoissueanyLetterofCreditAccommodation,ifaDefaultorEventofDefaultexists.
(g)Inadditiontoanycharges,feesorexpenseschargedbyanybankorLCIssuerinconnectionwiththeLetterofCreditAccommodations,BorrowershallpaytoAdministrativeAgent,forthebenefitofLenders,aletterofcreditfeeatarateequalto(A)1.50%perannumonthedailyoutstandingbalanceoftheLetterofCreditAccommodationswithrespecttostandbylettersofcreditand(B)1.00%perannumonthedailyoutstandingbalanceoftheLetterofCreditAccommodationswithrespecttodocumentarylettersofcredit,ineachcasefortheimmediatelyprecedingmonth(orpartthereof),payableinarrearsasofthefirstdayofeachsucceedingmonth,exceptthatBorrowershallpaytoAdministrativeAgentfortheratablebenefitofLenders,suchletterofcreditfee,atAdministrativeAgent’soption,withoutnotice,atarateequaltotwopercent(2%)perannuminexcessoftherateotherwiseprovidedinthisSection2.2(h)onsuchdailyoutstandingbalance(i)withoutnotice,atanytimeanEventofDefaultpursuanttoanyofSections10.1(f),10.1(g)and/or10.1(h)and/or(ii)uponthewrittenrequestofRequiredLenders,andotherwisewithoutnotice,fortheperiodfromandafterthedateoftheoccurrenceofanyEventofDefault,otherthananEventofDefaultdescribedintheimmediatelyprecedingclause(i),andforsolongassuchEventofDefaultiscontinuingasdeterminedbyAdministrativeAgent.Suchletterofcreditfeeshallbecalculatedonthebasisofathreehundredsixty(360)dayyearandactualdayselapsedandtheobligationofBorrowertopaysuchfeeshallsurvivetheterminationofthisAgreement.
(h)NoLetterofCreditAccommodationsshallbeavailableunlessonthedateoftheproposedissuanceofanyLetterofCreditAccommodations,andaftergivingeffectthereto,
(i)ExcessAvailabilityisatleast$1.00;
(ii)noorder,judgmentordecreeofanyGovernmentalAuthorityorarbitratorshallbyitstermspurporttoenjoinorrestraintheLCIssuerfromissuingsuchletterofcredit,ornolawapplicabletotheLCIssueroranyrequestordirective(whetherornothavingtheforceoflaw)fromanyGovernmentalAuthoritywithjurisdictionovertheLCIssuershallprohibit,orrequestthattheLCIssuerrefrainfrom,theissuanceoflettersofcreditgenerallyorsuchletterofcreditinparticularorshallimposeupontheLCIssuerwithrespecttosuchletterofcreditanyrestriction,reserveorcapitalrequirement(forwhichtheLCIssuerisnototherwisecompensatedhereunder)notineffectonthedatehereof,orshallimposeupontheLCIssueranyunreimbursedloss,costorexpensewhichwasnotapplicableonthedatehereofandwhichtheLCIssueringoodfaithdeemsmaterialtoit;
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(iii)theissuanceofsuchletterofcreditwouldviolateoneormorepoliciesoftheLCIssuerapplicabletolettersofcreditgenerally;or
(iv)anyLenderisatsuchtimeaDefaultingLenderorDeterioratingLenderhereunder,unlesstheAdministrativeAgentorLCIssuerhasenteredintosatisfactoryarrangementswiththeBorrowerorsuchLendertoeliminatetheLCIssuer’sriskwithrespecttosuchLender.
(i)ExceptinAdministrativeAgent’sdiscretion,withtheconsentofallLenders,theamountofalloutstandingLetterofCreditAccommodationsandallothercommitmentsandobligationsmadeorincurredbyeitherAgentoranyLenderinconnectiontherewithshallnotatanytimeexceed$10,000,000.AtanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,uponAdministrativeAgent’srequest,BorrowerwilleitherfurnishcashcollateraltosecurethereimbursementobligationstotheLCIssuerinconnectionwithanyLetterofCreditAccommodationsorfurnishcashcollateraltoAdministrativeAgentfortheLetterofCreditAccommodations,andineithercase,theLoansotherwiseavailabletoBorrowershallnotbereducedasprovidedinSectionto2.2(i)theextentofsuchcashcollateral.
(j)BorrowershallindemnifyandholdAgentsandLendersharmlessfromandagainstanyandalllosses,claims,damages,liabilities,costsandexpenseswhicheitherAgentoranyLendermaysufferorincurinconnectionwithanyLetterofCreditAccommodationsandanydocuments,draftsoracceptancesrelatingthereto,includinganylosses,claims,damages,liabilities,costsandexpensesduetoanyactiontakenbyanyLCIssuerorcorrespondentwithrespecttoanyLetterofCreditAccommodation.BorrowerassumesallriskswithrespecttotheactsoromissionsofthedrawerunderorbeneficiaryofanyLetterofCreditAccommodationandforsuchpurposesthedrawerorbeneficiaryshallbedeemedBorrower’sagent.Borrowerassumesallrisksfor,andagreestopay,allforeign,Federal,Stateandlocaltaxes,dutiesandleviesrelatingtoanygoodssubjecttoanyLetterofCreditAccommodationsoranydocuments,draftsoracceptancesthereunder.BorrowerherebyreleasesandholdsAgentsandLendersharmlessfromandagainstanyacts,waivers,errors,delaysoromissions,whethercausedbyBorrower,byanyLCIssuerorcorrespondentorotherwisewithrespecttoorrelatingtoanyLetterofCreditAccommodation,exceptforthegrossnegligenceorwillfulmisconductofeitherAgentoranyLenderasdeterminedpursuanttoafinal,non-appealableorderofacourtofcompetentjurisdiction.TheprovisionsofthisSection2.2(k)shallsurvivethepaymentofObligationsandtheterminationofthisAgreement.
(k)NothingcontainedhereinshallbedeemedorconstruedtograntBorroweranyrightorauthoritytopledgethecreditofeitherAgentoranyLenderinanymanner.AgentsandLendersshallhavenoliabilityofanykindwithrespecttoanyLetterofCreditAccommodationprovidedbyanLCIssuerotherthaneitherAgentoranyLenderunlessAdministrativeAgenthasdulyexecutedanddeliveredtosuchLCIssuertheapplicationoraguaranteeorindemnificationinwritingwithrespecttosuchLetterofCreditAccommodation.BorrowershallbeboundbyanyinterpretationmadeingoodfaithbyAdministrativeAgent,oranyotherLCIssuerorcorrespondentunderorinconnectionwithanyLetterofCreditAccommodationoranydocuments,draftsoracceptancesthereunder,notwithstandingthatsuchinterpretationmaybeinconsistentwithanyinstructionsofBorrower.AtanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,AdministrativeAgentshallhavethesoleand
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exclusiverightandauthorityto,andBorrowershallnot:(i)approveorresolveanyquestionsofnon-complianceofdocuments,(ii)giveanyinstructionsastoacceptanceorrejectionofanydocumentsorgoods,(iii)executeanyandallapplicationsforsteamshiporairwayguaranties,indemnitiesordeliveryorders,(iv)grantanyextensionsofthematurityof,timeofpaymentfor,ortimeofpresentationof,anydrafts,acceptances,ordocuments,or(v)agreetoanyamendments,renewals,extensions,modifications,changesorcancellationsofanyofthetermsorconditionsofanyoftheapplications,LetterofCreditAccommodations,ordocuments,draftsoracceptancesthereunderoranylettersofcreditincludedintheCollateral;provided,that,Borrowershallnot,atanytimepriortoanEventofDefault,takeanyoftheactionsspecifiedinclauses(iv)and(v)aboveexceptafterpriorwrittennoticetoAdministrativeAgentandwiththepriorwrittenconsentofAdministrativeAgent,ifAdministrativeAgentshalldetermineingoodfaiththatanysuchactionshallincreasetheriskofAgentsorLenderswithrespecttosuchLetterofCreditAccommodations.AdministrativeAgentmaytakesuchactionseitherinitsownnameorinBorrower’sname.
(l)Anyrights,remedies,dutiesorobligationsgrantedorundertakenbyBorrowertoanyLCIssuerorcorrespondentinanyapplicationforanyLetterofCreditAccommodation,oranyotheragreementinfavorofanyLCIssuerorcorrespondentrelatingtoanyLetterofCreditAccommodation,shallbedeemedtohavebeengrantedorundertakenbyBorrowertoAdministrativeAgentfortheratablebenefitofLenders.AnydutiesorobligationsundertakenbyAdministrativeAgenttoanyLCIssuerorcorrespondentinanyapplicationforanyLetterofCreditAccommodation,oranyotheragreementbyAdministrativeAgentinfavorofanyLCIssuerorcorrespondentrelatingtoanyLetterofCreditAccommodation,shallbedeemedtohavebeenundertakenbyBorrowertoAdministrativeAgentfortheratablebenefitofLendersandtoapplyinallrespectstoBorrower.
2.3AvailabilityReserves.
WithoutlimitinganyotherrightsandremediesofAgentsorLendershereunderorundertheotherFinancingAgreements,allLoansandLetterofCreditAccommodationsotherwiseavailabletoBorrowershallbesubjecttotherightofAgentsfromtimetotime,toestablishandreviseingoodfaithreservesreducingtheamountofLoansandLetterofCreditAccommodationsthatwouldotherwisebeavailabletoBorrower(“AvailabilityReserves”):(a)toreflectevents,conditionsorcontingenciesthat,asdeterminedbytheAgentsingoodfaith,adverselyaffectorhaveareasonablelikelihoodofadverselyaffectingeither(i)theCollateraloranyotherpropertywhichissecurityfortheObligations,itsvalueortheamountwhichmayberealizedbyCollateralAgentfromthesaleorotherdispositionthereof,or(ii)theassetsorfinancialconditionofBorroweroranyObligor,or(iii)thesecurityinterestsandotherrightsofCollateralAgentintheCollateral(includingtheenforceability,perfectionandprioritythereof),or(b)toreflecteitherAgent’sgoodfaithbeliefthatanycollateralreportorfinancialinformationfurnishedbyoronbehalfofBorroweroranyObligortoAgentsisormayhavebeenincomplete,inaccurateormisleadinginanymaterialrespect,or(c)inrespectofanystateoffactswhicheitherAgentdeterminesingoodfaithconstitutesanEventofDefaultormay,withnoticeorpassageoftimeorboth,constituteanEventofDefault,or(d)toreflectinventoryshrinkage(asreflectedonthemostrecentfinancialstatementsdeliveredpursuanttoSection9.6(a)(i)),or(e)toreflecttheaggregateamountofdeposits,ifany,receivedbyBorrowerfromitsretailcustomersinrespectofunfilledorders,or(f)toreflectamountsdueortobecomedueinrespectofsales,useand/or
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withholdingtaxes,provided,that,anAvailabilityReservepursuanttothisSection2.3(f)willonlybeestablishedif(i)ExcessAvailability(withoutgivingeffecttoanyreserveforsuchamounts)shallbelessthan$1,000,000,or(ii)anEventofDefaultoract,conditionoreventwhichwithnoticeorpassageoftimeorbothwouldconstituteanEventofDefault,shallexistorhaveoccurredandbecontinuing,or(g)(i)toreflectanyrentalpayments,servicechargesorotheramountspastduetolessorsofrealorpersonalproperty,and(ii)toreflectanyrentalpayments,servicechargesorotheramountstobecomeduetolessorsofrealorpersonalproperty,whichAvailabilityReserveshallbecalculatedinaccordancewithclause(c)ofthedefinitionofEligibleInventory(excludingfromthisclause(g)(ii)only,(A)lessorsfromwhomaLandlordAgreementisnotrequiredtobedeliveredunderthedefinitionofEligibleInventoryor(B)lessorsfromwhomaLandlordAgreementisrequiredtobedeliveredunderthedefinitionofEligibleInventoryandwhohaveexecutedanddeliveredLandlordAgreements)totheextentInventoryorRecordsarelocatedinoronsuchpropertyorsuchRecordsareneededtomonitororotherwisedealwiththeCollateral,or(h)[intentionallydeleted],or(i)forBankProductReservesandCashManagementReserves.TotheextenttheAgentsmayrevisethelendingformulasetforthinSection2.1hereoforestablishnewcriteriaorreviseexistingcriteriaforEligibleInventorysoastoaddressanycircumstance,condition,eventorcontingencyinamannersatisfactorytotheAgents,theAgentsshallnotestablishanAvailabilityReserveforthesamepurpose(and,forclarity,anylimitationsontheAgents’rightstorevisethelendingformulasetforthinSection2.1hereofortoestablishnewcriteriaorreviseexistingcriteriaforEligibleInventory,shallinnowaylimittherightoftheAgentstoestablishormodifyAvailabilityReserves).TheamountofanyAvailabilityReserveestablishedbytheAgentsshallhaveareasonablerelationshiptotheevent,conditionorothermatterwhich,isthebasisforsuchreserveasdeterminedbytheAgentsingoodfaith.
2.4Commitments.
(a)TheaggregateamountofeachLender’sProRataShareoftheLoansandLetterofCreditAccommodationsshallnotexceedtheamountofsuchLender’sCommitments,asthesamemayfromtimetotimebeamendedinaccordancewiththeprovisionshereof.
(b)Borrowermayatanytimeuponatleastfive(5)days’priorwrittennoticetotheAdministrativeAgentpermanentlyreducetheCommitmentshereunder;providedthat(A)theCommitmentsmaynotbereducedtolessthanfiftypercent(50%)oftheMaximumCreditineffectimmediatelypriortosuchreduction,(B)anysuchreductionshallbeinaminimumamountof$5,000,000andintegralmultiplesof$250,000inexcessofsuchamount,and(C)suchreductionmustbeaccompaniedbypaymentofanyfundingbreakagecostsinaccordancewithSection3.1(c).
2.5SwingLineFacility.
(a)TheAdministrativeAgentshallnotifytheSwingLineLenderupontheAdministrativeAgent’sreceiptofanyNoticeofBorrowing(asdefinedinSection6.5)thatrequestsaSwingLineLoan.Subjecttothetermsandconditionshereof,upontheBorrower’srequestforaSwingLineLoanassetforthintheapplicableNoticeofBorrowing,theSwingLineLendermay,initssolediscretion,makeavailablefromtimetotimeuntiltheTerminationDateadvances(each,a“SwingLineLoan”)inaccordancewithanysuchnotice,notwithstandingthat
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aftermakingarequestedSwingLineLoan,thesumoftheSwingLineLender’sProRataShareoftheRevolvingLoansoutstandingandalloutstandingSwingLineLoansmayexceedtheSwingLineLender’sProRataShareoftheCommitment.TheprovisionsofthisSection2.5shallnotrelieveLendersoftheirobligationstomakeRevolvingLoansunderSection2.1;providedthatiftheSwingLineLendermakesaSwingLineLoanpursuanttoanysuchnotice,suchSwingLineLoanshallbeinlieuofanyRevolvingLoanthatotherwisemaybemadebytheLenderspursuanttosuchnotice.TheaggregateamountofSwingLineLoansoutstandingshallnotexceedatanytimeSwingLineAvailability.UntiltheTerminationDate,theBorrowermayfromtimetotimeborrow,repayandreborrowunderthisSection2.5;providedthattheSwingLineLendershallnotbeobligatedtomakeanySwingLineLoanatanytimewhenanyLenderisatsuchtimeaDefaultingLenderorDeterioratingLenderhereunder,unlesstheSwingLineLenderhasenteredintosatisfactoryarrangementswiththeBorrowerorsuchLendertoeliminatetheSwingLineLender’sriskwithrespecttosuchLender.EachSwingLineLoanshallbemadepursuanttoaNoticeofBorrowingdeliveredbytheBorrowertotheAdministrativeAgentinaccordancewithSection6.5(a).Anysuchnoticemustbegivennolaterthan2:00P.M.ontheBusinessDayoftheproposedSwingLineLoan.UnlesstheSwingLineLenderhasreceivedatleastoneBusinessDay’spriorwrittennoticefromtheRequiredLendersinstructingitnottomakeaSwingLineLoan,theSwingLineLendershall,notwithstandingthefailureofanyconditionprecedentsetforthinSection4.2,beentitledtofundthatSwingLineLoan,andtohavetheLendersmakeRevolvingLoansinaccordancewithSection2.5(c)orpurchaseparticipatingintereststhereininaccordancewithSection2.5(d).NotwithstandinganyotherprovisionofthisAgreementortheotherFinancingAgreements,eachSwingLineLoanshallconstituteaPrimeRateLoan.TheBorrowershallrepaytheaggregateoutstandingprincipalamountofeachSwingLineLoanupondemandthereforebytheAdministrativeAgent.
(b)TheentireunpaidbalanceofeachSwingLineLoanandallothernoncontingentObligationsshallbeimmediatelydueandpayableinfullinimmediatelyavailablefundsontheTerminationDateifnotsoonerpaidinfull.
(c)TheSwingLineLender,atanytimeandfromtimetotimenolessfrequentlythanonceweekly,shallonbehalfoftheBorrower(andtheBorrowerherebyirrevocablyauthorizestheSwingLineLendertosoactonitsbehalf)requesteachLenderwithaCommitment(includingtheSwingLineLender)tomakeaRevolvingLoantotheBorrower(whichshallbeaPrimeRateLoan)inanamountequaltothatLender’sProRataShareoftheprincipalamountofallSwingLineLoans(the“RefundedSwingLineLoan”)outstandingonthedatesuchnoticeisgiven.UnlessanyoftheeventsdescribedinanyofSections10.1(f),10.1(g)or10.1(h)hasoccurred(inwhicheventtheproceduresofSection2.5(d)shallapply)andregardlessofwhethertheconditionsprecedentsetforthinthisAgreementtothemakingofaRevolvingLoanarethensatisfied,eachLendershalldisbursedirectlytotheAdministrativeAgent,itsProRataShareonbehalfoftheSwingLineLender,priorto2:00P.M.inimmediatelyavailablefundsonthedatethatnoticeisgiven(providedthatsuchnoticeisgivenby12:00noononsuchdate,whichshallbeaBusinessDay).TheproceedsofthoseRevolvingLoansshallbeimmediatelypaidtotheSwingLineLenderandappliedtorepaytheRefundedSwingLineLoan.
(d)If,priortorefundingaSwingLineLoanwithaRevolvingLoanpursuanttoSection2.5(c),oneoftheeventsdescribedinanyofSections10.1(f),10.1(g)or10.1(h)hasoccurred,then,subjecttotheprovisionsofSection2.5(e)below,eachLendershall,onthedate
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suchRevolvingLoanwastohavebeenmadeforthebenefitoftheBorrower,purchasefromtheSwingLineLenderanundividedparticipationinterestintheSwingLineLoaninanamountequaltoitsProRataShareofsuchSwingLineLoan.Uponrequest,eachLendershallpromptlytransfertotheSwingLineLender,inimmediatelyavailablefunds,theamountofitsparticipationinterest.
(e)EachLender’sobligationtomakeRevolvingLoansinaccordancewithSection2.5(c)andtopurchaseparticipationinterestsinaccordancewithSection2.5(d)shallbeabsoluteandunconditionalandshallnotbeaffectedbyanycircumstance,including(i)anysetoff,counterclaim,recoupment,defenseorotherrightthatsuchLendermayhaveagainsttheSwingLineLender,theBorroweroranyotherPersonforanyreasonwhatsoever;(ii)theoccurrenceorcontinuanceofanyDefaultorEventofDefault;(iii)anyinabilityoftheBorrowertosatisfytheconditionsprecedenttoborrowingsetforthinthisAgreementatanytimeor(iv)anyothercircumstance,happeningoreventwhatsoever,whetherornotsimilartoanyoftheforegoing.IfandtotheextentanyLendershallnothavemadesuchamountavailabletotheAdministrativeAgentortheSwingLineLender,asapplicable,by2:00P.M.theamountrequiredpursuanttoSections2.5(c)or2.5(d),asthecasemaybe,ontheBusinessDayonwhichsuchLenderreceivesnoticefromtheAdministrativeAgentofsuchpaymentordisbursement(itbeingunderstoodthatanysuchnoticereceivedafternoononanyBusinessDayshallbedeemedtohavebeenreceivedonthenextfollowingBusinessDay),suchLenderagreestopayinterestonsuchamounttotheAdministrativeAgentfortheSwingLineLender’saccountforthwithondemand,foreachdayfromthedatesuchamountwastohavebeendeliveredtotheAdministrativeAgenttothedatesuchamountispaid,atarateperannumequalto(a)forthefirstthreedaysafterdemand,theFederalFundsRatefromtimetotimeineffectand(b)thereafter,thePrimeRatefromtimetotimeineffect.
SECTION 3. INTEREST AND FEES
3.1Interest.
(a)BorrowershallpaytoAdministrativeAgent,forthebenefitofLenders,interestontheoutstandingprincipalamountoftheLoansattheInterestRate.AllinterestaccruinghereunderonandafterthedateofanyEventofDefaultorterminationhereofshallbepayableondemand.
(b)BorrowermayfromtimetotimerequestthatPrimeRateLoansbeconvertedtoLIBORateLoansorthatanyexistingLIBORateLoanscontinueforanadditionalInterestPeriod.Borrowershallgivewrittennotice(eachsuchwrittennotice,a“NoticeofConversion/Continuation”)substantiallyintheformofExhibitDortelephonicnotice(followedimmediatelybyaNoticeofConversion/Continuation)totheAdministrativeAgentofeachproposedconversionorcontinuationnotlaterthan(i)inthecaseofconversionintoPrimeRateLoans,12:00noonontheproposeddateofsuchconversionand(ii)inthecaseofconversionintoorcontinuationofLIBORateLoans,12:00noonatleastthree(3)BusinessDayspriortotheproposeddateofsuchconversionorcontinuation,specifyingineachcase:(A)theproposeddateofconversionorcontinuation,(B)theaggregateamountofLoanstobeconvertedorcontinued,(C)thetypeofLoansresultingfromtheproposedconversionorcontinuation,and(D)inthecaseofconversioninto,orcontinuationof,LIBORateLoans,thedurationoftherequestedInterest
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Periodtherefore.Subjecttothetermsandconditionscontainedherein,three(3)BusinessDaysafterreceiptbyAdministrativeAgentofsucharequestfromBorrower,suchPrimeRateLoansshallbeconvertedtoLIBORateLoansorsuchLIBORateLoansshallcontinue,asthecasemaybe,provided,that,(i)noDefaultorEventofDefaultshallexistorhaveoccurredandbecontinuing,(ii)nopartyheretoshallhavesentanynoticeofterminationofthisAgreement,(iii)BorrowershallhavecompliedwithsuchcustomaryproceduresasareestablishedbyAdministrativeAgentandspecifiedbyAdministrativeAgenttoBorrowerfromtimetotimeforrequestsbyBorrowerforLIBORateLoans,(iv)nomorethanten(10)InterestPeriodsmaybeineffectatanyonetime,(v)theaggregateamountoftheLIBORateLoansmustbeinanamountnotlessthan$2,000,000oranintegralmultipleof$100,000inexcessthereofand(vi)AdministrativeAgentandeachLendershallhavedeterminedthattheInterestPeriodorAdjustedLIBORateisavailabletoAdministrativeAgentandsuchLenderandcanbereadilydeterminedasofthedateoftherequestforsuchLIBORateLoanbyBorrower.AnyrequestbyBorrowertoconvertPrimeRateLoanstoLIBORateLoansortocontinueanyexistingLIBORateLoansshallbeirrevocable.Notwithstandinganythingtothecontrarycontainedherein,AgentsandLendersshallnotberequiredtopurchaseUnitedStatesDollardepositsintheLondoninterbankmarketorotherapplicableLIBORatemarkettofundanyLIBORateLoans,buttheprovisionshereofshallbedeemedtoapplyasifAgentsandLendershadpurchasedsuchdepositstofundtheLIBORateLoans.AdministrativeAgentwillpromptlynotifyeachLenderofitsreceiptofaNoticeofConversion/ContinuationpursuanttothisSection3.1(b)or,ifnotimelynoticeisprovidedbytheBorrower,ofthedetailsofanyautomaticconversion.
(c)AnyLIBORateLoansshallautomaticallyconverttoPrimeRateLoansuponthelastdayoftheapplicableInterestPeriod,unlessAdministrativeAgenthasreceivedandapprovedarequesttocontinuesuchLIBORateLoanatleastthree(3)BusinessDayspriortosuchlastdayinaccordancewiththetermshereof.AnyLIBORateLoansshall,atAdministrativeAgent’soption,uponnoticebyAdministrativeAgenttoBorrower,converttoPrimeRateLoansintheeventthat(i)aDefaultoranEventofDefaultshallexist,(ii)thisAgreementshallterminateornotberenewed,or(iii)theaggregateprincipalamountofthePrimeRateLoanswhichhavepreviouslybeenconvertedtoLIBORateLoansorexistingLIBORateLoanscontinued,asthecasemaybe,atthebeginningofanInterestPeriodshallatanytimeduringsuchInterestPeriodexceedeither(A)theaggregateprincipalamountoftheLoansthenoutstanding,or(B)theLoansthenavailabletoBorrowerunderSection2hereof.BorrowershallpaytoAdministrativeAgent,forthebenefitofLenders,upondemandbyAdministrativeAgent(orAdministrativeAgentmay,atitsoption,chargeanyloanaccountofBorrower)anyamountsrequiredtocompensateanyLender,theAdministrativeAgentoranyParticipantforanyloss(otherthanthelossofanticipatedprofits),costorexpensereasonablyincurredbysuchperson,asaresultoftheconversionofLIBORateLoanstoPrimeRateLoanspursuanttoanyoftheforegoing.
(d)InterestaccruinginrespectofPrimeRateLoansshallbepayablebyBorrowertoAdministrativeAgent,forthebenefitofLenders,quarterlyinarrearsnotlaterthanthelastdayofeachcalendarquarterandshallbecalculatedonthebasisofathreehundredsixty(360)dayyearandactualdayselapsed.InterestaccruinginrespectofLIBORateLoansshallbepayableonthelastdayofeachapplicableInterestPeriod,unlesstheInterestPeriodisgreaterthanthree(3)months,inwhichcaseinterestshallbepayableonthelastdayofeachthree(3)monthintervalcommencingwiththefirstdayofsuchInterestPeriod.Theinterestrateonnon-contingent
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Obligations(otherthanLIBORateLoans)shallincreaseordecreasebyanamountequaltoeachincreaseordecreaseinthePrimeRateeffectiveonthefirstdayofthemonthafteranychangeinsuchPrimeRateisannouncedbasedonthePrimeRateineffectonthelastdayofthemonthinwhichanysuchchangeoccurs.InnoeventshallchargesconstitutinginterestpayablebyBorrowertoAgentsandLendersexceedthemaximumamountortheratepermittedunderanyapplicablelaworregulation,andifanysuchpartorprovisionofthisAgreementisincontraventionofanysuchlaworregulation,suchpartorprovisionshallbedeemedamendedtoconformthereto.
3.2OtherFees.
(a)BorrowershallpaytoAdministrativeAgent,fortheaccountofLenders,monthlyasbilled,anunusedlinefeeatarateequalto0.20%perannumcalculatedupontheamountbywhichtheMaximumCredit(orintheeventthattheMaximumCredithaschangedduringameasuringperiod,theaveragedailyMaximumCreditduringsuchperiod)exceedstheaveragedailyprincipalbalanceoftheoutstandingRevolvingLoansandLetterofCreditAccommodationsduringtheimmediatelyprecedingcalendarquarter(orpartthereof),whichfeeshallbepayableonthelastdayofeachcalendarquarterinarrears.
(b)BorroweragreestopaytheAdministrativeAgentfortheaccountofeachLenderontheClosingDateaclosingfeeforeachLenderof0.10%oftheirrespectiveCommitment.Additionally,inconsiderationoftheLendersenteringintotheSecondAmendment,BorroweragreestopaytheAdministrativeAgentfortheaccountofeachLenderontheSecondAmendmentEffectiveDateaclosingfeeforeachLenderof0.10%oftheirrespectiveCommitment.
(c)BorroweragreestopaytoAdministrativeAgenttheotherfeesandamountssetforthintheFeeLetterintheamountsandatthetimesspecifiedtherein.
3.3ChangesinLawsandIncreasedCostsofLoans.
(a)Notwithstandinganythingtothecontrarycontainedherein,allLIBORateLoansofanyLendershall,uponnoticebyAdministrativeAgenttoBorrower,converttoPrimeRateLoansintheeventthat(i)anyChangeInLaworregulation(ortheinterpretationoradministrationthereof)shalleither(A)makeitunlawfulforsuchLendertomakeormaintainLIBORateLoansortocomplywiththetermshereofinconnectionwiththeLIBORateLoans,or(B)shallresultintheincreaseinthecoststosuchLenderofmakingormaintaininganyLIBORateLoansbyanamountdeemedbyAdministrativeAgenttobematerial,or(C)reducetheamountsreceivedorreceivablebysuchLenderinrespectthereof,byanamountdeemedbyAdministrativeAgenttobematerialor(ii)thecosttosuchLenderofmakingormaintaininganyLIBORateLoansshallotherwiseincreasebyanamountdeemedbyAdministrativeAgenttobematerial.BorrowershallpaytoAdministrativeAgent,fortheratablebenefitofLenders,upondemandbyAdministrativeAgent(orAdministrativeAgentmay,atitsoption,chargeanyloanaccountofBorrower)anyamountsrequiredtocompensateanyLenderforanyloss(includinglossofanticipatedprofits),costorexpenseincurredbysuchpersonasaresultoftheforegoing,including,withoutlimitation,anysuchloss,costorexpenseincurredbyreasonoftheliquidationorreemploymentofdepositsorotherfundsacquiredbysuchpersontomakeormaintainthe
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LIBORateLoansoranyportionthereof.AcertificateofAdministrativeAgentortheapplicableLendersettingforththebasisforthedeterminationofsuchamountnecessarytocompensatesuchLenderasaforesaidshallbedeliveredtoBorrowerandshallbepresumptiveevidenceofsuchamount.
(b)IfanypaymentsorprepaymentsinrespectoftheLIBORateLoansarereceivedbyeitherAgentoranyLenderotherthanonthelastdayoftheapplicableInterestPeriod(whetherpursuanttoacceleration,uponmaturityorotherwise),includinganypaymentspursuanttotheapplicationofcollectionsunderSection6.3oranyotherpaymentsmadewiththeproceedsofCollateral,oriftheBorrowerfailstoprepay,borrow,continueorconvertanyLIBORateLoanotherthanaBaseRateLoanonthedateorintheamountnotifiedbytheBorrower,BorrowershallpaytoAdministrativeAgent,upondemandbyAdministrativeAgent(orAdministrativeAgentmay,atitsoption,chargeanyloanaccountofBorrower)anyamountsrequiredtocompensateanyLenderoranyParticipantforanyadditionalloss(includinglossofanticipatedprofits),costorexpenseincurredbysuchpersonasaresultofsuchprepaymentorpayment,including,withoutlimitation,anyloss,costorexpenseincurredbyreasonoftheliquidationorreemploymentofdepositsorotherfundsacquiredbysuchpersontomakeormaintainsuchLIBORateLoansoranyportionthereof.AcertificateofAdministrativeAgentortheapplicableLendersettingforththebasisforthedeterminationofsuchamountnecessarytocompensatesuchLendershallbedeliveredtoBorrowerandshallbepresumptiveevidenceofsuchamount.
(c)IfanyLenderdeliversnoticepursuanttoSections3.3(a)and3.3(b)aboveinwhichsuchLenderassertsaclaimforcompensationwhichclaimisnotbeingassertedbytheotherLenders,Borrowermayrequirewithin90daysofreceivingsuchnotice,atitsexpense,thatsuchLenderassign,atpar,withoutrecourse(inaccordancewithSection13.6(a)hereof)allofitsinterests,rightsandobligationshereunderandundertheotherFinancingAgreements(includingallofitsCommitmentsandtheLoansatthetimeowingtoitandanyparticipationsinLoansheldbyit)toanEligibleTransfereeproposedbyBorrower(a“SubstituteLender”),provided,that(i)noEventofDefaultshallexistatthetimeofsuchassignment,(ii)suchassignmentshallnotconflictwithorviolateanylaw,ruleorregulationororderofanycourtorothergovernmentalauthority,(iii)BorrowershallhavereceivedthewrittenconsentofAdministrativeAgenttosuchassignment(whichconsentshallnotbeunreasonablywithheldordelayed)and(iv)BorrowershallhavepaidtotheassigningLenderallmoniesaccruedandowinghereundertoit(includingpursuanttoSections3.3(a)and3.3(b)above.
(d)PromptlyafteranyLenderbecomesawareofanycircumstancethatwill,initssolejudgment,resultinarequestforincreasedcompensationpursuanttoSections3.3(a)and3.3(b)above,suchLendershallnotifytheBorrowerthereof.EachLenderwillusereasonableeffortstodesignatealendingoffice(oradifferentlendingoffice),solongassuchdesignationisnotadversetosuchLenderinsuchLender’ssolejudgment,ifsuchdesignationwouldavoidtheneedto,orreducetheamountwhichwouldberequiredto,compensatesuchLenderforanyadditionalcostsincurredorreductionssuffered.FailureonthepartofanyLendertosonotifyBorrowerortodemandcompensationforanyincreasedcostsinamountsreceivedorreceivablewithrespecttoanyperiodshallnotconstituteawaiverofsuchLender’srighttodemandcompensationwithrespecttosuchperiodoranyotherperiod.
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SECTION 4. CONDITIONS PRECEDENT
4.1ConditionsPrecedenttoInitialLoansandLetterofCreditAccommodations.
EachofthefollowingisaconditionprecedenttoAgentsandLendersmakingtheinitialLoansandprovidingtheinitialLetterofCreditAccommodationshereunder:
(a)allrequisitecorporateactionandproceedingsinconnectionwiththisAgreementandtheotherFinancingAgreementsshallbesatisfactoryinformandsubstancetoAdministrativeAgent,andAdministrativeAgentshallhavereceivedallinformationandcopiesofalldocuments,includingrecordsofrequisitecorporateactionandproceedingswhichAdministrativeAgentmayhaverequestedinconnectiontherewith,suchdocumentswhererequestedbyAdministrativeAgentoritscounseltobecertifiedbyappropriatecorporateofficers(andincludingacopyofthecertificateofincorporationofBorrowercertifiedbytheSecretaryofState(orequivalentGovernmentalAuthority)whichshallsetforththesamecompletecorporatenameofBorrowerasissetforthhereinandsuchdocumentasshallsetforththeorganizationalidentificationnumberofBorrower,ifoneisissuedinitsjurisdictionofincorporation);
(b)AgentsshallhavereceivedandreviewedlienandjudgmentsearchresultsforthejurisdictionofincorporationofBorrowerandthejurisdictionofthechiefexecutiveofficeoftheBorrower,whichsearchresultsshallbeinformandsubstancesatisfactorytotheAgents;
(c)Agentsshallhavereceived,informandsubstancesatisfactorytoAgents,suchopinionlettersofcounseltoBorrowerwithrespecttotheFinancingAgreementsandsuchothermattersasAgentsmayreasonablyrequest;
(d)AdministrativeAgentshallhavereceivedevidenceofpaymentbyBorrowerofallaccruedandunpaidfees,costsandexpensestotheextentthendueandpayableontheClosingDate,togetherwithallreasonablelegalexpensesandreasonableattorneys’feesincurredbytheAgents,plussuchadditionalamountsasshallconstitutetheAgents’reasonableestimateofreasonablelegalexpensesandreasonableattorneys’feesincurredortobeincurredbytheAgentsthroughtheclosingproceedings(providedthatsuchestimateshallnotthereafterprecludefinalsettlingofaccountsbetweenBorrowerandtheAgents);
(e)theagreements,instrumentsanddocumentssetforthontheclosingchecklistattachedasExhibitEheretoshallhavebeendulyexecutedanddeliveredtoAdministrativeAgent,informandsubstancesatisfactorytoAdministrativeAgent.
4.2ConditionsPrecedenttoAllLoansandLetterofCreditAccommodations.
