Exhibit 10.1

EXECUTION COPY

FIRST AMENDMENT TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

This First Amendment to Third Amended and Restated Credit Agreement (this “Amendment”) is made as of August 30, 2019, by and among:

MICHAELS STORES, INC., a Delaware corporation (the “Lead Borrower”);

the Persons named on Schedule I hereto (together with the Lead Borrower, individually, a “Borrower”, and collectively, the “Borrowers”);

the Persons named on Schedule II hereto (individually, a “Facility Guarantor”, and collectively, the “Facility Guarantors”, and together with the Borrowers, individually, a “Loan Party”, and collectively, the “Loan Parties”);

the LENDERS party hereto; and

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and Collateral Agent;

in consideration of the mutual covenants herein contained and benefits to be derived herefrom.

 

W I T N E S S E T H:

WHEREAS, reference is made to that certain Third Amended and Restated Credit Agreement dated as of May 27, 2016,  as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof (the “Credit Agreement”), by, among others, the Loan Parties, the Lenders party thereto from time to time, and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent; and

WHEREAS, the Loan Parties, the Agents and the Lenders desire to amend certain provisions of the Credit Agreement as set forth herein and subject to the terms and conditions hereof.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1.         Defined Terms.  Capitalized terms used in this Amendment shall have the respective meanings assigned to such terms in the Credit Agreement, as amended pursuant to this Amendment (the “Amended Credit Agreement”) unless otherwise defined herein.

2.         Amendments to Credit Agreement.  The Credit Agreement is hereby amended as follows:

(a)        Composite Credit Agreement.  By deleting the stricken text (indicated textually in the same manner as the following example: stricken text) and by adding the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as reflected in the modifications identified in the document annexed hereto as Annex A attached to this Amendment.

 

 

 

(b)        Amendments to Schedules.  By amending and restating each Schedule to the Credit Agreement in its entirety to read as set forth in the corresponding Schedule annexed hereto as Annex B attached to this Amendment.

3.         [Reserved].

4.         Ratification of Loan Documents.  Except as otherwise expressly provided herein, all terms and conditions of the Credit Agreement, the Security Agreement, the Facility Guarantee and the other Loan Documents remain in full force and effect.  The Loan Parties hereby ratify, confirm, and reaffirm that all representations and warranties of the Loan Parties contained in the Amended Credit Agreement, the Security Agreement and each other Loan Document are true and correct in all material respects on and as of the date hereof, other than representations and warranties that relate solely to an earlier date, which are true and correct in all material respects as of such earlier date, provided that any representations and warranties which are qualified as to “materiality”, “Material Adverse Effect” or similar language are true and correct in all respects as of such respective dates. The Facility Guarantors hereby acknowledge, confirm and agree that the Guaranteed Obligations of the Facility Guarantors under, and as defined in, the Facility Guarantee include, without limitation, all Obligations of the Loan Parties at any time and from time to time outstanding under the Amended Credit Agreement and the other Loan Documents, as such Obligations have been amended and reaffirmed pursuant to this Amendment.  The Loan Parties hereby acknowledge, confirm and agree that the Security Documents (as reaffirmed pursuant to this Amendment) and any and all Collateral previously pledged to the Collateral Agent, for the benefit of the Secured Parties, pursuant thereto (to the extent not released prior to the date hereof), shall continue to secure all applicable Obligations of the Loan Parties at any time and from time to time outstanding under the Amended Credit Agreement and the other Loan Documents, as such Obligations have been, and may hereafter be, amended, restated, supplemented, increased or otherwise modified from time to time.

5.         Conditions to Effectiveness.  This Amendment shall not be effective until each of the following conditions precedent has been fulfilled (or concurrently fulfilled with the effectiveness of this Amendment) to the reasonable satisfaction of the Administrative Agent:

(a)        The Administrative Agent shall have received the following, each dated as of the First Amendment Effective Date (unless otherwise specified), in form and substance reasonably satisfactory to the Administrative Agent):

(i)         from each Loan Party and the Lenders,  either (i) a counterpart of this Amendment signed on behalf of each such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission or electronic pdf copy of a signed signature page of this Amendment) that each such party has signed a counterpart of this Amendment;

2

(ii)       that certain Fee Letter, duly executed on the First Amendment Effective Date by and between the Lead Borrower and the Administrative Agent;

(iii)      Organization Documents and such other documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization and existence of each Loan Party, the authorization of the transactions contemplated by the Loan Documents, incumbency certificates evidencing the identity, authority and capacity of each of certain Responsible Officers thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which such Loan Party is a party or is to be a party on the First Amendment Effective Date and any other legal matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel;

(iv)       a written opinion (addressed to the Administrative Agent, the Collateral Agent and the Lenders and dated the First Amendment Effective Date) of each of (i) Ropes & Gray LLP, counsel for the Loan Parties, (ii) Jones Day, Ohio counsel for the Loan Parties and (iii) Troutman Sanders LLP, Virginia counsel for the Loan Parties, in each case covering such matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby as the Administrative Agent shall reasonably request, which opinions the Loan Parties hereby request such counsel to deliver; and

(v)        the other documents, instruments and agreements set forth on Annex C attached to this Amendment.

(b)        All representations and warranties contained in this Amendment and the other Loan Documents or otherwise made in writing in connection herewith or therewith shall be true and correct in all material respects on and as of the First Amendment Effective Date, other than representations and warranties that relate solely to an earlier date, which shall be true and correct in all material respects as of such earlier date, provided that any representations and warranties which are qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct in all respects as of such respective dates;

(c)        The Collateral Agent shall have received results of searches or other evidence reasonably satisfactory to the Collateral Agent (in each case dated as of a date reasonably satisfactory to the Collateral Agent) indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances and Liens for which termination statements and releases or subordination agreements are being tendered on the First Amendment Effective Date;

3

(d)        [Reserved];

(e)        The Administrative Agent shall be reasonably satisfied with the amount, types and terms and conditions of all insurance maintained by the Loan Parties, and the Administrative Agent shall have received insurance certificates naming the Collateral Agent, on behalf of the Lenders, as an additional insured or lender’s loss payee, as the case may be, under each insurance policy to be maintained with respect to the Collateral and as to which the Administrative Agent shall have reasonably requested to be so named;

(f)        The Administrative Agent shall have received, at least three Business Days prior to the First Amendment Effective Date, all documentation and other information that is required by regulatory authorities and/or the Administrative Agent’s due diligence investigation under applicable “know your customer” laws, Anti-Corruption Laws, and Anti-Money Laundering Laws, including the Patriot Act, to the extent such documentation and other information has been requested in writing by the Administrative Agent at least 10 Business Days prior to the First Amendment Effective Date, and the results of such investigation shall be reasonably satisfactory to the Administrative Agent;

(g)        The Administrative Agent shall have received a Borrowing Base Certificate dated as of the First Amendment Effective Date, relating to the fiscal month ended August 3, 2019, and executed by a Financial Officer of the Lead Borrower, which Borrowing Base Certificate shall demonstrate that Availability as of such date is not less than $500,000,000.00;

(h)        After giving effect to this Amendment and the transactions contemplated hereby, no Default or Event of Default shall be continuing; and

(i)         The Administrative Agent shall be reasonably satisfied that all Credit Party Expenses (including the reasonable fees and expenses of counsel to the Administrative Agent and the Collateral Agent) in connection with the preparation, negotiation, execution and delivery of this Amendment and related documents, to the extent invoiced at least two Business Days prior to the First Amendment Effective Date, shall be paid in full on or prior to the First Amendment Effective Date.

6.         Commitments of Lenders.  Each Lender hereby acknowledges and agrees that upon satisfaction of the conditions precedent specified in Section 5 above, such Lender’s Revolving Credit Commitment shall be the amount specified for such Lender set forth on Schedule 1.01(a) to the Credit Agreement (as amended hereby).  The Administrative Agent and each Lender acknowledge and agree that from and after the First Amendment Effective Date, all payments under the Credit Agreement and the other Loan Documents in respect of the Revolving Credit Commitments (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) shall be made

4

in accordance with such Revolving Credit Commitments as set forth on Schedule 1.01(a) to the Credit Agreement (as amended hereby).

7.         Representations and Warranties.

(a)        The execution, delivery and performance by each Loan Party of this Amendment are within such Loan Party’s corporate or other powers, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (x) contravene the terms of any of such Person’s Organization Documents, (y) conflict with or result in any breach or contravention of, or the creation of any Lien under or require any payment to be made under (i) any other contractual obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Restricted Subsidiaries or (ii) any material order, injunction, writ or decree of any Governmental Authority or any material arbitral award to which such Person or its property is subject; or (z) violate any material Applicable Law; except with respect to any conflict, breach or contravention or payment (but not creation of Liens) referred to in clause (y)(i), to the extent that such conflict, breach, contravention or payment could not reasonably be expected to have a Material Adverse Effect.

(b)        This Amendment has been duly executed and delivered by each Loan Party that is party thereto.  This Amendment constitutes a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, by general principles of equity and an implied covenant of good faith and fair dealing.

(c)        On the First Amendment Effective Date, after giving effect to the transactions contemplated by this Amendment, the Loan Parties, on a Consolidated basis, are Solvent.

(d)        No Material Adverse Effect has occurred since February 2, 2019.