EachofthefollowingisanadditionalconditionprecedenttoAgentsandLendersmakingLoansand/orprovidingLetterofCreditAccommodationstoBorrower,includingtheinitialLoansandLetterofCreditAccommodationsandanyfutureLoansandLetterofCreditAccommodations:
(a)allrepresentationsandwarrantiescontainedhereinandintheotherFinancingAgreementsshallbetrueandcorrectinallmaterialrespectswiththesameeffectasthoughsuchrepresentationsandwarrantieshadbeenmadeonandasofthedateofthemakingof
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eachsuchLoanorprovidingeachsuchLetterofCreditAccommodationandaftergivingeffectthereto,excepttotheextentthatsuchrepresentationsandwarrantiesexpresslyrelatesolelytoanearlierdate(inwhichcasesuchrepresentationsandwarrantiesshallhavebeentrueandaccurateonandasofsuchearlierdate);
(b)nolaw,regulation,order,judgmentordecreeofanyGovernmentalAuthorityshallexist,andnoaction,suit,investigation,litigationorproceedingshallbependingorthreatenedinanycourtorbeforeanyarbitratororGovernmentalAuthority,which(i)purportstoenjoin,prohibit,restrainorotherwiseaffect(A)themakingoftheLoansorprovidingtheLetterofCreditAccommodations,or(B)theconsummationofthetransactionscontemplatedpursuanttothetermshereofortheotherFinancingAgreementsor(ii)hasorcouldreasonablybeexpectedtohaveamaterialadverseeffectontheassets,businessorprospectsofBorrowerorwouldimpairtheabilityofBorrowertoperformitsobligationshereunderorunderanyoftheotherFinancingAgreementsorofeitherAgentoranyLendertoenforceanyObligationsorrealizeuponanyoftheCollateral;and
(c)noDefaultorEventofDefaultshallexistorhaveoccurredandbecontinuingonandasofthedateofthemakingofsuchLoanorprovidingeachsuchLetterofCreditAccommodationandaftergivingeffectthereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1GrantofSecurityInterest.
Borrowerherebyconfirmsthat,pursuanttotheExistingLoanAgreement,itgrantedtoCollateralAgent,foritselfandtheratablebenefitofLenders,acontinuingsecurityinterestin,alienupon,andarightofsetoffagainst,andassignedtoCollateralAgent,foritselfandtheratablebenefitofLenders,assecurity,theCollateral(ashereinafterdefined).TosecurepaymentandperformanceofallObligations,Borrowerhereby(i)ratifies,reaffirmsandrestatessuchgrantandassignmentand(ii)furthermoregrantstoCollateralAgent,foritselfandtheratablebenefitofLenders,acontinuingsecurityinterestin,alienupon,andarightofsetoffagainst,andassignstoCollateralAgent,foritselfandtheratablebenefitofLenders,assecurity,allpersonalandrealpropertyandfixturesandinterestsinpropertyandfixturesofBorrower,whethernowownedorhereafteracquiredorexisting,andwhereverlocated(togetherwithallothercollateralsecurityfortheObligationsatanytimegrantedtoorheldoracquiredbyeitherAgentoranyLender,collectively,the“Collateral”),including:
(a)allAccounts;
(b)allgeneralintangibles,including,withoutlimitation,allIntellectualProperty;
(c)allgoods,including,withoutlimitation,InventoryandEquipment;
(d)allchattelpaper(includingalltangibleandelectronicchattelpaper);
(e)allinstruments(includingallpromissorynotes);
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(f)alldocuments;
(g)alldepositaccounts;
(h)alllettersofcredit,banker’sacceptancesandsimilarinstrumentsandincludingallletter-of-creditrights;
(i)allsupportingobligationsandallpresentandfutureliens,securityinterests,rights,remedies,titleandinterestin,toandinrespectofReceivablesandotherCollateral,including(i)rightsandremediesunderorrelatingtoguaranties,contractsofsuretyship,lettersofcreditandcreditandotherinsurancerelatedtotheCollateral,(ii)rightsofstoppageintransit,replevin,repossession,reclamationandotherrightsandremediesofanunpaidvendor,lienororsecuredparty,(iii)goodsdescribedininvoices,documents,creditcardsalesdrafts,creditcardsalesslipsorchargeslipsorreceiptsandotherformsofstorereceipts,contractsorinstrumentswithrespectto,orotherwiserepresentingorevidencing,ReceivablesorotherCollateral,includingreturned,repossessedandreclaimedgoods,and(iv)depositsbyandpropertyofaccountdebtorsorotherpersonssecuringtheobligationsofaccountdebtors;
(j)all(i)investmentproperty(includingsecurities,whethercertificatedoruncertificated,securitiesaccounts,securityentitlements,commoditycontractsorcommodityaccounts)and(ii)monies,creditbalances,depositsandotherpropertyofBorrowernoworhereafterheldorreceivedbyorintransittoeitherAgent,anyLenderortheirAffiliatesoratanyotherdepositoryorotherinstitutionfromorfortheaccountofBorrower,whetherforsafekeeping,pledge,custody,transmission,collectionorotherwise;
(k)allcommercialtortclaims,including,withoutlimitation,thoseidentifiedintheInformationCertificate;
(l)totheextentnototherwisedescribedabove,allReceivables;
(m)allRecords;and
(n)allproductsandproceedsoftheforegoing,inanyform,includinginsuranceproceedsandallclaimsagainstthirdpartiesforlossordamagetoordestructionoforotherinvoluntaryconversionofanykindornatureofanyoralloftheotherCollateral.
5.2ExceptionfromSecurityInterest.
(a)NotwithstandinganythingtothecontrarysetforthinSection5.1above,thetypesoritemsofCollateraldescribedinsuchSectionshallnotincludeanyrightsorinterestsinanycontract,lease,permit,license,charterorlicenseagreementcoveringrealorpersonalproperty,assuch,ifunderthetermsofsuchcontract,lease,permit,license,charterorlicenseagreement,orapplicablelawwithrespectthereto,thevalidgrantofasecurityinterestorlienthereintoCollateralAgentisprohibitedandsuchprohibitionhasnotbeenorisnotwaivedortheconsentoftheotherpartytosuchcontract,lease,permit,license,charterorlicenseagreementhasnotbeenorisnototherwiseobtainedorunderapplicablelawsuchprohibitioncannotbewaived;provided,that,theforegoingexclusionshallinnowaybeconstrued(a)toapplyifanysuchprohibitionisunenforceableundertheUCCorotherapplicablelawor(b)soastolimit,
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impairorotherwiseaffectCollateralAgent’sunconditionalcontinuingsecurityinterestsinandliensuponanyrightsorinterestsofBorrowerinortomoniesdueortobecomedueunderanysuchcontract,lease,permit,license,charterorlicenseagreement(includinganyAccounts).
(b)NotwithstandinganythingtothecontrarycontainedinSection5.1above,theCollateralshallnotincludethetrademark“StudioGear”totheextentsuchtrademarkislicensedtoStudioGearCosmetics,Inc.pursuanttotheLicenseandDistributionAgreement,datedMay,1996,betweenBorrowerandStudioGearCosmetics,Inc.
(c)NotwithstandinganythingtothecontrarycontainedinSection5.1above,thetypesoritemsofCollateraldescribedinsuchSectionshallnotincludeanyEquipmentwhichis,oratthetimeofBorrower’sacquisitionthereofshallbe,subjecttoapurchasemoneymortgageorotherpurchasemoneylienorsecurityinterest(includingcapitalizedorfinanceleases)permittedunderSection9.8hereofif:(a)thevalidgrantofasecurityinterestorlientoCollateralAgentinsuchitemofEquipmentisprohibitedbythetermsoftheagreementbetweenBorrowerandtheholderofsuchpurchasemoneymortgageorotherpurchasemoneylienorsecurityinterestorunderapplicablelawandsuchprohibitionhasnotbeenorisnotwaived,ortheconsentoftheholderofthepurchasemoneymortgageorotherpurchasemoneylienorsecurityinteresthasnotbeenorisnototherwiseobtained,orunderapplicablelawsuchprohibitioncannotbewaivedand(b)thepurchasemoneymortgageorotherpurchasemoneylienorsecurityinterestonsuchitemofEquipmentisorshallbecomevalidandperfected.
(d)NotwithstandinganythingtothecontrarycontainedinSection5.1above,theCollateralshallnotincludetheassetsorCapitalStockof(x)anySubsidiarythatisacontrolledforeigncorporation(asdefinedunderSection957oftheCode(each,a“CFC”))exceptforCapitalStockrepresenting(i)65%ofthevotingCapitalStockofsuchSubsidiaryand(ii)100%ofthenon-votingCapitalStockofsuchSubsidiaryand(y)anyotherSubsidiarytotheextent(A)theinclusionofsuchassetsorCapitalStockwouldresultinanyadversetaxconsequences(including,withoutlimitation,asaresultoftheoperationofSection956oftheCodeoranysimilarlaworregulationinanyapplicablejurisdiction)toBorroweroranyofitsAffiliatesand(B)thesoleassetsofsuchSubsidiaryconsistsofCapitalStockinoneormoreCFCs.
5.3PerfectionofSecurityInterest
(a)BorrowerirrevocablyandunconditionallyauthorizesCollateralAgent(oritsagent)tofileatanytimeandfromtimetotimesuchfinancingstatementswithrespecttotheCollateralnamingCollateralAgentoritsdesigneeasthesecuredpartyandBorrowerasdebtor,asCollateralAgentmayrequire,andincludinganyotherinformationwithrespecttoBorrowerorotherwiserequiredbypart5ofArticle9oftheUniformCommercialCodeofsuchjurisdictionasCollateralAgentmaydetermine,togetherwithanyamendmentandcontinuationswithrespectthereto,whichauthorizationshallapplytoallfinancingstatementsfiledon,priortoorafterthedatehereof.BorrowerherebyratifiesandapprovesallfinancingstatementsnamingCollateralAgentoritsdesigneeassecuredpartyandBorrowerasdebtorwithrespecttotheCollateral(andanyamendmentswithrespecttosuchfinancingstatements)filedbyoronbehalfofCollateralAgentpriortothedatehereofandratifiesandconfirmstheauthorizationofCollateralAgenttofilesuchfinancingstatements(andamendments,ifany).BorrowerherebyauthorizesCollateral
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AgenttoadoptonbehalfofBorroweranysymbolrequiredforauthenticatinganyelectronicfiling.IntheeventthatthedescriptionofthecollateralinanyfinancingstatementnamingCollateralAgentoritsdesigneeasthesecuredpartyandBorrowerasdebtorincludesassetsandpropertiesofBorrowerthatdonotatanytimeconstituteCollateral,whetherhereunder,underanyoftheotherFinancingAgreementsorotherwise,thefilingofsuchfinancingstatementshallnonethelessbedeemedauthorizedbyBorrowertotheextentoftheCollateralincludedinsuchdescriptionanditshallnotrenderthefinancingstatementineffectiveastoanyoftheCollateralorotherwiseaffectthefinancingstatementasitappliestoanyoftheCollateral.InnoeventshallBorroweratanytimefile,orpermitorcausetobefiled,anycorrectionstatementorterminationstatementwithrespecttoanyfinancingstatement(oramendmentorcontinuationwithrespectthereto)namingCollateralAgentoritsdesigneeassecuredpartyandBorrowerasdebtor.
(b)Borrowerdoesnothaveanychattelpaper(whethertangibleorelectronic)orinstrumentsasofthedatehereof,exceptassetforthintheInformationCertificate.IntheeventthatBorrowershallbeentitledtoorshallreceiveanychattelpaperorinstrumentafterthedatehereof,BorrowershallpromptlynotifytheAgentsthereofinwriting.PromptlyuponthereceiptthereofbyoronbehalfofBorrower(includingbyanyagentorrepresentative),Borrowershalldeliver,orcausetobedeliveredtoCollateralAgent,alltangiblechattelpaperandinstrumentsthatBorrowerormayatanytimeacquire,accompaniedbysuchinstrumentsoftransferorassignmentdulyexecutedinblankasCollateralAgentmayfromtimetotimespecify,ineachcaseexceptastheAgentsmayotherwiseagree.AttheAgents’option,Borrowershall,orCollateralAgentmayatanytimeonbehalfofBorrower,causetheoriginalofanysuchinstrumentorchattelpapertobeconspicuouslymarkedinaformandmanneracceptabletotheAgentswiththefollowinglegendreferringtochattelpaperorinstrumentsasapplicable:“This[chattelpaper][instrument]issubjecttothesecurityinterestofWellsFargoRetailFinanceLLC,asCollateralAgent,andanysale,transfer,assignmentorencumbranceofthis[chattelpaper][instrument]violatestherightsofsuchsecuredparty.”
(c)IntheeventthatBorrowershallatanytimeholdoracquireaninterestinanyelectronicchattelpaperorany“transferablerecord”(assuchtermisdefinedinSection201oftheFederalElectronicSignaturesinGlobalandNationalCommerceActorinSection16oftheUniformElectronicTransactionsActasineffectinanyrelevantjurisdiction),BorrowershallpromptlynotifytheAgentsthereofinwriting.PromptlyupontheAgents’request,Borrowershalltake,orcausetobetaken,suchactionsastheAgentsmayreasonablyrequesttogiveCollateralAgentcontrolofsuchelectronicchattelpaperunderSection9-105oftheUCCandcontrolofsuchtransferablerecordunderSection201oftheFederalElectronicSignaturesinGlobalandNationalCommerceActor,asthecasemaybe,Section16oftheUniformElectronicTransactionsAct,asineffectinsuchjurisdiction.
(d)Borrowerdoesnothaveanydepositaccountsasofthedatehereof,exceptassetforthonSchedule6.3totheInformationCertificate.BorrowershalldirectitscreditcardprocessorstodepositanyandallpaymentsandotheramountsatanytimeowedbysuchcreditcardprocessorsintotheconcentrationaccountmaintainedwithJPMorganChaseBank,N.A.whichissubjecttotheJPMControlAgreement.Withinthirty(30)daysaftertheoccurrenceandduringthecontinuanceofaControlEvent,Borrowershallexecuteanddeliver(i)DepositAccountControlAgreementswithrespecttotheBlockedAccountsand(ii)InvestmentPropertyControlAgreementinrespectofanyinvestmentaccountsorsecuritiesaccountscontainingassets
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withafairmarketvalueinexcessof$500,000intheaggregate,ineachcaseastheAdministrativeAgentmayreasonablyrequirefromtimetotime.Inaddition,Borrowershallnot,directlyorindirectly,afterthedatehereofopen,establishormaintainanydepositaccountunlesseachofthefollowingconditionsissatisfied:(i)CollateralAgentshallhavereceivednotlessthanfive(5)BusinessDayspriorwrittennoticeoftheintentionofBorrowertoopenorestablishsuchaccountwhichnoticeshallspecifyinreasonabledetailandspecificityacceptabletotheAgentsthenameoftheaccount,theowneroftheaccount,thenameandaddressofthebankatwhichsuchaccountistobeopenedorestablished,theindividualatsuchbankwithwhomBorrowerisdealingandthepurposeoftheaccount,(ii)thebankwheresuchaccountisopenedormaintainedshallbeacceptabletotheAgents,and(iii)onorbeforetheopeningofsuchdepositaccount,BorrowershallastheAgentsmayspecifyeither(A)ifthenrequiredpursuanttothetermsofthissubsection(d)above,delivertoCollateralAgentaDepositAccountControlAgreementwithrespecttosuchdepositaccountdulyauthorized,executedanddeliveredbyBorrowerandthebankatwhichsuchdepositaccountisopenedandmaintainedor(B)arrangeforCollateralAgenttobecomethecustomerofthebankwithrespecttothedepositaccountontermsandconditionsacceptabletotheAgents.Notwithstandinganythingtothecontrarycontainedherein,thetermsofthissubsection(d)shallnotapplytoStoreBankAccountsortodepositaccountsspecificallyandexclusivelyusedforpayroll,taxes,otherobligationstothirdpartiesorotheremployeewageandbenefitpaymentstoorforthebenefitofBorrower’ssalariedemployees.
(e)Borrowerdoesnotownorhold,directlyorindirectly,beneficiallyorasrecordownerorboth,anyinvestmentproperty,asofthedatehereof,orhaveanyinvestmentaccount,securitiesaccount,commodityaccountorothersimilaraccountwithanybankorotherfinancialinstitutionorothersecuritiesintermediaryorcommodityintermediaryasofthedatehereof,ineachcaseexceptassetforthintheInformationCertificate.
(i)IntheeventthatBorrowershallbeentitledtoorshallatanytimeafterthedatehereofholdoracquireanycertificatedsecurities,Borrowershallpromptlyendorse,assignanddeliverthesametoCollateralAgent,foritselfandtheratablebenefitofLenders.accompaniedbysuchinstrumentsoftransferorassignmentdulyexecutedinblankasCollateralAgentmayfromtimetotimespecify.Ifanysecurities,noworhereafteracquiredbyBorrowerareuncertificatedandareissuedtoBorroweroritsnomineedirectlybytheissuerthereof,BorrowershallimmediatelynotifytheAgentsthereofandshallastheAgentsmayspecify,either(A)causetheissuertoagreetocomplywithinstructionsfromCollateralAgentastosuchsecurities,withoutfurtherconsentofBorrowerorsuchnominee,or(B)arrangeforCollateralAgent,foritselfandtheratablebenefitofLenders,tobecometheregisteredownerofthesecurities.
(ii)Borrowershallnot,directlyorindirectly,afterthedatehereofopen,establishormaintainanyinvestmentaccount,securitiesaccount,commodityaccountoranyothersimilaraccount(otherthanadepositaccount)withanysecuritiesintermediaryorcommodityintermediaryunlesseachofthefollowingconditionsissatisfied:(A)theAgentsshallhavereceivednotlessthanfive(5)BusinessDayspriorwrittennoticeoftheintentionofBorrowertoopenorestablishsuchaccountwhichnoticeshallspecifyinreasonabledetailand
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specificityacceptabletotheAgentsthenameoftheaccount,theowneroftheaccount,thenameandaddressofthesecuritiesintermediaryorcommodityintermediaryatwhichsuchaccountistobeopenedorestablished,theindividualatsuchintermediarywithwhomBorrowerisdealingandthepurposeoftheaccount,(B)thesecuritiesintermediaryorcommodityintermediary(asthecasemaybe)wheresuchaccountisopenedormaintainedshallbeacceptabletotheAgents,and(C)totheextentrequiredbySection5.3(d),onorbeforetheopeningofsuchinvestmentaccount,securitiesaccountorothersimilaraccountwithasecuritiesintermediaryorcommodityintermediary,BorrowershallastheAgentsmayspecifyeither(1)executeanddeliver,andcausetobeexecutedanddeliveredtoCollateralAgent,anInvestmentPropertyControlAgreementwithrespecttheretodulyauthorized,executedanddeliveredbyBorrowerandsuchsecuritiesintermediaryorcommodityintermediaryor(2)arrangeforCollateralAgent,foritselfandfortheratablebenefitofLenders,tobecometheentitlementholderwithrespecttosuchinvestmentpropertyontermsandconditionsacceptabletotheAgents.
(f)Borrowerisnotthebeneficiaryorotherwiseentitledtoanyrighttopaymentunderanyletterofcredit,banker’sacceptanceorsimilarinstrumentasofthedatehereof,exceptassetforthintheInformationCertificate.IntheeventthatBorrowershallbeentitledtoorshallreceiveanyrighttopaymentunderanyletterofcredit,banker’sacceptanceoranysimilarinstrument,whetherasbeneficiarythereoforotherwiseafterthedatehereof,BorrowershallpromptlynotifytheAgentsthereofinwriting.Borrowershallimmediately,astheAgentsmayspecify,either(i)deliver,orcausetobedeliveredtoCollateralAgent,withrespecttoanysuchletterofcredit,banker’sacceptanceorsimilarinstrument,thewrittenagreementoftheissuerandanyothernominatedpersonobligatedtomakeanypaymentinrespectthereof(includinganyconfirmingornegotiatingbank),informandsubstancesatisfactorytotheAgents,consentingtotheassignmentoftheproceedsoftheletterofcredittoCollateralAgent,foritselfandfortheratablebenefitofLenders,byBorrowerandagreeingtomakeallpaymentsthereondirectlytoCollateralAgent,foritselfandfortheratablebenefitofLenders,orasCollateralAgentmayotherwisedirector(ii)causeCollateralAgent,foritselfandfortheratablebenefitofLenders,tobecome,atBorrower’sexpense,thetransfereebeneficiaryoftheletterofcredit,banker’sacceptanceorsimilarinstrument(asthecasemaybe).
(g)Borrowerhasnocommercialtortclaimsasofthedatehereof,exceptassetforthintheInformationCertificate.IntheeventthatBorrowershallatanytimeafterthedatehereofassertanycommercialtortclaimsinrespectofwhichtheexpectednetrecoveryexceeds$250,000,BorrowershallpromptlynotifytheAgentsthereofinwriting,whichnoticeshall(i)setforthinreasonabledetailthebasisforandnatureofsuchcommercialtortclaimand(ii)ifrequestedbyanyAgent,includetheexpressgrantbyBorrowertoCollateralAgent,foritselfandtheratablebenefitofLenders,ofasecurityinterestinsuchcommercialtortclaim(andtheproceedsthereof).Intheeventthatsuchnoticedoesnotincludesuchgrantofasecurityinterest,thesendingthereofbyBorrowertotheAgentsshallbedeemedtoconstitutesuchgranttoCollateralAgent,foritselfandfortheratablebenefitofLenders.Uponthesendingofsuchnotice,anycommercialtortclaimdescribedthereinshallconstitutepartoftheCollateralandshallbedeemedincludedtherein.WithoutlimitingtheauthorizationofCollateralAgentprovidedinSection5.3(a)hereoforotherwisearisingbytheexecutionbyBorrowerofthis
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AgreementoranyoftheotherFinancingAgreements,CollateralAgentisherebyirrevocablyauthorizedfromtimetotimeandatanytimetofilesuchfinancingstatementsnamingCollateralAgentoritsdesigneeassecuredpartyandBorrowerasdebtor,oranyamendmentstoanyfinancingstatements,coveringanysuchcommercialtortclaimasCollateral.Inaddition,BorrowershallpromptlyupontheAgents’request,executeanddeliver,orcausetobeexecutedanddelivered,toCollateralAgentsuchotheragreements,documentsandinstrumentsastheAgentsmayrequireinconnectionwithsuchcommercialtortclaim.
(h)Borrowerdoesnothaveanygoods,documentsoftitleorotherCollateralinthecustody,controlorpossessionofathirdpartyasofthedatehereof,exceptassetforthintheInformationCertificateandexceptforgoodslocatedintheUnitedStatesintransittoalocationofBorrowerpermittedhereinintheordinarycourseofbusinessofBorrowerinthepossessionofthecarriertransportingsuchgoods.Intheeventthatanygoods,documentsofthetitleorotherCollateralareatanytimeafterthedatehereofinthecustody,controlorpossessionofanyotherpersonnotreferredtointheInformationCertificateorsuchcarriers,BorrowershallpromptlynotifytheAgentsthereofinwriting.PromptlyupontheAgents’request,BorrowershalldelivertoCollateralAgentaCollateralAccessAgreementdulyauthorized,executedanddeliveredbysuchpersonandBorrower.
(i)BorrowershalltakeanyotheractionsreasonablyrequestedbytheAgentsfromtimetotimetocausetheattachment,perfectionandfirstpriorityof,andtheabilityofCollateralAgenttoenforce,thesecurityinterestofCollateralAgentinanyandalloftheCollaterallocatedintheUnitedStates,CanadaorPuertoRico,including,withoutlimitation,(i)executing,deliveringand,whereappropriate,filingfinancingstatementsandamendmentsrelatingtheretoundertheUCCorotherapplicablelaw,totheextent,ifany,thatBorrower’ssignaturethereonisrequiredtherefore,(ii)causingCollateralAgent’snametobenotedassecuredpartyonanycertificateoftitleforatitledgoodifsuchnotationisaconditiontoattachment,perfectionorpriorityof,orabilityofCollateralAgenttoenforce,thesecurityinterestofCollateralAgentinsuchCollateral,(iii)complyingwithanyprovisionofanystatute,regulationortreatyoftheUnitedStates,CanadaorPuertoRicoastoanyCollateralifcompliancewithsuchprovisionisaconditiontoattachment,perfectionorpriorityof,orabilityofCollateralAgenttoenforce,thesecurityinterestofCollateralAgentinsuchCollateral,(iv)obtainingtheconsentsandapprovalsofanyGovernmentalAuthorityorthirdparty,including,withoutlimitation,anyconsentofanylicensor,lessororotherpersonobligatedonCollateral,andtakingallactionsrequiredbyanyearlierversionsoftheUCCorbyotherlaw,asapplicableinanyrelevantjurisdiction.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1Borrower’sLoanAccount.
AdministrativeAgentshallmaintainoneormoreloanaccount(s)onitsbooksinwhichshallberecorded(a)allLoans,LetterofCreditAccommodationsandotherObligations,(b)allpaymentsmadebyoronbehalfofBorrowerand(c)allotherappropriatedebitsandcreditsasprovidedinthisAgreement,includingfees,charges,costs,expensesandinterest.Allentriesintheloanaccount(s)shallbemadeinaccordancewithAdministrativeAgent’scustomarypracticesasineffectfromtimetotime.TheRevolvingLoansshallbeevidencedbytheloan
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accountsmaintainedbyAdministrativeAgent;providedthatifanyLendersorequests,theBorrowerwillexecuteapromissorynoteinfavorofsuchLenderfurtherevidencingsuchLender’sCommitment.AdministrativeAgentisauthorizedbyallthepartiesheretotomakeallrevisionsandmodificationstoScheduleIheretoatanytimetoreflectthethencurrentCommitmentsofeachLender.
6.2Statements.
AdministrativeAgentshallrendertoBorrowereachmonthastatementsettingforththebalanceintheBorrower’sloanaccount(s)maintainedbyAdministrativeAgentforBorrowerpursuanttotheprovisionsofthisAgreement,includingprincipal,interest,fees,costsandexpenses.EachsuchstatementshallbesubjecttosubsequentadjustmentbyAdministrativeAgentbutshall,absentmanifesterrorsoromissions,beconsideredcorrectanddeemedacceptedbyBorrowerandconclusivelybindinguponBorrowerasanaccountstatedexcepttotheextentthatAdministrativeAgentreceivesawrittennoticefromBorrowerofanyspecificexceptionsofBorrowertheretowithinforty-five(45)daysafterthedatesuchstatementhasbeenmailedbyAdministrativeAgent.UntilsuchtimeasAdministrativeAgentshallhaverenderedtoBorrowerawrittenstatementasprovidedabove,thebalanceinBorrower’sloanaccount(s)shallbepresumptiveevidenceoftheamountsdueandowingtoAdministrativeAgentandLendersbyBorrower.
6.3CollectionofAccounts.
(a)Borrowershallestablishandmaintain,atitsexpense,depositaccountarrangementsandmerchantpaymentarrangementswiththebankssetforthonSchedule6.3totheInformationCertificateandafterpriorwrittennoticetoAdministrativeAgent,andsubjecttoSection5.3(d),suchotherbanksasBorrowermayhereafterselectasareacceptabletoAdministrativeAgent.ThebankssetforthonSchedule6.3totheInformationCertificateconstituteallofthebankswithwhomBorrowerhasdepositaccountarrangementsandmerchantpaymentarrangementsasofthedatehereofandsuchScheduleidentifieseachofthedepositaccountsatsuchbankstoaretailstorelocationofBorrowerorotherwisedescribesthenatureoftheuseofsuchdepositaccountbyBorrower.
(i)BorrowershalldepositallproceedsfromsalesofInventoryineveryform,including,withoutlimitation,cash,checks,creditcardsalesdrafts,creditcardsalesorchargeslipsorreceiptsandotherformsofstorereceipts,fromeachretailstorelocationofBorroweroneachBusinessDayintothedepositaccountsofBorrowerusedsolelyforsuchpurposeandidentifiedtoeachretailstorelocationassetforthonSchedule6.3totheInformationCertificate(togetherwithanyotherdepositaccountsatanytimeestablishedorusedbyBorrowerforreceivingsuchstorereceiptsfromanyretailstorelocation,collectively,the“StoreBankAccounts”)orasotherwiseprovidedinSection6.3(a)(iii)below.Borrowershallirrevocablyauthorizeanddirect,andshalluseitsbesteffortstocause,allavailablefundsdepositedintotheStoreBankAccountstobesentbywiretransferorbytransferusingtheautomatedclearinghousenetwork(“ACHtransfer”)onadailybasis,andallotherproceedsofCollateraltobesentbywiretransferorbyACHtransfer,totheBlockedAccountasprovidedinSection6.3(a)(ii)below
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(exceptnominalamountswhicharerequiredtobemaintainedinsuchStoreBankAccountsunderthetermsofBorrower’sarrangementswiththebankatwhichsuchStoreBankAccountsaremaintained,nottoexceed$10,000foreachindividualstoreutilizingsuchStoreBankAccount).Borrowershallirrevocablyauthorizeanddirectinwriting,informandsubstancesatisfactorytoAdministrativeAgent,eachofthebanksintowhichproceedsfromsalesofInventoryfromeachretailstorelocationofBorrowerareatanytimedepositedasprovidedaboveandallofthebanksinwhichBorrower’sconcentrationaccountsaremaintainedtosendallavailablefundsdepositedinsuchaccount(otherthanthenominalamountsreferredtoabove)bywiretransferorACHtransferonadailybasistotheBlockedAccount.Suchauthorizationanddirectionshallnotberescinded,revokedormodifiedwithoutthepriorwrittenconsentofAdministrativeAgent.IntheeventanyofsuchbanksfailstosendsuchfundstotheBlockedAccountasprovidedherein,Borrowershallpursueallofitsrightsandremediesasaresultofsuchfailure.Notwithstandingtheforegoing,forthoseStoreBankAccountsthattransferfundsdailybyACHtransferinitiatedbyBorrower’sstoremanagementnotifyingathirdpartyprocessor,Borrowershallirrevocablyauthorizeanddirectinwriting,informandsubstancesatisfactorytoAdministrativeAgent,thethirdpartyprocessorthatestablishestheroutingandexecutestheACHtransfertosendfundsonlytotheBlockedAccountsandtoagreetodosoatanytimeuponAdministrativeAgent’srequestandAdministrativeAgentshallreceiveanagreementfromsuchthirdpartyprocessorconfirmingitsagreementtodoso.Suchauthorizationanddirectionshallnotberescinded,revokedormodifiedwithoutthepriorwrittenconsentofAdministrativeAgent.
(ii)Borrowershallestablishandmaintain,atitsexpense,oneormoredepositaccountswithsuchbanksasareacceptabletoAdministrativeAgent(the“BlockedAccounts”)intowhichBorrowershallpromptlyeithercauseallamountsondepositintheStoreBankAccountstobesentasprovidedinSection6.3(a)(i)aboveorshallitselfdepositorcausetobedepositedallproceedsfromsalesofInventory,allamountspayabletoBorrowerfromCreditCardIssuersandCreditCardProcessorsandallotherproceedsofCollateral.TotheextentrequiredbySection5.3(d)hereof,thebanksatwhichtheBlockedAccountsareestablishedshallenterintoanagreement,informandsubstancesatisfactorytoAdministrativeAgent,providingthatallitemsreceivedordepositedintheBlockedAccountsarethepropertyofBorrowersubjecttothelienandsecurityinterestofCollateralAgent,forthebenefitofAgentsandLenders,thatthedepositorybankhasnolienupon,orrightofsetoffagainst,theBlockedAccounts,theitemsreceivedfordeposittherein,orthefundsfromtimetotimeondepositthereinandthatuponnotice(an“ActivationNotice”)fromeitherAgentatanytimethatanEventofDefaulthasoccurredandiscontinuingorthatExcessAvailabilityislessthanthirtypercent(30%)ofthelesserof(1)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(2)theMaximumCredit,thedepositorybankwillwire,orotherwisetransfer,immediatelyavailablefunds,on
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adailybasis,allfundsreceivedordepositedintotheBlockedAccountstosuchbankaccountofAdministrativeAgentasAdministrativeAgentmayfromtimetotimedesignateforsuchpurpose(“PaymentAccount”),whichagreements,onceenteredinto,shallremainineffectuntilthisAgreementisterminated.BorroweragreesthatallamountsdepositedinsuchBlockedAccountsorintheStoreBankAccountsorotherfundsreceivedandcollectedbyeitherAgent,whetherasproceedsofinventoryorotherCollateralorotherwiseshall,totheextentthatthereareObligationsoutstandingandanActivationNoticehasbeendelivered,bethepropertyofCollateralAgent,forthebenefitofAgentsandLenders.PriortotheoccurrenceofanEventofDefault,amountsinthePaymentAccountinexcessoftheLoanbalance(includinganyrequiredcashcollateralizationofLetterofCreditAccommodations)andotherObligationsthatarethendueandnotpaidbytheBorrowershallbepromptlyreturnedtoadisbursementaccountdesignatedbytheBorrower.AnActivationNotice,oncefurnished,shallremainineffect(i)solongassuchEventofDefaulthasnotbeencuredorwaived,and/or(ii)iftheActivationNoticewasfurnishedasaresultoftheBorrowers’failuretoachieveExcessAvailabilityasrequiredabove,untilExcessAvailabilityhasexceededthirtypercent(30%)ofthelesserof(1)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(2)theMaximumCreditforsixty(60)consecutivedays,inwhichcasetheAgentswillrescindtheActivationNotice;providedthatnosuchrescissionshallberequiredtobefurnished(evenifanEventofDefaultisnolongercontinuingand/orExcessAvailabilityexceedstherequiredamountforsixty(60)consecutivedays)afteranActivationNoticehasbeenrescindedonceinanytwelveconsecutivemonths.AtanytimethattheAgentsrescindtheActivationNoticeasprovidedabove,theBlockedAccountsshallremainineffectandsuchterminationshallinnowaylimit,waiveordelaytheobligationoftheBorrower,ortherightoftheAgents,toagainrequireallfundsbetransferredtothePaymentAccountupontheBorrower’sfailuretoachieveExcessAvailabilityintheamountsrequiredherein.
(iii)TotheextentBorrowermayelect,atBorrower’soption,tousetheArmoredCarCompaniestopickupandcollectcashorotherproceedsofsalesofInventoryfromaretailstorelocation,BorrowershalldelivertotheArmoredCarCompaniesallproceedsfromsalesofInventoryandotherCollateralfromsuchretailstorelocationofBorrower.BorrowershallirrevocablyauthorizeanddirecttheArmoredCarCompaniesinwriting,consistentwithpastpracticesdescribedtoAdministrativeAgent,toremitallsuchproceedsatanytimereceivedbytheArmoredCarCompaniesonlytothedepositaccountidentifiedonSchedule6.3totheInformationCertificateorotherStoreBankAccountsforsuchpurposeandthereaftertotheBlockedAccounts.SuchauthorizationanddirectiontotheArmoredCarCompaniesshallnotberescinded,revokedormodifiedwithoutthepriorwrittenconsentofAdministrativeAgentunlessBorrowershallceasetodobusinesswithsuchArmoredCarCompany,providedthatuponanysuchterminationtheArmoredCarCompanyshallnotbereleasedfromitsobligationtomakepaymentsforamountspreviouslydeliveredtosuchArmoredCarCompany.
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Asofthedatehereof,theonlyArmoredCarCompaniesusedbyBorrowerarethoseidentifiedinSchedule6.3totheInformationCertificate.BorrowershallnotuseanyotherArmoredCarCompaniesforanypurposeunlesstheaforesaidarrangementsareinplacewithsuchotherArmoredCarCompany.UponrequestoftheAdministrativeAgent,BorrowerwillpromptlyeitherobtainandprovideanagreementinwritingfromsuchotherArmoredCarCompanies,informandsubstancesatisfactorytoAdministrativeAgent,dulyauthorized,executedanddeliveredbysuchotherArmoredCarCompany,orceasedoingbusinesswithsuchArmoredCarCompany.
(b)ForpurposesofcalculatinginterestontheObligationsandtheamountofLoansavailabletoBorrower,paymentsorotherfundsreceivedinthePaymentAccountshallbeappliedtotheObligations(conditionaluponfinalcollection)promptlyandinaccordancewithitscustomarydepositorypracticeassuchamountsbecomeavailable.