(e)        No consents, licenses or approvals are required in connection with the execution, delivery, or performance by, or enforcement against, any Loan Party, of this Amendment,  except for (i) filings necessary to perfect the Liens on the Collateral granted by the Loan Parties in favor of the Secured Parties, (ii) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect and (iii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make could not reasonably be expected to have a Material Adverse Effect.

(f)        No Default or Event of Default has occurred and is continuing.

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8.         Miscellaneous.

(a)        Each of the Loan Parties hereby acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims against the Agents, the other Secured Parties, or their respective parents, affiliates, predecessors, successors, or assigns, or their officers, directors, employees, attorneys, or representatives, with respect to the Obligations, and that if any of the Loan Parties now has, or ever did have, any offsets, defenses, claims, or counterclaims against such Persons, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Amendment, all of them are hereby expressly WAIVED, and each of the Loan Parties hereby RELEASES such Persons from any liability therefor.

(b)        This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Delivery by telecopier or by electronic pdf copy of an executed counterpart of a signature page to this Amendment shall be effective as delivery of an original executed counterpart of this Amendment.  The Administrative Agent and the Collateral Agent may also require that any such documents and signatures delivered by telecopier or by electronic pdf copy be confirmed by a manually signed original thereof; provided that the failure to request or deliver the same shall not limit the effectiveness of any document or signature delivered by telecopier or by electronic pdf copy.

(c)        This Amendment, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

(d)        If any provision of this Amendment is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Amendment shall not be affected or impaired thereby.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(e)        This Amendment was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

(f)        THIS AMENDMENT AND EACH OTHER LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED,  HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL

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MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

[SIGNATURE PAGES FOLLOW]

 

 

 

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IN WITNESS WHEREOF, the parties have hereunto caused this Amendment to be executed as of the date first above written.

 

 

 

 

MICHAELS STORES, INC., as Lead Borrower and as a Borrower

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

Executive Vice President – Chief Financial Officer

 

 

 

 

 

AARON BROTHERS, INC.

 

ARTISTREE, INC., as Borrowers

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

President and Executive Vice

 

 

President – Chief Financial Officer

 

 

 

 

 

MICHAELS STORES PROCUREMENT COMPANY, INC., as a Borrower

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

Executive Vice President – Chief Financial Officer

 

 

 

 

 

LAMRITE WEST, INC., as a Borrower

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

Executive Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

MICHAELS FUNDING, INC.

 

MICHAELS STORES CARD SERVICES, LLC,

 

as Facility Guarantors

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

President and Chief Financial Officer

 

 

 

 

 

MICHAELS FINANCE COMPANY, INC., as a Facility Guarantor

 

 

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

President and Executive Vice President – Chief

 

 

Financial Officer

 

 

 

 

 

DARICE, INC.

 

DARICE IMPORTS, INC., as Facility Guarantors

 

 

 

By:

/s Denise Paulonis

 

Name:

Denise A. Paulonis

 

Title:

Executive Vice President – Chief

 

 

Financial Officer

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

WELLS FARGO BANK, NATIONAL

 

ASSOCIATION, as Administrative Agent,

 

Collateral Agent, Lender, Swingline Lender and

 

Issuing Bank

 

 

 

By:

/s Joseph Burt

 

Name:

Joseph Burt

 

Title:

Duly Authorized Signatory

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

JPMORGAN CHASE BANK, N.A., as a

 

Lender

 

 

 

 

 

By:

/s Alexander Vardaman

 

Name:

Alexander Vardaman

 

Title:

Authorized Officer

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

BANK OF AMERICA, N.A., as a Lender

 

 

 

 

 

By:

/s Peter Walther

 

Name:

Peter M. Walther

 

Title:

Senior Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

SUNTRUST BANK, as a Lender

 

 

 

 

 

By:

/s Jonathan Keegan

 

Name:

Jonathan Keegan

 

Title:

Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

BARCLAYS BANK PLC, as a Lender

 

 

 

 

 

By:

/s Christopher Aitkin

 

Name:

Christopher M. Aitkin

 

Title:

Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

BRANCH BANKING AND TRUST COMPANY, as a Lender

 

 

 

 

 

By:

/s David Miller

 

Name:

David Miller

 

Title:

Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

BMO HARRIS BANK N.A., as a Lender

 

 

 

 

 

By:

/s Kara Goodwin

 

Name:

Kara Goodwin

 

Title:

Managing Director

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

CITIZENS BANK, NATIONAL ASSOCIATION, as a Lender

 

 

 

 

 

By:

/s Richard Norberg

 

Name:

Richard Norberg

 

Title:

Vice President

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

FIFTH THIRD BANK, as a Lender

 

 

 

 

 

By:

/s Herbert M. Kidd II

 

Name:

Herbert M. Kidd II

 

Title:

Managing Director

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

GOLDMAN SACHS BANK USA, as a Lender

 

 

 

 

 

By:

/s Annie Carr

 

Name:

Annie Carr

 

Title:

Authorized Signatory

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION, as a Lender

 

 

 

 

 

By:

/s Lynne Ciaccia

 

Name:

Lynne Ciaccia

 

Title:

Authorized Officer

 

 

Signature Page to First Amendment to Third Amended and Restated Credit Agreement

Schedule I

 

Borrowers other than the Lead Borrower

 

Aaron Brothers, Inc.

Michaels Stores Procurement Company, Inc.

Artistree, Inc.

Lamrite West, Inc.

 

 

 

 

Schedule II

 

Facility Guarantors

 

Michaels Funding, Inc.

Michaels Finance Company, Inc.

Michaels Stores Card Services, LLC

Darice, Inc.

Darice Imports, Inc.

 

 

Execution VersionEXECUTION COPY

 

Annex A

 

Composite Third Amended and Restated Credit Agreement

 

[see attached]

 

 

 

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

dated as of

May 27, 20162016,

as amended August 30, 2019

 

MICHAELS STORES, INC.,

as Lead Borrower

for

 

THE BORROWERS PARTY HERETO

 

THE FACILITY GUARANTORS PARTY HERETO

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 as Administrative Agent and Collateral Agent

 

BANK OF AMERICA, N.A.

and

JPMORGAN CHASE BANK, N.A.,

as Co-Syndication Agent

 

BANK OF AMERICA, N.A. and

SUNTRUST BANK,as Co-Documentation Agents

 

THE LENDERS PARTY HERETO

 

WELLS FARGO BANK, NATIONAL ASSOCIATION and,

JPMORGAN CHASE BANK, N.A.,

 

and

BANK OF AMERICA, N.A.,

as Joint Lead Arrangers

 

WELLS FARGO BANK, NATIONAL ASSOCIATION and,

JPMORGAN CHASE BANK, N.A.

and

BANK OF AMERICA, N.A.,

as Joint Book RunnersBookrunners

 

iv

TABLE OF CONTENTS

 

 

 

ARTICLE I

 

1

SECTION 1.01

Definitions.

1

SECTION 1.02

Terms Generally.

53 58

SECTION 1.03

Accounting Terms.

55 59

SECTION 1.04

Rounding.

56 61

SECTION 1.05

Times of Day.

56 61

SECTION 1.06

Letter of Credit Amounts.

56 61

SECTION 1.07

Certifications.

56 61

SECTION 1.08

Currency Equivalents Generally.

56 61

SECTION 1.09

Change of Currency.

57 62

SECTION 1.10

Pro Forma and Other Calculations.

57 62

SECTION 1.11

Divisions.

63

SECTION 1.12

Limited Condition Transactions.

63

ARTICLE II Amount and Terms of Credit

58 65

SECTION 2.01

Commitment of the Lenders.

58 65

SECTION 2.02

Increase in Total Commitments.

59 65

SECTION 2.03

Reserves; Changes to Reserves.

61 67

SECTION 2.04

Making of Revolving Loans.

61 68

SECTION 2.05

Overadvances.

63 69

SECTION 2.06

Swingline Loans.

63 69

SECTION 2.07

Notes.

64 70

SECTION 2.08

Interest on Loans.

64 70

SECTION 2.09

Conversion and Continuation of Revolving Loans.

65 71

SECTION 2.10

Alternate RateRates of Interest for Revolving Loans.

66 72

SECTION 2.11

Change in Legality.

66 76

SECTION 2.12

Default Interest.

66 76

SECTION 2.13

Letters of Credit.

67 77

SECTION 2.14

Increased Costs.

74 85

SECTION 2.15

Termination or Reduction of Commitments.

75 86

SECTION 2.16

Optional Prepayment of Loans; Reimbursement of Lenders.

76 87

SECTION 2.17

Mandatory Prepayment; Commitment Termination; Cash Collateral.

77 88

SECTION 2.18

Cash Management.

78 89

SECTION 2.19

Fees.

81 93

SECTION 2.20

Maintenance of Loan Account; Statements of Account.

82 94

SECTION 2.21

Payments; Sharing of Setoff.

83 94

SECTION 2.22

Settlement Amongst Lenders.

84 95

SECTION 2.23

Taxes.

85 96

SECTION 2.24

Mitigation Obligations; Replacement of Lenders.

88 99

SECTION 2.25

Designation of Lead Borrower as Borrowers’ Agent.

89 100

SECTION 2.26

[Reserved].

89 100

SECTION 2.27

Extensions of Loans.

89 100

ARTICLE III  Representations and Warranties

92 104

SECTION 3.01

Existence, Qualification and Power; Compliance with Laws.

92 104

SECTION 3.02

Authorization; No Contravention.

92 104

SECTION 3.03

Governmental Authorization; Other Consents.

93 104

v

SECTION 3.04

Binding Effect.

93 105

SECTION 3.05

Financial Statements; No Material Adverse Effect.

93 105

SECTION 3.06

Litigation.

94 105

SECTION 3.07

No Default.

94 105

SECTION 3.08

Ownership of Property; Liens.

94 106

SECTION 3.09

Environmental Compliance.

94 106

SECTION 3.10

Taxes.

95 107

SECTION 3.11

ERISA; Plan Compliance.

96 107

SECTION 3.12

Subsidiaries; Equity Interests.

96 108

SECTION 3.13

Margin Regulations; Investment Company Act.

96 108

SECTION 3.14

Disclosure.

97 108

SECTION 3.15

Intellectual Property; Licenses, Etc.

97 109

SECTION 3.16

Solvency.

97 109

SECTION 3.17

Subordination of Junior Financing.

97 109

SECTION 3.18

Labor Matters.

97 109

SECTION 3.19

Compliance with Laws and Agreements.

98 109

SECTION 3.20

Security Documents.

98 110

SECTION 3.21

Insurance.

98 110

SECTION 3.22

Patriot ActOFAC;  Sanctions; Anti-Terrorism Laws.Corruption Laws; Anti-Money Laundering Laws; Patriot Act.

99 110

ARTICLE IV Conditions

99 111

SECTION 4.01

Conditions to Effectiveness.

99 111

SECTION 4.02

Conditions Precedent to Each Loan and Each Letter of Credit.

101 113

ARTICLE V Affirmative Covenants

102 114

SECTION 5.01

Financial Statements.

102 114

SECTION 5.02

Certificates; Other Information.

104 116

SECTION 5.03

Notices.

106 118

SECTION 5.04

Payment of Taxes, Etc.

107 119

SECTION 5.05

Preservation of Existence, Etc.

107 119

SECTION 5.06

Maintenance of Properties.

107 119

SECTION 5.07

Maintenance of Insurance.

107 120

SECTION 5.08

Compliance with Laws.

108 121

SECTION 5.09

Books and Records.

108 121

SECTION 5.10

Inspection Rights.

109 121

SECTION 5.11

Covenant to Become a Loan Party and Give Security.

110 123

SECTION 5.12

Compliance with Environmental Laws.

112 125

SECTION 5.13

Further Assurances and Post-Closing Conditions.

112 125

SECTION 5.14

Designation of Subsidiaries.

112 125

SECTION 5.15

Information Regarding Collateral.

113 126

SECTION 5.16

Physical Inventories.

113 126

SECTION 5.17

Use of Proceeds of Credit Extensions.

113 126

SECTION 5.18

[Reserved].

114 126

SECTION 5.19

[Reserved].

114 127

SECTION 5.20

Pension Plans.

114 127

SECTION 5.21

[Reserved].

114 127

SECTION 5.22

[Reserved].

114 127

vi

SECTION 5.23

[Reserved]. OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.

114 127

SECTION 5.24

Financial Covenant.

114 127

ARTICLE VI Negative Covenants

114 127

SECTION 6.01

Liens.

114 127

SECTION 6.02

Investments.

118 131

SECTION 6.03

Indebtedness.

120 134

SECTION 6.04

Fundamental Changes.

124 137

SECTION 6.05

Dispositions.

125 138

SECTION 6.06

Restricted Payments.

128 141

SECTION 6.07

Change in Nature of Business.

130 144

SECTION 6.08

Transactions with Affiliates.

131 144

SECTION 6.09

Burdensome Agreements.

131 145

SECTION 6.10

Accounting Changes.

132 146

SECTION 6.11

Prepayments, Etc., of Indebtedness.

133 146

SECTION 6.12

[Reserved].

133 147

SECTION 6.13

Amendment of Material Documents.

134 148

SECTION 6.14

Designated Account.

134 148

SECTION 6.15

Material Intellectual Property.

148

ARTICLE VII Events of Default

134 148

SECTION 7.01

Events of Default.

134 148

SECTION 7.02

Remedies Upon Event of Default.

137 151

SECTION 7.03

Exclusion of Immaterial Subsidiaries.

138 152

SECTION 7.04

Application of Proceeds.

138 152

ARTICLE VIII The Administrative Agent

139 153

SECTION 8.01

Appointment of Administrative Agent.

139 153

SECTION 8.02

Appointment of Collateral Agent.

139 153

SECTION 8.03

[Reserved].

140 154

SECTION 8.04

Sharing of Excess Payments.

140 154

SECTION 8.05

Agreement of Applicable Lenders.

140 154

SECTION 8.06

Liability of Agents.

140 154

SECTION 8.07

Notice of Default.

141 155

SECTION 8.08

Credit Decisions.

142 156

SECTION 8.09

Reimbursement and Indemnification.

142 156

SECTION 8.10

Rights of Agents.

142 157

SECTION 8.11

Notice of Transfer.

143 157

SECTION 8.12

Successor Agents.

143 157

SECTION 8.13

Relation Among the Lenders.

143 157

SECTION 8.14

Reports and Financial Statements.

143 157

SECTION 8.15

Agency for Perfection.

144 158

SECTION 8.16

Defaulting Lender.

144 158

SECTION 8.17

Collateral and Guarantee Matters.

147 161

SECTION 8.18

Co-Syndication Agent, Co-Documentation Agents, and Arrangers.

147 161

SECTION 8.19

Providers.

162

SECTION 8.20

Certain ERISA Matters.

162

ARTICLE IX Miscellaneous

147 163

vii

SECTION 9.01

Amendments, Etc.

148 163

SECTION 9.02

Notices and Other Communications; Facsimile Copies.

151 167

SECTION 9.03

No Waiver; Cumulative Remedies.

152 168

SECTION 9.04

Attorney Costs and Expenses.

152 168

SECTION 9.05

Indemnification by the Lead Borrower.

153 169

SECTION 9.06

Payments Set Aside.

154 170

SECTION 9.07

Successors and Assigns.

154 170

SECTION 9.08

Confidentiality.

158 173

SECTION 9.09

Setoff.

158 175

SECTION 9.10

Interest Rate Limitation.

159 175

SECTION 9.11

Counterparts.

159 175

SECTION 9.12

Integration.

159 176

SECTION 9.13

Severability.

160 176

SECTION 9.14

GOVERNING LAW.

160 176

SECTION 9.15

WAIVER OF RIGHT TO TRIAL BY JURY.

160 177

SECTION 9.16

Binding Effect.

161 177

SECTION 9.17

Judgment Currency.

161 177

SECTION 9.18

Lender Action.

161 177

SECTION 9.19

PATRIOT ACT, ETC.

161 178

SECTION 9.20

No Advisory or Fiduciary Responsibility.

162 178

SECTION 9.21

[Reserved]. Recognition of U.S. Special Resolution Regime.

162 179

SECTION 9.22

Survival.

162 179

SECTION 9.23

Press Releases and Related Matters.

163 180

SECTION 9.24

Additional Waivers.

163 180

SECTION 9.25

Intercreditor Agreements.

165 182

SECTION 9.26

Existing Credit Agreement Amended and Restated; Amendments to Security Agreement.

166 183

SECTION 9.27

Keepwell.

167 184

SECTION 9.28

Acknowledgement and Consent to Bail-In of EEA Financial Institutions.

167 184

 

viii

EXHIBITS

Exhibit A:

Form of Assignment and Acceptance

Exhibit B:

LIBO Loan Notice

Exhibit C:

Form of Revolving Credit Note

Exhibit D:

Form of Swingline Note

Exhibit E:

Form of Joinder

Exhibit F:

Form of Credit Card Notification

Exhibit G:

Form of Compliance Certificate

Exhibit H:

Form of Borrowing Base Certificate

 

ix

SCHEDULES

 

Schedule 1.01(a):

Lenders and Commitments

Schedule 1.01(b):

Excluded Subsidiaries

Schedule 2.18(b):

Credit Card Arrangements

Schedule 2.18(c):

Blocked Accounts

Schedule 3.01:

Organization Information

Schedule 3.08(b)(i):

Owned Real Estate

Schedule 3.08(b)(ii):

Leased Real Estate

Schedule 3.09(b):

Environmental Matters

Schedule 3.09(d):

Environmental Investigation

Schedule 3.10:

Taxes

Schedule 3.11:

ERISA and Other Pension Matters

Schedule 3.12:

Subsidiaries; Equity Interests

Schedule 5.02:

Lead Borrower’s Website

Schedule 5.02(f):

Reporting Requirements

Schedule 5.07:

Insurance

Schedule 5.14:

Unrestricted Subsidiaries

Schedule 6.01:

Permitted Encumbrances

Schedule 6.02:

Permitted Investments

Schedule 6.03:

Existing Indebtedness

Schedule 6.05:

Permitted Dispositions

Schedule 6.09:

Burdensome Agreements

 

 

 

x

THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 27, 2016, as amended August 30, 2019, among:

MICHAELS STORES, INC., a corporation organized under the laws of the State of Delaware, with its principal executive offices at 8000 Bent Branch Drive, Irving, Texas 75063, for itself and as agent for the Borrowers (in such capacity, the “Lead Borrower”); and

THE OTHER BORROWERS AND THE FACILITY GUARANTORS from time to time party hereto; and

WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, having a place of business at One Boston Place, 18th Floor, Boston, Massachusetts 02108, as administrative agent (in such capacity, the “Administrative Agent”), and as collateral agent (in such capacity, the “Collateral Agent”), for its own benefit and the benefit of the other Secured Parties;

The LENDERS party hereto;

WELLS FARGO BANK, NATIONAL ASSOCIATION, JPMORGAN CHASE BANK, N.A., as Syndication Agent ( and BANK OF AMERICA, N.A., as Arrangers (each, in such capacity, the “Syndication Agentan “Arranger”); and

 

JPMORGAN CHASE BANK, N.A. and BANK OF AMERICA, N.A. and SUNTRUST BANK, each as a Co-DocumentationSyndication Agent (each, in such capacity, a “Co-DocumentationSyndication Agent”).