(c)Borrowerandallofitssubsidiaries,shareholders,directors,employees,agentsorotherAffiliatesshall,actingastrusteeforCollateralAgent,receive,asthepropertyofBorrowersubjecttothelienandsecurityinterestofCollateralAgent,forthebenefitofAgentsandLenders,anycash,checks,creditcardsalesdrafts,creditcardsalesorchargeslipsorreceipts,notes,draftsandallformsofstorereceiptsoranyotherpaymentrelatingtoand/orproceedsofAccountsorotherCollateralwhichcomeintotheirpossessionorundertheircontrolandimmediatelyuponreceiptthereof,shalldepositorcausethesametobedepositedintheStoreBankAccounts(subjecttotheprovisionsofSection6.3(a)(i))ortheBlockedAccounts,orremitthesameorcausethesametoberemitted,inkind,toAdministrativeAgent.BorroweragreestoreimburseAdministrativeAgentondemandforanyamountsowedorpaidtoanybankatwhichaBlockedAccountisestablishedoranyotherbankorpersoninvolvedinthetransferoffundstoorfromtheBlockedAccountsarisingoutofAdministrativeAgent’spaymentstoorindemnificationofsuchbankorperson.TheobligationofBorrowertoreimburseAdministrativeAgentforsuchamountspursuanttothisSection6.3shallsurvivetheterminationofthisAgreement.
6.4Payments.
(a)AllObligationsshallbepayabletothePaymentAccountasprovidedinSection6.3orsuchotherplaceasAdministrativeAgentmaydesignatefromtimetotime.TheAgentsshallapplypaymentsreceivedorcollectedfromBorrowerorfortheaccountofBorrower(includingthemonetaryproceedsofcollectionsorofrealizationuponanyCollateral)asfollows:first,topayanyfees,indemnitiesorexpensereimbursementsthenduetoanyAgent,anyLenderortheirrepresentativesfromBorroweroranyObligor(otherthaninconnectionwithanyHedgingAgreements,BankProductsorCashManagementServices);second,topayinterestdueinrespectofanyLoansandSpecialAgentAdvances;third,topayprincipaldueinrespectoftheSwingLineLoansandSpecialAgentAdvances;fourth,topayprincipaldueinrespectoftheRevolvingLoans;fifth,topayanyotherObligations(otherthaninconnectionwithanyHedgingAgreements,BankProductsorCashManagementServices)thendueandowing,insuchorderandmannerasAdministrativeAgentdetermines;sixth,topayanyObligationsthendueandowingrelatingtoCashManagementServices(includingfees,indemnities,expensesandotheramountsarisingfromanyCashManagementServices),seventh,topayanyObligationsthendue
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andowingrelatingtoHedgingAgreementsandBankProducts(includingfees,indemnities,expensesandotheramountsarisingfromanyHedgingAgreementsorBankProducts)onaproratabasisandeighth,totheextentofanybalanceremaining,suchbalanceshallbedeliveredtoBorrowerorasacourtofcompetentjurisdictionmaydirect.NotwithstandinganythingtothecontrarycontainedinthisAgreement,(i)unlesssodirectedbyBorrower,orunlessaDefaultoranEventofDefaultshallexistorhaveoccurredandbecontinuing,noAgentshallapplyanypaymentswhichitreceivestoanyLIBORateLoans,exceptontheexpirationdateoftheInterestPeriodapplicabletoanysuchLIBORateLoansand(ii)totheextentBorrowerusesanyproceedsoftheLoansorLetterofCreditAccommodationstoacquirerightsinortheuseofanyCollateralortorepayanyIndebtednessusedtoacquirerightsinortheuseofanyCollateral,paymentsinrespectoftheobligationsshallbedeemedappliedfirsttotheObligationsarisingfromLoansandLetterofCreditAccommodationsthatwerenotusedforsuchpurposesandsecondtotheObligationsarisingfromLoansandLetterofCreditAccommodationstheproceedsofwhichwereusedtoacquirerightsinortheuseofanyCollateralinthechronologicalorderinwhichBorroweracquiredsuchrightsoruse.EachpaymentonanyoftheLoanstoorfortheaccountofoneormoreLendersentitledtosuchpaymentspursuanttothisSection6.4(a)shallbeallocatedamongsuchLendersbasedontheirrespectiveProRataSharesofsuchLoans.
(b)AtAdministrativeAgent’soption,allprincipal,interest,fees,costs,expensesandotherchargesprovidedforinthisAgreementortheotherFinancingAgreementsmaybechargeddirectlytotheloanaccount(s)ofBorrower.BorrowershallmakeallpaymentstoAgentsandLendersontheObligationsfreeandclearof,andwithoutdeductionorwithholdingfororonaccountof,anysetoff,counterclaim,defense,duties,taxes,levies,imposts,fees,deductions,withholding,restrictionsorconditionsofanykind.Ifafterreceiptofanypaymentof,orproceedsofCollateralappliedtothepaymentof,anyoftheObligations,anyAgentoranyLenderisrequiredtosurrenderorreturnsuchpaymentorproceedstoanyPersonforanyreason,thentheObligationsintendedtobesatisfiedbysuchpaymentorproceedsshallbereinstatedandcontinueandthisAgreementshallcontinueinfullforceandeffectasifsuchpaymentorproceedshadnotbeenreceivedbysuchAgentorsuchLender.BorrowershallbeliabletopaytoeachAgent,anddoesherebyindemnifyandholdAgentsandLendersharmlessfortheamountofanypaymentsorproceedssurrenderedorreturned.ThisSection6.4shallremaineffectivenotwithstandinganycontraryactionwhichmaybetakenbyanyAgentoranyLenderinrelianceuponsuchpaymentorproceeds.ThisSection6.4shallsurvivethepaymentoftheObligationsandtheterminationofthisAgreement.
(c)IfanypaymentofprincipalorinterestwithrespecttoanyoftheLoans,orofanyfees,fallsdueonadaywhichisnotaBusinessDay,thensuchduedateshallbeextendedtotheimmediatelyfollowingBusinessDay(unless,inthecaseofaLIBORateLoan,suchimmediatelyfollowingBusinessDayisthefirstBusinessDayofacalendarmonth,inwhichcasesuchduedateshallbetheimmediatelyprecedingBusinessDay)and,inthecaseofprincipal,additionalinterestshallaccrueandbepayablefortheperiodofanysuchextension.
6.5AuthorizationtoMakeLoans.
AgentsandLendersareauthorizedtomaketheLoansuponthereceiptbyAdministrativeAgentofawrittennotice(eachsuchwrittennotice,a“NoticeofBorrowing”)substantiallyintheformattachedheretoasExhibitFortelephonicnotice(followedimmediatelybyaNoticeof
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Borrowing)ofeachproposedborrowingnotlaterthan(a)inthecaseofaPrimeRateborrowing,12:00noonontheproposeddateofsuchborrowing,and(b)inthecaseofaLIBORateborrowing,12:00noonatleastthree(3)BusinessDayspriortotheproposeddateofsuchborrowing.EachsuchnoticeshallbeeffectiveuponreceiptbytheAdministrativeAgent,shallbeirrevocable,andshallspecifythedate,amountandtypeofborrowingand,inthecaseofaLIBORateborrowing,theinitialInterestPeriodtherefore.Promptlyuponreceiptofsuchnotice,theAdministrativeAgentshalladviseeachLenderthereof.Notlaterthan3:00P.M.onthedateofaproposedborrowing,eachLendershallprovidetheAdministrativeAgentattheofficespecifiedbytheAdministrativeAgentwithimmediatelyavailablefundscoveringsuchLender’sProRataShareofsuchborrowingand,solongastheAdministrativeAgenthasnotreceivedwrittennoticethattheconditionsprecedentsetforthinSection4withrespecttosuchborrowinghavenotbeensatisfied,theAdministrativeAgentshallpayoverthefundsreceivedbytheAdministrativeAgenttoBorrowerontherequestedborrowingdate.EachborrowingshallbeonaBusinessDay.EachLIBORateborrowingshallbeinanaggregateamountofatleast$2,000,000andanintegralmultipleofatleast$100,000.AllLoansandLetterofCreditAccommodationsunderthisAgreementshallbeconclusivelypresumedtohavebeenmadeto,andattherequestofandforthebenefitof,BorrowerwhendepositedtothecreditofBorrowerorotherwisedisbursedorestablishedinaccordancewiththeinstructionsofBorrowerorinaccordancewiththetermsandconditionsofthisAgreement.
6.6UseofProceeds.
AllLoansmadeorLetterofCreditAccommodationsprovidedtoBorrowerpursuanttotheprovisionshereofshallbeusedbyBorroweronlyforgeneraloperating,workingcapitalandotherpropercorporatepurposesofBorrowernototherwiseprohibitedbythetermshereof,includingwithoutlimitationthepaymentofallcosts,expensesandfeesinconnectionwiththepreparation,negotiation,executionanddeliveryofthisAgreementandtheotherFinancingAgreements.Noneoftheproceedswillbeused,directlyorindirectly,forthepurposeofpurchasingorcarryinganymarginsecurityorforthepurposesofreducingorretiringanyindebtednesswhichwasoriginallyincurredtopurchaseorcarryanymarginsecurityorforanyotherpurposewhichmightcauseanyoftheLoanstobeconsidereda“purposecredit”withinthemeaningofRegulationUoftheBoardofGovernorsoftheFederalReserveSystem,asamended.
6.7ProRataTreatment.
ExcepttotheextentotherwiseprovidedinthisAgreement:(a)themakingandconversionofLoansshallbemadeamongtheLendersbasedontheirrespectiveProRataSharesastotheLoansand(b)eachpaymentonaccountofanyObligationstoorfortheaccountofoneormoreofLendersinrespectofanyObligationsdueonaparticulardayshallbeallocatedamongtheLendersentitledtosuchpaymentsbasedontheirrespectiveProRataSharesandshallbedistributedaccordingly.
6.8SharingofPayments,Etc.
(a)Borroweragreesthat,inadditionto(andwithoutlimitationof)anyrightofsetoff,banker’slienorcounterclaimeitherAgentoranyLendermayotherwisehave,eachLendershallbeentitled,atitsoption(butsubject,asamongAgentsandLenders,tothe
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provisionsofSection12.3(b)hereof),tooffsetbalancesheldbyitfortheaccountofBorroweratanyofitsoffices,indollarsorinanyothercurrency,againstanyprincipaloforinterestonanyLoansowedtosuchLenderoranyotheramountpayabletosuchLenderhereunder,thatisnotpaidwhendue(regardlessofwhethersuchbalancesarethenduetoBorrower),inwhichcaseitshallpromptlynotifyBorrowerandAdministrativeAgentthereof;provided,that,suchLender’sfailuretogivesuchnoticeshallnotaffectthevaliditythereof.
(b)IfanyLender(includingeitherAgent)shallobtainfromBorroweroranyObligorpaymentofanyprincipaloforinterestonanyLoanowingtoitorpaymentofanyotheramountunderthisAgreementoranyoftheotherFinancingAgreementsthroughtheexerciseofanyrightofsetoff,banker’slienorcounterclaimorsimilarrightorotherwise(otherthanfromAdministrativeAgentasprovidedherein),and,asaresultofsuchpayment,suchLendershallhavereceivedmorethanitsProRataShareoftheprincipaloftheLoansormorethanitsshareofsuchotheramountsthenduehereunderorthereunderbyBorroweroranyObligortosuchLenderthanthepercentagethereofreceivedbyanyotherLender,itshallpromptlypaytoAdministrativeAgent,forthebenefitoftheapplicableLenders,theamountofsuchexcessandsimultaneouslypurchasefromsuchotherapplicableLendersaparticipationintheLoansorsuchotheramounts,respectively,owingtosuchotherLenders(orsuchinterestduethereon,asthecasemaybe)insuchamounts,andmakesuchotheradjustmentsfromtimetotimeasshallbeequitable,totheendthatallLendersofthesamecategoryofLoansshallsharethebenefitofsuchexcesspayment(netofanyexpensesthatmaybeincurredbysuchLenderinobtainingorpreservingsuchexcesspayment)inaccordancewiththeirrespectiveProRataSharesorasotherwiseagreedbytheapplicableLenders.TosuchendallapplicableLendersshallmakeappropriateadjustmentsamongthemselves(bytheresaleofparticipationsoldorotherwise)ifsuchpaymentisrescindedormustotherwiseberestored.
(c)BorroweragreesthatanyLenderpurchasingaparticipation(ordirectinterest)asprovidedinthisSectionmayexercise,inamannerconsistentwiththisSection,allrightsofsetoff,banker’slien,counterclaimorsimilarrightswithrespecttosuchparticipationasfullyasifsuchLenderwereadirectholderofLoansorotheramounts(asthecasemaybe)owingtosuchLenderintheamountofsuchparticipation.
(d)NothingcontainedhereinshallrequireanyLendertoexerciseanyrightofsetoff,banker’slien,counterclaimsorsimilarrightsorshallaffecttherightofanyLendertoexercise,andretainthebenefitsofexercising,anysuchrightwithrespecttoanyotherIndebtednessorobligationofBorroweroranyObligor.If,underanyapplicablebankruptcy,insolvencyorothersimilarlaw,anyLenderreceivesasecuredclaiminlieuofasetofftowhichthisSectionapplies,suchLendershall,totheextentpracticable,assignsuchrightstoAdministrativeAgentforthebenefitofLendersand,inanyevent,exerciseitsrightsinrespectofsuchsecuredclaiminamannerconsistentwiththerightsofLendersentitledunderthisSectiontoshareinthebenefitsofanyrecoveryonsuchsecuredclaim.
6.9SettlementProcedures.
(a)TheamountofeachLender’sProRataShareofoutstandingRevolvingLoansshallbecomputedweekly(ormorefrequentlyintheAdministrativeAgent’sdiscretion)andshallbeadjustedupwardordownwardbasedonallRevolvingLoansandrepaymentsof
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RevolvingLoansreceivedbytheAdministrativeAgentasof3:00p.m.onthefirstBusinessDay(suchdate,the“SettlementDate”)followingtheendoftheperiodspecifiedbytheAdministrativeAgent.
(b)TheAdministrativeAgentshalldelivertoeachoftheLenderspromptlyafteraSettlementDateasummarystatementoftheamountofoutstandingRevolvingLoansfortheperiodandtheamountofrepaymentsreceivedfortheperiod.Asreflectedonthesummarystatement,(i)theAdministrativeAgentshalltransfertoeachLenderitsProRataShareofrepayments,and(ii)eachLendershalltransfertotheAdministrativeAgent(asprovidedbelow)ortheAdministrativeAgentshalltransfertoeachLender,suchamountsasarenecessarytoinsurethat,aftergivingeffecttoallsuchtransfers,theamountofRevolvingLoansmadebyeachLendershallbeequaltosuchLender’sProRataShareofallRevolvingLoansoutstandingasofsuchSettlementDate.IfthesummarystatementrequirestransferstobemadetotheAdministrativeAgentbytheLendersandisreceivedpriorto11:00a.m.onaBusinessDay,suchtransfersshallbemadeinimmediatelyavailablefundsnolaterthan3:00p.m.thatday;and,ifreceivedafter11:00a.m.,thennolaterthan3:00p.m.onthenextBusinessDay.TheobligationofeachLendertotransfersuchfundsisirrevocable,unconditionalandwithoutrecoursetoorwarrantybytheAdministrativeAgent.IfandtotheextentanyLendershallnothavesomadeitstransfertotheAdministrativeAgent,suchLenderagreestopaytotheAdministrativeAgent,forthwithondemandsuchamount,togetherwithinterestthereon,foreachdayfromsuchdateuntilthedatesuchamountispaidtotheAdministrativeAgent,equaltothegreateroftheFederalFundsRateandaratedeterminedbytheAdministrativeAgentinaccordancewithbankingindustryrulesoninterbankcompensationplusanyadministrative,processing,orsimilarfeescustomarilychargedbytheAdministrativeAgentinconnectionwiththeforegoing.
(c)AllpaymentsunderSection3.3shallbemadebyBorrowerdirectlytotheLenderentitledtheretowithoutsetoff,counterclaimorotherdefense.
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS
7.1CollateralReporting.
BorrowershallprovidetheAgentswiththefollowingdocumentsinaformsatisfactorytotheAgents(a)onamonthlybasisormorefrequentlyaseitherAgentmayreasonablyrequest(i)aBorrowingBaseCertificateintheformofExhibitIhereto(orsuchotherformastheAdministrativeAgentmayrequire),(ii)inventoryreportsbycategoryandlocation(withsuchdetailsastothemixofInventoryaseitherAgentmayrequest),and(iii)agingsofaccountspayable;(b)uponreasonablerequestofeitherAgent(i)thestockstatusreportsofBorrower,(ii)reportsonsalesandusetaxpaymentandincludingmonthlysalesandusetaxaccruals,(iii)reportsofamountsofconsignedInventoryheldbyBorrowerbycategoryandconsignor,(iv)reportsofsalesofInventoryindicatingnetsales,(v)reportsofaggregateInventorypurchases(includingallcostsrelatedthereto,suchasfreight,dutyandtaxes)andidentifyingitemsofInventoryintransittoBorrowerrelatedtotheapplicabledocumentaryletterofcreditand/orbillofladingnumber,(vi)reportsoftheCostoftheInventory(netofmarkdowns),(vii)reportsonthestatusofallpaymentstoownersandlessorsoftheleasedretailstorelocationsofBorrowerandotherleasedpremisesofBorrower,(viii)copiesofcustomerstatementsandcreditmemos,remittanceadvicesandreports,andcopiesofdepositslipsandbankstatements,(ix)copiesof
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shippinganddeliverydocuments,(x)copiesofpurchaseorders,invoicesanddeliverydocumentsforInventoryandEquipmentacquiredbyBorrower,(xi)reportsbyretailstorelocationofsalesandoperatingprofitsforeachsuchretailstorelocation(xii)reportsofsalesforeachcategoryofInventoryand(xiii)themonthlystatementsreceivedbyBorrowerfromanyCreditCardIssuersorCreditCardProcessors,togetherwithsuchadditionalinformationwithrespecttheretoasshallbesufficienttoenabletheAgentstomonitorthetransactionspursuanttotheCreditCardAgreements;and(c)suchotherreportsastotheCollateralastheAgentsshallreasonablyrequestfromtimetotime.IfanyofBorrower’srecordsorreportsoftheCollateralarepreparedormaintainedbyanaccountingservice,contractor,shipperorotheragent,Borrowerherebyirrevocablyauthorizessuchservice,contractor,shipperoragenttodeliversuchrecords,reports,andrelateddocumentstotheAgentsandtofollowtheinstructionsoftheAgentswithrespecttofurtherservicesatanytimethatanEventofDefaultexistsorhasoccurredandiscontinuing.
7.2AccountsCovenants.
(a)[intentionallydeleted].
(b)[intentionallydeleted].
(c)WithrespecttoeachAccount:(i)theamountsshownonanyinvoicedeliveredtoeitherAgentorschedulethereofdeliveredtoeitherAgentshallbetrueandcomplete,(ii)nopaymentsshallbemadethereonexceptpaymentsimmediatelydeliveredtoAdministrativeAgentpursuanttothetermsofthisAgreement,(iii)nocredit,discount,allowanceorextensionoragreementforanyoftheforegoingshallbegrantedtoanyaccountdebtorexceptasreported,totheextentrequiredhereunder,toAdministrativeAgentinaccordancewiththisAgreementandexceptforcredits,discounts,allowancesorextensionsmadeorgivenintheordinarycourseofBorrower’sbusinessinaccordancewithpracticesandpoliciespreviouslydisclosedtoAdministrativeAgent,(iv)thereshallbenosetoffs,deductions,contras,defenses,counterclaimsordisputesexistingorassertedwithrespecttheretoexceptasreportedtoAdministrativeAgentinaccordancewiththetermsofthisAgreement,(v)noneofthetransactionsgivingrisetheretowillviolateanyapplicableforeign,Federal,Stateorlocallawsorregulations,alldocumentationrelatingtheretowillbelegallysufficientundersuchlawsandregulationsandallsuchdocumentationwillbelegallyenforceableinaccordancewithitsterms.
(d)TheAgentsmay,atanytimeortimesthatanEventofDefaultexistsorhasoccurred,(i)notifyanyorallaccountdebtors,CreditCardIssuersandCreditCardProcessorsthattheAccountshavebeenassignedtoCollateralAgentandthatCollateralAgenthasasecurityinterestthereinandCollateralAgentmaydirectanyorallaccountdebtors,CreditCardIssuersandCreditCardProcessorstomakepaymentsofAccountsdirectlytoCollateralAgent,(ii)extendthetimeofpaymentof,compromise,settleoradjustforcash,credit,returnoforotherwise,anduponanytermsorconditions,anyandallAccountsorotherobligationsincludedintheCollateralandtherebydischargeorreleasetheaccountdebtororanyotherpartyorpartiesinanywayliableforpaymentthereofwithoutaffectinganyoftheObligations,(iii)demand,collectorenforcepaymentofanyAccountsorsuchotherobligations,butwithoutanydutytodoso,andCollateralAgentshallnotbeliableforitsfailuretocollectorenforcethepaymentthereofnorforthenegligenceofitsagentsorattorneyswithrespecttheretoand(iv)takewhateverotheractionCollateralAgentmaydeemnecessaryordesirablefortheprotection
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ofitsinterests.AtanytimethatanEventofDefaultexistsorhasoccurredandiscontinuing,ateitherAgent’srequest,allinvoicesandstatementssenttoanyaccountdebtor,CreditCardIssuerorCreditCardProcessorshallstatethattheAccountsduefromsuchaccountdebtor,CreditCardIssuerorCreditCardProcessorandsuchotherobligationshavebeenassignedtoCollateralAgentandarepayabledirectlyandonlytoCollateralAgentandBorrowershalldelivertoCollateralAgentsuchoriginalsofdocumentsevidencingthesaleanddeliveryofgoodsortheperformanceofservicesgivingrisetoanyAccountsasCollateralAgentmayrequire.
(e)CollateralAgentshallhavetherightatanytimeortimes,inCollateralAgent’snameorinthenameofanomineeofCollateralAgent,toverifythevalidity,amountoranyothermatterrelatingtoanyAccountorotherCollateral,bymail,telephone,facsimiletransmissionorotherwise.
(f)BorrowershalldeliverorcausetobedeliveredtoCollateralAgent,withappropriateendorsementandassignment,withfullrecoursetoBorrower,allchattelpaperandinstrumentswhichBorrowernowownsormayatanytimeacquireimmediatelyuponBorrower’sreceiptthereof,exceptasCollateralAgentmayotherwiseagree.
7.3InventoryCovenants.
WithrespecttotheInventory:(a)BorrowershallatalltimesmaintaininventoryrecordsreasonablysatisfactorytoCollateralAgent,keepingcorrectandaccuraterecordsitemizinganddescribingthekind,type,qualityandquantityofInventory,Borrower’scostthereforanddailywithdrawalstherefromandadditionsthereto;(b)BorrowershallconductaphysicalcountoftheInventoryeitherthroughperiodiccyclecountsorwall-to-wallcountssothatallInventoryiscoveredbysuchcountsatleastonceeachyear,butatanytimeortimesasanyAgentmayrequestonorafteranEventofDefault,andpromptlyfollowingsuchphysicalinventory(whetherpursuanttoperiodiccyclecountsorotherwise)shall,totheextentrequested,supplyCollateralAgentwithareportintheformandwithsuchspecificityasmaybereasonablysatisfactorytoCollateralAgentconcerningsuchphysicalcount;(c)BorrowershallnotremoveanyInventoryfromthelocationssetforthorpermittedherein,withoutthepriorwrittenconsentofCollateralAgent,exceptforsalesofInventoryintheordinarycourseofBorrower’sbusinessandexcepttomoveInventorydirectlyfromonelocationsetforthorpermittedhereintoanothersuchlocationortoreturndefective,returnedorslowmovingInventorytotherelevantdistributioncenterordirectlytothesupplierforappropriatecredit;(d)BorrowershallmakeallmaterialpaymentsrequiredtobemadeunderleasesofpremisesatwhichInventoryislocatedwhendue,exceptasspecificallyreportedtoCollateralAgentpursuanttoSection7.1above;(e)uponCollateralAgent’srequest(subjecttotheprovisointhisclause(e)),Borrowershall,atitsexpense,nomorethanonceinanytwelve(12)monthperiod,butatanytimeortimesasCollateralAgentmayreasonablyrequestonorafteranEventofDefault,deliverorcausetobedeliveredtoCollateralAgentwrittenappraisalsastotheInventoryinform,scopeandmethodologyacceptabletoCollateralAgentandbyanappraiseracceptabletoCollateralAgent,addressedtoCollateralAgentanduponwhichCollateralAgentisexpresslypermittedtorely;provided,that,solongasnoEventofDefaultexistsorhasoccurredandiscontinuing,nosuchappraisalsshallberequestedunless(i)thereceasestoremainatleast$25,000,000intheaggregateinoneormoreBlockedAccounts,or(ii)theoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsisgreaterthan$0andhasbeenoutstandingforatleastfive(5)consecutive
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BusinessDaysor(iii)theoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsisinexcessof$20,000,000atanytime;(f)uponCollateralAgent’srequest,Borrowershall,atitsexpense,conductthroughRGISInventorySpecialists,Inc.oranotherinventorycountingserviceacceptabletoCollateralAgent,aphysicalcountoftheInventoryinform,scopeandmethodologyacceptabletoCollateralAgentnomorethanonceinanytwelve(12)monthperiod,butatanytimeortimesasCollateralAgentmayrequestonorafteranEventofDefault,theresultsofwhichshallbereporteddirectlybysuchinventorycountingservicetoCollateralAgentandBorrowershallpromptlydeliverconfirmationinaformsatisfactorytoCollateralAgentthatappropriateadjustmentshavebeenmadetotheinventoryrecordsofBorrowertoreconciletheinventorycounttoBorrower’sinventoryrecords;(g)Borrowershallproduce,use,storeandmaintaintheInventorywithallreasonablecareandcautionandinaccordancewithapplicablestandardsofanyinsuranceandinconformitywithapplicablelaws(includingtherequirementsoftheFederalFairLaborStandardsActof1938,asamendedandallrules,regulationsandordersrelatedthereto);(h)Borrowerassumes(asbetweenLenderandBorrower)allresponsibilityandliabilityarisingfromorrelatingtotheproduction,use,saleorotherdispositionoftheInventory;(i)BorrowershallnotsellInventorytoanycustomeronapproval,oranyotherbasiswhichentitlesthecustomertoreturnormayobligateBorrowertorepurchasesuchInventoryexceptfortherightofreturngiventoretailcustomersofBorrowerintheordinarycourseofthebusinessofBorrowerinaccordancewiththethencurrentreturnpolicyofBorrower;(j)BorrowershalluseitsbesteffortstokeeptheInventoryingoodandmarketableconditionandtoidentifyandmakeappropriateadjustmentsforInventorythatdoesnotmeetthatrequirementexceptthatwhichistobereturned;and(k)BorrowershallnotacquireoracceptanyInventoryonconsignmentorapprovalexcepttotheextentsuchInventoryisreportedtoCollateralAgentinaccordancewiththetermshereof.
7.4PowerofAttorney.
BorrowerherebyirrevocablydesignatesandappointseachAgent(andallpersonsdesignatedbyeitherAgent)asBorrower’strueandlawfulattorney-in-fact,andauthorizesCollateralAgent,inBorrower’sorCollateralAgent’sname,to:(a)atanytimeanEventofDefaultexistsorhasoccurredandiscontinuing(i)demandpaymentonReceivablesorotherCollateral,(ii)enforcepaymentofReceivablesbylegalproceedingsorotherwise,(iii)exerciseallofBorrower’srightsandremediestocollectanyReceivableorotherCollateral,(iv)sellorassignanyReceivableuponsuchterms,forsuchamountandatsuchtimeortimesastheCollateralAgentdeemsadvisable,(v)settle,adjust,compromise,extendorrenewanAccount,(vi)dischargeandreleaseanyReceivable,(vii)prepare,fileandsignBorrower’snameonanyproofofclaiminbankruptcyorothersimilardocumentagainstanaccountdebtororotherobligorinrespectofanyReceivablesorotherCollateral,(viii)notifythepostofficeauthoritiestochangetheaddressfordeliveryofremittancesfromaccountdebtorsorotherobligorsinrespectofReceivablesorotherproceedsofCollateraltoanaddressdesignatedbyCollateralAgent,andopenanddisposeofallmailaddressedtoBorrowerandhandleandstoreallmailrelatingtotheCollateral;and(ix)doallactsandthingswhicharenecessary,inCollateralAgent’sdetermination,tofulfillBorrower’sobligationsunderthisAgreementandtheotherFinancingAgreementsand(b)atanytimeto(i)takecontrolinanymannerofanyitemofpaymentinrespectofReceivablesorconstitutingCollateralorotherwisereceivedinorfordepositintheBlockedAccountsorotherwisereceivedbyeitherAgentoranyLender,(ii)haveaccesstoanylockboxorpostalboxintowhichremittancesfromaccountdebtorsorother
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obligorsinrespectofReceivablesorotherproceedsofCollateralaresentorreceived,(iii)endorseBorrower’snameuponanyitemsofpaymentinrespectofReceivablesorconstitutingCollateralorotherwisereceivedbyeitherAgentoranyLenderanddepositthesameinAdministrativeAgent’saccountforapplicationtotheObligations,(iv)endorseBorrower’snameuponanychattelpaper,document,instrument,invoice,orsimilardocumentoragreementrelatingtoanyReceivableoranygoodspertainingtheretooranyotherCollateral,includinganywarehouseorotherreceipts,orbillsofladingandothernegotiableornon-negotiabledocuments,(v)clearInventorythepurchaseofwhichwasfinancedwithLetterofCreditAccommodationsthroughU.S.CustomsorforeignexportcontrolauthoritiesinBorrower’sname,CollateralAgent’snameorthenameofCollateralAgent’sdesignee,andtosignanddelivertocustomsofficialspowersofattorneyinBorrower’snameforsuchpurpose,andtocompleteinBorrower’sorCollateralAgent’sname,anyorder,saleortransaction,obtainthenecessarydocumentsinconnectiontherewithandcollecttheproceedsthereof,(vi)signBorrower’snameonanyverificationofReceivablesandnoticesthereoftoaccountdebtorsoranysecondaryobligorsorotherobligorsinrespectthereof.BorrowerherebyreleaseseachAgentandLendersandtheirrespectiveofficers,employeesanddesigneesfromanyliabilitiesarisingfromanyactoractsunderthispowerofattorneyandinfurtherancethereof,whetherofomissionorcommission,exceptasaresultofsuchAgent’soranyLender’sowngrossnegligenceorwillfulmisconductasdeterminedpursuanttoafinalnon-appealableorderofacourtofcompetentjurisdiction.
7.5RighttoCure.
AdministrativeAgentmay,atitsoptionuponnoticetoBorrower(a)cureanydefaultbyBorrowerunderanymaterialagreementwithathirdpartythataffectstheCollateral,itsvalueortheabilityofAdministrativeAgenttocollect,sellorotherwisedisposeoftheCollateralortherightsandremediesofAdministrativeAgentthereinortheabilityofBorrowertoperformitsobligationshereunderorundertheotherFinancingAgreements,(b)payorbondonappealanyjudgmententeredagainstBorrower,(c)dischargetaxes,liens,securityinterestsorotherencumbrancesatanytimeleviedonorexistingwithrespecttotheCollateraland(d)payanyamount,incuranyexpenseorperformanyactwhich,inAdministrativeAgent’sjudgment,isnecessaryorappropriatetopreserve,protect,insureormaintaintheCollateralandtherightsofAgentsandLenderswithrespectthereto.AdministrativeAgentmayaddanyamountssoexpendedtotheObligationsandchargeBorrower’saccounttherefor,suchamountstoberepayablebyBorrowerondemand.AgentsandLendersshallbeundernoobligationtoeffectsuchcure,paymentorbondingandshallnot,bydoingso,bedeemedtohaveassumedanyobligationorliabilityofBorrower.AnypaymentmadeorotheractiontakenbyeitherAgentoranyLenderunderthisSectionshallbewithoutprejudicetoanyrighttoassertanEventofDefaulthereunderandtoproceedaccordingly.
7.6AccesstoPremises.
FromtimetotimeasreasonablyrequestedbyanyAgent,atthecostandexpenseofBorrower,(a)eachAgentoritsdesigneeshallhavecompleteaccesstoallofBorrower’spremisesduringnormalbusinesshoursandafternoticetoBorrower,oratanytimeandwithoutnoticetoBorrowerifanEventofDefaultexistsorhasoccurredandiscontinuing,forthepurposesofconductingfieldexaminations(whichCollateralAgentmayconductnotmorethantwiceperyearoratsuchgreaterfrequencyasAdministrativeAgentshallelectduringthe
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existenceofanEventofDefault),inspecting,verifyingandauditingtheCollateralandallofBorrower’sbooksandrecords,includingtheRecords;provided,that,solongasnoEventofDefaultexistsorhasoccurredandiscontinuing,nosuchfieldexaminations,inspections,verificationsorauditsshallbeconducteduntilsuchtimeaseither(i)theoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsisgreaterthan$0andhasbeenoutstandingforatleastfive(5)consecutiveBusinessDaysor(ii)theoutstandingprincipalbalanceoftheLoansandLetterofCreditAccommodationsisinexcessof$20,000,000atanytime,and(b)BorrowershallpromptlyfurnishtoeachAgentsuchcopiesofsuchbooksandrecordsorextractstherefromasanyAgentmayreasonablyrequest,and(c)anyAgentoranyAgent’sdesigneemayuseduringnormalbusinesshourssuchofBorrower’spersonnel,equipment,suppliesandpremisesasmaybereasonablynecessaryfortheforegoingandifanEventofDefaultexistsorhasoccurredandiscontinuingforthecollectionofReceivablesandrealizationofotherCollateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
BorrowerherebyrepresentsandwarrantstoAgentsandLendersthefollowing(whichshallsurvivetheexecutionanddeliveryofthisAgreement),thetruthandaccuracyofwhichareacontinuingconditionofthemakingofLoansandprovidingLetterofCreditAccommodationstoBorrower:
8.1CorporateExistence;PowerandAuthority.
Borrowerisacorporationdulyorganizedandingoodstandingunderthelawsofitsstateofincorporationandisdulyqualifiedasaforeigncorporationandingoodstandinginallstatesorotherjurisdictionswherethenatureandextentofthebusinesstransactedbyitortheownershipofassetsmakessuchqualificationnecessary,andinwhichthefailuretosoqualifywouldhaveaMaterialAdverseEffect.Theexecution,deliveryandperformanceofthisAgreement,theotherFinancingAgreementsandthetransactionscontemplatedhereunderandthereunder(a)areallwithinBorrower’scorporatepowers,(b)havebeendulyauthorizedand(c)arenotincontraventionoflaworthetermsofBorrower’scertificateofincorporation,by-laws,orotherorganizationaldocumentation,oranyindenture,agreementorundertakingtowhichBorrowerisapartyorbywhichBorroweroritspropertyarebound.ThisAgreementandtheotherFinancingAgreementsconstitutelegal,validandbindingobligationsofBorrowerenforceableinaccordancewiththeirrespectiveterms.BorrowerdoesnothaveanySubsidiariesexceptassetforthontheInformationCertificate.
8.2Name;StateofOrganization;ChiefExecutiveOffice;CollateralLocations.
(a)TheexactlegalnameofBorrowerisassetforthonthesignaturepageofthisAgreementandintheInformationCertificate.Borrowerhasnot,duringthepastfiveyears,beenknownbyorusedanyothercorporateorfictitiousnameorbeenapartytoanymergerorconsolidation,oracquiredallorsubstantiallyalloftheassetsofanyPerson,oracquiredanyofitspropertyorassetsoutoftheordinarycourseofbusiness,exceptassetforthintheInformationCertificate.
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(b)BorrowerisanorganizationofthetypeandorganizedinthejurisdictionsetforthintheInformationCertificate.TheInformationCertificateaccuratelysetsforththeorganizationalidentificationnumberofBorroweroraccuratelystatesthatBorrowerhasnoneandaccuratelysetsforththefederalemployeridentificationnumberofBorrower.