 

W I T N E S S E T H:

WHEREAS, the Borrowers and the Facility Guarantors have entered into a Second Amended and Restated Credit Agreement, dated as of September 17, 2012 (as in effect, the “Existing Credit Agreement”), by, among others, such Borrowers and Facility Guarantors, the “Lenders” as defined therein and Wells Fargo Bank, National Association, as “Administrative Agent” and “Collateral Agent” thereunder; and

WHEREAS, in accordance with SECTION 9.01 of the Existing Credit Agreement, the parties hereto desire to amend and restate the Existing Credit Agreement as provided herein; and

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the undersigned hereby agree that the Existing Credit Agreement shall be amended and restated in its entirety to read as follows:

ARTICLE I

SECTION 1.01           Definitions.

As used in this Agreement, the following terms have the meanings specified below:

1

ABL Priority Collateral” has the meaning set forth in the Intercreditor Agreement.

ACH” means automated clearing house transfers.

Accommodation Payment” has the meaning provided in SECTION 9.24(d).

Account(s)” means “accounts” as defined in the UCC and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) arising out of the use of a credit or charge card or information contained on or for use with the card.  The term “Account” does not include (a) rights to payment evidenced by chattel paper or an instrument, (b) commercial tort claims, (c) deposit accounts, (d) investment property, or (e) letter-of-credit rights or letters of credit.

Account Debtor” means any Person who is obligated on or under an Account.

“ACH” means automated clearing house transfers.

Acquisition” means, with respect to a specified Person, (a) an Investment in or a purchase of a 50% or greater interest in the Capital Stock of any other Person, (b) a purchase or acquisition of all or substantially all of the assets of any other Person, (c) a purchase or acquisition of a Real Estate portfolio or one or more Stores from any other Person or assets constituting a business unit, line of business or division of any other Person or (d) any merger, amalgamation or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a 50% or greater interest in the Capital Stock of, any Person, in each case in any transaction or group of transactions which are part of a common plan.

Additional Commitment Lender”  has the meaning provided in SECTION 2.02(b).

Additional First Lien Intercreditor Agreement” has the meaning provided in the Term Loan Agreement (as in effect on the Third RestatementFirst Amendment Effective Date).

Additional Junior Lien Intercreditor Agreement” has the meaning provided in the Term Loan Agreement (as in effect on the Third RestatementFirst Amendment Effective Date).

Adjusted LIBO Rate” means:

(a)         for any Interest Period with respect to any LIBO Borrowing, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to (i) the LIBO Rate for such Interest Period multiplied by (ii) the Statutory Reserve Rate; and

(b)         for any interest rate calculation with respect to any Prime Rate Loan, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent), as determined on any day, equal to (i) the LIBO Rate for an Interest Period commencing on the date of such calculation and ending on the date that is one month thereafter multiplied by (ii) the Statutory Reserve Rate.

The Adjusted LIBO Rate will be adjusted automatically as of the effective date of any change in the Statutory Reserve Rate.

Adjustment Date” has the meaning provided in clause (b) of the definition of “Applicable Margin.”

2

Administrative Agent” has the meaning provided in the preamble to this Agreement.

Advisory Agreements” means collectively, (i) the Management Agreement dated as of October 31, 2006 by and among the Lead Borrower, Bain Capital Partners, LLC and Blackstone Management Partners V LLC, as amended and in effect from time to time in a manner not prohibited hereunder and (ii) the Management Agreement dated as of October 31, 2006 by and among the Lead Borrower and Highfields Capital, as amended and in effect from time to time in a manner not prohibited hereunder.

Advisory Fees” means management, monitoring, consulting and advisory fees, closing fees, and termination fees, payments by the Lead Borrower and its Restricted Subsidiaries to the Sponsors made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with Acquisitions or divestitures), and related indemnities and related expenses payable by the Loan Parties pursuant to the Advisory Agreements, as they are in effect on the Second Restatement Date or such increased amount as may be agreed to in writing by the Administrative Agent in its sole commercially reasonable discretion.

Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified.

Agents” means, collectively, the Administrative Agent and the Collateral Agent.

Agreement” means this Third Amended and Restated Credit Agreement, as modified, amended, supplemented or restated, and in effect from time to time.

 “Amendment Transaction Expenses” means any fees or expenses incurred or paid by the Lead Borrower or any Restricted Subsidiary in connection with (a) the amendment and restatement of the Existing Credit Agreement and, (b) the amendment of this Agreement in connection with the First Amendment and (c) the consummation of any other transactions in connection with the foregoing.

“Anti-Corruption Laws” means the Applicable Laws of the United States and Canada from time to time in effect relating to bribery or corruption, including but not limited to the FCPA.

“Anti-Money Laundering Laws” means the Applicable Laws of the United States and Canada from time to time in effect relating to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto, including, without limitation, the Patriot Act.

Applicable Indebtedness” has the meaning provided in the definition of “Weighted Average Life to Maturity”.

Applicable Law” means as to any Person: (a) any and all federal, state, provincial, local and foreign statutes, laws, regulations, ordinances, rules, codes, ordinances, permits, concessions, grants, franchises, licenses, agreements, governmental restrictions or other requirements having the force of law; and (b) all court orders, decrees, judgments, injunctions, enforceable notices, binding agreements and/or rulings, in each case, of or by any Governmental Authority which has jurisdiction over such Person or any property of such Person.

Applicable Lenders” means the Required Lenders, all Lenders or all affected Lenders, in each case, as applicable.

3

Applicable Margin” means:

(a)         from and after the Third Restatement Date until the first Adjustment Date to occur after the Third Restatement Date, the percentages set forth in Level I of the pricing grid below; and

(b)         on the first day of each Fiscal Quarter (each, an “Adjustment Date”) commencing with the Fiscal Quarter beginning on October 30, 2016, the Applicable Margin shall be determined from the pricing grid below based upon average daily Excess Availability for the most recently ended Fiscal Quarter immediately preceding such Adjustment Date:

Level

Average Daily Excess
Availability

LIBO
Applicable
Margin

Prime Rate
Applicable
Margin

I

Greater than or equal to 50% of the Loan Cap

1.25%

0.25%

II

Less than 50% of the Loan Cap

1.50%

0.50%

 

Applicable Unused Fee Rate” means 0.25%. :

(a)         from and after the First Amendment Effective Date until the first Adjustment Date to occur after the First Amendment Effective Date, the percentages set forth in Level I of the pricing grid below; and

(b)         on each Adjustment Date commencing with the Fiscal Quarter beginning on the first Adjustment Date to occur after the First Amendment Effective Date, the Applicable Unused Fee Rate shall be determined from the grid below based upon average daily Excess Availability for the most recently ended Fiscal Quarter immediately preceding such Adjustment Date:

 

 

 

Level

Average Daily Excess
Availability

Applicable
Unused Fee
Rate

I

Greater than or equal to 50% of the Loan Cap

0.25%

II

Less than 50% of the Loan Cap

0.20%

 

Appraised Value” means the net appraised recovery value of the Borrowers’ Inventory as set forth in the Borrowers’ stock ledger (expressed as a percentage of the Cost of such Inventory) as determined by the Administrative Agent in its Permitted Discretion from time to time by reference to the

4

most recent appraisal received by the Administrative Agent conducted by an independent appraiser reasonably satisfactory to the Administrative Agent.

Approved Fund” means, with respect to any Credit Party, any Fund that is administered or managed by (a) such Credit Party, (b) an Affiliate of such Credit Party, (c) an entity or an Affiliate of an entity that administers or manages such Credit Party or (d) the same investment advisor that administers or manages such Credit Party or an investment advisor under common control with such Credit Party or investment advisor, as applicable.

Arrangers” means, collectively, Wells and, JPMorgan Chase Bank, N.A. and Bank of America, N.A., in their respective capacities as joint lead arrangers and joint bookrunners.

Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by SECTION 9.07), and accepted by the Administrative Agent, in substantially the form of Exhibit A, or any other form approved by the Administrative Agent.

Assignment of Claims Act” means the Assignment of Claims Act of 1940 (31 U.S.C. Section 3727 and 41 U.S.C. Section 15), as amended from time to time, and any successor statutes.

Attributable Indebtedness” means, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP;  provided, that all obligations of any Person that are or would be characterized as operating lease obligations in accordance with GAAP immediately prior to the Third Restatement Date (whether or not such operating lease obligations were in effect on such date) shall continue to be accounted for as operating lease obligations (and not as Capitalized Leases) for purposes of this Agreement regardless of any change in GAAP following the Third Restatement Date that would otherwise require such obligations to be recharacterized as Capitalized Leases.

Audited Financial Statements” means the audited consolidated balance sheet of the Lead Borrower and its Subsidiaries as of January 30, 2016 and the related audited consolidated statements of income, stockholders’ equity and cash flows for the Lead Borrower and its Subsidiaries for the fiscal year ended January 30, 2016.

Availability” means, as of any date of determination thereof, the result, if a positive number, of:

(a)          the Loan Cap,

minus

(b)          the aggregate unpaid balance of Credit Extensions to, or for the account of, the Borrowers.

Availability Reserves” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria or Appraised Value, such reserves as the Administrative Agent, from time to time determines in its Permitted Discretion as being appropriate (a) to reflect any impediments to the realization upon the Collateral included in the Borrowing Base (including, without limitation, claims and liabilities that the Administrative Agent determines will need to be satisfied in connection with the realization upon such Collateral), (b) to reflect events, conditions, contingencies or risks which adversely affect any component of the Borrowing Base, the Collateral or the validity or enforceability of this Agreement or the other Loan Documents or any of the material rights or remedies of

5

the Secured Parties hereunder or thereunder and (c) to reflect any restrictions in the Senior Subordinated Note Documents or the Term Loan Agreement on the incurrence of Indebtedness by the Loan Parties, but only to the extent that such restrictions reduce, or with the passage of time could reduce, the amounts available to be borrowed hereunder (including, without limitation as a result of the Loan Parties’ receipt of net proceeds from asset sales) in order for the Loan Parties to comply with the Senior Subordinated Note Documents and the Term Loan Agreement.  Availability Reserves shall include, without limitation, and without duplication, the Cash Management Reserves, the Bank Product Reserves, and the Debt Maturity Reserves.

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Bank Products” means any services or facilities (other than Cash Management Services) provided to (i) any Loan Party or (ii) any Restricted Subsidiary that is not a Loan Party, provided that such services or facilities provided to such Restricted Subsidiary that is not a Loan Party are guaranteed by the Lead Borrower, in each case, by any Lender or any Affiliate of a Lender (and with respect to Swap Contracts, any Lender or Affiliate of a Lender who (x) was a Lender or an Affiliate of a Lender at the time such Swap Contract was entered into and who is no longer a Lender or an Affiliate of a Lender, (y) is, and at all times remains, in compliance with the provisions of SECTION 8.14(a) and (z) agrees in writing that the Agents and the other Secured Parties shall have no duty to such Person (other than the payment of any amounts to which such Person may be entitled under SECTION 7.04) and acknowledges that the Agents and the other Secured Parties may deal with the Loan Parties and the Collateral as they deem appropriate (including the release of any Loan Party or all or any portion of the Collateral) without notice or consent from such Person, whether or not such action impairs the ability of such Person to be repaid its Other Liabilities) on account of (a) Swap Contracts, to the extent designated by the Lead Borrower at the time such Swap Contract is entered into as being Obligations under this Agreement and (b) Factored Receivables, to the extent designated in writing by the Lead Borrower and agreed in writing by the Administrative Agent as being Obligations under this Agreement.

Bank Product Reserves” means such reserves as the Administrative Agent, from time to time after the occurrence and during the continuation of a Cash Dominion Event, determines in its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Bank Products then provided or outstanding.

Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. Section 101 et seq.) as now or hereafter in effect, or any successor thereto, as now or hereafter in effect, or any successor thereto.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

6

Blocked Account” has the meaning provided in SECTION 2.18(c)(ii)SECTION 2.18(c).

Blocked Account Agreement” has the meaning provided in SECTION 2.18(c)(ii).

Blocked Account Banks” means the banks with whom Material DDAs are maintained and with whom a Blocked Account Agreement has been, or is required to be, executed in accordance with the terms hereof.

Bona Fide Debt Fund” shall mean any debt fund or other Person that is engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course and whose managers have fiduciary duties to the third-party investors in such fund or investment vehicle independent of their duties to Holdco or the Sponsors; provided,  however, in no event shall (x) any natural Person or (y) Holdco, any parent of Holdco, the Lead Borrower or any Subsidiary be a “Bona Fide Debt Fund.”

Borrower Minimum Extension Condition” has the meaning provided in SECTION 2.27(b).

Borrowers” means, collectively, the Lead Borrower, the Borrowers identified on the signature pages hereto and each other Person (other than an Excluded Subsidiary) who owns assets of the type included in the Borrowing Base and becomes a Borrower hereunder in accordance with the terms of this Agreement.

Borrowing” means (a) Loans of the same Class and Type, made, converted, or continued on the same date and having, in the case of LIBO Loans, a single Interest Period or (b) a Swingline Loan.

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

(a)         the face amount of Eligible Credit Card Receivables of the Loan Parties multiplied by the Credit Card Advance Rate;

plus

(b)         the face amount of Eligible Trade Receivables of the Loan Parties multiplied by the Trade Receivables Advance Rate;

plus

(c)         the Cost of Eligible Inventory consisting of Eligible Retail Inventory of the Loan Parties, net of Inventory Reserves, multiplied by the Inventory Advance Rate multiplied by the Appraised Value of Eligible Retail Inventory of the Loan Parties;

plus

(d)         the Cost of Eligible Inventory consisting of Eligible Wholesale Inventory of the Loan Parties, net of Inventory Reserves, multiplied by the Inventory Advance Rate multiplied by the Appraised Value of Eligible Wholesale Inventory of the Loan Parties;

plus

(e)         with respect to any Eligible Letter of Credit, the lesser of (i) the Cost of Inventory of the Loan Parties supported by such Eligible Letter of Credit, net of Inventory Reserves, multiplied by the Inventory Advance Rate for such Inventory, multiplied by the

7

Appraised Value of the Inventory supported by such Eligible Letter of Credit and (ii) the Stated Amount of such Eligible Letter of Credit, multiplied by the Inventory Advance Rate, multiplied by the Appraised Value of the Inventory supported by such Eligible Letter of Credit;

minus

(f)         the then amount of all Availability Reserves.

Borrowing Base Certificate” has the meaning provided in SECTION 5.01(e).

Borrowing Request” means a request by the Lead Borrower on behalf of any of the Borrowers for a Borrowing in accordance with SECTION 2.04.

Breakage Costs” has the meaning provided in SECTION 2.16(b).

Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Boston, Massachusetts are authorized or required by law to remain closed (or are in fact closed), provided,  however, that when used in connection with a LIBO Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

Canadian Dollars” means lawful currency of Canada.

Capital Expenditures” means, with respect to the Loan Parties for any period, all expenditures that would be reflected as capital expenditures on a Consolidated statement of cash flows of the Lead Borrower and its Restricted Subsidiaries for such period prepared in accordance with GAAP; provided that “Capital Expenditures” shall not include (i) any additions to property and equipment and other capital expenditures made with the proceeds of any equity securities issued or capital contributions received by any Loan Party or any Subsidiary, (ii) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (x) insurance proceeds paid on account of the loss of or damage to the assets being replaced, restored or repaired, or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (iii) the purchase price of equipment that is purchased substantially concurrently with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (iv) the purchase of property, plant or equipment to the extent financed with the proceeds of Permitted Dispositions that are not required to be applied to prepay the Obligations or the Term Loan Facility, (v) expenditures that are accounted for as capital expenditures by the Lead Borrower or any Restricted Subsidiary and that actually are paid for by a Person other than the Lead Borrower or any Restricted Subsidiary to the extent neither the Lead Borrower nor any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period) other than rent, (vi) any expenditures which are contractually required to be, and are, advanced or reimbursed to the Loan Parties in cash by a third party (including landlords) during such period of calculation, (vii) the book value of any asset owned by the Lead Borrower or any Restricted Subsidiary prior to or during such period to the extent that such book value is included as a Capital Expenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period, provided that (A) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period in which such expenditure actually is made and (B) such book value shall have been included in Capital Expenditures when such asset was originally acquired, (viii) expenditures

8

that constitute Permitted Acquisitions, or (ix) that portion of interest on Indebtedness incurred for Capital Expenditures which is paid in cash or capitalized in accordance with GAAP.

 “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases; provided that for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP; provided,  further, that all obligations of any Person that are or would be characterized as operating lease obligations in accordance with GAAP immediately prior to the Third Restatement Date (whether or not such operating lease obligations were in effect on such date) shall continue to be accounted for as operating lease obligations (and not as Capitalized Leases) for purposes of this Agreement regardless of any change in GAAP following the Third Restatement Date that would otherwise require such obligations to be recharacterized as CapitalizedCapitalized Leases shall, for the avoidance of doubt, exclude all Non-Finance Leases.

Capital Stock” shall mean, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing.

Cash Collateral Account” means an interest bearing account established by the Loan Parties with the Collateral Agent, for the Collateral Agent’s own benefit and the benefit of the other Secured Parties, under the sole and exclusive dominion and control of the Collateral Agent, in the name of the Collateral Agent or as the Collateral Agent shall otherwise direct, in which deposits are required to be made in accordance with SECTION 2.13(k).

Cash Collateralize” has the meaning specified in SECTION 2.13(k).  Derivatives of such term have corresponding meanings.

Cash Dominion Event” means either:  (a) the occurrence and continuance of any Specified Default or (b) the failure of the Borrowers to maintain Availability at least equal to the Threshold Amount for five consecutive Business Days.  For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (unless the Administrative Agent otherwise agrees in its commercially reasonable discretion that the circumstances surrounding such Specified Default cease to exist) (a) so long as such Specified Default is continuing or has not been waived, and/or (b) if the Cash Dominion Event arises as a result of the Borrowers’ failure to achieve Availability as required hereunder, until Availability has exceeded the Threshold Amount for 30 consecutive calendar days, in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement.  The termination of a Cash Dominion Event as provided herein shall in no way limit, waive or delay the occurrence of a subsequent Cash Dominion Event in the event that the conditions set forth in this definition again arise.