(c)ThechiefexecutiveofficeandmailingaddressofBorrowerandBorrower’sRecordsconcerningAccountsarelocatedonlyattheaddressidentifiedassuchinSchedule8.2totheInformationCertificateanditsonlyotherplacesofbusinessandtheonlyotherlocationsofCollateral,ifany,aretheaddressessetforthinSchedule8.2totheInformationCertificate,subjecttotherightofBorrowertoestablishnewlocationsinaccordancewithSection9.2below.TheInformationCertificatecorrectlyidentifiesanyofsuchlocationswhicharenotownedbyBorrowerandsetsforththeownersand/oroperatorsthereof.
8.3FinancialStatements;NoMaterialAdverseChange.
AllfinancialstatementsrelatingtoBorrowerwhichhavebeenormayhereafterbedeliveredbyBorrowertoAgentsandLendershavebeenpreparedinaccordancewithGAAP(exceptastoanyinterimfinancialstatements,totheextentsuchstatementsaresubjecttonormalyear-endadjustmentsanddonotincludeanynotes)andfairlypresentthefinancialpositionandtheresultsofoperationofBorrowerasatthedatesandfortheperiodssetforththerein.ExceptasdisclosedinanyinterimfinancialstatementsfurnishedbyBorrowertoAdministrativeAgentpriortothedateofthisAgreement,therehasbeennomaterialadversechangeintheassets,liabilities,propertiesandcondition,financialorotherwise,ofBorrower,sincethedateofthemostrecentauditedfinancialstatementsfurnishedbyBorrowertoAdministrativeAgentpriortothedateofthisAgreement.
8.4PriorityofLiens;TitletoProperties.
ThesecurityinterestsandliensgrantedtoCollateralAgentunderthisAgreementandtheotherFinancingAgreementsconstitutevalidandperfectedfirstpriorityliensandsecurityinterestsinandupontheCollateralwhichislocatedwithintheUnitedStatesofAmerica,CanadaorPuertoRicosubjectonlytotheliensindicatedonSchedule8.4totheInformationCertificateandtheotherlienspermittedunderSection9.8hereof.Borrowerhasgoodandmarketablefeesimpletitletoallofitsotherpropertiesandassetssubjecttonoliens,mortgages,pledges,securityinterests,encumbrancesorchargesofanykind,exceptthosegrantedtoCollateralAgentandsuchothersasarespecificallylistedonSchedule8.4totheInformationCertificateorpermittedunderSection9.8hereof.
8.5TaxReturns.
Borrowerhasfiled,orcausedtobefiled,inatimelymannerall(i)federalandstatetaxreturns,reportsanddeclarationswhicharerequiredtobefiledbyBorrowerand(ii)allothertaxreturns,reportsanddeclarationswhicharerequiredtobefiledbyBorrower,otherthansuchtaxreturns,reportsanddeclarationsthefailureofwhichtofilecouldnotreasonablybeexpectedtohaveaMaterialAdverseEffect.Allinformationinsuchtaxreturns,reportsanddeclarationsiscompleteandaccurateinallmaterialrespects.Borrowerhaspaidorcausedtobepaidalltaxesdueandpayableorclaimeddueandpayableinanyassessmentreceivedbyitandhascollected,
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depositedandremittedinaccordancewithallapplicablelawsallsalesand/orusetaxesapplicabletotheconductofitsbusiness,excepttaxesthevalidityofwhicharebeingcontestedingoodfaithbyappropriateproceedingsdiligentlypursuedandavailabletoBorrowerandwithrespecttowhichadequatereserveshavebeensetasideonitsbooksandexceptforanytaxesoflessthan$500,000intheaggregate.AdequateprovisionhasbeenmadeforthepaymentofallaccruedandunpaidFederal,State,county,local,foreignandothertaxeswhetherornotyetdueandpayableandwhetherornotdisputed.Borrowerhascollectedanddepositedinaseparatebankaccountorremittedtotheappropriatetaxauthorityallsalesand/orusetaxesapplicabletoitsbusinessrequiredtobecollectedandsodepositedunderthelawsoftheUnitedStatesandeachpossessionorterritorythereof,andeachStateorpoliticalsubdivisionthereof,includinganyStateinwhichBorrowerownsanyInventoryorownsorleasesanyotherproperty.
8.6Litigation.
ExceptassetforthinSchedule8.6totheInformationCertificate,thereisnopresentinvestigationbyanyGovernmentalAuthoritypending,ortothebestofBorrower’sknowledgethreatened,againstoraffectingBorrower,itsassetsorbusinessandthereisnoaction,suit,proceedingorclaimbyanyPersonpending,ortothebestofBorrower’sknowledgethreatened,againstBorroweroritsassetsorgoodwill,oragainstoraffectinganytransactionscontemplatedbythisAgreement,whichifadverselydeterminedagainstBorrowercouldreasonablybeexpectedtohaveaMaterialAdverseEffect.
8.7CompliancewithOtherAgreementsandApplicableLaws.
(a)Borrowerisnotindefaultinanyrespectunder,orinviolationinanyrespectofanyofthetermsof,anyagreement,contract,instrument,leaseorothercommitmenttowhichitisapartyorbywhichitoranyofitsassetsarebound,ineachcasewheresuchdefaultorviolationhasorwouldhaveaMaterialAdverseEffect.Borrowerisincomplianceinallrespectswiththerequirementsofallapplicablelaws,rules,regulationsandordersofanygovernmentalauthorityrelatingtoitsbusiness,including,withoutlimitation,thosesetforthinorpromulgatedpursuanttotheOccupationalSafetyandHealthActof1970,asamended,theFairLaborStandardsActof1938,asamended,ERISA,theCode,asamended,andtherulesandregulationsthereunder,theEnvironmentalLaws,allFederal,Stateandlocalstatutes,regulations,rulesandordersrelatingtoconsumercredit(including,withoutlimitation,aseachhasbeenamended,theTruth-in-LendingAct,theFairCreditBillingAct,theEqualCreditOpportunityActandtheFairCreditReportingAct,andregulations,rulesandorderspromulgatedthereunder),allFederal,Stateandlocalstates,regulations,rulesandorderspertainingtosalesofconsumergoods(including,withoutlimitation,theConsumerProductsSafetyActof1972,asamended,andtheFederalTradeCommissionActof1914,asamended,andallregulations,rulesandorderspromulgatedthereunder)ineachcasewherethefailuretocomplywouldhaveaMaterialAdverseEffect.
(b)Borrowerhasobtainedallmaterialpermits,licenses,approvals,consents,certificates,ordersorauthorizationsofanygovernmentalagencyrequiredforthelawfulconductofitsbusiness(the“Permits”).Schedule8.7totheInformationCertificatesetsforthallofthePermitsissuedtoorheldbyBorrowerasofthedatehereofbyanyFederal,StateorlocalgovernmentalagencyandanyapplicationspendingbyBorrowerwithsuchfederal,stateorlocal
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governmentalagency.ThePermitsconstituteallpermits,licenses,approvals,consents,certificates,ordersorauthorizationsnecessaryforBorrowertoownandoperateitsbusinessaspresentlyconductedorproposedtobeconductedwherethefailuretohavesuchPermitswouldhaveaMaterialAdverseEffect.AllofthePermitsarevalidandsubsistingandinfullforceandeffect.Therearenoactions,claimsorproceedingspendingorthreatenedthatseektherevocation,cancellation,suspensionormodificationofanyofthePermits.
8.8EnvironmentalCompliance.
(a)ExceptassetforthonSchedule8.8totheInformationCertificate,Borrowerhasnotgenerated,used,stored,treated,transported,manufactured,handled,producedordisposedofanyHazardousMaterials,onoroffitspremises(whetherornotownedbyit)inanymannerwhichviolatesanyapplicableEnvironmentalLawandtheoperationsofBorrowercomplywithallapplicableEnvironmentalLaws,ineachcasewheresuchviolationorfailuretosocomplywouldhaveaMaterialAdverseEffect.
(b)ExceptassetforthonSchedule8.8totheInformationCertificate,thereisnoinvestigation,proceeding,complaint,order,directive,claim,citationornoticebyanyGovernmentalAuthorityoranyotherpersonpendingortothebestofBorrower’sknowledgethreatened,withrespecttoanymaterialnon-compliancewithormaterialviolationoftherequirementsofanyapplicableEnvironmentalLawbyBorrower.
(c)ExceptassetforthinSchedule8.8totheInformationCertificate,Borrowerdoesnothaveanyliability(contingentorotherwise)inconnectionwitharelease,spillordischarge,threatenedoractual,ofanyHazardousMaterialsorthegeneration,use,storage,treatment,transportation,manufacture,handling,productionordisposalofanyHazardousMaterialswhichwouldhaveaMaterialAdverseEffect.
(d)Borrowerhasalllicenses,certificates,approvalsandotherPermitsrequiredtobeobtainedorfiledinconnectionwiththeoperationsofBorrowerunderanyEnvironmentalLawineachcasewherethefailuretoobtainorfilethesamewouldhaveaMaterialAdverseEffectandallsuchlicenses,permits,certificates,approvalsorsimilarauthorizationsarevalidandinfullforceandeffectwherethefailuretohaveanyofsuchlicenses,permits,certificates,approvalsorsimilarauthorizationwouldhaveaMaterialAdverseEffect.
8.9[intentionallydeleted].
8.10EmployeeBenefits.
(a)BorrowerhasnotengagedinanytransactioninconnectionwithwhichBorroweroranyofitsERISAAffiliatescouldbesubjecttoeitheracivilpenaltyassessedpursuanttoERISAorataximposedtheCode,includinganyaccumulatedfundingdeficiencydescribedinSection8.10(c)hereofandanydeficiencywithrespecttovestedaccruedbenefitsdescribedinSection8.10(d)hereof.
(b)NoliabilitytothePensionBenefitGuarantyCorporationhasbeenorisexpectedbyBorrowertobeincurredwithrespecttoanyemployeebenefitplanofBorroweroranyofitsERISAAffiliates.Therehasbeennoreportableevent(withinthemeaningofERISA)
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oranyothereventorconditionwithrespecttoanyemployeebenefitplanofBorroweroranyofitsERISAAffiliateswhichpresentsariskofterminationofanysuchplanbythePensionBenefitGuarantyCorporation.
(c)FullpaymenthasbeenmadeofallamountswhichBorroweroranyofitsERISAAffiliatesisrequiredunderERISAandtheCodetohavepaidunderthetermsofeachemployeebenefitplanascontributionstosuchplanasofthelastdayofthemostrecentfiscalyearofsuchplanendedpriortothedatehereof,andnoaccumulatedfundingdeficiency(asdefinedinERISAandtheCode),whetherornotwaived,existswithrespecttoanyemployeepensionbenefitplan,includinganypenaltyortaxdescribedinSection8.10(a)hereofandanydeficiencywithrespecttovestedaccruedbenefitsdescribedinSection8.10(d)hereof.
(d)ThecurrentvalueofallvestedaccruedbenefitsunderallemployeepensionbenefitplansmaintainedbyBorrowerthataresubjecttoTitleIVofERISAdoesnotexceedthecurrentvalueoftheassetsofsuchplansallocabletosuchvestedaccruedbenefits,includinganypenaltyortaxdescribedinSection8.10(a)hereofandanyaccumulatedfundingdeficiencydescribedinSection8.10(c)hereof.Theterms“currentvalue”and“accruedbenefit”havethemeaningsspecifiedinERISA.
(e)NeitherBorrowernoranyofitsERISAAffiliatesisorhaseverbeenobligatedtocontributetoany“multiemployerplan”(assuchtermisdefinedinERISA)thatissubjecttoTitleIofERISA.
8.11BankAccounts.
Allofthedepositaccounts,investmentaccountsorotheraccountsinthenameoforusedbyBorrowermaintainedatanybankorotherfinancialinstitutionaresetforthinSchedule6.3totheInformationCertificate,subjecttotherightofBorrowertoestablishnewaccountsinaccordancewithSection5.3(d)hereofandStoreBankAccounts(whichmaybeestablishedatanytime,subjecttotheprovisionsofSection6.3(a)(i)).
8.12RegulationU.
Borrowerisnotengagedprincipally,orasoneofitsimportantactivities,inthebusinessofextendingcreditforthepurposeofpurchasingorcarryingMarginStock.
8.13InvestmentCompanyAct.
NeitherBorrowernoranyofitsSubsidiariesisan“investmentcompany”oracompany“controlled”byan“investmentcompany”ora“subsidiary”ofan“investmentcompany,”withinthemeaningoftheInvestmentCompanyActof1940.
8.14OFAC.
NeitherBorrowernor,tothebestknowledgeofBorrower,anyAffiliateofBorrower(a)isaSanctionedPerson,(b)doesbusinessinaSanctionedCountryinviolationoftheeconomicsanctionsoftheUnitedStatesadministeredbyOFACor(c)doesbusinessinsuchcountryorwithanysuchagency,organizationorperson,inviolationoftheeconomicsanctionsoftheUnitedStatesadministeredbyOFAC.
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8.15AccuracyandCompletenessofInformation.
AllinformationfurnishedbyoronbehalfofBorrowerinwritingtoanyAgentoranyLenderinconnectionwiththisAgreementoranyoftheotherFinancingAgreementsoranytransactioncontemplatedherebyorthereby,includingallinformationontheInformationCertificateistrueandcorrectinallmaterialrespectsonthedateasofwhichsuchinformationisdatedorcertifiedanddoesnotomitanymaterialfactnecessaryinordertomakesuchinformationnotmisleading.NoeventorcircumstancehasoccurredwhichhashadorcouldreasonablybeexpectedtohaveaMaterialAdverseEffect,whichhasnotbeenfullyandaccuratelydisclosedtoAdministrativeAgentinwriting.
8.16SurvivalofWarranties;Cumulative.
AllrepresentationsandwarrantiescontainedinthisAgreementoranyoftheotherFinancingAgreementsshallsurvivetheexecutionanddeliveryofthisAgreementandshallbedeemedtohavebeenmadeagaintoAgentsandLendersonthedateofeachadditionalborrowingorothercreditaccommodationhereunderexcepttotheextentthatanysuchrepresentationsandwarrantiesexpresslyrelatesolelytoanearlierdate(inwhichcasesuchrepresentationsandwarrantiesshallhavebeentrueandaccurateonandasofsuchearlierdate)andshallbeconclusivelypresumedtohavebeenreliedonbyAgentsandLendersregardlessofanyinvestigationmadeorinformationpossessedbyanyAgentoranyLender.TherepresentationsandwarrantiessetforthhereinshallbecumulativeandinadditiontoanyotherrepresentationsorwarrantieswhichBorrowershallnoworhereaftergive,orcausetobegiven,toanyAgentoranyLender.InnoeventshallthecorporateofficersofBorrowerhaveanypersonalliabilitytoanyAgentoranyLenderifanyoftherepresentationsandwarrantiesofBorrowerinthisSection8arefalseormisleading,absentfraud.
8.17ExemptionfromIllinoisInterestAct.
Borrowerrepresentsandwarrantsthat,forthepurposesof815IllinoisCompiledStatutes205/4,theLoansandanySpecialAgentAdvancesconstituteabusinessloan.
8.18UnrestrictedSubsidiaries.
NoUnrestrictedSubsidiaryownsanyassets,otherthan(a)inthecaseofanyUnrestrictedSubsidiaryunderclause(a)ofsuchdefinition,thosenecessarytoconductprincipalactivitiesinvolvingfacilitatingcharitablefundraising,donationsandothercharitableactivities,includingfundsraisedinconnectiontherewith,(b)inthecaseofanyUnrestrictedSubsidiaryunderclause(b)ofsuchdefinition,assetshavingavalueofnotmorethan$1,000,000foranyperiodofthirty(30)consecutivedays,(c)books,records,rightsandotherassetsassociatedwithitsexistence,and(d)otherimmaterialassetsnotusedinconnectionwithanyoftheObligors’businessoperations.
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SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1MaintenanceofExistence.
(a)Borrowershallatalltimespreserve,renewandkeepinfullforceandeffectitscorporateexistenceandrightsandfranchiseswithrespecttheretoandmaintaininfullforceandeffectallpermits,licenses,trademarks,tradenames,approvals,authorizations,leasesandcontractsnecessarytocarryonthebusinessaspresentlyorproposedtobeconducted.
(b)Borrowershallnotchangeitsnameunlesseachofthefollowingconditionsissatisfied:(ii)AdministrativeAgentshallhavereceivednotlessthanthirty(30)dayspriorwrittennoticefromBorrowerofsuchproposedchangeinitscorporatename,whichnoticeshallaccuratelysetforththenewname;and(ii)AdministrativeAgentshallhavereceivedacopyoftheamendmenttotheCertificateofIncorporationofBorrowerprovidingforthenamechangecertifiedbytheSecretaryofStateofthejurisdictionofincorporationororganizationofBorrowerassoonasitisavailable.
(c)Borrowershallnotchangeitschiefexecutiveofficeoritsmailingaddressororganizationalidentificationnumber(orifitdoesnothaveone,shallnotacquireone)unlessAdministrativeAgentshallhavereceivednotlessthanthirty(30)days’priorwrittennoticefromBorrowerofsuchproposedchange,whichnoticeshallsetforthsuchinformationwithrespecttheretoasAdministrativeAgentmayrequireandAdministrativeAgentshallhavereceivedsuchagreementsasAdministrativeAgentmayreasonablyrequireinconnectiontherewith.Borrowershallnotchangeitstypeoforganization,jurisdictionoforganizationorotherlegalstructure.
9.2NewCollateralLocations.
BorrowermayonlyopenanynewlocationwithintheUnitedStatesofAmerica,CanadaorPuertoRicoprovidedBorrowerhasgrantedtoCollateralAgent(i)aperfectedsecurityinterestintheCollateralatsuchlocationand(ii)aLandlordAgreementinrespectofsuchnewlocationifrequiredunderthedefinitionofEligibleInventory.Fromtimetotime,uponrequestoftheCollateralAgent,BorrowershallprovideCollateralAgentwithanaccuratelistshowinganynewlocationsorclosedlocationssincethelastsuchlistingprovidedhereunder.
9.3CompliancewithLaws,Regulations,Etc.
(a)Borrowershall,andshallcauseanySubsidiaryto,atalltimes,complyinallmaterialrespectswithalllaws,rules,regulations,licenses,Permits,approvalsandordersapplicabletoitanddulyobserveallrequirementsofanyforeign,Federal,StateorlocalGovernmentalAuthority,includingERISA,theCode,theOccupationalSafetyandHealthActof1970,asamended,theFairLaborStandardsActof1938,asamended,andallstatutes,rules,regulations,orders,permitsandstipulationsrelatingtoenvironmentalpollutionandemployeehealthandsafety,includingalloftheEnvironmentalLawsineachcasewherethefailuretosocomplytherewithorobservesuchrequirementswouldhaveaMaterialAdverseEffect.WithoutlimitationoftheprecedingprovisionsofthisSection9.3,Borrowershall(x)ensurethatneitherBorrowernor,tothebestknowledgeofBorrower,anyAffiliateofBorrower(i)becomesaSanctionedPerson,(ii)doesbusinessinaSanctionedCountryinviolationoftheeconomicsanctionsoftheUnitedStatesadministeredbyOFACor(iii)doesbusinessinsuchcountryor
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withanysuchagency,organizationorperson,inviolationoftheeconomicsanctionsoftheUnitedStatesadministeredbyOFAC,and(y)comply,andcauseeachofitsSubsidiariestocomply,withallapplicableBankSecrecyActandanti-moneylaunderinglawsandregulations.
(b)BorrowershallgivebothoralandwrittennoticetoAdministrativeAgentwithinfive(5)BusinessDaysofBorrower’sreceiptofanynoticeof,orBorrower’sotherwiseobtainingknowledgeof,(i)theoccurrenceofanyeventinvolvingtherelease,spillordischarge,threatenedoractual,ofanyHazardousMaterialatanyoneofBorrower’spropertiesor(ii)anyinvestigation,proceeding,complaint,order,directive,claims,citationornoticewithrespectto:(A)anymaterialnon-compliancewithormaterialviolationofanyEnvironmentalLawbyBorroweror(B)therelease,spillordischarge,threatenedoractual,ofanyHazardousMaterialor(C)thegeneration,use,storage,treatment,manufacture,handling,productionordisposalofanyHazardousMaterialsor(D)anyotherenvironmental,healthorsafetymatterwhichhasorwouldhaveaMaterialAdverseEffect.
(c)Withoutlimitingthegeneralityoftheforegoing,wheneverAdministrativeAgentreasonablydeterminesthatthereisnon-compliance,oranyconditionwhichrequiresanyactionbyoronbehalfofBorrowerinordertoavoidanymaterialnon-compliance,withanyEnvironmentalLaw,Borrowershall,atAdministrativeAgent’srequestandBorrower’sexpense:(i)causeanindependentenvironmentalengineeracceptabletoAdministrativeAgenttoconductsuchtestsofthesitewhereBorrower’snon-complianceorallegednon-compliancewithsuchEnvironmentalLawshasoccurredastosuchnon-complianceandprepareanddelivertoAdministrativeAgentareportastosuchnon-compliancesettingforththeresultsofsuchtests,aproposedplanforrespondingtoanymaterialenvironmentalproblemsdescribedtherein,andanestimateofthecoststhereofand(ii)providetoAdministrativeAgentasupplementalreportofsuchengineerwheneverthescopeofsuchnon-compliance,orBorrower’sresponsetheretoortheestimatedcoststhereof,shallchangeinanymaterialrespect.
(d)BorrowershallindemnifyandholdharmlessAgentsandLendersandtheirrespectivedirectors,officers,employees,agents,invitees,representatives,successorsandassigns,fromandagainstanyandalllosses,claims,damages,liabilities,costs,andexpenses(includingattorneys’feesandlegalexpenses)directlyorindirectlyarisingoutoforattributabletotheuse,generation,manufacture,reproduction,storage,release,threatenedrelease,spill,discharge,disposalorpresenceofaHazardousMaterial,includingthecostsofanyrequiredornecessaryrepair,cleanuporotherremedialworkwithrespecttoanypropertyofBorrowerandthepreparationandimplementationofanyclosure,remedialorotherrequiredplans.Allrepresentations,warranties,covenantsandindemnificationsinthisSection9.3shallsurvivethepaymentoftheObligationsandtheterminationofthisAgreement.
9.4PaymentofTaxesandClaims.
Borrowershall,andshallcauseanySubsidiaryto,dulypayanddischargealltaxes,assessments,contributionsandgovernmentalchargesuponoragainstitoritspropertiesorassets,exceptfortaxesthevalidityofwhicharebeingcontestedingoodfaithbyappropriateproceedingsdiligentlypursuedandavailabletoBorrowerorsuchSubsidiary,asthecasemaybe,andwithrespecttowhichadequatereserveshavebeensetasideonitsbooks.BorrowershallbeliableforanytaxorpenaltiesimposedonanyAgentoranyLenderasaresultofthefinancing
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arrangementsprovidedforhereinandBorroweragreestoindemnifyandholdAgentsandLendersharmlesswithrespecttotheforegoing,andtorepaytoAdministrativeAgent,forthebenefitofAgentsandLenders,ondemandtheamountthereof,anduntilpaidbyBorrowersuchamountshallbeaddedanddeemedpartoftheLoans,provided,that,nothingcontainedhereinshallbeconstruedtorequireBorrowertopayanyincomeorfranchisetaxesattributabletotheincomeofLendersfromanyamountschargedorpaidhereundertoLenders.TheforegoingindemnityshallsurvivethepaymentoftheObligationsandtheterminationofthisAgreement.
9.5Insurance.
Borrowershall,andshallcauseanySubsidiaryto,atalltimes,maintainwithfinanciallysoundandreputableinsurersinsurancewithrespecttotheCollateralagainstlossordamageandallotherinsuranceofthekindsandintheamountscustomarilyinsuredagainstorcarriedbycorporationsofestablishedreputationengagedinthesameorsimilarbusinessesandsimilarlysituated.SaidpoliciesofinsuranceshallbereasonablysatisfactorytoAdministrativeAgentastoform,amountandinsurer.Borrowershallfurnishcertificates,policiesorendorsementstoAdministrativeAgentasAdministrativeAgentshallrequireasproofofsuchinsurance,and,ifBorrowerfailstodoso,AdministrativeAgentisauthorized,butnotrequired,toobtainafterprovidingwrittennoticethereoftoBorrowersuchinsurancewithrespecttotheCollateralattheexpenseofBorrower.Allpoliciesshallprovideforatleastthirty(30)dayspriorwrittennoticetoAdministrativeAgentofanycancellationorreductionofcoverage.AdministrativeAgentmayactasattorneyforBorrowerinobtaining,andatanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,adjusting,settling,amendingandcancelinganysuchinsurancewhichrelatestotheCollateral.BorrowershallcauseCollateralAgenttobenamedasalosspayeeandeachAgentanadditionalinsured(butwithoutanyliabilityforanypremiums)undersuchinsurancepoliciesrelatingtotheCollateralandBorrowershallobtainnon-contributorylender’slosspayableendorsementstoallsuchinsurancepoliciesinformandsubstancesatisfactorytoAdministrativeAgent.Suchlender’slosspayableendorsementsshallspecifythattheproceedsofsuchinsuranceshallbepayabletoCollateralAgentasitsinterestsmayappearandfurtherspecifythatCollateralAgentshallbepaidregardlessofanyactoromissionbyBorroweroranyofitsAffiliates.AnyinsuranceproceedsreceivedbyCollateralAgentatanytimeshallbeappliedtopaymentoftheObligationsintheorderandmannersetforthinSection6.4(a)hereof.
9.6FinancialStatementsandOtherInformation.
(a)BorrowershallkeepproperbooksandrecordsinwhichtrueandcompleteentriesshallbemadeofalldealingsortransactionsoforinrelationtotheCollateralandthebusinessofBorroweranditsSubsidiaries(ifany)inaccordancewithGAAPandBorrowershallfurnishorcausetobefurnishedtoAdministrativeAgent:(i)withinforty-five(45)daysaftertheendofeachofthefirstthreefiscalquartersofeachfiscalyearofHoldings,(x)quarterlyunauditedconsolidatedfinancialstatements(includingbalancesheets,statementsofincomeandloss,statementsofcashflowandstatementsofshareholders’equity)allinreasonabledetail,fairlypresentingtheconsolidatedfinancialpositionandtheresultsoftheoperationsofHoldingsanditsSubsidiaries,asoftheendofandthroughsuchfiscalquarterand(y)quarterlyunauditedconsolidatedfinancialstatements(includingbalancesheets,statementsofincomeandlossandstatementsofcashflow)allinreasonabledetail,fairlypresentingthefinancialpositionandthe
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resultsoftheoperationsofBorroweranditsSubsidiaries,asoftheendofandthroughsuchfiscalquarter;(ii)withinninety(90)daysaftertheendfiscalyear,(x)auditedconsolidatedfinancialstatementsofHoldingsanditssubsidiaries(includingbalancesheets,statementsofincomeandloss,statementsofcashflowandstatementsofshareholders’equity),andtheaccompanyingnotesthereto,allinreasonabledetail,fairlypresentingtheconsolidatedfinancialpositionandtheresultsoftheoperationsofHoldingsanditssubsidiaries,asoftheendofandforsuchfiscalyear,togetherwiththeopinionofindependentcertifiedpublicaccountants,whichaccountantsshallbeanindependentaccountingfirmselectedbyHoldingsandreasonablyacceptabletoLender,thatsuchfinancialstatementshavebeenpreparedinaccordancewithGAAP,andpresentfairlytheresultsofoperationsandconsolidatedfinancialpositionofHoldingsanditssubsidiariesasoftheendofandforthefiscalyearthenendedand(y)unauditedconsolidatedfinancialstatementsofBorroweranditsSubsidiaries(includingbalancesheets,statementsofincomeandlossandstatementsofcashflow),andtheaccompanyingnotesthereto,allinreasonabledetail,fairlypresentingthefinancialpositionandtheresultsoftheoperationsofBorroweranditsSubsidiaries,asoftheendofandforsuchfiscalyear,togetherwithacertificationfromaseniorofficerofBorrowercertifyingthatsuchfinancialstatementshavebeenpreparedinaccordancewithGAAP,andpresentfairlytheresultsofoperationsandfinancialpositionofBorroweranditsSubsidiariesasoftheendofandforthefiscalyearthenended;and(iii)contemporaneouslywiththematerialsdescribedintheforegoingclause(ii),atrue,completeandcorrectlistofallUnrestrictedSubsidiariesexistingasoftheendofthefiscalyearthatisthesubjectofsuchmaterials.Documentsrequiredtobedeliveredpursuanttothisclause(a)(totheextentanysuchdocumentsareincludedinmaterialsotherwisefiledwiththeSecuritiesandExchangeCommission)maybedeliveredelectronicallyandifsodelivered,shallbedeemedtohavebeendeliveredonthedate(i)onwhichBorrowerpostssuchdocuments,orprovidesalinktheretoonBorrower’swebsiteontheInternetatthewebsiteaddresshttp://www.ulta.com;or(ii)onwhichsuchdocumentsarepostedonBorrower’sbehalfonanInternetorintranetwebsite,ifany,towhicheachLenderandtheAdministrativeAgenthaveaccess(whetheracommercial,third-partywebsiteorwhethersponsoredbyAdministrativeAgent);providedthat:(i)BorrowershalldeliverpapercopiesofsuchdocumentstoAdministrativeAgent,ifrequestedbyAdministrativeAgent,untilawrittenrequesttoceasedeliveringpapercopiesisgivenbyAdministrativeAgentand(ii)BorrowershallnotifyAdministrativeAgentandeachLender(bytelecopierorelectronicmail)ofthepostingofanysuchdocumentsandprovidetoAdministrativeAgentbyelectronicmailelectronicversions(i.e.,softcopies)ofsuchdocuments.AdministrativeAgentshallhavenoobligationtorequestthedeliveryortomaintaincopiesofthedocumentsreferredtoabove,andinanyeventshallhavenoresponsibilitytomonitorcompliancebyBorrowerwithanysuchrequestfordelivery.
(b)BorrowershallpromptlynotifyAdministrativeAgentinwritingofthedetailsof(i)anymaterialloss,damage,investigation,action,suit,proceedingorclaimrelatingtotheCollateraloranyotherpropertywhichissecurityfortheObligationsorwhichhasorwouldhaveaMaterialAdverseEffectand(ii)theoccurrenceofanyEventofDefaultoractconditionoreventwhich,withthepassageoftimeorgivingofnoticeorboth,wouldconstituteanEventofDefault.
(c)BorrowershallpromptlyafterthesendingorfilingthereoffurnishorcausetobefurnishedtoAdministrativeAgentcopiesofallreportswhichBorrowersendstoitsstockholdersgenerallyandcopiesofallreportsandregistrationstatementswhichBorrowerorHoldingsfileswiththeSecuritiesandExchangeCommission,anynationalsecuritiesexchangeortheNationalAssociationofSecuritiesDealers,Inc.
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(d)BorrowershallfurnishorcausetobefurnishedtoAdministrativeAgentsuchbudgets,forecasts,projectionsandotherinformationrespectingtheCollateralandthebusinessofBorrower,asAdministrativeAgentmay,fromtimetotime,reasonablyrequest.AdministrativeAgentisherebyauthorizedtodeliveracopyofanyfinancialstatementoranyotherinformationrelatingtothebusinessofBorrowertoanycourtorotherGovernmentalAuthorityortoanyLenderorParticipantortoanyprospectiveLenderorprospectiveParticipant.BorrowerherebyirrevocablyauthorizesanddirectsallaccountantsorauditorstodelivertoAdministrativeAgent,atBorrower’sexpense,copiesofthefinancialstatementsofBorrowerorHoldingsandanyreportsormanagementletterspreparedbysuchaccountantsorauditorsonbehalfofBorrowerorHoldingsandtodisclosetoanyAgentoranyLendersuchinformationastheymayhaveregardingthebusinessofBorrowerorHoldings.Anydocuments,schedules,invoicesorotherpapersdeliveredtoanyAgentoranyLendermaybedestroyedorotherwisedisposedofbysuchAgentorsuchLenderone(1)yearafterthesamearedeliveredtosuchAgentorsuchLender,exceptasotherwisedesignatedbyBorrowertosuchAgentorsuchLenderinwriting.
9.7SaleofAssets,Consolidation,Merger,Dissolution,Etc.
Borrowershallnot,andshallnotpermitanySubsidiaryto(andnoAgentnoranyLenderauthorizesBorrowerto),directlyorindirectly,
(a)mergeintoorwithorconsolidatewithanyotherPersonorpermitanyotherPersontomergeintoorwithorconsolidatewithitifsuchmergerorconsolidationresultsinaChangeofControl;provided,thatanyObligormaymergeintoanotherObligorortheBorrower(providedthattheBorroweristhesurvivingentityaftergivingeffectthereto)ormaydissolveorceasedoingbusinesssolongastheassetsofsuchObligoraretransferredtotheBorroweroranotherObligor;
(b)sell,assign,lease,transfer,abandonorotherwisedisposeofanyCapitalStockorindebtednesstoanyotherPersonoranyofitsassetstoanyotherPerson,exceptfor
(i)salesofInventoryintheordinarycourseofbusiness,
(ii)thedispositionofworn-outorobsoleteEquipmentsolongas(A)anyproceedsarepaidtoAdministrativeAgentand(B)suchsalesdonotinvolveEquipmenthavinganaggregatefairmarketvalueinexcessof$2,000,000forallsuchEquipmentdisposedofinanyfiscalyearofBorrower;
(iii)salesorotherdispositionsbyBorrowerofassetsinconnectionwiththeclosingorsaleofaretailstorelocationofBorrowerintheordinarycourseofBorrower’sbusinesswhichconsistofleaseholdinterestsinthepremisesofsuchstore,theEquipmentandfixtureslocatedatsuchpremisesandthebooksandrecordsrelatingexclusivelyanddirectlytotheoperationsofsuchstore;provided,that,astoeachandallsuchsales,(A)onthedateof,andaftergivingeffectto,anysuchsale,inanycalendaryear,Borrowershallnothaveclosedor
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soldretailstorelocationsaccountingformorethansevenandone-half(71/2%)percentofallsalesofBorrowerintheimmediatelyprecedingtwelve(12)monthperiod,(B)AdministrativeAgentshallhavereceivednotlessthanten(10)BusinessDayspriorwrittennoticeofsuchsale,whichnoticeshallsetforthinreasonabledetailsatisfactorytoAdministrativeAgent,thepartiestosuchsaleorotherdisposition,theassetstobesoldorotherwisedisposedof,thepurchasepriceandthemannerofpaymentthereofandsuchotherinformationwithrespecttheretoasAdministrativeAgentmayrequest,(C)asofthedateofsuchsaleorotherdispositionandaftergivingeffectthereto,noEventofDefault,oract,conditionoreventwhichwithnoticeorpassageoftimewouldconstituteanEventofDefault,shallexistorhaveoccurred,(D)suchsaleshallbeoncommerciallyreasonablepricesandtermsinabonafidearm’slengthtransaction,and(E)anyandallnetproceedspayableordeliveredtorespectofsuchsaleorotherdispositionshallbepaidordelivered,orcausedtobepaidordelivered,toAdministrativeAgentinaccordancewiththetermsofthisAgreementeither,atAdministrativeAgent’soption,forapplicationtotheObligationsinaccordancewiththetermshereof(excepttotheextentsuchproceedsreflectpaymentinrespectofindebtednesssecuredbyaproperlyperfectedfirstprioritysecurityinterestintheassetssold,inwhichcase,suchproceedsshallbeappliedtosuchindebtednesssecuredthereby)ortobeheldbyAdministrativeAgentascashcollateralfortheObligationsontermsandconditionsacceptabletoAdministrativeAgent;
(iv)sales,assignments,leases,transfersorotherdispositionsofassetsnottoexceedanaggregatefairmarketvalueof$10,000,000forallsuchassetsinanyfiscalyearofBorrower;
(v)othersales,assignments,leases,transfersorotherdispositionsofassetsnototherwisepermittedhereundersolongasExcessAvailabilityshallnotbelessthanthirtypercent(30%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(B)theMaximumCreditcalculatedonaproformabasisbothbeforeandaftergivingeffecttosuchdisposition;provided,thattheaggregatebookvalueofInventorythatmaybesubjecttosuchsales,assignments,leases,transfersorotherdispositionsshallnotexceed$100,000,000intheaggregateduringthetermofthisAgreement;
(vi)salesandissuanceofCapitalStockbytheSubsidiariesofBorrowertoBorrowerorsuchotherwhollyownedSubsidiariesandbyBorroweroranyotherObligor(thatisnotaSubsidiaryofBorrower)toHoldings;
(vii)anysale,releaseorotherdispositionofanyinterestofBorrowerintheStudioGeartrademarkoranyotherintellectualpropertyrightswithrespecttothatbrand;or
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(viii)sales,assignments,leases,transfersorotherdispositionsofassetsfrom(A)BorroweroranyObligortoBorroweroranyotherObligor,(B)anySubsidiarythatisnotanObligortoBorroweroranyotherSubsidiaryand(C)BorroweroranyObligortoaSubsidiarythatisnotanObligor;provided,thatwithrespecttothisclause(C),(1)theconditionssetforthinSection9.10(f)(i)-(iii)shallbesatisfiedwithrespecttoanysuchdispositionand(2)totheextentanyintellectualpropertywhichisrequiredtosellEligibleInventoryissubjecttosuchdisposition,theneithertheAdministrativeAgentshallretainalienonsuchintellectualpropertyortheSubsidiaryholdingsuchintellectualpropertyshallgranttoAdministrativeAgentanon-exclusiveroyaltyfreelicense(upontermsreasonablyacceptabletotheAdministrativeAgent)tousesuchintellectualpropertytosellEligibleInventoryduringthecontinuationofanEventofDefault;
(c)formoracquireanysubsidiariesexceptthatBorroweranditsSubsidiariesmay(i)acquireSubsidiariesinaccordancewithSection9.10(f)and(ii)formadditionalSubsidiaries;provided,thattotheextentanysuchacquiredorformedSubsidiaryisorganizedwithintheUnitedStates(andsubjecttothelimitationssetforthinSection5.2(d)),atthetimethatsuchPersonbecomesaSubsidiary,andpromptlythereafter(andinanyeventwithinten(10)days),Borrowershall,andshallcausesuchSubsidiaryto:(A)totheextentsuchSubsidiaryisnotaSubsidiarydescribedunderclause(y)ofSection5.2(d),becomeanObligorbyexecutinganddeliveringtotheAdministrativeAgentthefollowingdocuments,whichdocumentsshall,forclarity,incorporateastosuchSubsidiary,allrepresentationsandwarrantiesmadebytheBorrowerunderthisAgreementandallaffirmativeandnegativecovenantsapplicabletotheBorrowerunderthisAgreement:(1)aguarantyoftheObligationsinfavoroftheAdministrativeAgent,fortheratablebenefitoftheLenders,(2)asecurityagreement,pursuanttowhichsuchSubsidiarygrantsalientotheCollateralAgent,fortheratablebenefitoftheLenders,onsubstantiallyalltheassetsofsuchSubsidiarytosecuresuchguarantyandtheObligations,ontermsandconditionsconsistentwiththeBorrower’sgrantofliensunderthisAgreementand(3)documentsofthetypereferredtoinclauses(a)and(c)ofSection4.1,togetherwithanyotherdocumentsrequiredbythetermsoftheguarantyandsecurityagreementreferredtoinclauses(1)and(2)above,and(B)pledgetheCapitalStockofsuchSubsidiary(subjecttoSection5.2(d)totheextentsuchSubsidiaryisdescribedtherein)totheAdministrativeAgent,fortheratablebenefitoftheLenders,tosecuretheObligations;ineachcase,inform,contentandscopereasonablysatisfactorytotheAdministrativeAgent(itbeingunderstoodandagreedthat,withrespecttoanyPersonthatwasanUnrestrictedSubsidiarybutceasestosatisfythecriteriatherefor,atthetimethatsuchPersonceasestososatisfy,andpromptlythereafter(andinanyeventwithinten(10)days),Borrowershall,andshallcausesuchSubsidiaryto,becomeanObligor,pledgetheCapitalStockofsuchSubsidiary,andotherwisecomplywiththetermsofthisSection9.7(c));or
(d)agreetodoanyoftheforegoing.
9.8Encumbrances.
Borrowershallnot,andshallnotpermitanySubsidiaryto,create,incur,assume,sufferorpermittoexistanysecurityinterest,mortgage,pledge,lien,chargeorotherencumbranceofanynaturewhatsoeveronanyofitsassetsorproperties,includingtheCollateral,except:(a)the
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securityinterestsandliensofCollateralAgentforitselfandthebenefitofLenders;(b)lienssecuringthepaymentoftaxes,eithernotyetoverdueorthevalidityofwhicharebeingcontestedingoodfaithbyappropriateproceedingsdiligentlypursuedandavailabletoBorrowerorsuchSubsidiary,asthecasemaybeandwithrespecttowhichadequatereserveshavebeensetasideonitsbooks;(c)non-consensualstatutoryliens(otherthanlienssecuringthepaymentoftaxes)arisingintheordinarycourseofBorrower’sorsuchSubsidiary’sbusinesstotheextent:(i)suchlienssecureIndebtednesswhichisnotoverdueor(ii)suchlienssecureIndebtednessrelatingtoclaimsorliabilitieswhicharefullyinsuredandbeingdefendedatthesolecostandexpenseandatthesoleriskoftheinsurerorbeingcontestedingoodfaithbyappropriateproceedingsdiligentlypursuedandavailabletoBorrowerorsuchSubsidiary,ineachcasepriortothecommencementofforeclosureorothersimilarproceedingsandwithrespecttowhichadequatereserveshavebeensetasideonitsbooks;(d)zoningrestrictions,easements,licenses,covenantsandotherrestrictionsaffectingtheuseofrealpropertywhichdonotinterfereinanymaterialrespectwiththeuseofsuchrealpropertyorordinaryconductofthebusinessofBorrowerorsuchSubsidiaryaspresentlyconductedthereonormateriallyimpairthevalueoftherealpropertywhichmaybesubjectthereto;(e)purchasemoneysecurityinterestsinEquipment(includingCapitalLeases)andpurchasemoneymortgagesonrealestatenottoexceed$15,000,000intheaggregateatanytimeoutstandingsolongassuchinterestsandmortgagesdonotapplytoanypropertyofBorrowerotherthantheEquipmentorrealestatesoacquired,andtheindebtednesssecuredtherebydoesnotexceedthecostoftheEquipmentorrealestatesoacquired,andtheindebtednesssecuredtherebydoesnotexceedthecostoftheEquipmentorrealestatesoacquired,asthecasemaybe;(f)liensorrightsofsetoffsorcreditbalancesofBorrowerwithCreditCardProcessorsasaresultoffeesandchargebacks;(g)depositsofcashwiththeownerorlessorofretailstorelocationsleasedandoperatedbyBorrowerintheordinarycourseofthebusinessofBorrowertosecuretheperformancebyBorrowerofitsobligationsunderthetermsoftheleaseforsuchpremises;(h)liensonassetsofBorrowertosecureindebtednessofBorrowerpermittedunderSection9.9(d)below,provided,that,suchliensshallbejuniorandsubordinatetotheliensofCollateralAgentontermsandconditionsacceptabletoCollateralAgent;(i)pledgesanddepositsofcash,CashEquivalentsorinvestmentsecuritiesbyBorrowertosecureindebtednessofBorrowerpermittedunderSection9.9(g)hereof;provided,that,(i)theaggregateamountsopledgedordeposited,togetherwiththeamountofallLetterofCreditAccommodationsissuedinconnectionwithanyHedgingAgreements,shallnotintheaggregateexceed$2,500,000,(ii)asofeachofthethirty(30)daysimmediatelyprecedingthedateofsuchpledgeordepositandaftergivingeffectthereto,ExcessAvailabilityshallnotbelessthan$4,000,000,(iii)suchpledgeordeposit(ortherighttodemandsuchpledgeordeposit)shallberequiredbytheotherpartytotheHedgingAgreementasaconditiontoitenteringintosuchcontractwithBorrowerandAdministrativeAgentshallhavereceivedevidencethereofinformandsubstancesatisfactorytoAdministrativeAgentand(iv)asofthedateofsuchpledgeordepositandaftergivingeffectthereto,noDefaultorEventofDefaultshallexistorhaveoccurredandbecontinuing;and(j)thesecurityinterestsandlienssetforthonSchedule8.4totheInformationCertificate.
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9.9Indebtedness.
Borrowershallnot,andshallnotpermitanySubsidiaryto,incur,create,assume,becomeorbeliableinanymannerwithrespectto,sufferorpermittoexist,anyindebtednessoranyobligationsinrespectoftherepaymentofborrowedmoney,except:
(a)theObligations(excludingthosedescribedinSection9.9(g)below);
(b)tradeobligationsandnormalaccrualsintheordinarycourseofbusinessnotyetdueandpayable,orwithrespecttowhichBorroweriscontestingingoodfaiththeamountorvaliditythereofbyappropriateproceedingsdiligentlypursuedandavailabletoBorrowerandwithrespecttowhichadequatereserveshavebeensetasideonitsbooks;
(c)purchasemoneyindebtedness(includingcapitalleases)totheextentnotincurredorsecuredbyliens(includingcapitalleases)inviolationofanyotherprovisionofthisAgreement;
(d)indebtednessofBorrowerforborrowedmoney(otherthanindebtednesspermittedunderSection9.9(c)aboveorSection9.9(e)below)arisingafterthedatehereofowingtoanypersoninanaggregateamountnottoexceed$20,000,000atanytimeoutstanding;provided,that,astoeachandallofsuchindebtedness:(i)AdministrativeAgentshallhavereceivednotlessthanten(10)BusinessDayspriorwrittennoticeoftheintentiontoincursuchindebtedness,whichnoticeshallsetforthinreasonabledetailsatisfactorytoAdministrativeAgent,theamountofsuchindebtedness,thepersontowhomsuchindebtednesswillbeowed,theinterestrate,thescheduleofrepaymentsandmaturitydatewithrespecttheretoandsuchotherinformationwithrespecttheretoasAdministrativeAgentmayrequest,(ii)AdministrativeAgentshallhavereceivedtrue,correctandcompletecopiesofallagreements,documentsandinstrumentsevidencingorotherwiserelatedtosuchindebtedness,asdulyauthorized,executedanddeliveredbythepartiesthereto,(iii)suchindebtednessshallbeincurredbyBorroweratcommerciallyreasonableratesandtermsinabonafidearm’slengthtransaction,(iv)ifanyofsuchindebtednessistobesecuredbyanyassetsofBorrower,then(A)allofthetermsandconditionsofsuchindebtednessandthepersontowhomsuchindebtednessisowedshallbereasonablyacceptabletoAdministrativeAgent,(B)thesecurityinterestsandliensontheassetsofBorrowerinfavorofsuchpersontosecuresuchindebtednessshallbejuniorandsubordinatetothesecurityinterestsandliensofAdministrativeAgentonsuchassetsontermsandconditionsreasonablyacceptabletoAdministrativeAgent,and(C)AdministrativeAgentshallhavereceived,informandsubstancesatisfactorytoAdministrativeAgent,anintercreditoragreementbetweenAdministrativeAgentandsuchperson,asacknowledgedandagreedtobyBorrower,dulyauthorized,executedanddeliveredbysuchpersonandBorrower,providingfor,interalia,theparties’relativerightsandprioritieswithrespecttotheassetsofBorrower,(v)suchindebtednessshallnotatanytimeincludetermsandconditionswhichinanymanneradverselyaffectAgentsorLendersoranyrightsofeitherAgentorLendersasdeterminedingoodfaithbyAdministrativeAgentandconfirmedbyAdministrativeAgenttoBorrowerinwritingorwhicharemorerestrictiveorburdensomethanthetermsorconditionsofanyotherindebtednessofBorrowerasineffectonthedatehereof(otherthantheObligations),(vi)asofthedateofincurringsuchindebtednessandaftergivingeffectthereto,noEventofDefaultshallexistorhaveoccurred,(vii)Borrowermayonlymakeregularlyscheduledpaymentsofprincipalandinterestinrespectofsuchindebtedness,(viii)Borrowershallnot,directlyorindirectly,(A)amend,modify,alterorchangethetermsoftheagreementswithrespecttosuchindebtedness,except,that,Borrowermay,afterpriorwrittennoticetoAdministrativeAgent,amend,modify,alterorchangethetermsthereofsoastoextendthematuritythereofordeferthetimingofanypaymentsinrespectthereof,ortoforgiveorcancelaportionofsuchindebtedness(otherthanpursuanttopaymentsthereof),ortoreleaseanyliensorsecurityinterestsinanyassetsof
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Borrowerwhichsecuresuchindebtedness(ifany),ortoreducetherateoranyfeesinconnectiontherewith,ortomakeanycovenantscontainedthereinlessrestrictiveorburdensomeastoBorrowerorotherwisemorefavorabletoBorrower(asdeterminedingoodfaithbyAdministrativeAgent),or(B)redeem,retire,defease,purchaseorotherwiseacquiresuchindebtedness,orsetasideorotherwisedepositorinvestanysumsforsuchpurpose,and(ix)BorrowershallfurnishtoAdministrativeAgentallnoticesordemandsinconnectionwithsuchindebtednesseitherreceivedbyBorroweroronitsbehalfpromptlyafterthereceiptthereof,orsentbyBorroweronitsbehalf,concurrentlywiththesendingthereof,asthecasemaybe;
(e)indebtednessofBorrowerforborrowedmoneyafterthedatehereof(otherthanindebtednesspermittedunderSections9.9(c)and(d)above)arisingafterthedatehereof;provided,that,astoeachandallofsuchindebtedness:(i)AdministrativeAgentshallhavereceivednotlessthanten(10)BusinessDayspriorwrittennoticeoftheintentiontoincursuchindebtedness,whichnoticeshallsetforthinreasonabledetailsatisfactorytoAdministrativeAgent,theamountofsuchindebtedness,thepersontowhomsuchindebtednesswillbeowed,theinterestrate,thescheduleofrepaymentsandmaturitydatewithrespecttheretoandsuchotherinformationwithrespecttheretoasAdministrativeAgentmayrequest(ii)AdministrativeAgentshallhavereceivedtrue,correctandcompletecopiesofallagreements,documentsandinstrumentsevidencingorotherwiserelatedtosuchindebtedness,asdulyauthorized,executedanddeliveredbythepartiesthereto,(iii)suchindebtednessshallbeincurredbyBorroweratcommerciallyreasonableratesandtermsinabonafidearm’slengthtransaction,(iv)suchindebtednessisandshallremainatalltimesunsecured,(v)suchindebtednessis,andshallbe,subjectandsubordinateinrightofpaymenttotherightofAdministrativeAgenttoreceivethepriorindefeasiblepaymentandsatisfactioninfullofalloftheObligations,andBorrowershallnotmakeorberequiredtomakepaymentsincashorotherimmediatelyavailablefundsorotherproperty(butmaymakepaymentofinterestbyissuingindebtednessonthesameterms)atanytimeduringthethencurrenttermofthisAgreement,(vi)AdministrativeAgentshallhavereceived,informandsubstancesatisfactorytoAdministrativeAgent,asubordinationagreementbetweenAdministrativeAgentandsuchperson,asacknowledgedandagreedtobyBorrower,dulyauthorized,executedanddeliveredbysuchpersonandBorrower,providingfor,interaliathetermsofthesubordinationinrightofpaymentoftheindebtednessofBorrowertosuchpersontothepriorindefeasiblepaymentandsatisfactioninfullofalloftheObligations,(vii)suchindebtednessshallnotatanytimeincludetermsandconditionswhichinanymanneradverselyaffectAdministrativeAgentoranyrightsofAdministrativeAgentasdeterminedingoodfaithbyAdministrativeAgentandconfirmedbyAdministrativeAgenttoBorrowerinwritingorwhicharemorerestrictiveorburdensomethanthetermsorconditionsofanyotherindebtednessofBorrowerasineffectonthedatehereof(otherthantheObligations),(viii)asofthedateofincurringsuchindebtednessandaftergivingeffectthereto,noEventofDefaultshallexistorhaveoccurred,(ix)Borrowershallnot,directlyorindirectly,(A)amend,modify,alterorchangethetermsoftheagreementswithrespecttosuchindebtedness,except,that,Borrowermay,afterpriorwrittennoticetoAdministrativeAgent,amend,modify,alterorchangethetermsthereofsoastoextendthematuritythereofordeferthetimingofanypaymentsinrespectthereof,ortoforgiveorcancelaportionofsuchindebtedness(otherthanpursuanttoPaymentsthereof),ortoreducetherateoranyfeesinconnectiontherewith,ortomakeanycovenantscontainedthereinlessrestrictiveorburdensomeastoBorrowerorotherwisemorefavorabletoBorrower(asdeterminedingoodfaithbyAdministrativeAgent),or(B)redeem,retire,defease,purchaseorotherwiseacquiresuchindebtedness,orsetasideorotherwisedepositorinvestany
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sumsforsuchpurpose,and(x)BorrowershallfurnishtoAdministrativeAgentallnoticesordemandsinconnectionwithsuchindebtednesseitherreceivedbyBorroweroronitsbehalfpromptlyafterthereceiptthereof,orsentbyBorroweronitsbehalf,concurrentlywiththesendingthereof,asthecasemaybe;
(f)obligationsorindebtednessexistingasofthedatehereofsetforthonSchedule9.9totheInformationCertificate,provided,that,(i)Borrowermayonlymakeregularlyscheduledpaymentsofprincipalandinterestinrespectofsuchindebtednessinaccordancewiththetermsoftheagreementorinstrumentevidencingorgivingrisetosuchindebtednessasineffectonthedatehereof,(ii)Borrowershallnot,directlyorindirectly,(A)amend,modify,alterorchangethetermsofsuchindebtednessoranyagreement,documentorinstrumentrelatedtheretoasineffectonthedatehereof,except,that,Borrowermay,afterpriorwrittennoticetoAdministrativeAgent,amend,modify,alterorchangethetermsthereofsoastoextendthematuritythereofordeferthetimingofanypaymentsinrespectthereof,ortoforgiveorcancelaportionofsuchindebtedness(otherthanpursuanttopaymentsthereof),ortoreducetheinterestrateoranyfeesinconnectiontherewith,ortoreleaseanyoftheliensorsecurityinterestsinanyassetsandpropertiesofBorrowerwhichsecuresuchindebtedness,ortomakeanycovenantscontainedthereinlessrestrictiveorburdensomeastoBorrowerorotherwisemorefavorabletoBorrower(asdeterminedingoodfaithbyAdministrativeAgent),or(B)redeem,retire,defease,purchaseorotherwiseacquiresuchindebtedness,orsetasideorotherwisedepositorinvestanysumsforsuchpurpose,and(iii)BorrowershallfurnishtoAdministrativeAgentallnoticesordemandsinconnectionwithsuchindebtednesseitherreceivedbyBorroweroronitsbehalf,promptlyafterthereceiptthereof,orsentbyBorroweroronitsbehalf,concurrentlywiththesendingthereof,asthecasemaybe;
(g)(A)contingentliabilitiesofBorrowerand/oranyObligorspursuanttoanyHedgingAgreementsenteredintobyBorrowerand/oranyObligors;providedthattheaggregateprincipalnotionalamountofindebtednessthatmaybesubjecttoHedgingAgreementsatanyonetimeshallnotexceed$100,000,000atanytime.Notwithstandinganyprovisionhereintothecontrary,noAffiliateofaLendershallactasacounterpartytoaHedgingAgreementunlessanduntilsuchAffiliateshallhaveenteredintoawrittenagreementandacknowledgementinfavorofAdministrativeAgent,informandsubstancesatisfactorytoAdministrativeAgent,inwhichsuchAffiliateagreestobeboundbythetermsofthisAgreement,inthecapacityasacounterpartytoaHedgingAgreement,inthesamemannerasaLenderhereunder,inthecapacityasacounterpartytoaHedgingAgreementand(B)contingentliabilitiesofBorrowerand/oranyObligorspursuanttoanyOtherHedgingAgreementsenteredintobyBorrowerand/oranyObligors;providedthat(i)LendersshallhavebeengivenareasonableopportunitytomatchtheproposedtermsoftheOtherHedgingAgreementspriortoBorroweroranyObligorenteringintotheOtherHedgingAgreementsand(ii)theaggregateprincipalnotionalamountofindebtednessthatmaybesubjecttoOtherHedgingAgreementsatanyonetimeshallnotexceed$25,000,000;and
(h)indebtednessandobligationsconsistingofintercompanyloans,advancesandotherobligationspermittedunderSections9.10(f),(g)and(h).
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9.10Loans,Investments,Etc.
Borrowershallnot,andshallnotpermitanySubsidiaryto,directlyorindirectly,make,orsufferorpermittoexist,anyloansoradvancemoneyorpropertytoanyperson,oranyinvestmentin(bycapitalcontribution,dividendorotherwise)orpurchaseorrepurchasetheCapitalStockorindebtednessorallorasubstantialpartoftheassetsorpropertyofanyPerson,orguarantee,assume,endorseorotherwisebecomeresponsiblefor(directlyorindirectly)theindebtedness,performance,obligationsordividendsofanyPerson,oragreetodoanyoftheforegoing,except:
(a)theendorsementofinstrumentsforcollectionordepositintheordinarycourseofbusiness;
(b)investmentsinCashEquivalents,provided,that,astoanyoftheforegoing,unlesswaivedinwritingbyAdministrativeAgent,BorrowershalltakesuchactionsasaredeemednecessarybyAdministrativeAgenttoperfectthesecurityinterestofCollateralAgentinsuchinvestments;
(c)loansandadvancesbyBorrowertoemployeesofBorrowernottoexceedtheprincipalamountof$500,000intheaggregateatanytimeoutstandingforreasonableandnecessarywork-relatedtravelorotherordinarybusinessexpensestobeincurredbyemployeesinconnectionwiththeirworkforBorrower;
(d)theexistingloans,advancesandguaranteesbyBorroweroutstandingasofthedatehereofassetforthonSchedule9.10totheInformationCertificate;provided,that,astosuchloans,advancesandguarantees,(i)Borrowershallnotdirectlyorindirectly,(A)amend,modify,alterorchangethetermofsuchloans,advancesorguaranteesoranyagreement,documentorinstrumentrelatedthereto,or(B)astosuchguarantees,redeem,retire,defease,purchaseorotherwiseacquiresuchguaranteeorsetasideorotherwisedepositorinvestanysumsforsuchpurposeand(ii)BorrowershallfurnishtoAdministrativeAgentallnotices,demandsorothermaterialsinconnectionwithsuchloans,advancesorguaranteeseitherreceivedbyBorroweroronitsbehalf,promptlyafterthereceiptthereof,orsentbyBorroweroronitsbehalf,concurrentlywiththesendingthereof,asthecasemaybe;and
(e)loansbyBorrower,totheextenttheyarepermittedbyapplicablelaw,toofficersordirectorsofBorrowernottoexceed$15,000,000intheaggregateatanytime,provided,that,withrespecttoanysuchloan,(i)theofficerordirectorshallhaveexecutedanddeliveredtotheBorrowerapromissorynoteinformandsubstancesufficienttoevidencetheloan,(ii)theloanshallberecordedonthebooksandrecordsofBorrowerinamannersatisfactorytoAdministrativeAgent,(iii)theproceedsoftheloanshallbeusedeithertopurchasecommonorpreferredstockintheBorrower,ortofinancetheexerciseofrestrictedstockoptions,togetherwiththeordinaryincometaxattributabletosuchexercise(provided,thattheaggregateoutstandingamountofsuchloansusedtofinancetaxliabilitiesshallatnotimeexceed$7,500,000),(iv)thestocksopurchasedshallbepledgedbysuchofficerordirectortotheBorrowerassecurityfortheloan,(v)thematuritydateoftheloanshallnotbemorethanten(10)yearsfromthedatetheloanismadeand(vi)theinterestrateontheloanshallbesufficientunderregulationspromulgatedbytheInternalRevenueServicetopreventsuchloanfrombeingtreatedasabelow-marketloancausingtheattributiontosuchofficerordirectorofincomeasaresultoftheloantransaction;
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(f)otherloans,advancesand/orinvestments(includingbycapitalcontribution,dividendorotherwiseorbypurchaseorrepurchaseoftheCapitalStockorindebtednessorallorasubstantialpartoftheassetsorpropertyofanyPerson,orguarantee,assumption,endorsementorotherwisebecomingresponsiblefortheindebtedness,performance,obligationsordividendsofanyPerson),ineachcasetoorinaPersonthatisnottheBorroweroranObligorandaslongas(i)noEventofDefaulthasoccurredandiscontinuingatthetimeofsuchloan,advanceorinvestment,(ii)theaverageExcessAvailabilityfortheprecedingtwelvemonthsmostrecentlyendedshallnothavebeenlessthanthirtypercent(30%)ofthelesserof(A)theaverageamountoftheLoansavailabletoBorrowerduringsuchperiodbasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesestablishedbyAgentshereunderand(B)theMaximumCreditthenineffectand(iii)aftergivingproformaeffecttoanysuchloans,advancesand/orinvestments,projectedExcessAvailabilityasoftheendofeachoftheimmediatelyfollowingtwelvemonthsshallbenotlessthantwenty-fivepercent(25%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(B)theMaximumCredit,(iv)totheextentanysuchinvestmentconstitutesanAcquisition,theconditionssetforthinthedefinitionofPermittedAcquisitionaresatisfiedand(v)anyassetsacquiredinconnectionwithanyinvestmentshallnotbeeligibletobeincludedintheBorrowingBaseuntiltheAdministrativeAgentshallhavehadtheopportunitytoconductsuchduediligenceastheAdministrativeAgentmayrequire,theresultsofwhichshallbesatisfactorytotheAgents;
(g)loans,advancesand/orinvestments(includingcapitalcontributions)(i)fromBorroweroranyObligortoorinBorroweroranyotherObligor,(ii)fromanySubsidiarywhichisnotanObligortoorinanyotherSubsidiarywhichisnotanObligor,and(iii)fromanySubsidiarywhichisnotanObligortoBorroweroranyotherObligorsolongas,withrespecttothisclause(iii)only,atthetimeofanyrepaymentofanysuchloanoradvance,theconditionssetforthinSection9.10(f)(i)-(iii)aresatisfied;
(h)guaranteesbytheBorroweroranyotherObligoroftheperformancebyBorroweroranyotherObligorunderanycontract,leaseorotherobligation;and
(i)loansandadvancestoHoldingsinsuchamounts(inlieuofmaking,andwithoutduplicationof,dividendsanddistributionspermittedunderSection9.11)asarepermittedunderSection9.11asthoughsuchloansandadvancesweremadeasdividends.
9.11DividendsandRedemptions.Borrowershallnot,directlyorindirectly,declareorpayanydividendsonaccountofanysharesofclassofCapitalStockofBorrowernoworhereafteroutstanding,orsetasideorotherwisedepositorinvestanysumsforsuchpurpose,orredeem,retire,defease,purchaseorotherwiseacquireanysharesofanyclassofCapitalStock(orsetasideorotherwisedepositorinvestanysumsforsuchpurpose)foranyconsiderationotherthancommonstockorapplyorsetapartanysum,ormakeanyotherdistribution
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(byreductionofcapitalorotherwise)inrespectofanysuchsharesoragreetodoanyoftheforegoing,except,thatBorrowermaymakedividendsanddistributionsconsistingofitsCapitalStocktoHoldingsand:
(a)BorrowermaymakedividendsanddistributionstoHoldingstopermitHoldingstorepurchaseitssharesofCapitalStockfromanyformeremployeeofHoldingsorBorrower(orinconnectionwithanyseverancearrangementwithanyemployee)totheextentsuchCapitalStockwasobtainedbysuchemployeepursuanttotheexerciseofastockoptionoranyotheremployeestockpurchasearrangementgrantedintheordinarycourseofthebusinessofBorrower;provided,that,(i)noDefaultorEventofDefaultshallexistorhaveoccurredatthetimeoforaftergivingeffecttoanysuchpayments,(ii)theaggregateamountofsuchdividendsanddistributionsbyBorrower(includinganyamountforgivenbyBorrowerwithrespecttoanyloanoradvancemadetoanysuchemployeesunderclause(e)ofSection9.10)toallsuchformeremployeesofBorrowerorHoldingsshallnotinanytwelve(12)monthperiodexceed$25,000,000lesstheamountofanydividendsanddistributionswhicharemadeinsuchperiodunderSection9.11(c)belowandwhicharenotfundedfromaQualifiedPublicOffering,(iii)asofthedateofanysuchdividendsanddistributions,thedailyaverageoftheExcessAvailabilityfortheimmediatelyprecedingthirty(30)consecutivedayperiodshallbenotlessthan$7,500,000,and(iv)thereshallbenolimitationontherightofBorrowertomakesuchpurchasesusingnetcashproceedsofaQualifiedPublicOffering;
(b)BorrowermaydeclareandpaydividendsinrespectoftheCapitalStockofBorrowerconstitutingcommonstock,provided,that,eachofthefollowingconditionsissatisfied:(i)noDefaultorEventofDefaultshallexistorhaveoccurredatthetimeoforaftergivingeffecttoanysuchdividends,(ii)anydividendsshallbeoutoffundslegallyavailabletherefor,(iii)aftergivingproformaeffecttoanysuchdividends,ExcessAvailabilityshallbenotlessthantwentypercent(20%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(B)theMaximumCredit,(iv)projectedExcessAvailabilityasoftheendofeachofthesubsequenttwelvemonthperiodsshallbenotlessthantwentypercent(20%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunder,and(B)theMaximumCredit,and(v)AdministrativeAgentshallhavereceivednotlessthanten(10)BusinessDayspriorwrittennoticeoftheintentionofBorrowertopaysuchdividendsspecifyingtheamountofsuchdividendswhichBorrowerintendstopay,togetherwithprojectionsofExcessAvailabilitysupportedbyasetof12monthfinancialstatements(includingprofitandloss,balancesheetandcashflowstatements)preparedonabasisreasonablyacceptabletotheAdministrativeAgentandLenders(nottobeunreasonablywithheld);
(c)Borrowermaydeclareandpayanyaccruedandunpaiddividends,ormakedividendsanddistributionstoHoldingsforthepurposeofredeemingorretiringanysharesofCapitalStockofHoldings(inadditiontoanydividendspermittedunderSection9.11(a)and(b)above),provided,that,eachofthefollowingconditionsissatisfied:(i)noDefaultorEventofDefaultshallexistorhaveoccurredatthetimeoforaftergivingeffecttoanysuchpayments,(ii)anysuchpaymentsshallbeoutoffundslegallyavailabletherefor,(iii)allsuchpaymentsshalleither(A)bemadesolelywiththenetcashproceedsreceivedbyBorrowerfromaQualifiedPublicOfferingor(B)belimitedtoanamountinanytwelve(12)monthperiodof$25,000,000lessanyamountspaidduringsuchperiodunderSection9.11(a)above,providedthat,asofthedateofanypaymentunderthisSection9.11(c)(iii)(B),(1)thedailyaverageoftheExcess
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Availabilityfortheimmediatelyprecedingthirty(30)consecutivedayperiodshallbenotlessthan$7,500,000,and(iv)AdministrativeAgentshallhavereceivednotlessthanfive(5)BusinessDayspriorwrittennoticeoftheintentionofBorrowertomakesuchpaymentsspecifyingtheamountofsuchpaymentswhichBorrowerintendstomake;
(d)[Reserved];
(e)BorrowermaymakedividendsanddistributionstoHoldingstopermitHoldingstorepurchase,redeemorotherwiseretireanysharesofCapitalStockofHoldings(inadditiontoanyrepurchasesunderSections9.11(a)and(c)above);provided,that,eachofthefollowingconditionsissatisfied:(i)noDefaultorEventofDefaultshallexistorhaveoccurredatthetimeoforaftergivingeffecttoanysuchtransaction,(ii)anypaymentsshallbeoutoffundslegallyavailabletherefor,(iii)aftergivingproformaeffecttoanysuchtransaction,ExcessAvailabilityshallbenotlessthantwentypercent(20%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(B)theMaximumCredit,(iv)projectedExcessAvailabilityasoftheendofeachofthesubsequenttwelvemonthperiodsshallbenotlessthantwentypercent(20%)ofthelesserof(A)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunder,and(B)theMaximumCredit,and(v)AdministrativeAgentshallhavereceivednotlessthanfive(5)BusinessDayspriorwrittennoticeoftheintentionofBorrowertoengageinsuchtransactionspecifyingtheamountofpaymentswhichBorrowerintendstopay,togetherwithprojectionsofExcessAvailabilitysupportedbyasetof12monthfinancialstatements(includingprofitandloss,balancesheetandcashflowstatements)preparedonabasisreasonablyacceptabletotheAdministrativeAgentandLenders(nottobeunreasonablywithheld);
(f)intheeventBorrowerfilesaconsolidated,combined,unitaryorsimilartypeincometaxreturnwithHoldings,BorrowermaymakedividendsanddistributionstoHoldingsinamountsrequiredforHoldingstopayfederalandstateincometaxesthendueandpayablewhicharedirectlyattributabletotheincomeofBorrower;provided,thatsuchamountsareusedbyHoldingsforsuchpurposeanddonot,inanyfiscalyear,exceedtheamountBorrowerwouldhavebeenrequiredtopayinrespectoffederalandstateincometaxesforsuchfiscalyearhadBorrowerbeenastand-alonetaxpayerorstand-alonegroup(separatefromHoldings)forallfiscalyearsendingaftertheFourthAmendmentEffectiveDate;and
(g)BorrowermaymakedividendsanddistributionstoHoldingstopermitHoldingstopay(i)feesandexpenses(includingfranchiseorsimilartaxes)requiredtomaintainitsexistence,customarysalary,bonusandotherbenefitspayableto,andindemnitiesprovidedonbehalfof,officersandemployeesofHoldings,feesandout-of-pocketexpensesforboardofdirectorsandgeneraloperating,complianceandoverheadexpenses(includinglegal,accountingandotherprofessionalfeesandexpenses)ofHoldings,and(ii)feesandexpenses(otherthantoAffiliatesofBorrower)relatedtoanyequityordebtofferingofHoldings(whetherornotsuccessful);provided,thattheaggregateamountofallsuchdividendsanddistributionsmadetoHoldingstopermitHoldingstopayfeesandexpensesdescribedinthisSection9.11(g),totheextentsuchfeesandexpensesarenotdirectlyattributabletotheownershiporoperationoftheObligorsandtheirSubsidiaries,shallnotexceed$5,000,000intheaggregateinanyfiscalyearofBorrower.
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9.12TransactionswithAffiliates.
Exceptfor(a)transactionsbetweenoramongBorrower,itsSubsidiaries,UnrestrictedSubsidiariesandanyotherObligors,and(b)transactionsbetweenoramongBorroweranditsSubsidiaries,anyUnrestrictedSubsidiariesandanyotherObligors,ontheonehand,andothersubsidiariesofHoldings,ontheotherhand(whichexceptionshallnot,ineachcaseoftheseclauses(a)and(b),applytoanysuchtransactionsexpresslyprohibitedbyothersectionsofthisAgreement),Borrowershallnotdirectlyorindirectly,(i)purchase,acquireorleaseanypropertyfromorsell,transferorleaseanypropertyto,anyofficer,employee,shareholder,director,agentoranyotheraffiliateofBorrower,exceptintheordinarycourseofandpursuanttothereasonablerequirementsofBorrower’sbusinessanduponfairandreasonabletermsnolessfavorabletoBorrowerthanBorrowerwouldobtaininacomparablearm’slengthtransactionwithapersonwhoisnotanAffiliateor(ii)makeanypaymentsofmanagement,consultingorotherfeesformanagementorsimilarservices,orofanyIndebtednessowingtoanyofficer,employee,shareholder,directororotherpersonaffiliatedwithBorrowerexceptreasonablecompensationtoofficers,employeesanddirectorsforservicesrenderedtoBorrowerintheordinarycourseofbusiness.
9.13CreditCardAgreements.