Cash Equivalents” means:

(a)         Dollars;

9

(b)         (i) Canadian Dollars, euro or any national currency of any participating member state of the EMU, and (ii) in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

(c)         securities issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition;

(d)         certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $250,000,000 in the case of U.S. banks and, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, $100,000,000 (or the Dollar equivalent as of the date of determination) in the case of non-U.S. banks, and in each case, in a currency permitted under clauses (a) or (b) above;

(e)         repurchase obligations for underlying securities of the types described in clauses (c) and (d) entered into with any financial institution meeting the qualifications specified in clause (d) above and in each case in a currency permitted under clauses (a) or (b) above;

(f)         commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P and in each case maturing within 24 months after the date of creation thereof and in each case in a currency permitted under clauses (a) or (b) above;

(g)         marketable short term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency) and in each case maturing within 24 months after the date of creation thereof and in each case in a currency permitted under clauses (a) or (b) above;

(h)         readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition;

(i)          Indebtedness or preferred stock issued by Persons with a rating of A or higher from S&P or A2 or higher from Moody’s with maturities of 24 months or less from the date of acquisition and in each case in a currency permitted under clauses (a) or (b) above;

(j)          Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s and in each case in a currency permitted under clauses (a) or (b) above;

(k)         investment funds investing substantially all of their assets in securities of the type described in clauses (a) through (j) above; and

(l)          credit card receivables and debit card receivables so long as same are payable by a financial institution and are considered “cash equivalents” in accordance with GAAP and are so reflected on the Lead Borrower’s balance sheet.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (a) and (b) above, provided that such amounts are

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converted into any currency listed in clauses (a) and (b) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

Cash Management Reserves” means such reserves as the Administrative Agent, from time to time after the occurrence and during the continuation of a Cash Dominion Event, determines in its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities and obligations of the Loan Parties with respect to Cash Management Services then provided or outstanding.

Cash Management Services” means any cash management services or facilities provided to any (i) any Loan Party or (ii) any Restricted Subsidiary that is not a Loan Party, provided that such services or facilities provided to such Restricted Subsidiary that is not a Loan Party are guaranteed by the Lead Borrower, in each case, by a Lender or any Affiliate of a Lender, including, without limitation: (a) ACH transactions; (b) controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services; (c) foreign exchange facilities; (d) credit or debit cards;  (e) credit card processing services;  (f) purchase cards;  (g) Commercial Letter of Credit Facilities and (h) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable and drafts/bills of exchange purchases, in each case set forth in this clause (h), to the extent designated in writing by the Lead Borrower and agreed in writing by the Administrative Agent as being Obligations under this Agreement.

Cash Receipts” has the meaning provided in SECTION 2.18(d).

Casualty Event” means any event that gives rise to the receipt by the Lead Borrower or any of its Restricted Subsidiaries that is a Borrower or Subsidiary Facility Guarantor of any insurance proceeds or condemnation awards in respect of any Inventory, equipment, fixed assets or Real Estate (including any improvements thereon).

CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

CFC”  means a “controlled foreign corporation” within the meaning of Section 957(a) of the Code.

Change in Control” means the occurrence of any of the following after the Third Restatement Date:

(a)         the Lead Borrower becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by (i) any Person (other than one or more Permitted Holders) or (ii) Persons (other than one or more Permitted Holders) that together are (1) a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), or (2) acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) as a group in a single transaction or in a related series of transactions, by way of merger, amalgamation, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the voting securities of the Lead Borrower or any of its direct or indirect parent companies holding directly or indirectly 100% of the total voting power of the voting securities of the Lead Borrower; or

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(b)         any “Change in Control” (or any comparable term) in any document pertaining to the Term Loan Facility, the Senior Subordinated Notes or any other Material Indebtedness; or

(c)         the failure of Holdco (or any successor) to own 100% of the Capital Stock of the Lead Borrower.

 “Change in Law” means (a) the adoption of any Applicable Law after the Third Restatement Date, (b) any change in any Applicable Law or in the interpretation or application thereof by any Governmental Authority after the Third Restatement Date or (c) compliance by any Credit Party (or, for purposes of SECTION 2.14, by any lending office of such Credit Party or by such Credit Party’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Third Restatement Date applicable to the Loan Parties.  For purposes of clarity, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Class” (i) when used with respect to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Credit Loans or Extended Revolving Credit Loans (of the same Extension Series), and (ii) when used with respect to Commitments, refers to whether such Commitment is a Revolving Credit Commitment or an Extended Commitment (of the same Extension Series).

Co-DocumentationSyndication Agent” has the meaning provided in the preamble to this Agreement.

Code” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated thereunder, as amended from time to time.

Collateral” means any and all “Collateral”, “Pledged Collateral” or words of similar intent as defined in any applicable Security Document.

Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Collateral Agent executed by (a) a bailee or other Person in possession of Collateral, including, without limitation, any warehouseman or (b) a landlord of Real Estate leased by any Loan Party (including, without limitation, any warehouse or distribution center), pursuant to which such Person (i) acknowledges the Collateral Agent’s Lien on the Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral held by such Person or located on such Real Estate, (iii) agrees to furnish the Collateral Agent with access to the Collateral in such Person’s possession or on the Real Estate for the purposes of conducting a Liquidation and (iv) makes such other agreements with the Collateral Agent as the Collateral Agent may reasonably require.

Collateral Agent” has the meaning provided in the preamble to this Agreement.

Collection Account” has the meaning provided in SECTION 2.18(d).

Commercial Letter of Credit” means any Letter of Credit issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a

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Borrower or a Restricted Subsidiary in the ordinary course of business of such Borrower or Restricted Subsidiary.

Commercial Letter of Credit Agreement” means the Commercial Letter of Credit Agreement relating to the issuance of a Commercial Letter of Credit in the form from time to time in use by the applicable Issuing Bank.

Commercial Letter of Credit Facility” means, with respect to the Lead Borrower or any of its Restricted Subsidiaries, a facility or other arrangement with any Lender or any Affiliate of any Lender providing for the issuance of commercial letters of credit, including any instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals or restatements thereof and any facility or arrangement with any Lender or any Affiliate of any Lender that replaces all or any part of such facility or arrangement, including any such facility or arrangement that increases the aggregate face value of commercial letters of credit to be issued thereunder, whether by the same or any other issuing bank which is a Lender or an Affiliate of a Lender.

Commitments” shall mean, with respect to each Lender (to the extent applicable), such Lender’s Revolving Credit Commitment (including any Incremental Revolving Credit Commitment constituting an increase to such Lender’s Revolving Credit Commitment in accordance with SECTION 2.02) or Extended Commitment (including any Incremental Revolving Credit Commitment constituting an increase to such Lender’s Extended Commitment of a particular Class in accordance with SECTION 2.02).

Commitment Percentage” shall mean, with respect to each Lender, that percentage obtained by dividing (i) such Lender’s Commitments (or, to the extent referring to any single Class of Commitments, such Lender’s Commitments in respect of such Class) at such time by (ii) the amount of the Total Commitment (or, to the extent referring to any single Class of Commitments, the aggregate Commitments of all Lenders in respect of such Class) at such time; provided that at any time when the Total Commitment (or, to the extent referring to any single Class of Commitments, the aggregate Commitments in respect of such Class) shall have been terminated, each Lender’s Commitment Percentage shall be the percentage obtained by dividing (a) such Lender’s Credit Exposure (or, to the extent referring to any single Class of Revolving Loans, such Lender’s Credit Exposure in respect of such Class) at such time by (b) the Credit Exposure of all Lenders at such time (or, to the extent referring to any single Class of Revolving Loans, the Credit Exposure of all Lenders in respect of such Class).

Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

Compliance Certificate” has the meaning provided in SECTION 5.02(b).

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

Consolidated Depreciation and Amortization Expense” means with respect to any Person for any period, the total amount of depreciation and amortization expense of such Person and its Restricted Subsidiaries, including the amortization of deferred financing fees of such Person and its Restricted Subsidiaries, for such period on a Consolidated basis and otherwise determined in accordance with GAAP.