Borrowershall(a)complywiththetermsoftheCreditCardAgreementstowhichitisapartytotheextentthefailuretosocomplywouldreasonablybelikelytohaveaMaterialAdverseEffectand(b)deliver,orcausetobedeliveredtoCollateralAgent,aCreditCardNotificationinfavorofCollateralAgentwithrespecttoeachCreditCardAgreementineffect.
9.14MinimumExcessAvailability.
Borrowershall,atalltimes,haveandmaintainExcessAvailabilityofnotlessthantenpercent(10%)ofthelesserof(i)theamountoftheLoansavailabletoBorrowerasofsuchtimebasedontheformulasetforthinSection2.1(a)hereof,subjecttothesublimitsandAvailabilityReservesfromtimetotimeestablishedbyAgentshereunderand(ii)theMaximumCredit;provided,thatExcessAvailabilityshallnotbelessthan$20,000,000atanytime.
9.15CompliancewithERISA.
(a)Borrowershallnotwithrespecttoany“employeebenefitplans”maintainedbyBorroweroranyofitsERISAAffiliates:(i)terminateanyofsuchemployeepensionplanssoastoincuranyliabilitytothePensionBenefitGuarantyCorporationestablishedpursuanttoERISA,(ii)alloworsuffertoexistanyprohibitedtransactioninvolvinganyofsuchemployeebenefitplansoranytrustcreatedthem-underwhichwouldsubjectBorrowerorsuchERISAAffiliatetoataxorpenaltyorotherliabilityonprohibitedtransactionsimposedundertheCodeorERISA,(iii)failtopaytoanysuchemployeebenefitplananycontributionwhichitisobligatedtopayunderERISA,theCodeorthetermofsuchplan,(iv)alloworsuffertoexistanyaccumulatedfundingdeficiency,whetherornotwaived,withrespecttoanysuchemployeebenefitplan,(v)alloworsuffertoexistanyoccurrenceofareportableeventoranyotherevent
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orconditionwhichpresentsamaterialriskofterminationbythePensionBenefitGuarantyCorporationofanysuchemployeebenefitplanthatisasingleemployerplan,whichterminationcouldresultinanyliabilitytothePensionBenefitGuarantyCorporationor(ii)incuranywithdrawalliabilitywithrespecttoanymultiemployerpensionplan.
(b)AsusedinthisSection9.15,theterm“employeepensionbenefitplans,”“employeebenefitplans”,“accumulatedfundingdeficiency”and“reportableevent”shallhavetherespectivemeaningsassignedtotheminERISA,andtheterm“prohibitedtransaction”shallhavethemeaningassignedtoitintheCodeandERISA.
9.16CostsandExpenses.
BorrowershallpaytoeachAgentondemandallreasonablecosts,expenses,filingfeesandtaxespaidorpayableinconnectionwiththepreparation,negotiation,execution,delivery,recording,administration,collection,liquidation,enforcementanddefenseoftheObligations,CollateralAgent’srightsintheCollateral,thisAgreement,theotherFinancingAgreementsandallotherdocumentsrelatedheretoorthereto,includinganyamendments,supplementsorconsentswhichmayhereafterbecontemplated(whetherornotexecuted)orenteredintoinrespecthereofandthereof,including,butnotlimitedto:(a)allcostsandexpensesoffilingorrecording(includingUniformCommercialCodefinancingstatementfilingtaxesandfees,documentarytaxes,intangiblestaxesandmortgagerecordingtaxesandfees,ifapplicable);(b)allreasonableappraisalfeesandsearchfees;(c)costsandexpensesofremittingloanproceeds,collectingchecksandotheritemsofpayment,andestablishingandmaintainingtheBlockedAccounts,togetherwitheachAgent’scustomarychargesandfeeswithrespectthereto;(d)charges,feesorexpenseschargedbyanybankorLCIssuerinconnectionwiththeLetterofCreditAccommodations;(e)reasonablecostsandexpensesofpreservingandprotectingtheCollateral;(f)costsandexpensespaidorincurredinconnectionwithobtainingpaymentoftheObligations,enforcingthesecurityinterestsandliensofCollateralAgent,sellingorotherwiserealizingupontheCollateral,andotherwiseenforcingtheprovisionsofthisAgreementandtheotherFinancingAgreementsordefendinganyclaimsmadeorthreatenedagainstanyAgentoranyLenderarisingoutofthetransactionscontemplatedherebyandthereby(including,withoutlimitation,preparationsforandconsultationsconcerninganysuchmatters);(g)allreasonableout-of-pocketexpensesandcostsheretoforeandfromtimetotimehereafterincurredbyCollateralAgentduringthecourseofperiodicfieldexaminationsoftheCollateralandBorrower’soperations,totheextentrequiredunderSection7.6hereof,and(h)thefeesanddisbursementsofcounsel(includinglegalassistants)toAgentsandLendersinconnectionwithanyoftheforegoing.
9.17FurtherAssurances.
AttherequestofanyAgentatanytimeandfromtimetotime,Borrowershall,atitsexpense,dulyexecuteanddeliver,orcausetobedulyexecutedanddelivered,suchfurtheragreements,documentsandinstruments,anddoorcausetobedonesuchfurtheractsasmaybenecessaryorpropertoevidence,perfect,maintainandenforcethesecurityinterestsandtheprioritythereofintheCollateralandtootherwiseeffectuatetheprovisionsorpurposesofthisAgreementoranyoftheotherFinancingAgreements.AdministrativeAgentmayatanytimeandfromtimetotimerequestacertificatefromanofficerofBorrowerrepresentingthatall
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conditionsprecedenttothemakingofLoansandprovidingLetterofCreditAccommodationscontainedhereinaresatisfied.IntheeventofsuchrequestbyAdministrativeAgent,AgentsandLendersmay,atAdministrativeAgent’soption,ceasetomakeanyfurtherLoansorprovideanyfurtherLetterofCreditAccommodationsuntilAdministrativeAgenthasreceivedsuchcertificateand,inaddition,AdministrativeAgenthasdeterminedthatsuchconditionsaresatisfied.
9.18UnrestrictedSubsidiaries.
Borrowershallnotpermit(a)anyUnrestrictedSubsidiaryunderclause(a)ofthedefinitionof“UnrestrictedSubsidiaries”toengageinanyactivitiesoracquireanyassets(otherthanthoseactivitiesdescribedinclause(a)ofthedefinitionof“UnrestrictedSubsidiaries”andthoseassetsreferredtoinSection8.18)and(b)anyUnrestrictedSubsidiaryunderclause(b)ofthedefinitionof“UnrestrictedSubsidiaries”toacquireanyassets(otherthanthoseassetsreferredtoinSection8.18),ineachcaseunless,priortosuchengagementoracquisition,suchUnrestrictedSubsidiaryshallhavebecomeanObligorhereunderandtakensuchstepsasarerequiredinconnectionwithsuchjoindertotheFinancingAgreementspursuanttoSection9.7(c).
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1EventsofDefault.
Theoccurrenceorexistenceofanyoneormoreofthefollowingeventsisreferredtohereinindividuallyasan“EventofDefault”,andcollectivelyas“EventsofDefault”:
(a)(i)BorrowerfailstopayanyoftheObligationswithinthree(3)BusinessDaysafterthesamebecomesdueandpayableor(ii)BorroweroranyObligorfailstoperformanyofthecovenantscontainedinSections5.3(d),9.1,9.2,9.3,9.4,9.6,9.13,9.14,9.15and9.16ofthisAgreementandsuchfailureshallcontinueforten(10)days;provided,that,suchten(10)dayperiodshallnotapplyinthecaseof:(A)anyfailuretoobserveanysuchcovenantwhichisnotcapableofbeingcuredatallorwithinsuchten(10)dayperiodorwhichhasbeenthesubjectofapriorfailurewithinasix(6)monthperiod(providedthatifanEventofDefaulthasoccurredasaresultoftheBorrower’sfailuretocomplywiththeprovisionsofSection9.14,then,exceptasprovidedinthesubsequentproviso,totheextentthattheBorrowerreceivesacashcapitalcontributioninasufficientamounttocuresuchEventofDefault(totheextentsuchEventofDefaultmaybecuredbyacashcapitalcontribution),whichadditionalcashcapitalcontributionshallbereceivedwithinfifteen(15)daysofthedateuponwhichtheBorrowerhasknowledgeoftheoccurrenceofsuchEventofDefault,thenupontimelysatisfactionoftheforegoingprovisionsinthisproviso,suchEventofDefaultshallbedeemedcuredorwaived;providedfurtherthatiftherighttosocureanyEventofDefaultunderSection9.14hasbeenexercisedontwooccasionsinanyfiscalyearoronsix(6)occasionsaftertheClosingDate,thennofurthercureofsuchfailurehereundermaybemade,orshallberequiredtobeacceptedbytheAgentsandtheLenders,duringtheremainderofsuchfiscalyearorduringtheremainingtermofthisAgreement,asapplicable);or(B)anintentionalbreachbyBorroweroranyObligorofanysuchcovenant,or(iii)Borrowerfailstoperformanyoftheterms,covenants,conditionsorprovisionscontainedinthisAgreementoranyoftheotherFinancingAgreementsotherthanthosedescribedinSections10.1(a)(i)and10.1(a)(ii)above;
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(b)anyrepresentation,warrantyorstatementoffactmadebyBorroweroranyObligortoanyAgentoranyLenderinthisAgreement,theotherFinancingAgreementsoranyotheragreement,schedule,confirmatoryassignmentorotherwiseshallwhenmadeordeemedmadebefalseormisleadinginanymaterialrespect;
(c)anyObligorrevokes,terminatesorfailstoperformanyoftheterms,covenants,conditionsorprovisionsofanyguarantee,endorsementorotheragreementofsuchpartyinfavorofanyAgentoranyLender(excepttotheextentsuchObligornolongerexistsasaresultofamergerordissolutionpermittedunderthisAgreement);
(d)anyjudgmentforthepaymentofmoneyisrenderedagainstBorroweroranyObligorinexcessof$5,000,000inanyonecaseorinexcessof$10,000,000intheaggregateandshallremainundischargedorunvacatedforaperiodinexcessofforty-five(45)daysorexecutionshallatanytimenotbeeffectivelystayed,oranyjudgmentotherthanforthepaymentofmoney,orinjunction,attachment,garnishmentorexecutionisrenderedagainstBorroweroranyObligororanyoftheirassets;
(e)anyObligor(beinganaturalpersonorageneralpartnerofanObligorwhichisapartnership)diesorBorroweroranyObligor,whichisapartnership,limitedliabilitycompany,limitedliabilitypartnershiporacorporation,dissolvesorsuspendsordiscontinuesdoingbusiness,exceptforObligorswhichmaymerge,dissolve,suspendordiscontinuedoingbusinessinaccordancewiththetermsofthisAgreement;
(f)BorroweroranyObligorbecomesinsolvent(howeverdefinedorevidenced),makesanassignmentforthebenefitofcreditors,makesorsendsnoticeofabulktransferorcallsameetingofitscreditorsorprincipalcreditors;
(g)acaseorproceedingunderthebankruptcylawsoftheUnitedStatesofAmericanoworhereafterineffectorunderanyinsolvency,reorganization,receivership,readjustmentofdebt,dissolutionorliquidationlaworstatuteofanyjurisdictionnoworhereafterineffect(whetheratlaworinequity)isfiledagainstBorroweroranyObligororalloranypartofitspropertiesandsuchpetitionorapplicationisnotdismissedwithinsixty(60)daysafterthedateofitsfilingorBorroweroranyObligorshallfileanyansweradmittingornotcontestingsuchpetitionorapplicationorindicatesitsconsentto,acquiescenceinorapprovalof,anysuchactionorproceedingorthereliefrequestedisgrantedsooner;
(h)acaseorproceedingunderthebankruptcylawsoftheUnitedStatesofAmericanoworhereafterineffectorunderanyinsolvency,reorganization,receivership,readjustmentofdebt,dissolutionorliquidationlaworstatuteofanyjurisdictionnoworhereafterineffect(whetheratalaworequity)isfiledbyBorroweroranyObligororforalloranypartofitsproperty;or
(i)anydefaultbyBorroweroranyObligorunderanyagreement,documentorinstrumentrelatingtoanyindebtednessforborrowedmoneyowingtoanypersonotherthanAgentandLenders,oranycapitalizedleaseobligations,contingentindebtednessinconnectionwithanyguarantee,letterofcredit,indemnityorsimilartypeofinstrumentinfavorofanypersonotherthanAgentsandLenders,inanycaseinanamountinexcessof$5,000,000,which
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defaultcontinuesformorethantheapplicablecureperiod,ifany,withrespectthereto,oranydefaultbyBorroweroranyObligorunderanymaterialcontract,lease,licenseorotherobligationtoanypersonotherthanAgentsandLenders,whichdefaultcontinuesformorethantheapplicablecureperiod,ifany,withrespectthereto;
(j)anyChangeofControl;
(k)theindictmentorthreatenedindictmentofBorroweroranyObligorunderanycriminalstatute.orcommencementorthreatenedcommencementofcriminalorcivilproceedingsagainstBorroweroranyObligor,pursuanttowhichstatuteorproceedingsthepenaltiesorremediessoughtoravailableincludeforfeitureofanyofthepropertyofBorrowerorsuchObligor;or
(l)thereshallbeaneventofdefaultunderanyoftheotherFinancingAgreements.
10.2Remedies.
(a)AtanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,AgentsandLendersshallhaveallrightsandremediesprovidedinthisAgreement,theotherFinancingAgreements,theUCCandotherapplicablelaw,allofwhichrightsandremediesmaybeexercisedwithoutnoticetoorconsentbyBorroweroranyObligor,exceptassuchnoticeorconsentisexpresslyprovidedforhereunderorrequiredbyapplicablelaw.Allrights,remediesandpowersgrantedtoAgentsandLendershereunder,underanyoftheotherFinancingAgreements,theUCCorotherapplicablelaw,arecumulative,notexclusive,andenforceable,inAdministrativeAgent’sdiscretion,alternatively,successively,orconcurrentlyonanyoneormoreoccasions,andshallinclude,withoutlimitation,therighttoapplytoacourtofequityforaninjunctiontorestrainabreachorthreatenedbreachbyBorrowerorofthisAgreementoranyoftheotherFinancingAgreements.AdministrativeAgentmay,inaccordancewiththetermshereof,atanytimeortimes,proceeddirectlyagainstBorroweroranyObligortocollecttheObligationswithoutpriorrecoursetoanyObligororanyoftheCollateral.
(b)Withoutlimitingtheforegoing,atanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,AdministrativeAgentmay,initsdiscretion,oruponthedirectionofRequiredLendersshall,and,withoutlimitation,(i)acceleratethepaymentofallObligationsanddemandimmediatepaymentthereoftoAdministrativeAgentforitselfandfortheratablebenefitofLenders(provided,that,upontheoccurrenceofanyEventofDefaultdescribedinSections10.1(g)and10.1(h),allObligationsshallautomaticallybecomeimmediatelydueandpayable),(ii)withorwithoutjudicialprocessortheaidorassistanceofothers,directCollateralAgentto,andCollateralAgentshall,enteruponanypremisesonorinwhichanyoftheCollateralmaybelocatedandtakepossessionoftheCollateralorcompleteprocessing,manufacturingandrepairofalloranyportionoftheCollateral,(iii)requireBorrower,atBorrower’sexpense,toassembleandmakeavailabletoCollateralAgentanypartoralloftheCollateralatanyplaceandtimedesignatedbyCollateralAgent,(iv)directCollateralAgentto,andCollateralAgentshall,collect,foreclose,receive,appropriate,setoffandrealizeuponanyandallCollateral,(v)directCollateralAgentto,andCollateralAgentshall,removeanyoralloftheCollateralfromanypremisesonorinwhichthesamemaybelocatedforthepurposeof
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effectingthesale,foreclosureorotherdispositionthereoforforanyotherpurpose,(vi)directCollateralAgentto,andCollateralAgentshall,sell,lease,transfer,assign,deliverorotherwisedisposeofanyandallCollateral(includingenteringintocontractswithrespectthereto,publicorprivatesalesatanyexchange,broker’sboard,atanyofficeofCollateralAgentorelsewhere)atsuchpricesortermsasCollateralAgentmaydeemreasonable,forcash,uponcreditorforfuturedelivery,withtheCollateralAgenthavingtherighttopurchasethewholeoranypartoftheCollateralatanysuchpublicsale,alloftheforegoingbeingfreefromanyrightorequityofredemptionofBorrower,whichrightorequityofredemptionisherebyexpresslywaivedandreleasedbyBorrower(vii)directtheCollateralAgenttoconductoneormoregoingoutofbusinesssales,intheCollateralAgent’sownrightorbyoneormoreagentsandcontractors.TheCollateralAgentandanysuchagentorcontractor,inconjunctionwithanysuchsale,mayaugmenttheInventorywithothergoods(allofwhichothergoodsshallremainthesolepropertyoftheCollateralAgentorsuchagentorcontractor);anyamountsrealizedfromthesaleofsuchgoodswhichconstituteaugmentationstotheInventory(netofanallocableshareofthecostsandexpensesincurredintheirdisposition)shallbethesolepropertyoftheCollateralAgentorsuchagentorcontractorandneithertheBorrowernoranyPersonclaimingunderorinrightofanyBorrowershallhaveanyinteresttherein;and/or(vii)terminatethisAgreement.IfanyoftheCollateralissoldorleasedbyCollateralAgentuponcredittermsorforfuturedelivery,theObligationsshallnotbereducedasaresultthereofuntilpaymentthereforisfinallycollectedbyCollateralAgent.IfnoticeofdispositionofCollateralisrequiredbylaw,ten(10)dayspriornoticebyCollateralAgenttoBorrowerdesignatingthetimeandplaceofanypublicsaleorthetimeafterwhichanyprivatesaleorotherintendeddispositionofCollateralistobemade,shallbedeemedtobereasonablenoticethereofandBorrowerwaivesanyothernotice.IntheeventanyAgentinstitutesanactiontorecoveranyCollateralorseeksrecoveryofanyCollateralbywayofprejudgmentremedy,Borrowerwaivesthepostingofanybondwhichmightotherwiseberequired.AtanytimeanEventofDefaultexistsorhasoccurredandiscontinuing,uponAdministrativeAgent’srequest,Borrowerwilleither,asAdministrativeAgentshallspecify,furnishcashcollateraltotheLCIssuertobeusedtosecureandfundAgent’sreimbursementobligationstotheLCIssuerinconnectionwithanyLetterofCreditAccommodationsorfurnishcashcollateraltoAdministrativeAgentfortheLetterofCreditAccommodations.Suchcashcollateralshallbeintheamountequaltoonehundredten(110%)percentoftheamountoftheLetterofCreditAccommodationsplustheamountofanyfeesandexpensespayableinconnectiontherewiththroughtheendoftheexpirationofsuchLetterofCreditAccommodations.
(c)TotheextentthatapplicablelawimposesdutiesonanyAgentoranyLendertoexerciseremediesinacommerciallyreasonablemanner(whichdutiescannotbewaivedundersuchlaw),BorroweracknowledgesandagreesthatitisnotcommerciallyunreasonableforAgentsandLenders(i)tofailtoincurexpensesreasonablydeemedsignificantbyanyAgentoranyLendertoprepareCollateralfordispositionorotherwisetocompleterawmaterialorworkinprocessintofinishedgoodsorotherfinishedproductsfordisposition,(ii)tofailtoobtainthirdpartyconsentsforaccesstoCollateraltobedisposedof,ortoobtainor,ifnotrequiredbyotherlaw,tofailtoobtainconsentsofanyGovernmentalAuthorityorotherthirdpartyforthecollectionordispositionofCollateraltobecollectedordisposedof,(iii)tofailtoexercisecollectionremediesagainstaccountdebtors,secondaryobligorsorotherpersonsobligatedonCollateralortoremoveliensorencumbrancesonoranyadverseclaimsagainstCollateral,(iv)toexercisecollectionremediesagainstaccountdebtorsandotherpersonsobligatedonCollateraldirectlyorthroughtheuseofcollectionagenciesandothercollection
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specialists,(v)toadvertisedispositionsofCollateralthroughpublicationsormediaofgeneralcirculation,whetherornottheCollateralisofaspecializednature,(vi)tocontactotherpersons,whetherornotinthesamebusinessasBorrowerforexpressionsofinterestinacquiringalloranyportionoftheCollateral,(vii)tohireoneormoreprofessionalauctioneerstoassistinthedispositionofCollateral,whetherornotthecollateralisofaspecializednature,(viii)todisposeofCollateralbyutilizingInternetsitesthatprovidefortheauctionofassetsofthetypesincludedintheCollateralorthathavethereasonablecapabilityofdoingso,orthatmatchbuyersandsellersofassets,(ix)todisposeofassetsinwholesaleratherthanretailmarkets,(x)todisclaimdispositionwarranties,(xi)topurchaseinsuranceorcreditenhancementstoinsureAgentsandLendersagainstrisksofloss,collectionordispositionofCollateralortoprovidetoCollateralAgentaguaranteedreturnfromthecollectionordispositionofCollateral,or(xii)totheextentdeemedappropriatebyCollateralAgent,toobtaintheservicesofotherbrokers,investmentbankers,consultantsandotherprofessionalstoassistCollateralAgentinthecollectionordispositionofanyoftheCollateral.BorroweracknowledgesthatthepurposeofthisSectionistoprovidenon-exhaustiveindicationsofwhatactionsoromissionsbyCollateralAgentwouldnotbecommerciallyunreasonableinCollateralAgent’sexerciseofremediesagainsttheCollateralandthatotheractionsoromissionsbyanyAgentoranyLendershallnotbedeemedcommerciallyunreasonablesolelyonaccountofnotbeingindicatedinthisSection.Withoutlimitationoftheforegoing,nothingcontainedinthisSectionshallbeconstruedtograntanyrightstoBorrowerortoimposeanydutiesonanyAgentoranyLenderthatwouldnothavebeengrantedorimposedbythisAgreementorbyapplicablelawintheabsenceofthisSection.
(d)ForthepurposeofenablingAgentstoexercisetherightsandremedieshereunder,BorrowerherebygrantstoAgents,totheextentassignable,anirrevocable,non-exclusivelicense(exercisablewithoutpaymentofroyaltyorothercompensationtoBorrower)touse,assign,licenseorsublicenseanyofthetrademarks,service-marks,tradenames,businessnames,tradestyles,designs,logosandothersourceofbusinessidentifiersandotherIntellectualProperty,generalintangiblesandotherassetsdescribedinSection5.2ofthisAgreement,nowownedorhereafteracquiredbyBorrower,whereverthesamemaybelocated,includinginsuchlicensereasonableaccesstoallmediainwhichanyofthelicenseditemsmayberecordedorstoredandtoallcomputerprogramsusedforthecompilationorprintoutthereof.
(e)AdministrativeAgentmayapplythecashproceedsofCollateralactuallyreceivedbyCollateralAgentfromanysale,lease,foreclosureorotherdispositionoftheCollateraltopaymentoftheObligations,inwholeorinpartandinsuchorderasAdministrativeAgentmayelect,whetherornotthendue.BorrowershallremainliabletoAgentsandLendersforthepaymentofanydeficiencywithinterestatthehighestrateprovidedforhereinandallcostsandexpensesofcollectionorenforcement,includingattorneys’feesandlegalexpenses.
(f)Withoutlimitingtheforegoing,upontheoccurrenceofaDefaultorEventofDefault,AdministrativeAgentmay,atitsoption,oruponthedirectionofRequiredLendersshall,withoutnotice,(i)ceasemakingLoansorarrangingforLetterofCreditAccommodationsorreducethelendingformulasoramountsofRevolvingLoansandLetterofCreditAccommodationsavailabletoBorrowerand/or(ii)terminateanyprovisionofthisAgreementprovidingforanyfutureLoansorLetterofCreditAccommodationstobemadebyAgentsandLenderstoBorrower.
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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1GoverningLaw;ChoiceofForum;ServiceofProcess;JuryTrialWaiver.
(a)Thevalidity,interpretationandenforcementofthisAgreementandtheotherFinancingAgreementsandanydisputearisingoutoftherelationshipbetweenthepartieshereto,whetherincontract,tort,equityorotherwise,shallbegovernedbytheinternallawsoftheStateofIllinois(withoutgivingeffecttoprinciplesofconflictsoflaw).
(b)Borrower,AgentsandLendersirrevocablyconsentandsubmittothenon-exclusivejurisdictionoftheCircuitCourtofCookCounty,IllinoisandtheUnitedStatesDistrictCourtfortheNorthernDistrictofIllinoisandwaiveanyobjectionbasedonvenueorforumnonconvenienswithrespecttoanyactioninstitutedthereinarisingunderthisAgreementoranyoftheotherFinancingAgreementsorinanywayconnectedwithorrelatedorincidentaltothedealingsofthepartiesheretoinrespectofthisAgreementoranyoftheotherFinancingAgreementsorthetransactionsrelatedheretoorthereto,ineachcasewhethernowexistingorhereafterarising,andwhetherincontract,tort,equityorotherwise,andagreethatanydisputewithrespecttoanysuchmattersshallbeheardonlyinthecourtsdescribedabove(exceptthatAgentsandLendersshallhavetherighttobringanyactionorproceedingagainstBorroweroritspropertyinthecourtsofanyotherjurisdictionwhichAdministrativeAgentdeemsnecessaryorappropriateinordertorealizeontheCollateralortootherwiseenforceitsrightsagainstBorroweroritsproperty).
(c)Borrowerherebywaivespersonalserviceofanyandallprocessuponitandconsentsthatallsuchserviceofprocessmaybemadebycertifiedmail(returnreceiptrequested)directedtoitsaddresssetforthhereinandservicesomadeshallbedeemedtobecompletedfive(5)daysafterthesameshallhavebeensodepositedintheU.S.mails,or,atAdministrativeAgent’soption,byserviceuponBorrowerinanyothermannerprovidedundertherulesofanysuchcourts.Withinthirty(30)daysaftersuchservice,Borrowershallappearinanswertosuchprocess,failingwhichBorrowershallbedeemedindefaultandjudgmentmaybeenteredbyAdministrativeAgentagainstBorrowerfortheamountoftheclaimandotherreliefrequested.
(d)BORROWER,AGENTSANDLENDERSEACHHEREBYWAIVESANYRIGHTTOTRIALBYJURYOFANYCLAIM,DEMAND,ACTIONORCAUSEOFACTION(i)ARISINGUNDERTHISAGREEMENTORANYOFTHEOTHERFINANCINGAGREEMENTSOR(ii)INANYWAYCONNECTEDWITHORRELATEDORINCIDENTALTOTHEDEALINGSOFTHEPARTIESHERETOINRESPECTOFTHISAGREEMENTORANYOFTHEOTHERFINANCINGAGREEMENTSORTHETRANSACTIONSRELATEDHERETOORTHERETOINEACHCASEWHETHERNOWEXISTINGORHEREAFTERARISING,ANDWHETHERINCONTRACT,TORT,EQUITYOROTHERWISE.BORROWER,AGENTSANDLENDERSEACHHEREBYAGREESANDCONSENTSTHATANYSUCHCLAIM,DEMAND,ACTIONORCAUSEOFACTIONSHALLBEDECIDEDBYCOURTTRIALWITHOUTAJURYANDTHATBORROWERORLENDERMAYFILEANORIGINALCOUNTERPARTOFACOPYOFTHISAGREEMENTWITHANYCOURTASWRITTENEVIDENCEOFTHECONSENTOFTHEPARTIESHERETOTOTHEWAIVEROFTHEIRRIGHTTOTRIALBYJURY.
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(e)AgentsandLendersshallnothaveanyliabilitytoBorrower(whetherintort,contract,equityorotherwise)forlossessufferedbyBorrowerinconnectionwith,arisingoutof,orinanywayrelatedtothetransactionsorrelationshipscontemplatedbythisAgreement,oranyact,omissionoreventoccurringinconnectionherewith,unlessitisdeterminedbyafinalandnon-appealablejudgmentorcourtorderbindingonsuchAgentandsuchLender,thatthelossesweretheresultofactsoromissionsconstitutinggrossnegligenceorwillfulmisconductofsuchAgentorsuchLender.Inanysuchlitigation,AgentsandLendersshallbeentitledtothebenefitoftherebuttablepresumptionthatitactedingoodfaithandwiththeexerciseofordinarycareintheperformancebyitofthetermsofthisAgreement.
11.2WaiverofNotices.
Borrowerherebyexpresslywaivesdemand,presentment,protestandnoticeofprotestandnoticeofdishonorwithrespecttoanyandallinstrumentsandchattelpaper,includedinorevidencinganyoftheObligationsortheCollateral,andanyandallotherdemandsandnoticesofanykindornaturewhatsoeverwithrespecttotheObligations,theCollateralandthisAgreement,exceptsuchasareexpresslyprovidedforherein.NonoticetoordemandonBorrowerwhichanyAgentoranyLendermayelecttogiveshallentitleBorrowertoanyotherorfurthernoticeordemandinthesame,similarorothercircumstances.
11.3AmendmentsandWaivers.
(a)ExceptforactionsexpresslypermittedtobetakenbyanyAgent,noamendment,modification,terminationorwaiverofanyprovisionofthisAgreementoranyotherFinancingAgreement,oranyconsenttoanydeparturebyBorrowertherefrom,shallinanyeventbeeffectiveunlessthesameshallbeinwritingandsignedbyanauthorizedofficerofAdministrativeAgentandBorrower,andbyRequiredLendersorallaffectedLenders,asapplicable.Exceptassetforthinclauses(b)and(c)below,allsuchamendments,modifications,terminationsorwaiversrequiringtheconsentofanyLendersshallrequirethewrittenconsentofRequiredLenders.
(b)Noamendment,modification,terminationorwaiveroforconsentwithrespecttoanyprovisionofthisAgreementthat(i)increasesthepercentageadvanceratessetforthinSection2.1(a)hereof,makeslessrestrictivethenondiscretionarycriteriaforexclusionfrom“EligibleInventory”setforthinthedefinitionofsuchterm,or(ii)amendsSection12.8hereoforamendsthemaximumdollaramountinSection12.11(a)(i)hereofshallbeeffectiveunlessthesameshallbeinwritingandsignedbyAdministrativeAgent,eachoftheLendersandBorrower.Noamendment,modification,terminationorwaiveroforconsentwithrespecttoanyprovisionofthisAgreementthatwaivescompliancewiththeconditionsprecedentsetforthinSection4.2tothemakingofanyRevolvingLoanortheincurrenceofanyLetterofCreditAccommodationshallbeeffectiveunlessthesameshallbeinwritingandsignedbyAdministrativeAgent,RequiredLendersandBorrower.NotwithstandinganythingcontainedinthisAgreementtothecontrary,nowaiverorconsentwithrespecttoanyEventofDefaultshallbeeffectiveforpurposesoftheconditionsprecedenttothemakingofRevolvingLoansortheincurrenceofLetterofCreditAccommodationssetforthinSection4.2unlessthesameshallbeinwritingandsignedbyAdministrativeAgent,RequiredLendersandBorrower.
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(c)Noamendment,modification,terminationorwaivershall,unlessinwritingandsignedbyAdministrativeAgentandeachLenderdirectlyaffectedthereby:(i)increasetheprincipalamountofsuchLender’sCommitmentovertheamountthenineffect;(ii)reducetheprincipalof,rateofinterestonorfeespayablewithrespecttoanyLoanorLetterofCreditAccommodationsofanyaffectedLender;(iii)extendanyscheduledpaymentdateorfinalmaturitydateoftheprincipalamountofanyLoanofanyaffectedLender;(iv)waive,forgive,defer,extendorpostponeanypaymentofinterestorfeesastoanyaffectedLender;(v)releaseanyObligorexceptasotherwisepermittedherein(whichactionshallbedeemedtodirectlyaffectallLenders);(vi)changethepercentageoftheCommitmentsoroftheaggregateunpaidprincipalamountoftheLoansthatshallberequiredforLendersoranyofthemtotakeanyactionhereunder(whichactionshallbedeemedtodirectlyeffectallLenders);(vii)amendorwaivethisSection11.3orthedefinitionoftheterm“RequiredLenders”insofarassuchdefinitionaffectsthesubstanceofthisSection11.3;or(viii)permittheassignmentortransferbyBorrowerofanyofitsrightandobligationshereunder(whichactionshallbedeemedtodirectlyaffectallLenders).
(d)Noamendment,modification,terminationorwaivershall,unlessotherwisepermittedbythisAgreementorunlessconsentedtoinwritingandsignedbyAdministrativeAgentandallLenders,(i)release,orpermitBorroweroranyObligortosellorotherwisedisposeof,allorsubstantiallyalloftheCollateral,orreleaseanyObligorfromanyguarantyofanyoralloftheObligationsor(ii)amendSection6.4(a)hereof.
(e)AgentsandLendersshallnot,byanyact,delay,omissionorotherwisebedeemedtohaveexpresslyorimpliedlywaivedanyofitsortheirrights,powersand/orremediesunlesssuchwaivershallbeinwritingandsignedasprovidedherein.Anysuchwaivershallbeenforceableonlytotheextentspecificallysetforththerein.AwaiverbyanyAgentoranyLenderofanyright,powerand/orremedyonanyoneoccasionshallnotbeconstruedasabartoorwaiverofanysuchright,powerand/orremedywhichanyAgentoranyLenderwouldotherwisehaveonanyfutureoccasion,whethersimilarinkindorotherwise.
(f)TheconsentofeachAgentshallberequiredforanyamendment,waiverorconsentaffectingtherightsordutiesofsuchAgenthereunderorunderanyoftheotherFinancingAgreements,inadditiontotheconsentoftheLendersotherwiserequiredbythisSection.
(g)TheconsentofSwingLineLendershallberequiredforanyamendment,waiverorconsentaffectingtherightsordutiesoftheSwingLineLenderinitscapacityassuch.
11.4WaiverofCounterclaims.
Borrowerwaivesallrightstointerposeanyclaims,deductions,setoffsorcounterclaimsofanynature(otherthancompulsorycounterclaims)inanyactionorproceedingwithrespecttothisAgreement,theObligations,theCollateraloranymatterarisingtherefromorrelatingheretoorthereto.
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11.5Indemnification.
BorrowershallindemnifyandholdeachAgentandeachLender,andtheirrespectivedirectors,agents,employeesandcounsel,harmlessfromandagainstanyandalllosses,claims,damages,liabilities,costsorexpensesimposedon,incurredbyorassertedagainstanyoftheminconnectionwithanylitigation,investigation,claimorproceedingcommencedorthreatenedrelatedtothenegotiation,preparation,execution,delivery,enforcement,performanceoradministrationofthisAgreement,anyotherFinancingAgreements,oranyundertakingorproceedingrelatedtoanyofthetransactionscontemplatedherebyoranyact,omission,eventortransactionrelatedorattendantthereto,includingamountspaidinsettlement,courtcosts,andthefeesandexpensesofcounselexceptforanysuchlosses,claims,liabilities,costsorexpensesresultingfromthegrossnegligenceorwillfulmisconductofanyAgentoranyLenderasdeterminedpursuanttoafinalnon-appealableorderofacourtofcompetentjurisdiction.Totheextentthattheundertakingtoindemnify,payandholdharmlesssetforthinthisSectionmaybeunenforceablebecauseitviolatesanylaworpublicpolicy,BorrowershallpaythemaximumportionwhichitispermittedtopayunderapplicablelawtoAgentsandLendersinsatisfactionofindemnifiedmattersunderthisSection.TheforegoingindemnityshallsurvivethepaymentoftheObligationsandtheterminationofthisAgreement.
SECTION 12. THE AGENT S
12.1Appointment,PowersandImmunities.
EachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreement)irrevocablydesignates,appointsandauthorizesWellsFargotoactasbothAdministrativeAgentandCollateralAgent,hereunderandundertheotherFinancingAgreementswithsuchpowersasarespecificallydelegatedtoAdministrativeAgentandCollateralAgent,respectivelybythetermsofthisAgreementandoftheotherFinancingAgreements,togetherwithsuchotherpowersasarereasonablyincidentalthereto.Agents(a)shallhavenodutiesorresponsibilitiesexceptthoseexpresslysetforthinthisAgreementandintheotherFinancingAgreements,andshallnotbyreasonofthisAgreementoranyotherFinancingAgreementbeatrusteeorfiduciaryforanyLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices);(b)shallnotberesponsibletoLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)foranyrecitals,statements,representationsorwarrantiescontainedinthisAgreementorinanyoftheotherFinancingAgreements,orinanycertificateorotherdocumentreferredtoorprovidedforin,orreceivedbyanyofthemunder,thisAgreementoranyotherFinancingAgreement,orforthevalue,validity,effectiveness,genuineness,enforceabilityorsufficiencyofthisAgreementoranyotherFinancingAgreementoranyotherdocumentreferredtoorprovidedforhereinorthereinorforanyfailurebyBorroweroranyObligororanyotherPersontoperformanyofitsobligationshereunderorthereunder;and(c)shallnotberesponsibletoLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)foranyactiontakenoromittedtobetakenbyithereunderorunderanyotherFinancingAgreementorunderanyotherdocumentorinstrumentreferredtoorprovidedforhereinorthereinorinconnectionherewithortherewith,exceptforitsowngrossnegligenceorwillfulmisconductasdetermined
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byafinalnon-appealablejudgmentofacourtofcompetentjurisdiction.EachAgentmayemployagentsandattorneys-in-factandshallnotberesponsibleforthenegligenceormisconductofanysuchagentsorattorneys-in-factselectedbyitingoodfaith.Agentsmaydeemandtreatthepayeeofanynoteastheholderthereofforallpurposeshereofunlessanduntiltheassignmentthereofpursuanttoanagreement(ifandtotheextentpermittedherein)informandsubstancesatisfactorytoAgentsshallhavebeendeliveredtoandacknowledgedbyAgents.
12.2ReliancebyAgents.
EachAgentshallbeentitledtorelyuponanycertification,noticeorothercommunication(includinganythereofbytelephone,telecopy,telex,telegramorcable)believedbyittobegenuineandcorrectandtohavebeensignedorsentbyoronbehalfoftheproperPersonorPersons,anduponadviceandstatementsoflegalcounsel,independentaccountantsandotherexpertsselectedbysuchAgent.AstoanymattersnotexpresslyprovidedforbythisAgreementoranyotherFinancingAgreement,eachAgentshallinallcasesbefullyprotectedinacting,orinrefrainingfromacting,hereunderorthereunderinaccordancewithinstructionsgivenbytheRequiredLendersorallLendersasisrequiredinsuchcircumstance,andsuchinstructionsofsuchAgentandanyactiontakenorfailuretoactpursuanttheretoshallbebindingonallLenders.
12.3EventsofDefault.
(a)AgentsshallnotbedeemedtohaveknowledgeornoticeoftheoccurrenceofanEventofDefaultorotherfailureofaconditionprecedenttotheLoansandLetterofCreditAccommodationshereunder,unlessanduntiltherespectiveAgenthasreceivedwrittennoticefromaLender,orBorrowerspecifyingsuchEventofDefaultoranyunfulfilledconditionprecedent,andstatingthatsuchnoticeisa“NoticeofDefaultorFailureofCondition”.IntheeventthatAdministrativeAgentreceivessuchaNoticeofDefaultorFailureofCondition,AdministrativeAgentshallgivepromptnoticethereoftotheLenders.EachAgentshall(subjecttoSection12.7)takesuchactionwithrespecttoanysuchEventofDefaultorfailureofconditionprecedentasshallbedirectedbytheRequiredLenders.NotwithstandingtheexistenceoroccurrenceandcontinuanceofanEventofDefaultoranyotherfailuretosatisfyanyoftheconditionsprecedentsetforthinSection4ofthisAgreementtothecontrary,AdministrativeAgentmay,butshallhavenoobligationto,continuetomakeRevolvingLoansandissueorcausetobeissuedLetterofCreditAccommodationsfortheratableaccountandriskofLendersfromtimetotimeifAdministrativeAgentbelievesmakingsuchRevolvingLoansorissuingorcausingtobeissuedsuchLetterofCreditAccommodationsisinthebestinterestsofLenders.
(b)ExceptwiththepriorwrittenconsentofAdministrativeAgent,neitherCollateralAgentnoranyLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreement)mayassertorexerciseanyenforcementrightorremedyinrespectoftheLoans,LetterofCreditAccommodationsorotherObligations,asagainstBorroweroranyObligororanyoftheCollateralorotherpropertyofBorroweroranyObligor.
12.4WellsFargoinitsIndividualCapacity.
WithrespecttoanyCommitmentitmaymakeandanyLoansmadeandLetterofCreditAccommodationsissuedorcausedtobeissuedbyit(andanysuccessoractingasanAgent),if
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andtotheextentthatWellsFargoshallbeaLenderhereunder,itshallhavethesamerightsandpowershereunderasanyotherLenderandmayexercisethesameasthoughitwerenotactingasanAgent,andtheterm“Lender”or“Lenders”shall,unlessthecontextotherwiseindicates,includeWellsFargoinitsindividualcapacityasLenderhereunder.WellsFargo(andanysuccessoractingasAdministrativeAgentorCollateralAgent,respectively)anditsAffiliatesmay(withouthavingtoaccountthereforetoanyLender)lendmoneyto,makeinvestmentsinandgenerallyengageinanykindofbusinesswithBorrower(andanyofitsSubsidiariesorAffiliates)asifitwerenotactingasanAgent,andWellsFargoanditsAffiliatesmayacceptfeesandotherconsiderationfromBorrowerandanyofitsSubsidiariesandAffiliatesforservicesinconnectionwiththisAgreementorotherwisewithouthavingtoaccountforthesametoLenders.
12.5Indemnification.
Lenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)agreetoindemnifyAgents(totheextentnotreimbursedbyBorrowerhereunderandwithoutlimitinganyobligationsofBorrowerhereunder)ratably,inaccordancewiththeirProRataShares,foranyandallclaimsofanykindandnaturewhatsoeverthatmaybeimposedon,incurredbyorassertedagainstanyAgent(includingbyanyLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices))arisingoutoforbyreasonofanyinvestigationinorinanywayrelatingtoorarisingoutofthisAgreement,anyHedgingAgreement,anyBankProduct,anyCashManagementServices,oranyotherFinancingAgreementoranyotherdocumentscontemplatedbyorreferredtohereinorthereinorthetransactionscontemplatedherebyorthereby(includingthecostsandexpensesthateachAgentisobligatedtopayhereunder)ortheenforcementofanyofthetermshereoforthereoforofanysuchotherdocuments,provided,that,noLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)shallbeliableforanyoftheforegoingtotheextentitarisesfromthegrossnegligenceorwillfulmisconductofthepartytobeindemnifiedasdeterminedbyafinalnon-appealablejudgmentofacourtofcompetentjurisdiction,andfurtherprovidedthatifnoEventofDefaulthasoccurred,theLendersshallnotbeobligatedtoreimbursetheAgentsforanycostsincurredinconnectionwithfieldexaminationsunderSection7.6hereofinexcessof$15,000inanyyear.
12.6Non-RelianceonAgentsandOtherLenders.
EachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)agreesthatithas,independentlyandwithoutrelianceonanyAgentorotherLenders,andbasedonsuchdocumentsandinformationasithasdeemedappropriate,madeitsowncreditanalysisofBorrowerandObligorsandhasmadeitsowndecisiontoenterintothisAgreementandthatitwill,independentlyandwithoutrelianceuponanyAgentoranyotherLender,andbasedonsuchdocumentsandinformationasitshalldeemappropriateatthetime,continuetomakeitsownanalysisanddecisionsintakingornottakingactionunderthisAgreementoranyoftheotherFinancingAgreements.NeitherAgentshallberequiredtokeepitselfinformedastotheperformanceorobservancebyBorroweroranyObligorofanytermorprovisionofthisAgreementoranyoftheotherFinancingAgreementsoranyotherdocumentreferredtoorprovidedforhereinorthereinortoinspectthepropertiesorbooksofBorroweroranyObligor.
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AdministrativeAgentwillusereasonableeffortstoprovideLenderswithanyinformationreceivedbyAdministrativeAgentfromBorroweroranyObligorregardingitsfinancialperformanceortheCollateral(includingthecollateralreportsidentifiedinSection7.1andthefinancialinformationdeliveredbytheBorrowerhereunder)orwhichisotherwiserequiredtobeprovidedtoLendershereunderandwithacopyofanyNoticeofDefaultorFailureofConditionreceivedbyAdministrativeAgentfromBorroweroranyLender;provided,that,AdministrativeAgentshallnotbeliabletoanyLenderforanyfailuretodoso,excepttotheextentthatsuchfailureisattributabletoAdministrativeAgent’sowngrossnegligenceorwillfulmisconductasdeterminedbyafinalnon-appealablejudgmentofacourtofcompetentjurisdiction.
12.7FailuretoAct.
ExceptforactionexpresslyrequiredofAgentshereunderandundertheotherFinancingAgreements,eachAgentshallinallcasesbefullyjustifiedinfailingorrefusingtoacthereunderandthereunderunlessitshallreceivefurtherassurancestoitssatisfactionfromLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)oftheirindemnificationobligationsunderSection12.5hereofagainstanyandallliabilityandexpensethatmaybeincurredbyitbyreasonoftakingorcontinuingtotakeanysuchaction.
12.8AdditionalLoans.
AdministrativeAgentshallnotmakeanyRevolvingLoansorprovideanyLetterofCreditAccommodationstoBorroweronbehalfofLendersintentionallyandwithactualknowledgethatsuchRevolvingLoansorLetterofCreditAccommodationswouldcausetheaggregateamountofthetotaloutstandingRevolvingLoansandLetterofCreditAccommodationstoBorrowertoexceedtheamountoftheLoansavailabletoBorrowerasofsuchtimebasedonthelendingformulassetforthinSection2.1(a),withoutthepriorconsentofallLenders,except,that,AdministrativeAgentmaymakesuchadditionalRevolvingLoansorprovidesuchadditionalLetterofCreditAccommodationsonbehalfofLenders,intentionallyandwithactualknowledgethatsuchLoansorLetterofCreditAccommodationswillcausethetotaloutstandingRevolvingLoansandLetterofCreditAccommodationstoBorrowertoexceedtheamountoftheLoansavailabletoBorrowerasofsuchtimebasedonthelendingformulassetforthinSection2.1(a),asAdministrativeAgentmaydeemnecessaryoradvisableinitsdiscretion,provided,that:(a)thetotalprincipalamountoftheadditionalRevolvingLoansoradditionalLetterofCreditAccommodationstoBorrowerwhichAdministrativeAgentmaymakeorprovideafterobtainingsuchactualknowledgethattheaggregateprincipalamountoftheRevolvingLoansequalorexceedtheamountoftheLoansavailabletoBorrowerasofsuchtimebasedonthelendingformulassetforthinSection2.1.(a)shallnotexceedtheamountequalto$10,000,000outstandingatanytimelessthethenoutstandingamountofanySpecialAgentAdvancesandshallnotcausethetotalprincipalamountoftheRevolvingLoansandLetterofCreditAccommodationstoexceedtheMaximumCreditand(b)withouttheconsentofallLenders,AdministrativeAgentshallnotmakeanysuchadditionalRevolvingLoansorLetterofCreditAccommodationsmorethansixty(60)daysfromthedateofthefirstsuchadditionalRevolvingLoansorLetterofCreditAccommodations.EachLendershallbeobligatedtopayAdministrativeAgenttheamountofitsProRataShareofanysuchadditionalRevolvingLoansorLetterofCreditAccommodationsprovidedthatAdministrativeAgentisactinginaccordancewiththetermsofthisSection12.8.
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12.9ConcerningtheCollateralandtheRelatedFinancingAgreements.
EachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)authorizesanddirectsAgentstoenterintothisAgreementandtheotherFinancingAgreements.EachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)agreesthatanyactiontakenbyanyAgentorRequiredLendersorallLendersinaccordancewiththetermsofthisAgreementortheotherFinancingAgreementsandtheexercisebyanyAgentoranycategoryofLendersoftheirrespectivepowerssetforththereinorherein,togetherwithsuchotherpowersthatarereasonablyincidentalthereto,shallbebindinguponalloftheLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices).
12.10FieldAudit,ExaminationReportsandotherInformation;DisclaimerbyLenders.
BysigningthisAgreement,eachLender:
(a)isdeemedtohaverequestedthatCollateralAgentfurnishsuchLender,promptlyafteritbecomesavailable,acopyofeachfieldauditorexaminationreportandaweeklyreportwithrespecttotheamountoftheLoansavailabletoBorrowerasofsuchtimebasedonthelendingformulassetforthinSection2.1.(a)preparedbyCollateralAgent(eachfieldauditorexaminationreportandweeklyreportwithrespecttotheamountoftheLoansavailabletoBorrowerasofsuchtimebasedonthelendingformulassetforthinSection2.1.(a)beingreferredtohereinasa“Report”andcollectively,“Reports”)andBorrowerherebyconsentstothedistributionofsuchReports;
(b)expresslyagreesandacknowledgesthatCollateralAgent(A)doesnotmakeanyrepresentationorwarrantyastotheaccuracyofanyReport,or(B)shallnotbeliableforanyinformationcontainedinanyReport;
(c)expresslyagreesandacknowledgesthattheReportsarenotcomprehensiveauditsorexaminations,thatCollateralAgentoranyotherpartyperforminganyauditorexaminationwillinspectonlyspecificinformationregardingBorrowerandtheSubsidiariesandwillrelysignificantlyuponBorrower’sandtheSubsidiaries’booksandrecords,aswellasonrepresentationsofBorrower’sandtheSubsidiaries’personnel;and
(d)agreestokeepallReportsconfidentialandstrictlyforitsinternaluseandnottodistributeoruseanyReportinanyothermanner.
12.11CollateralMatters.
(a)AdministrativeAgentmay,atitsoption,fromtimetotime,atanytimeonorafteranEventofDefaultandforsolongasthesameiscontinuingoruponanyotherfailureof
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aconditionprecedenttotheRevolvingLoansandLetterofCreditAccommodationshereunder,makesuchdisbursementsandadvances(“SpecialAgentAdvances”)whichAdministrativeAgent,initssolediscretion,deemsnecessaryordesirableeither(i)topreserveorprotecttheCollateraloranyportionthereof(providedthatinnoeventshallSpecialAgentAdvancesforsuchpurposeexceedtheamountequalto$10,000,000intheaggregateoutstandingatanytimelessthethenoutstandingRevolvingLoansunderSection12.8hereof)or(ii)topayanyotheramountchargeabletoBorrowerpursuanttothetermsofthisAgreementoranyoftheotherFinancingAgreementsconsistingofcosts,feesandexpensesandpaymentstoanyLCIssuerofLetterofCreditAccommodations.SpecialAgentAdvancesshallberepayableondemand,shallbearinterestattheInterestRateforPrimeRateLoansineffectaftertheoccurrenceofanEventofDefault,andbesecuredbytheCollateral.SpecialAgentAdvancesshallnotconstituteLoansbutshallotherwiseconstituteObligationshereunder.AdministrativeAgentshallnotifyeachLenderandBorrowerinwritingofeachsuchSpecialAgentAdvance,whichnoticeshallincludeadescriptionofthepurposeofsuchSpecialAgentAdvance.WithoutlimitationofitsobligationspursuanttoSection6.9,eachLenderagreesthatitshallmakeavailabletoAdministrativeAgent,uponAdministrativeAgent’sdemand,inimmediatelyavailablefunds,theamountequaltosuchLender’sProRataShareofeachsuchSpecialAgentAdvance.IfsuchfundsarenotmadeavailabletoAdministrativeAgentbysuchLender,AdministrativeAgentshallbeentitledtorecoversuchfunds,ondemandfromsuchLendertogetherwithinterestthereonforeachdayfromthedatesuchpaymentwasdueuntilthedatesuchamountispaidtoAdministrativeAgentattheFederalFundsRateforeachdayduringsuchperiodandifsuchamountsarenotpaidwithinthree(3)daysofAdministrativeAgent’sdemand,atthehighestInterestRateprovidedforinSection3.1hereofapplicabletoPrimeRateLoans.
(b)Lenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)herebyirrevocablyauthorizeCollateralAgent,toreleaseanysecurityinterestin,mortgageorlienupon,anyoftheCollateral(i)uponterminationoftheCommitmentsandpaymentandsatisfactionofalloftheObligationsanddeliveryofcashcollateraltotheextentrequiredunderSection13.1below,or(ii)constitutingpropertybeingsoldordisposedofifBorrowercertifiestoCollateralAgentthatthesaleordispositionismadeincompliancewithSection9.7or9.16hereof(andCollateralAgentmayrelyconclusivelyonanysuchcertificate,withoutfurtherinquiry),or(iii)constitutingpropertyinwhichBorroweroranyObligordidnotownaninterestatthetimethesecurityinterest,mortgageorlienwasgrantedoratanytimethereafter,or(iv)ifapproved,authorizedorratifiedinwritingbytheapplicableLenderspursuanttoSection11.3hereof.Exceptasprovidedabove,CollateralAgentwillnotreleaseanysecurityinterestin,mortgageorlienupon,anyoftheCollateralwithoutthepriorwrittenauthorizationoftheapplicableLenderspursuanttoSection11.3hereof.
(c)WithoutanymannerlimitingCollateralAgent’sauthoritytoactwithoutanyspecificorfurtherauthorizationorconsentbytheLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices),eachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)agreestoconfirminwriting,uponrequestbyCollateralAgent,theauthoritytoreleaseCollateralconferreduponCollateralAgentunderthisSectionandinSection11.3(d)hereof.CollateralAgentshall(andisherebyirrevocablyauthorizedbyLendersto)executesuchdocumentsasmay
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benecessarytoevidencethereleaseofthesecurityinterest,mortgageorliensgrantedtoCollateralAgentuponanyCollateraltotheextentsetforthaboveandinSection11.3(d)hereof;provided,that,(i)CollateralAgentshallnotberequiredtoexecuteanysuchdocumentontermswhich,ineitherAgent’sopinion,wouldexposeCollateralAgenttoliabilityorcreateanyobligationsorentailanyconsequenceotherthanthereleaseofsuchsecurityinterest,mortgageorlienswithoutrecourseorwarrantyand(ii)suchreleaseshallnotinanymannerdischarge,affectorimpairtheObligationsoranysecurityinterest,mortgageorlienupon(orobligationsofBorroweroranyObligorinrespectof)theCollateralretainedbyBorrowerorsuchObligor.
(d)NoAgentshallhaveanyobligationwhatsoevertoanyLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)oranyotherPersontoinvestigate,confirmorassurethattheCollateralexistsorisownedbyBorroweroranyObligororiscaredfor,protectedorinsuredorhasbeenencumbered,orthatanyparticularitemsofCollateralmeettheeligibilitycriteriaapplicableinrespectoftheLoansorLetterofCreditAccommodationshereunder,orwhetheranyparticularreservesareappropriate,orthattheliensandsecurityinterestsgrantedtoCollateralAgentpursuantheretooranyoftheFinancingAgreementsorotherwisehavebeenproperlyorsufficientlyorlawfullycreated,perfected,protectedorenforcedorareentitledtoanyparticularpriority,ortoexerciseatallorinanyparticularmannerorunderanydutyofcare,disclosureorfidelity,ortocontinueexercising,anyoftherights,authoritiesandpowersgrantedoravailabletoCollateralAgentinthisAgreementorinanyoftheotherFinancingAgreements,itbeingunderstoodandagreedthatinrespectoftheCollateral,oranyact,omissionoreventrelatedthereto,subjecttothepriorconsentofAdministrativeAgent,CollateralAgentmayactinanymanneritmaydeemappropriate,initsdiscretion,givenCollateralAgent’sowninterestintheCollateralasaLenderandthat,subjecttoactinginaccordancewiththeconsentofAdministrativeAgent,CollateralAgentshallhavenodutyorliabilitywhatsoevertoanyotherLender.
12.12AgencyforPerfection.
EachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreement)andAdministrativeAgentherebyappointsCollateralAgentandeachotherLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreement)andAgentasagentandbaileeforthepurposeofperfectingthesecurityinterestsinandliensupontheCollateralofCollateralAgentinassetswhich,inaccordancewithArticle9oftheUCCcanbeperfectedonlybypossession(orwherethesecurityinterestofasecuredpartywithpossessionhaspriorityoverthesecurityinterestofanothersecuredparty)andeachLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)andAgentherebyacknowledgesthatitholdspossessionofanysuchCollateralforthebenefitofCollateralAgentassecuredparty.ShouldanyLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)obtainpossessionofanysuchCollateral,suchLender(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices)shallnotifyCollateralAgentthereof,and,promptlyuponCollateralAgent’srequestthereforshalldeliversuchCollateraltoCollateralAgentorinaccordancewithCollateralAgent’sinstructions.
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12.13SuccessorAgent.
EitherAgentmayresignatanytimebygivingnotlessthan30days’priorwrittennoticethereoftoLendersandBorrower.Uponanysuchresignation,theRequiredLendersshallhavetheright,withthepriorconsentofeachotherAgent,toappointasuccessorAdministrativeAgentorCollateralAgent,asapplicable.IfnosuccessorAgentshallhavebeensoappointedbytheRequiredLendersandotherAgentsandshallhaveacceptedsuchappointmentwithin30daysaftertheresigningAgent’sgivingnoticeofresignation,thentheresigningAgentmay,onbehalfofLenders(includinganyLenderinitscapacityasacounterpartytoaHedgingAgreement),appointasuccessorAgent,whichshallbeaLender,ifaLenderiswillingtoacceptsuchappointment,orotherwiseshallbeacommercialbankorfinancialinstitutionorasubsidiaryofacommercialbankorfinancialinstitutionifsuchcommercialbankorfinancialinstitutionisorganizedunderthelawsoftheUnitedStatesofAmericaorofanyStatethereofandhasacombinedcapitalandsurplusofatleast$500,000,000.IfnosuccessorAgenthasbeenappointedpursuanttotheforegoing,within30daysafterthedatesuchnoticeofresignationwasgivenbytheresigningAgent,suchresignationshallbecomeeffectiveandtheRequiredLendersshallthereafterperformallthedutiesofsuchresigningAgenthereunderuntilsuchtime,ifany,astheRequiredLendersappointasuccessorAgentasprovidedabove.AnysuccessorAgentappointedbyRequiredLendersandAgentshereundershallbesubjecttotheapprovalofBorrower,suchapprovalnottobeunreasonablywithheldordelayed;providedthatsuchapprovalshallnotberequiredifanEventofDefaulthasoccurredandiscontinuing.UpontheacceptanceofanyappointmentasAdministrativeAgentorCollateralAgent,asapplicable,hereunderbyasuccessorAgent,suchsuccessorAgentshallsucceedtoandbecomevestedwithalltherights,powers,privilegesanddutiesoftheresigningAgent.UpontheearlieroftheacceptanceofanyappointmentasAgenthereunderbyasuccessorAgentortheeffectivedateoftheresigningAgent’sresignation,theresigningAgentshallbedischargedfromitsdutiesandobligationsunderthisAgreementandtheotherFinancingAgreements,exceptthatanyindemnityrightsorotherrightsinfavorofsuchresigningAgentshallcontinue.AfteranyresigningAgent’sresignationhereunder,theprovisionsofthisSection12shallinuretoitsbenefitastoanyactionstakenoromittedtobetakenbyitwhileitwasactingasAgentunderthisAgreementandtheotherFinancingAgreements.
12.14HedgingAgreements;BankProducts;CashManagementServices.
EachLenderagreesthatinitscapacityasacounterpartytoaHedgingAgreementwithBorrowerorastheproviderofanyBankProductsorCashManagementServicestotheBorrower,itshallnotbedeemedtohaveanyrightsasaLenderhereunderexceptfortherighttoreceiveproceedsofCollateral,asacounterpartytoaHedgingAgreement,orproviderofBankProductsandCashManagementServicesintheorderandmannersetforthinSection6.4(a)hereof.EachLenderfurtheragreesthatAdministrativeAgentshallhavenodutiestoaLenderhereunderinitscapacityasacounterpartytoaHedgingAgreement,orasaproviderofBankProductsorCashManagementServices,otherthaninrespectofsuchLender’sentitlementstoproceedsofCollateral,asacounterpartytoaHedgingAgreementorproviderofBankProductsandCashManagementServices,intheorderandmannersetforthinSection6.4(a)hereof.NothinginthisSection12.14isintendedtodiminishorotherwisealteranyLender’srights,oreitherAgent’sdutiestosuchLender,underthisAgreementastoLenderinitscapacityasaLenderhereunder.
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12.15DefaultingLender.
(a)IfforanyreasonanyLendershallfailorrefusetoabidebyitsobligationsunderthisAgreement,includingwithoutlimitationitsobligationtomakeavailabletoAdministrativeAgentitsProRataShareofanyLoans,expensesorsetofforpurchaseitsProRataShareofaparticipationinterestintheSwingLineLoansorLetterofCreditAccommodationsandsuchfailureisnotcuredwithinone(1)BusinessDayafterreceiptfromtheAdministrativeAgentofwrittennoticethereof,then,inadditiontotherightsandremediesthatmaybeavailabletotheAgents,theotherLenders,theBorroweroranyotherpartyatlaworinequity,andnotatlimitationthereof,(i)suchDefaultingLender’srighttoparticipateintheadministrationof,ordecision-makingrightsrelatedto,theObligations,thisAgreementortheotherFinancingAgreementsshallbesuspendedduringthependencyofsuchfailureorrefusal,andsuchDefaultingLendershallnotbeentitledtovoteorconsentonanymatterpursuanttoSection11.3anditsLoansandCommitmentsshallbeexcludedfromthecalculationofRequiredLenders,and(ii)aDefaultingLendershallbedeemedtohaveassignedanyandallpaymentsduetoitfromtheBorrowerandObligors,whetheronaccountofoutstandingLoans,interest,feesorotherwise,totheremainingnon-DefaultingLendersforapplicationto,andreductionof,theirproportionatesharesofalloutstandingObligationsuntil,asaresultofapplicationofsuchassignedpaymentstheLenders’respectiveProRataSharesofalloutstandingObligationsshallhavereturnedtothoseineffectimmediatelypriortosuchdelinquencyandwithoutgivingeffecttothenonpaymentcausingsuchdelinquency,and/or(iii)attheoptionoftheAdministrativeAgent,anyamountpayabletosuchDefaultingLenderhereunder(whetheronaccountofprincipal,interest,feesorotherwise)shall,inlieuofbeingdistributedtosuchDefaultingLender,beretainedbytheAdministrativeAgentascashcollateralforfuturefundingobligationsoftheDefaultingLenderinrespectofanyLoanorexistingorfutureparticipatinginterestinanySwingLineLoanorLetterofCreditAccommodation.TheDefaultingLender’sdecision-makingandparticipationrightsandrightstopaymentsassetforthinclauses(i)and(ii)hereinaboveshallberestoredonlyuponthepaymentbytheDefaultingLenderofitsProRataShareofanyObligations,anyparticipationobligation,orexpensesastowhichitisdelinquent,togetherwithinterestthereonattheFederalFundsRatefromthedatewhenoriginallydueuntilthedateuponwhichanysuchamountsareactuallypaid.
(b)Thenon-DefaultingLendersshallalsohavetheright,butnottheobligation,intheirrespective,soleandabsolutediscretion,tocausetheterminationandassignment,withoutanyfurtheractionbytheDefaultingLenderfornocashconsideration(prorata,basedontherespectiveCommitmentsofthoseLenderselectingtoexercisesuchright),oftheDefaultingLender’sCommitmenttofundfutureLoans.UponanysuchpurchaseoftheProRataShareofanyDefaultingLender,theDefaultingLender’sshareinfutureLoansandLetterofCreditAccommodationsanditsrightsundertheFinancingAgreementswithrespecttheretoshallterminateonthedateofpurchase,andtheDefaultingLendershallpromptlyexecutealldocumentsreasonablyrequestedtosurrenderandtransfersuchinterest,including,ifsorequested,anAssignmentandAcceptance.AnyassignmentofaDefaultingLender’sLoansand/orCommitmentsshallbemadeinaccordancewithSection13.6.
(c)IfanyLenderisaDeterioratingLenderoraDefaultingLender,thentheBorrowermay,atitssoleexpenseandeffort,uponnoticetosuchLenderandtheAdministrativeAgent,requiresuchLendertoassignanddelegate,withoutrecourse(inaccordancewithand
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subjecttotherestrictionscontainedin,andconsentsrequiredby,Section13.6),allofitsinterests,rightsandobligationsunderthisAgreementandtherelatedFinancingAgreementstoanEligibleTransfereethatshallassumesuchobligations(whichEligibleTransfereemaybeanotherLender,ifaLenderacceptssuchassignment),providedthat:(i)suchLendershallhavereceivedpaymentofanamountequaltotheoutstandingprincipalofitsLoansandLetterofCreditAccommodationsowedtosuchLender,accruedinterestthereon,accruedfeesandallotheramountspayabletoithereunderandundertheotherFinancingAgreementsfromtheEligibleTransferee(totheextentofsuchoutstandingprincipalandaccruedinterestandfees)ortheBorrower(inthecaseofallotheramounts),(ii)suchassignmentdoesnotconflictwithapplicablelaw,and(iii)totheextentthatsuchEligibleTransfereeisnotaLender,suchassignmentshallbesubjecttothewrittenconsentoftheAdministrativeAgent,whichconsentshallnotbeunreasonablywithheld.ALendershallnotberequiredtomakeanysuchassignmentordelegationif,priorthereto,asaresultofawaiverbysuchLenderorotherwise,thecircumstancesentitlingtheBorrowertorequiresuchassignmentanddelegationceasetoapply.
(d)EachDefaultingLendershallindemnifytheAdministrativeAgentandeachnon-DefaultingLenderfromandagainstanyandallloss,damageorexpenses,includingbutnotlimitedtoreasonableattorneys’feesandfundsadvancedbytheAdministrativeAgentorbyanynon-DefaultingLender,onaccountofaDefaultingLender’sfailuretotimelyfunditsProRataShareofaLoanortootherwiseperformitsobligationsundertheFinancingAgreements.
12.16OtherAgents;ArrangersandManagers.
NoneoftheLendersorotherPersonsidentifiedonthefacingpageorsignaturepagesofthisAgreementasa“syndicationagent,”“documentationagent,”“co-agent,”“bookmanager,”“leadmanager,”“arranger,”“leadarranger”or“co-arranger”,ifany,shallhaveanyright,power,obligation,liability,responsibilityordutyunderthisAgreementotherthan,inthecaseofsuchLenders,thoseapplicabletoallLendersassuch.Withoutlimitingtheforegoing,noneoftheLendersorotherPersonssoidentifiedshallhaveorbedeemedtohaveanyfiduciaryrelationshipwithanyLender.EachLenderacknowledgesthatithasnotrelied,andwillnotrely,onanyoftheLendersorotherPersonssoidentifiedindecidingtoenterintothisAgreementorintakingornottakingactionhereunder.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1Term.
(a)ThisAgreementandtheotherFinancingAgreementsshallbecomeeffectiveasofthedatesetforthonthefirstpagehereofandshallcontinueinfullforceandeffectforatermendingonDecember6,2018(the“TerminationDate”),unlesssoonerterminatedpursuanttothetermshereof.BorrowermayterminatethisAgreementatanytimeuponten(10)dayspriorwrittennoticetoAdministrativeAgent(whichnoticeshallbeirrevocable)andAdministrativeAgentorRequiredLendersmayterminatethisAgreementatanytimeonorafteranEventofDefault.UpontheeffectivedateofterminationofthisAgreement,BorrowershallpaytoAdministrativeAgent,infull,alloutstandingandunpaidObligationsandshallfurnishcashcollateraltoAdministrativeAgentinsuchamountsasAdministrativeAgentdeterminesarereasonablynecessarytosecure(orreimburse)AdministrativeAgentfromloss,cost,damageor
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expense,includingattorneys’feesandlegalexpenses,inconnectionwithanycontingentObligations,includingissuedandoutstandingLetterofCreditAccommodationsandchecksorotherpaymentsprovisionallycreditedtotheObligations,outstandingBankProducts,HedgingAgreementsandCashManagementServices,and/orastowhichanyAgentoranyLenderhasnotyetreceivedfinalandindefeasiblepayment.SuchpaymentsinrespectoftheObligationsandcashcollateralshallberemittedbywiretransferinFederalfundstosuchbankaccountofAdministrativeAgent,asAdministrativeAgentmay,initsdiscretion,designateinwritingtoBorrowerforsuchpurpose.InterestshallbedueuntilandincludingthenextBusinessDay,iftheamountssopaidbyBorrowertothebankaccountdesignatedbyAdministrativeAgentarereceivedinsuchbankaccountlaterthan2:00P.M.orasmaybeotherwisepermittedbytheAdministrativeAgentatitssolediscretion.
(b)NoterminationofthisAgreementortheotherFinancingAgreementsshallrelieveordischargeBorrowerofitsrespectiveduties,obligationsandcovenantsunderthisAgreementortheotherFinancingAgreementsuntilallObligationshavebeenfullyandfinallydischargedandpaid,andCollateralAgent’scontinuingsecurityinterestintheCollateralandtherightsandremediesofAgentsandtheLendershereunder,undertheotherFinancingAgreementsandapplicablelaw,shallremainineffectuntilallsuchObligationshavebeenfullyandfinallydischargedandpaid.
13.2InterpretativeProvisions.
(a)AlltermsusedhereinwhicharedefinedinArticle1orArticle9oftheUCCshallhavethemeaningsgiventhereinunlessotherwisedefinedinthisAgreement.
(b)Allreferencestothepluralhereinshallalsomeanthesingularandtothesingularshallalsomeanthepluralunlessthecontextotherwiserequires.
(c)AllreferencestoBorrower,AgentsandLenderspursuanttothedefinitionssetforthintherecitalshereto,ortoanyotherpersonherein,shallincludetheirrespectivesuccessorsandassigns.
(d)Thewords“hereof”,“herein”,“hereunder”,“thisAgreement”andwordsofsimilarimportwhenusedinthisAgreementshallrefertothisAgreementasawholeandnotanyparticularprovisionofthisAgreementandasthisAgreementnowexistsormayhereafterbeamended,modified,supplemented,extended,renewed,restatedorreplaced.
(e)Theword“including”whenusedinthisAgreementshallmean“including,withoutlimitation”.
(f)Allreferencestotheterm“goodfaith”usedhereinwhenapplicabletoeitherAgentshallmean,notwithstandinganythingtothecontrarycontainedhereinorintheUCC,honestyinfactintheconductortransactionconcerned.BorrowershallhavetheburdenofprovinganylackofgoodfaithonthepartofsuchAgentallegedbyBorroweratanytime.
(g)AnEventofDefaultshallexistorcontinueorbecontinuinguntilsuchEventofDefaultiswaivedinaccordancewithSection11.3oriscuredinamannerreasonablysatisfactorytoAdministrativeAgent,ifsuchEventofDefaultiscapableofbeingcuredasreasonablydeterminedbyAdministrativeAgent.
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(h)AnyaccountingtermusedinthisAgreementshallhave,unlessotherwisespecificallyprovidedherein,themeaningcustomarilygiveninaccordancewithGAAP,andallfinancialcomputationshereundershallbecomputedunlessotherwisespecificallyprovidedherein,inaccordancewithGAAPasconsistentlyappliedandusingthesamemethodforinventoryvaluationasusedinthepreparationofthefinancialstatementsofBorrowermostrecentlyreceivedbyAdministrativeAgentpriortothedatehereof.
(i)Inthecomputationofperiodsoftimefromaspecifieddatetoalaterspecifieddate,theword“from”means“fromandincluding”,thewords“to”and“until”eachmean“tobutexcluding”andtheword“through”means“toandincluding”.
(j)Unlessotherwiseexpresslyprovidedherein,(i)referenceshereintoanyagreement,documentorinstrumentshallbedeemedtoincludeallsubsequentamendments,modifications,supplements,extensions,renewals,restatementsorreplacementswithrespectthereto,butonlytotheextentthesamearenotprohibitedbythetermshereoforofanyotherFinancingAgreement,and(ii)referencestoanystatuteorregulationaretobeconstruedasincludingallstatutoryandregulatoryprovisionsconsolidating,amending,replacing,recodifying,supplementingorinterpretingthestatuteorregulation.