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Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person and its Restricted Subsidiaries for such period:

(a)         increased (without duplication of either (1) any item described in any other clause below or (2) any item excluded in the calculation of Consolidated Net Income) by:

(i)          provision for Consolidated Taxes paid or accrued during such period to the extent the same were deducted (and not added back) in computing Consolidated Net Income; plus

(ii)         (x) Consolidated Interest Expense of such Person for such period, plus  (y) bank fees and costs of surety bonds in connection with financing activities, plus (z) amounts excluded from Consolidated Interest Expense as set forth in clauses (iA) through (ixJ) of clause (a) of the definition thereof, to the extent the same were deducted (and not added back) in calculating such Consolidated Net Income; plus

(iii)       Consolidated Depreciation and Amortization Expense of such Person for such period to the extent the same were deducted (and not added back) in computing Consolidated Net Income; plus

(iv)        any expenses or charges (other than depreciation or amortization expense) related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by this Agreement (including any refinancing or amendment thereof) (in each case, whether or not successful), including (A) such fees, expenses or charges related to this Agreement and, the Term Loan Agreement and the Senior Notes and (B) any amendment or, other modification, or refinancing of the Senior Subordinated Notes, the Senior Notes, this Agreement, the other Loan Documents, the Term Loan Agreement and the other Term Loan Documents, in each case, deducted (and not added back) in computing Consolidated Net Income; plus

(v)         the amount of any restructuring charge or reserve deducted (and not added back) in such period in computing Consolidated Net Income; plus

(vi)        any other non-cash charges, expenses or losses including (v) any write offs or write downs, (w) equity based awards compensation expense, (x) losses on sales, disposals or abandonment of, or any impairment charges or asset write off, related to intangible assets, long-lived assets and investments in debt and equity securities, (y) all losses from investments recorded using the equity method, and (z) other non-cash charges, non-cash expenses or non-cash losses, in each case, reducing Consolidated Net Income for such period (provided that if any such non-cash charges represent an accrual or reserve for potential cash items in any future period, (1) the Lead Borrower may determine not to add back such non-cash charge in the current period, and (2) to the extent the Lead Borrower does decide to add back such non-cash charge, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period); plus

(vii)       the amount of any minority interest expense consisting of Subsidiary income attributable to minority equity or non-controlling interests of third parties in any

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non-wholly-owned Subsidiary deducted (and not added back) in such period in calculating Consolidated Net Income; plus

(viii)     Advisory Feesthe amount of management, monitoring, consulting, transaction, advisory and other fees (including termination fees) and related indemnities and expenses paid or accrued in such period to the Sponsors or Highfields Capital to the extent otherwise permitted hereunderunder SECTION 6.08 and deducted (and not added back) in such period in computing Consolidated Net Income;  plus

(ix)        the amount of “run rate” cost savings, synergies and operating expense reductions projected by the Lead Borrower in good faith to be realized as a result of specified actions taken, committed to be taken or with respect to which substantial steps have been taken or are expected in good faith to be taken no later than 1218 months after the end of such period (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions and/or synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions and/or synergies were realized during the entirety of such period), net of the amount of actual benefits realized during such period from such actions; provided that (x) such cost savings, synergies and operating expense reductions are reasonably identifiable and factually supportable (it is understood and agreed that “run-rate” means the full recurring benefit for a period that is associated with any action taken, committed to be taken or with respect to which substantial steps have been taken or are expected to be taken) and (y) the aggregate amount of cost savings added pursuant to this clause (ix) shall not exceed 1015% of Consolidated EBITDA determined on a Pro Forma Basis for any four consecutive Fiscal Quarter period (which adjustments may be incremental to pro forma adjustments made pursuant to SECTION 1.10); plus

(x)         (i) any charges, costs, expenses, accruals or expensereserves incurred by the Lead Borrower or a Restricted Subsidiary pursuant to any management equity plan, profits interest or stock option plan or any other management or employee benefit plan or agreement or, pension plan or other long-term or post-employment benefits, any stock subscription or shareholder agreement or any distributor equity plan or agreement, including any fair value adjustments that may be required under liquidity puts for such arrangements and (ii) any charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of Capital Stock held by management of the Lead Borrower, any direct or indirect parent company and/or any of its Subsidiaries, in each case, to the extent that such cost orcharges, costs, expenses, accruals or reserves are funded with cash proceeds contributed to the capital of the Lead Borrower or net cash proceeds of anas a result of capital contribution or as a result of the sale or issuance of Capital Stock of the Lead Borrower (other than Disqualified Capital Stock) of the Lead Borrower;  plus

(xi)        any net loss from disposed or discontinued operations; plus

(xii)       cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDA or Consolidated Net Income in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDA pursuant to clause (b) below for any previous period and not added back; and

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(b)         decreased (without duplication), in each case, to the extent included in arriving at such Consolidated Net Income, by:

(i)          non‑cash gains increasing Consolidated Net Income of such Person for such period, excluding any non-cash gains to the extent they represent the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDA in any prior period and any non-cash gains with respect to cash actually received in a prior period so long as such cash did not increase Consolidated EBITDA in such prior period; plus

(ii)         any net income from disposed or discontinued operations (excluding held for sale discontinued operations until actually disposed of); and

(c)         increased or decreased by (without duplication), as applicable, any adjustments resulting from the application of FASB Interpretation No. 45 (Guarantees).

Consolidated Fixed Charge Coverage Ratio” means, with respect to the Lead Borrower and its Restricted Subsidiaries for any period, the ratio of (a) (i) Consolidated EBITDA for such period, plus (ii) Net Proceeds of capital contributions received or Permitted Equity Issuances made during such period to the extent used to make payments on account of Debt Service Charges or Taxes, minus (iii) federal, state and foreign income Taxes paid in cash (net of cash refunds received) during such period,  minus (iv) Capital Expenditures paid in cash which are not financed with the Net Proceeds of Permitted Indebtedness (other than the Obligations) during such period, to (b) Debt Service Charges payable in cash during such period.

Consolidated Interest Expense” means, with respect to the Lead Borrowerany Person and its Restricted Subsidiaries on a Consolidated basis for any period, determined in accordance with GAAP,  :

(a)         total interest expense paid or payable in cash (including that attributable to obligations with respect to Capitalized Leases in accordance with GAAP but excluding any imputed interest as a result of purchase accounting) of the Lead Borrowerrespect of such period of such Person and its Restricted Subsidiaries on a Consolidated basis with respect to all outstanding Indebtedness of the Lead Borrower and its Restricted Subsidiaries, including, without limitation, the Obligations and, including (i) amortization of original issue discount resulting from the issuance of Indebtedness at less than par;  (ii) all commissions, discounts and other fees and charges owed with respect thereto, but excluding (i) any non-cash interest or deferred financing costs, (ii) anyto letters of credit, bank guarantees, bankers’ acceptances or any similar facility or financing and hedging agreements;  (iii) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Swap Contracts or other derivative instruments pursuant to GAAP) and (iv) the interest component of Capitalized Leases and, and excluding (A) amortization or write-down of deferred financing fees, debt issuance costs, discounted liabilities, commissions, fees and expenses,;  (iiiB)  the accretion or accrual of discounted liabilities,;  (ivC)  all non-recurring cash interest expense including liquidated damages for failure to timely comply with registration rights obligations and any non-recurring expense or loss attributable to the early extinguishment or conversion of Indebtedness,;  (vD)  any expensing of bridge, commitment and other financing fees,;  (viE)  penalties and interest related to Taxes, (vii;  (F) any expense resulting from the discounting of Indebtedness in connection with the application of recapitalization accounting or, if applicable, purchase accounting; (Gany prepayment premium or penalty, (viii) any one-time cash;  (H) fees and costs associated with obtaining Swap Contracts and breakage costs in respect of Swap Contracts to the extent such costs would be otherwise included in Consolidated Interest Expense and (ixrelated to interest rates;  (I) any lease, rental or other expense in connection with a Non-Finance

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Lease; and (J)  annual agency and trustee fees paid to any administrative agent or collateral agenttrustee under any credit facilities or other debt instruments or documents,;  less

(b)         interest income of such Person and its Restricted Subsidiaries received or receivable in cash for such period.

For purposes of the foregoing, interest expense of the Lead Borrower and its Restricted Subsidiaries shall be determined after giving effect to any net payments made or received by such Persons with respect to interest rate Swap Contracts.

For purposes of this definition, interest on a Capitalized Lease shall be deemed to accrue at an interest rate reasonably determined by the Lead Borrower to be the rate of interest implicit in such Capitalized Lease in accordance with GAAP.

Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, and otherwise determined in accordance with GAAP; provided,  however, that, without duplication,

(a)         (i) any after‑tax effect of extraordinary, non‑recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses or charges; Amendment Transaction Expenses; severance costs; relocation costs; costs related to the Perfect Store Initiative; pre-opening, opening, consolidation and closing costs for any facilities (including Stores); signing, retention or completion bonuses or recruiting costs; transition costs; costs incurred in connection with acquisitions after the Original Closing Date; restructuring costs; integration and systems establishment costs; and curtailments or modifications to pension and post-retirement employee benefit plans shall be excluded;

(b)         the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period,

(c)         any net after‑tax gains or losses on disposal of disposed, abandoned or discontinued operations shall be excluded,

(d)         any after‑tax effect of gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business, as determined in good faith by the Lead Borrower, shall be excluded,

(e)         the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of the Lead Borrower shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period by such Person,

(f)         solely for the purpose of determining the amount available for Restricted Payments under SECTION 6.06 and for prepayments of Indebtedness under SECTION 6.11, the Net Income for such period of any Restricted Subsidiary (other than any Borrower or Facility Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment,

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decree, order, statute, rule, or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or similar distributions has been legally waived, provided that Consolidated Net Income of the Lead Borrower will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to the Lead Borrower or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein,

(g)         effects of adjustments (including the effects of such adjustments pushed down to the Lead Borrower and its Restricted Subsidiaries) in the merchandise inventory, property and equipment, goodwill, intangible assets, deferred revenue and debt line items in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be excluded,

(h)         any after‑tax effect of income (loss) from the early extinguishment or conversion of Indebtedness or Swap Contracts or other derivative instruments shall be excluded,

(i)          any impairment charge or asset write‑off or write-down, in each case, pursuant to GAAP and the amortization of intangibles arising pursuant to GAAP shall be excluded,

(j)          any non‑cash compensation charge or expense, including any such charge or expense arising from the grant of stock appreciation or similar rights, stock options, restricted stock or other equity-incentive programs shall be excluded,

(k)         any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any Acquisition, Investment, Dispositions, issuance or repayment of Indebtedness, issuance of Capital Stock (including in any public offering of the Lead Borrower or Holdco or any parent company thereof), refinancing transaction or amendment or modification of any debt instrument (in each case, including any such transaction consummated prior to the Third RestatementFirst Amendment Effective Date and any such transaction undertaken but not completed) and any charges or non-recurring merger costs incurred during such period as a result of any such transaction shall be excluded,

(l)          any unrealized net gain or loss (after any offset) resulting in such period from currency transaction or translation gains or losses including those related to currency remeasurements of Indebtedness (including any net loss or gain resulting from (i) Swap Contracts for currency exchange risk and (ii) intercompany indebtedness) and any other foreign currency transaction or translation gains and losses, to the extent such gains or losses are non-cash items shall be excluded, and

(m)        any unrealized net gains and losses (after any offset) resulting from Swap Contracts or embedded derivatives that require similar accounting treatment and the application of Accounting Standards Codification Topic No. 815, Derivatives and Hedging shall be excluded.