(k)Unlessotherwisespecified,allreferenceshereintotimesofdayshallbereferencestoCentraltime(daylightorstandard,asapplicable).
(l)ThecaptionsandheadingsofthisAgreementareforconvenienceofreferenceonlyandshallnotaffecttheinterpretationofthisAgreement.
(m)ThisAgreementandotherFinancingAgreementsmayuseseveraldifferentlimitations,testsormeasurementstoregulatethesameorsimilarmatters.Allsuchlimitations,testsandmeasurementsarecumulativeandshalleachbeperformedinaccordancewiththeirterms.
(n)ThisAgreementandtheotherFinancingAgreementsaretheresultofnegotiationsamongandhavebeenreviewedbycounseltoAdministrativeAgentandtheotherparties,andaretheproductsofallparties.Accordingly,thisAgreementandtheotherFinancingAgreementsshallnotbeconstruedagainstAgentsorLendersmerelybecauseofeitherAgent’soranyLender’sinvolvementintheirpreparation.
13.3Notices.
Allnotices,requestsanddemandshereundershallbeinwritinganddeemedtohavebeengivenormade:ifdeliveredinperson,immediatelyupondelivery;ifbytelex,telegramorfacsimiletransmission,immediatelyuponsendinganduponconfirmationofreceipt;ifbynationallyrecognizedovernightcourierservicewithinstructionstodeliverthenextBusinessDay,one(1)BusinessDayaftersending;andifbycertifiedmail,returnreceiptrequested,five(5)daysaftermailing.Allnotices,requestsanddemandsuponthepartiesaretobegiventothe
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followingaddresses(ortosuchotheraddressasanypartymaydesignatebynoticeinaccordancewiththisSection):
IftoBorrower:
UltaSalon,Cosmetics&Fragrance,Inc.Suite1201000RemingtonBlvd.Bolingbrook,IL60440-4708Attention:GreggBodnarTelephoneNo.:(630)410-4633TelecopyNo.:(630)410-4864
withacopy,inthecaseofaDefaultorEventofDefault,to:
Latham&WatkinsSuite5800233S.WackerDriveChicago,Illinois60606Attention:VikPuriTelephoneNo.:(312)876-7700TelecopyNo.:(312)993-9767
IftoAdministrativeAgentortheCollateralAgent:
WellsFargoBank,NationalAssociationOneBostonPlaceBoston,Massachusetts02109Attention:JasonSearleTelephoneNo.:(617)854-7292TelecopyNo.:(617)523-4029
withacopyto:
Riemer&BraunsteinLLPThreeCenterPlazaBoston,Massachusetts02108Attention:JasonDelMonicoTelephoneNo.:(617)880-3496TelecopyNo.:(617)880-3456
NoticesandothercommunicationstotheLendersandtheLCIssuerhereundermayalsobedeliveredorfurnishedbyelectroniccommunication(includinge-mailandInternetorintranetwebsites)pursuanttoproceduresapprovedbytheAdministrativeAgent.TheAdministrativeAgentortheBorrowermay,initsdiscretion,agreetoacceptnoticesandothercommunicationstoithereunderbyelectroniccommunicationspursuanttoproceduresapprovedbyit,providedthatapprovalofsuchproceduresmaybelimitedtoparticularnoticesorcommunications.UnlesstheAdministrativeAgentotherwiseprescribes,(i)noticesandothercommunicationssenttoane-mailaddressshallbedeemedreceiveduponthesender’sreceiptofanacknowledgementfromtheintendedrecipient(suchasbythe“returnreceiptrequested”function,asavailable,returne-mailorotherwrittenacknowledgement),providedthatifsuchnoticeorothercommunicationisnotsentduringthenormalbusinesshoursoftherecipient,suchnoticeorcommunicationshallbedeemedtohavebeensentattheopeningofbusinessonthenextBusinessDayfortherecipient,and(ii)noticesorcommunicationspostedtoanInternetorintranetwebsiteshallbedeemedreceiveduponthedeemedreceiptbytheintendedrecipientatitse-mailaddressasdescribedintheforegoingclause(i)ofnotificationthatsuchnoticeorcommunicationisavailableandidentifyingthewebsiteaddresstherefor.
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13.4PartialInvalidity.
IfanyprovisionofthisAgreementisheldtobeinvalidorunenforceable,suchinvalidityorunenforceabilityshallnotinvalidatethisAgreementasawhole,butthisAgreementshallbeconstruedasthoughitdidnotcontaintheparticularprovisionheldtobeinvalidorunenforceableandtherightsandobligationsofthepartiesshallbeconstruedandenforcedonlytosuchextentasshallbepermittedbyapplicablelaw.
13.5Successors.
ThisAgreement,theotherFinancingAgreementsandanyotherdocumentreferredtohereinorthereinshallbebindinguponandinuretothebenefitofandbeenforceablebyAgents,Lenders,Borrowerandtheirrespectivesuccessorsandassigns,exceptthatBorrowermaynotassignitsrightsunderthisAgreement,theotherFinancingAgreementsandanyotherdocumentreferredtohereinorthereinwithoutthepriorwrittenconsentofAgentsandLenders.Anysuchpurportedassignmentwithoutthepriorwrittenconsentshallbevoid.NoLendermayassignitsrightsandobligationsunderthisAgreementwithoutthepriorwrittenconsentofAdministrativeAgent,exceptasprovidedinSection13.6below.ThetermsandprovisionsofthisAgreementandtheotherFinancingAgreementsareforthepurposeofdefiningtherelativerightsandobligationsofBorrower,AgentsandLenderswithrespecttothetransactionscontemplatedherebyandthereshallbenothirdpartybeneficiariesofanyofthetermsandprovisionsofthisAgreementoranyoftheotherFinancingAgreements.
13.6Assignments;Participations.
(a)EachLendermay(i)assignalloraportionofitsrightsandobligationsunderthisAgreement(including,withoutlimitation,aportionofitsCommitments,theLoansowingtoitanditsrightsandobligationsasaLenderwithrespecttoLetterofCreditAccommodations)andtheotherFinancingAgreementsto(A)itsparentcompanyand/oranyAffiliateofsuchLenderwhichisatleastfifty(50%)percentownedbysuchLenderoritsparentcompanyor(B)oneormoreLendersor(C)anyperson(whetheracorporation,partnership,trustorotherwise)thatisengagedinthebusinessofmaking,purchasing,holdingorotherwiseinvestinginbankloansandsimilarextensionsofcreditintheordinarycourseofitsbusinessandisadministeredormanagedbyaLenderorwithrespecttoanyLenderthatisafundwhichinvestsinbankloansandsimilarextensionsofcredit,anyotherfundthatinvestsinbankloansandsimilarextensionsofcreditandismanagedbythesameinvestmentadvisorassuchLenderorbyanAffiliateofsuchinvestmentadvisoror(ii)assignalloraportionofitsrightsandobligationsunderthisAgreementtooneormoreEligibleTransferees,eachofwhichassigneesshallbecomeapartytothisAgreementasaLenderbyexecutionofanAssignmentandAcceptance;provided,that,(A)theconsentofAdministrativeAgentshallberequiredinconnectionwithanyassignmenttoanEligibleTransfereepursuanttoclause(ii)above,whichconsentshallnotbeunreasonablywithheld,(B)absenttheexistenceofanEventofDefault,theconsentofBorrowershallberequiredinconnectionwithanyassignmenttoanEligibleTransfereepursuanttoclause(ii)above,whichconsentshallnotbeunreasonablywithheld;
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(C)ifsuchEligibleTransfereeisnotabank,AdministrativeAgentshallreceivearepresentationinwritingbysuchEligibleTransfereethateither(1)nopartofitsacquisitionofitsLoansismadeoutofassetsofanyemployeebenefitplan,or(2)afterconsultation,ingoodfaith,withBorrowerandprovisionbyBorrowerofsuchinformationasmaybereasonablyrequestedbysuchEligibleTransferee,theacquisitionandholdingofsuchCommitmentsandLoansdoesnotconstituteanon-exemptprohibitedtransactionunderSection406ofERISAandSection4975oftheCode,or(3)suchassignmentisan“insurancecompanygeneralaccount,”assuchtermisdefinedintheDepartmentofLaborProhibitedTransactionClassExemption95.60(issuedJuly12,1995)(“PTCE95-60),and,asofthedateoftheassignment,thereisno“employeebenefitplan”withrespecttowhichtheaggregateamountofsuchgeneralaccount’sreservesandliabilitiesforthecontractsheldbyoronbehalfofsuch“employeebenefitplan”andallother“employeebenefitplans”maintainedbythesameemployer(andaffiliatesthereofasdefinedinSectionV(a)(1)ofPTCE95-60)orbythesameemployeeorganization(ineachcasedeterminedinaccordancewiththeprovisionsofPTCE95-60)exceedsten(10%)percentofthetotalreservesandliabilitiesofsuchgeneralaccount(asdeterminedunderPTCE95-60)(exclusiveofseparateaccountliabilities)plussurplusassetforthintheNationalAssociationofInsuranceCommissionersAnnualStatementfiledwiththestateofdomicileofsuchEligibleTransferee,(D)suchtransferorassignmentwillnotbeeffectiveuntilrecordedbytheAdministrativeAgentontheRegister,(E)exceptasAdministrativeAgentshallotherwiseagree,anysuchassignmentshallbeinaminimumaggregateamountequalto$5,000,000or,ifless,theremainingCommitmentandLoansheldbytheassigningLender.AsusedinthisSection,theterm“employeebenefitplan”shallhavethemeaningassignedtoitinTitleIofERISAandshallalsoincludea“plan”asdefinedinSection4975(e)(1)oftheCodeand(F)anyLenderdesiringtoassignalloranyportionofitsrightsandobligationsunderthisAgreementtoaPersonpursuanttoclause(ii)aboveshallfirstandpriortoanyassignmenttosuchPersonprovideawrittenoffertoeachoftheotherexistingLenderstoacceptsuchassignment,andeachLenderwhohasreceivedsuchoffershallhavetheright,butnoobligation,toacceptsuchassignment,providedthat,nolaterthanseven(7)daysafterreceiptofsuchnotice,eachsuchLendershalladviseAdministrativeAgentandtheBorrowerwhetheritintendstoacceptsuchassignment,andanyLenderthathasnotrespondedwithinsuchperiodshallbedeemedtohavedeclinedsuchassignmentandintheeventthatmorethanoneLenderacceptssuchassignment,theassigningLendershallassignitsrightsandobligationstosuchLendersonaproratabasis.
(b)AdministrativeAgentshallmaintainaregisterofthenamesandaddressesofLenders,theirCommitmentsandtheprincipalamountoftheirLoans(the“Register”).AdministrativeAgentshallalsomaintainacopyofeachAssignmentandAcceptancedeliveredtoandacceptedbyitandshallmodifytheRegistertogiveeffecttoeachAssignmentandAcceptance.TheentriesintheRegistershallbeconclusiveandbindingforallpurposes,absentmanifesterror,andBorrower,anyObligor,AgentsandLendersmaytreateachPersonwhosenameisrecordedintheRegisterasaLenderhereunderforallpurposesofthisAgreement.TheRegistershallbeavailableforinspectionbyBorrowerandanyLenderatanyreasonabletimeandfromtimetotimeuponreasonablepriornotice.
(c)Uponsuchexecution,delivery,acceptanceandrecording,fromandaftertheeffectivedatespecifiedineachAssignmentandAcceptance,(i)theassigneethereundershallbeapartyheretoandtotheotherFinancingAgreementsand,totheextentthatrightsandobligationshereunderhavebeenassignedtoitpursuanttosuchAssignmentandAcceptance,
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havetherightsandobligations(including,withoutlimitation,theobligationtoparticipateinLetterofCreditAccommodations)ofaLenderhereunderandthereunderand(ii)theassigningLendershall,totheextentthatrightsandobligationshereunderhavebeenassignedbyitpursuanttosuchAssignmentandAcceptance,relinquishitsrightsandbereleasedfromitsobligationsunderthisAgreement.IntheeventthatanyLenderassignsorotherwisetransfersalloranypartoftheObligations,AdministrativeAgentshallsonotifyBorrowerandBorrowershall,upontherequestoftheAdministrativeAgent,executenewpromissorynotesinexchangeforthepromissorynotesofsuchassigningLender,ifany.
(d)ByexecutionanddeliveryofanAssignmentandAcceptance,theassignorandassigneethereunderconfirmtoandagreewitheachotherandtheotherpartiesheretoasfollows:(i)otherthanasprovidedinsuchAssignmentandAcceptance,theassigningLendermakesnorepresentationorwarrantyandassumesnoresponsibilitywithrespecttoanystatements,warrantiesorrepresentationsmadeinorinconnectionwiththisAgreementoranyoftheotherFinancingAgreementsortheexecution,legality,enforceability,genuineness,sufficiencyorvalueofthisAgreementoranyoftheotherFinancingAgreementsfurnishedpursuanthereto,(ii)theassigningLendermakesnorepresentationorwarrantyandassumesnoresponsibilitywithrespecttothefinancialpositionofBorrower,anyObligororanyoftheirSubsidiariesortheperformanceorobservancebyBorroweroranyObligorofanyoftheObligations;(iii)suchassigneeconfirmsthatithasreceivedacopyofthisAgreementandtheotherFinancingAgreements,togetherwithsuchotherdocumentsandinformationithasdeemedappropriatetomakeitsowncreditanalysisanddecisiontoenterintosuchAssignmentandAcceptance,(iv)suchassigneewill,independentlyandwithoutrelianceupontheassigningLender,AdministrativeAgentandbasedonsuchdocumentsandinformationasitshalldeemappropriateatthetime,continuetomakeitsowncreditdecisionsintakingornottakingactionunderthisAgreementandtheotherFinancingAgreements,(v)suchassigneeappointsandauthorizesAdministrativeAgenttotakesuchactionasagentonitsbehalfandtoexercisesuchpowersunderthisAgreementandtheotherFinancingAgreementsasaredelegatedtoAgentsbythetermshereofandthereof,togetherwithsuchpowersasarereasonablyincidentalthereto,and(vi)suchassigneeagreesthatitwillperforminaccordancewiththeirtermsalloftheobligationswhichbythetermsofthisAgreementandtheotherFinancingAgreementsarerequiredtobeperformedbyitasaLender.AgentsandLendersmayfurnishanyinformationconcerningBorroweroranyObligorinthepossessionofeitherAgentoranyLenderfromtimetotimetoassigneesandParticipants.
(e)EachLendermaysellparticipationstooneormorebanksorotherentitiesinortoalloraportionofitsrightsandobligationsunderthisAgreementandtheotherFinancingAgreements(including,withoutlimitation,alloraportionofitsCommitmentsandtheLoansowingtoitanditsparticipationintheLetterofCreditAccommodations,withouttheconsentofAdministrativeAgentortheotherLenders);provided,that,(i)suchLender’sobligationsunderthisAgreement(including,withoutlimitation,itsCommitmenthereunder)andtheotherFinancingAgreementsshallremainunchanged,(ii)suchLendershallremainsolelyresponsibletotheotherpartiesheretofortheperformanceofsuchobligations,andBorrower,andAdministrativeAgentshallcontinuetodealsolelyanddirectlywithsuchLenderinconnectionwithsuchLender’srightsandobligationsunderthisAgreementandtheotherFinancingAgreements,(iii)theParticipantshallnothaveanyrightsunderthisAgreementoranyoftheotherFinancingAgreements(theParticipant’srightsagainstsuchLenderinrespectofsuch
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participation(includingrightsinconnectionwithincreasedcostspursuanttoSection3.3hereof)tobethosesetforthintheagreementexecutedbysuchLenderinfavoroftheParticipantrelatingthereto)andallamountspayablebyBorroweroranyObligorhereundershallbedeterminedasifsuchLenderhadnotsoldsuchparticipation;provided,thattheBorrowershallnotberequiredtoreimburseanyParticipantpursuanttotheincreasedcostprovisionsofSection3.3inanyamountwhichexceedstheamountthatwouldhavebeenpayableundersuchprovisionstosuchLenderhadsuchLendernotsoldsuchparticipation,(iv)absenttheexistenceofanEventofDefault,theconsentofBorrower,whichconsentshallnotbeunreasonablywithheld,shallberequiredinconnectionwithanyparticipationtoanEligibleTransfereethatdoesnotconsistof(A)anyLender’sparentcompanyand/oranyAffiliateofsuchLenderwhichisatleastfifty(50%)percentownedbysuchLenderoritsparentcompanyor(B)oneormoreLendersor(C)anyperson(whetheracorporation,partnership,trustorotherwise)thatisengagedinthebusinessofmaking,purchasing,holdingorotherwiseinvestinginbankloansandsimilarextensionsofcreditintheordinarycourseofitsbusinessandisadministeredormanagedbyaLenderorwithrespecttoanyLenderthatisafundwhichinvestsinbankloansandsimilarextensionsofcredit,anyotherfundthatinvestsinbankloansandsimilarextensionsofcreditandismanagedbythesameinvestmentadvisorassuchLenderorbyanAffiliateofsuchinvestmentadvisor,and(v)ifsuchParticipantisnotabank,representthateither(A)nopartofitsacquisitionofitsparticipationismadeoutofassetsofanyemployeebenefitplan,or(B)afterconsultation,ingoodfaith,withBorrowerandprovisionbyBorrowerofsuchinformationasmaybereasonablyrequestedbytheParticipant,theacquisitionandholdingofsuchparticipationdoesnotconstituteanon-exemptprohibitedtransactionunderSection406ofERISAandSection4975oftheCode,or(C)suchparticipationisan“insurancecompanygeneralaccount,“assuchtermisdefinedinthe“PTCE95-60”,and,asofthedateofthetransferthereisno“employeebenefitplan”withrespecttowhichtheaggregateamountofsuchgeneralaccount’sreservesandliabilitiesforthecontractsheldbyoronbehalfofsuch“employeebenefitplan”andallother“employeebenefitplans”maintainedbythesameemployer(andaffiliatesthereofasdefinedinSectionV(a)(1)ofPTCE95-60)orbythesameemployeeorganization(ineachcasedeterminedinaccordancewiththeprovisionsofPTCE95-60)exceedsten(10%)percentofthetotalreservesandliabilitiesofsuchgeneralaccount(asdeterminedunderPTCE95-60)(exclusiveofseparateaccountliabilities)plussurplusassetforthintheNationalAssociationofInsuranceCommissionersAnnualStatementfiledwiththestateofdomicileoftheParticipant.AsusedinthisSection,theterm“employeebenefitplan”shallhavethemeaningassignedtoitinTitleIofERISAandshallalsoincludea“plan”asdefinedinSection4975(e)(1)oftheCode.
(f)AnyLendermayatanytimepledgeorassignasecurityinterestinalloranyportionofitsrightsunderthisAgreement(includingunderitsNote,ifany)tosecureobligationsofsuchLender,including,withoutlimitation,anypledgeorassignmenttosecureobligationstoaFederalReserveBank;providedthatnosuchpledgeorassignmentshallreleasesuchLenderfromanyofitsobligationshereunderorsubstituteanysuchpledgeeorassigneeforsuchLenderasapartyhereto.
(g)Borrowershall,andshallcauseeachofitsSubsidiariesto,assistanyAgentoranyLenderpermittedtosellassignmentsorparticipationsunderthisSection13.6inwhatevermannerreasonablynecessaryinordertoenableoreffectanysuchassignmentorparticipation,including(butnotlimitedto)theexecutionanddeliveryofanyandallagreements,notesandotherdocumentsandinstrumentsasshallberequestedandthedeliveryof
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informationalmaterials,appraisalsorotherdocumentsfor,andtheparticipationofrelevantmanagementinmeetingsandconferencecallswith,potentialLendersorParticipants.Borrowershallcertifythecorrectness,completenessandaccuracy,inallmaterialrespects,ofalldescriptionsofBorroweranditsSubsidiariesandtheiraffairsprovided,preparedorreviewedbyBorrowerthatarecontainedinanysellingmaterialsandallotherinformationprovidedbyitandincludedinsuchmaterials.
13.7Confidentiality.
(a)EachAgentandeachLendershalluseallreasonableeffortstokeepconfidential,inaccordancewithitsrespectivecustomaryproceduresforhandlingconfidentialinformationandsafeandsoundlendingpractices,anynon-publicinformationsuppliedtothembyBorrowerpursuanttothisAgreementwhichisclearlyandconspicuouslymarkedasconfidentialatthetimesuchinformationisfurnishedbyBorrowertoanyAgentoranyLender,provided,that,nothingcontainedhereinshalllimitthedisclosureofanysuchinformation:(i)totheextentrequiredbystatute,rule,regulation,subpoenaorcourtorder,(ii)tobankexaminersandotherregulators,auditorsand/oraccountants,(iii)inconnectionwithanylitigationtowhichanyAgentoranyLenderisaparty,(iv)toanyassigneeorParticipant(orprospectiveassigneeorParticipant)solongassuchassigneeorParticipant(orprospectiveassigneeorParticipant)shallhavefirstagreedinwritingtotreatsuchinformationasconfidentialinaccordancewiththisSection13.7,(v)toanyAffiliate,employee,director,officeroragentofsuchAgentorsuchLendersolongassuchAffiliate,employee,director,officerofagentshallhavebeeninstructedtotreatsuchinformationasconfidentialinaccordancewiththisSection13.7or(vi)tocounselforeitherAgentoranyLenderoranyParticipantorassignee(orprospectiveparticipantorassignee);provided,that,inthecaseofclause(i),suchAgentorLender,asapplicable,shallusereasonableeffortstoprovideBorrowerwithpriornoticeofsuchrequireddisclosureandtheopportunitytoobtainaprotectiveorderinrespectthereofifnoconflictexistswithsuchAgent’sorLender’sgovernmental,regulatoryorlegalrequirements.
(b)InnoeventshallthisSection13.7oranyotherprovisionofthisAgreementorapplicablelawbedeemed:(i)toapplytoorrestrictdisclosureofinformationthathasbeenorismadepublicbyBorroweroranythirdpartywithoutbreachofthisSection13.7orotherwisebecomegenerallyavailabletothepublicotherthanasaresultofadisclosureinviolationhereof,(ii)toapplytoorrestrictdisclosureofinformationthatwasorbecomesavailabletoAgentsorLendersonanon-confidentialbasisfromapersonotherthanBorrower,(iii)requireAgentsorLenderstoreturnanymaterialsfurnishedbyBorrowertoAgentsorLendersor(iv)preventAgentsorLendersfromrespondingtoroutineinformationalrequestsinaccordancewiththeCodeofEthicsfortheExchangeofCreditInformationpromulgatedbyTheRobertMorrisAssociatesorotherapplicableindustrystandardsrelatingtotheexchangeofcreditinformation.TheobligationsofAgentsandLendersunderthisSection13.7shallsupersedeandreplacetheobligationsofAgentsandLendersunderanyconfidentialitylettersignedpriortothedatehereof.
13.8EntireAgreement.
ThisAgreement,theotherFinancingAgreements,anysupplementsheretoorthereto,andanyinstrumentsordocumentsdeliveredortobedeliveredinconnectionherewithortherewith
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representstheentireagreementandunderstandingconcerningthesubjectmatterhereofandthereofbetweenthepartieshereto,andsupersedeallotherprioragreements,understandings,negotiationsanddiscussions,representations,warranties,commitments,proposals,offersandcontractsconcerningthesubjectmatterhereof,whetheroralorwritten.IntheeventofanyinconsistencybetweenthetermsofthisAgreementandanyscheduleorexhibithereto,thetermsofthisAgreementshallgovern.
13.9Counterparts,Etc.
ThisAgreementoranyoftheotherFinancingAgreementsmaybeexecutedinanynumberofcounterparts,eachofwhichshallbeanoriginal,butallofwhichtakentogethershallconstituteoneandthesameagreement.DeliveryofanexecutedcounterpartofthisAgreementoranyoftheotherFinancingAgreementsbytelefacsimileshallhavethesameforceandeffectasthedeliveryofanoriginalexecutedcounterpartofthisAgreementoranyofsuchotherFinancingAgreements.Anypartydeliveringanexecutedcounterpartofanysuchagreementbytelefacsimileshallalsodeliveranoriginalexecutedcounterpart,butthefailuretodososhallnotaffectthevalidity,enforceabilityorbindingeffectofsuchagreement.
13.10NoAdvisoryorFiduciaryResponsibility
Inconnectionwithallaspectsofeachtransactioncontemplatedhereby,theBorrowerandtheObligorseachacknowledgeandagreethat:(i)thecreditfacilityprovidedforhereunderandanyrelatedarrangingorotherservicesinconnectiontherewith(includinginconnectionwithanyamendment,waiverorothermodificationhereoforofanyotherFinancingAgreement)areanarm’s-lengthcommercialtransactionbetweentheBorrowerandObligors,ontheonehand,andtheAgentsandtheLenders,ontheotherhand,andeachoftheBorrowersandObligorsiscapableofevaluatingandunderstandingandunderstandsandacceptstheterms,risksandconditionsofthetransactionscontemplatedherebyandbytheotherFinancingAgreements(includinganyamendment,waiverorothermodificationhereoforthereof);(ii)inconnectionwiththeprocessleadingtosuchtransaction,theeachAgentandLenderisandhasbeenactingsolelyasaprincipalandisnotthefinancialadvisor,agentorfiduciary,fortheBorrower,theObligorsoranyoftheirrespectiveAffiliates,stockholders,creditorsoremployeesoranyotherPerson;(iii)noneoftheAgentsortheLendershasassumedorwillassumeanadvisory,agencyorfiduciaryresponsibilityinfavoroftheBorrowerorObligorswithrespecttoanyofthetransactionscontemplatedherebyortheprocessleadingthereto,includingwithrespecttoanyamendment,waiverorothermodificationhereoforofanyotherFinancingAgreement(irrespectiveofwhetheranyoftheAgentsorLendershasadvisedoriscurrentlyadvisingtheBorrower,anyObligororanyofitsAffiliatesonothermatters)andnoneoftheAgentsandLendershasanyobligationtotheBorrower,anyObligororanyofitsAffiliateswithrespecttothetransactionscontemplatedherebyexceptthoseobligationsexpresslysetforthhereinandintheotherFinancingAgreements;(iv)theAgentsandtheLendersandtheirrespectiveAffiliatesmaybeengagedinabroadrangeoftransactionsthatinvolveintereststhatdifferfromthoseoftheBorrowerandObligorsandtheirrespectiveAffiliates,andnoneoftheAgentsorLendershasanyobligationtodiscloseanyofsuchinterestsbyvirtueofanyadvisory,agencyorfiduciaryrelationship;and(v)theAgentandtheLendershavenotprovidedandwillnotprovideanylegal,accounting,regulatoryortaxadvicewithrespecttoanyofthetransactionscontemplatedhereby(includinganyamendment,waiverorothermodificationhereoforofanyotherFinancing
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Agreement)andeachoftheBorrowerandObligorshasconsulteditsownlegal,accounting,regulatoryandtaxadvisorstotheextentithasdeemedappropriate.EachoftheBorrowerandObligorsherebywaivesandreleases,tothefullestextentpermittedbylaw,anyclaimsthatitmayhaveagainsteachoftheAgentsandLenderswithrespecttoanybreachorallegedbreachofagencyorfiduciaryduty.
13.11CustomerIdentification-USAPatriotActNotice.
EachLenderandAdministrativeAgent(foritselfandnotonbehalfofanyotherparty)herebynotifiesBorrowerthat,pursuanttotherequirementsoftheUSAPatriotAct,TitleIIIofPub.L.107-56,signedintolawOctober26,2001(the“Act”),itisrequiredtoobtain,verifyandrecordinformationthatidentifiesBorrowerand/oritssubsidiaries,whichinformationincludesthenameandaddressofBorrowerand/oritssubsidiariesandotherinformationthatwillallowsuchLenderorAdministrativeAgent,asapplicable,toidentifyBorrowerand/oritssubsidiariesinaccordancewiththeAct.
13.12ForeignAssetControlRegulations
NeitheroftheadvanceoftheLoansnortheuseoftheproceedsofanythereofwillviolatetheTradingWiththeEnemyAct(50U.S.C.§1etseq.,asamended)(the“TradingWiththeEnemyAct”)oranyoftheforeignassetscontrolregulationsoftheUnitedStatesTreasuryDepartment(31CFR,SubtitleB,ChapterV,asamended)(the“ForeignAssetsControlRegulations”)oranyenablinglegislationorexecutiveorderrelatingthereto(whichfortheavoidanceofdoubtshallinclude,butshallnotbelimitedto(a)ExecutiveOrder13224ofSeptember21,2001BlockingPropertyandProhibitingTransactionsWithPersonsWhoCommit,ThreatentoCommit,orSupportTerrorism(66Fed.Reg.49079(2001))(the“ExecutiveOrder”)and(b)theUnitingandStrengtheningAmericabyProvidingAppropriateToolsRequiredtoInterceptandObstructTerrorismActof2001(PublicLaw107-56)).Furthermore,noneoftheBorrowerorObligors(a)isorwillbecomea“blockedperson”asdescribedintheExecutiveOrder,theTradingWiththeEnemyActortheForeignAssetsControlRegulationsor(b)engagesorwillengageinanydealingsortransactions,orbeotherwiseassociated,withanysuch“blockedperson”orinanymannerviolativeofanysuchorder.
13.13WaiverofConsequentialDamages,Etc.
Tothefullestextentpermittedbyapplicablelaw,eachofthepartiesheretoagreesnottoassert,andherebywaives,anyclaimagainstanyotherpartyheretoanditsAffiliatesonanytheoryofliability,forspecial,indirect,consequentialorpunitivedamages(asopposedtodirectoractualdamages)arisingoutof,inconnectionwith,orasaresultof,thisAgreement,anyotherFinancingAgreementoranyagreementorinstrumentcontemplatedhereby,thetransactionscontemplatedherebyorthereby,anyLoanorletterofcreditortheuseoftheproceedsthereof.
13.14PressReleases.
TheBorrowerconsentstothepublicationbyAdministrativeAgentoranyLenderofadvertisingmaterialrelatingtothefinancingtransactionscontemplatedbythisAgreementusingtheBorrower’sname,productphotographs,logoortrademark.AdministrativeAgentorsuchLendershallprovideadraftreasonablyinadvanceofanyadvertisingmaterialtotheBorrower
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foritsapprovalpriortothepublicationthereof(whichapprovalshallnotbeunreasonablywithheldordelayed).AdministrativeAgentreservestherighttoprovidetoindustrytradeorganizationsinformationnecessaryandcustomaryforinclusioninleaguetablemeasurements.
13.15AmendmentandRestatement.
(a)AmendmentandRestatement;NoNovation.OntheClosingDate,theExistingCreditAgreementshallbeamendedandrestatedinitsentiretybythisAgreementand(i)allreferencestotheExistingCreditAgreementinanyFinancingAgreementotherthanthisAgreement(includinganyamendment,waiverorconsent)shallbedeemedtorefertotheExistingCreditAgreementasamendedandrestatedhereby,(ii)allreferencestoanysection(orsubsection)oftheExistingCreditAgreementinanyFinancingAgreement(butnotherein)shallbeamendedtobe,mutatismutandis,referencestothecorrespondingprovisionsofthisAgreement,(iii)exceptasthecontextotherwiseprovides,allreferencestothisAgreementherein(includingforpurposesofindemnificationandreimbursementoffees)shallbedeemedtobereferencestotheExistingCreditAgreementasamendedandrestatedhereby,(iv)theterm“Lenders”asdefinedintheotherFinancingDocumentsshallbedeemedtorefertotheterm“Lenders”asamendedandrestatedherebyand(v)BorrowerherebyreaffirmsallofitsobligationsundereachoftheFinancingDocumentstowhichitisaparty.ThisAgreementisnotintendedtoconstitute,anddoesnotconstitute,anovationoftheobligationsandliabilitiesundertheExistingCreditAgreement(includingtheObligations)ortoevidencepaymentofalloranyportionofsuchobligationsandliabilitiesexcepttotheextentexpresslyprovidedforherein.
(b)EffectonExistingCreditAgreementandontheObligations.OnandaftertheClosingDate,(i)subjecttoclause(iii)below,theExistingCreditAgreementshallbeofnofurtherforceandeffectexcepttoevidencetheincurrencebyBorrowerofthe“Obligations”underandasdefinedtherein(whetherornotsuch“Obligations”arecontingentasoftheClosingDate),(ii)all“ObligationsundertheExistingCreditAgreementasoftheClosingDateshallbedeemedtobeObligationsoutstandingunderthisAgreement(whetherornotsuch“Obligations”arecontingentasoftheClosingDate)and(iii)allsecurityinterestsandliensgrantedundertheFinancingDocumentsshallsurvivetheexecutionanddeliveryofthisAgreementandshallcontinuetosecureallObligations.
[SIGNATUREPAGESFOLLOW]
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INWITNESSWHEREOF,Agents,LendersandBorrowerhavecausedthesepresentstobedulyexecutedasofthedayandyearfirstabovewritten.WELLSFARGOBANK,NATIONALASSOCIATION BORROWER
asAdministrativeAgent,CollateralAgentandLeadArrangerandasaLender ULTASALON,COSMETICS&FRAGRANCE,INC.
By: /s/ By: /s/Title: Title:
Address: ChiefExecutiveOffice:
OneBostonPlace,19thFloor 1000RemingtonBlvd.Boston,Massachusetts02108 Bolingbrook,IL60440-4708
WELLSFARGOBANK,NATIONALASSOCIATION,asLCIssuer
By: /s/ Title:
Address:
JPMORGANCHASEBANK,N.A.,asSyndicationAgentandCo-LeadArranger
By: /s/ Title:
Address:
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PNCBANK,NATIONALASSOCIATION,asDocumentationAgent
By: /s/Title:
Address:
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Exhibit 99
CompanyContacts:ScottSetterstenChiefFinancialOfficer(630)410-4807
LaurelLefebvreVicePresident,InvestorRelations(630)410-5230
KarenMayDirector,PublicRelations(630)410-5457
ULTA BEAUTY ANNOUNCES FORMATION OF NEW HOLDING COMPANY
Bolingbrook,IL–January27,2017–UltaBeauty[NASDAQ:ULTA]todayannouncedthattheCompanywillimplementaholdingcompanyreorganizationonJanuary29,2017,thebeginningoftheCompany’snewfiscalyear.Theprimarypurposeofthereorganizationistocreateamoreefficientcorporatestructure.BusinessoperationsfortheCompanywillnotchangeasaresultofthereorganization.
Pursuanttothisholdingcompanyreorganization,UltaBeauty,Inc.willreplaceUltaSalon,Cosmetics&Fragrance,Inc.asthepublicly-tradedentity.AlloutstandingsharesofcommonstockofUltaSalon,Cosmetics&Fragrance,Inc.willautomaticallyconvertintothesamenumberofsharesofcommonstockofUltaBeauty,Inc.withallofthesamerights,powersandpreferences,andqualifications,limitationsandrestrictions.ThecommonstockoftheCompanywillcontinuetotradeonTheNASDAQGlobalSelectMarketunderthesymbol“ULTA.”ThereisnochangetothedirectorsandexecutiveofficersoftheCompanyasaresultofthecreationoftheholdingcompany.
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About Ulta Beauty
UltaBeauty(NASDAQ:ULTA)isthelargestbeautyretailerintheUnitedStatesandthepremierbeautydestinationforcosmetics,fragrance,skin,haircareproductsandsalonservices.Sinceopeningitsfirststorein1990,UltaBeautyhasgrowntobecomethetopnationalretailerprovidingAllThingsBeauty,AllinOnePlace™.TheCompanyoffersmorethan20,000productsfromover500well-establishedandemergingbeautybrandsacrossallcategoriesandpricepoints,includingUltaBeauty’sownprivatelabel.UltaBeautyalsooffersafull-servicesalonineverystorefeaturinghair,skinandbrowservices.UltaBeautyisrecognizedforitscommitmenttopersonalizedservice,funandinvitingstoresanditsindustry-leadingUltamateRewardsloyaltyprogram.AsofJanuary27,2017,UltaBeautyoperates974retailstoresacross48statesandtheDistrictofColumbiaandalsodistributesitsproductsthroughitswebsite,whichincludesacollectionoftips,tutorialsandsocialcontent.Formoreinformation,visitwww.ulta.com.