In addition, to the extent not already included in the Net Income of such Person and its Restricted Subsidiaries, notwithstanding anything to the contrary in the foregoing, Consolidated Net Income shall include the amount of proceeds received from business interruption insurance and reimbursements of any expenses and charges that are covered by indemnification or other reimbursement provisions in connection with any Permitted Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement.

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Consolidated Taxes” means, as of any date for the applicable period ending on such date with respect to the Lead Borrowerany Person and its Restricted Subsidiaries on a Consolidated basis, the aggregate of all taxes based on income or profits or capital (including pursuant to any tax sharing or tax distribution arrangements), including, without limitation, federal, state, local, provincial, foreign, excise, franchise, property and similar taxes (such as the Pennsylvania capital tax and Texas margin tax) and foreign withholding taxes ofand foreign unreimbursed value added taxes (including, in each case, penalties and interest related to such taxes or arising from tax examinations) of or with respect to such Person as determined in accordance with GAAP, to the extent the same are paid or accrued during such period.

Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms “Controlling” and “Controlled” have meanings correlative thereto.

Cost” means the cost of the Loan Parties’ Inventory as determined in accordance with the Lead Borrower’s accounting policy as in effect as of the Third RestatementFirst Amendment Effective Date, furnished to the Administrative Agent and as reported on the Loan Parties’ stock ledger, as such policy may be modified with the consent of the Administrative Agent, whose consent will not be unreasonably withheld or delayed.

“Covered Entity” means any of the following:

(i)          a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(ii)         a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(iii)       a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Covered Party” has the meaning provided in SECTION 9.21(b).

Credit Card Advance Rate” means 90%.

Credit Card Notifications” has the meaning provided in SECTION 2.18(c)(ii).

Credit Card Receivables” means, with respect to any Person, Accounts or general intangibles constituting payment intangibles under the UCC due to such Person from major credit card and debit card processors (including, but not limited to, JCB, VISA, Mastercard, American Express, Diners Club, DiscoverCard, Interlink, NYCE, Star/Mac, Tyme, Pulse, Accel, AFF, Shazam, CU244, First Data Merchant Services, Paymentech, Global Payments Canada, Eigen Development, Maestro, Interac Debit Network and Jeanie Debit Network).

Credit Exposure” means, with respect to any Lender, the sum of (i) the aggregate outstanding principal amount of Revolving Loans of such Lender then outstanding (or, to the extent referring to any single Class of Revolving Loans, the aggregate amount of the principal amount of Revolving Loans of

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such Class of such Lender then outstanding), (ii) such Lender’s Letter of Credit Exposure at such time and (iii) such Lender’s Commitment Percentage of the aggregate principal amount of all outstanding Swingline Loans at such time.

Credit Extensions” as of any day, shall be equal to the sum of (a) the principal balance of all Loans (including Swingline Loans) then outstanding and (b) the then amount of the Letter of Credit Outstandings.

Credit Party” means (a) the Lenders, (b) the Agents, (c) each Issuing Bank, (d) the Arrangers and (e) the successors and permitted assigns of each of the foregoing.

Credit Party Expenses” means, without limitation, all of the following to the extent incurred in connection with this Agreement and the other Loan Documents: (a) all reasonable out-of-pocket expenses incurred by the Administrative Agent and the Collateral Agent, including the reasonable fees, charges and documented out-of-pocket disbursements of one counsel for the Administrative Agent, the Collateral Agent and their Affiliates (plus one local counsel in any other jurisdiction to the extent reasonably necessary), outside consultants for the Administrative Agent and the Collateral Agent consisting of one inventory appraisal firm and one commercial finance examination firm in connection with the preparation and administration of the Loan Documents, the syndication of the credit facilities provided for herein or any amendments, modifications or waivers requested by a Loan Party of the provisions hereof or thereof (whether or not any such amendments, modifications or waivers shall be consummated), including, without limitation, (x) the Administrative Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Loan Party or its Subsidiaries, (y) the Administrative Agent’s customary fees and charges (as adjusted from time to time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise), together with any out-of-pocket costs and expenses incurred in connection therewith, and (z) customary charges imposed or incurred by the Administrative Agent resulting from the dishonor of checks payable by or to any Loan Party; (b) all reasonable and documented out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (c) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent or the Collateral Agent and, subject to the proviso below, any Lender and their respective Affiliates and branches, including the reasonable fees, charges and disbursements of one counsel for the Administrative Agent, the Collateral Agent and their Affiliates (plus one local counsel in any other jurisdiction to the extent reasonably necessary) and outside consultants for the Administrative Agent and the Collateral Agent (including, without limitation, inventory appraisal firms and commercial finance examination firms) in connection with the enforcement and protection of their rights in connection with the Loan Documents, including all such documented out-of-pocket expenses incurred during any workout, restructuring or related negotiations in respect of such Loans or Letters of Credit; provided, that the Lenders, the Administrative Agent or the Collateral Agent or Affiliates of the Administrative Agent or the Collateral Agent shall be entitled to reimbursement for no more than one counsel representing all such Lenders (absent a conflict of interest in which case the affected Lenders may engage and be reimbursed for one additional counsel representing such affected Lenders). Credit Party Expenses shall not include the allocation of any overhead expenses of any Credit Party.

Customer Credit Liabilities” means, at any time, the aggregate remaining balance reflected on the books and records of the Loan Parties at such time of (a) outstanding gift certificates and gift cards of the Loan Parties entitling the holder thereof to use all or a portion of the gift certificate or gift card to pay all or a portion of the purchase price for any Inventory and (b) outstanding merchandise credits and customer deposits of the Loan Parties.

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DDAs” means any checking or other demand deposit account maintained by the Loan Parties other than any Cash Collateral Account (as defined in the Term Loan Agreement).  All funds in such DDAs shall be conclusively presumed to be Collateral and proceeds of Collateral and the Agents or the Lenders shall have no duty to inquire as to the source of the amounts on deposit in the DDAs.

Debt Maturity Reserve” means, during any Debt Reserve Period, an amount equal to the excess (if any) of (a) the outstanding principal amount of any Specified Debt over (b) $100,000,000 (reduced to give effect to any Repayment of such Indebtedness made during such Debt Reserve Period to the extent such Repayment is permitted hereunder).  The Debt Maturity Reserve shall remain in place at all times during the Debt Reserve Period.  The release of any Debt Maturity Reserve with respect to any one category of Specified Debt shall not derogate from the Administrative Agent’s right to impose a subsequent Debt Maturity Reserve with respect to any other category of Specified Debt in accordance with the terms hereof.

Debt Reserve Period” means the period beginning on the 60th day prior to the stated maturity date of any Specified Debt and, in each case, ending on the date that is the earlier to occur of (i) the outstanding principal amount of such Specified Debt being less than or equal to $100,000,000 or (ii) the extension of the maturity date of such Specified Debt to a date which is at least 180 days after the Initial Maturity Date.   If and to the extent that such Specified Debt, or any portion thereof, is Repaid by virtue of any Permitted Refinancing, a subsequent Debt Maturity Reserve shall be imposed in an amount equal to the excess (if any) of (a) the outstanding principal balance of such Permitted Refinancing Indebtedness over (b) $100,000,000 (reduced to give effect to any Repayment of such Permitted Refinancing Indebtedness made during such Debt Reserve Period to the extent such Repayment is permitted hereunder) from and after the date that is 60 days prior to the stated maturity date of such Permitted Refinancing Indebtedness and ending on the date that is the earlier to occur of (x) the outstanding principal amount of such Permitted Refinancing Indebtedness being less than or equal to $100,000,000 or (y) the extension of the maturity date of such Permitted Refinancing Indebtedness to a date which is at least 180 days after the Latest Maturity Date.

Debt Service Charges” means, for any period, the sum of (a) Consolidated Interest Expense required to be paid or paid in cash, plus (b) scheduled principal payments made or required to be made on account of Indebtedness for borrowed money (after giving effect to any prepayments paid in cash that reduce the amount of such required payments) (excluding the Obligations and any mandatory prepayments or redemptions, but including, without limitation, obligations with respect to Capitalized Leases) for such period, plus (c) scheduled mandatory payments on account of Disqualified Capital Stock (whether in the nature of dividends, redemption, repurchase or otherwise) required to be made during such period, in each case determined in accordance with GAAP.

Default” means any event or condition described in SECTION 7.01 that constitutes an Event of Default or that upon notice, lapse of any cure period set forth in SECTION 7.01 or both would, unless cured or waived, become an Event of Default.

Default Rate” has the meaning provided in SECTION 2.12.

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

Defaulting Lender” means any Lender that (a) has failed to fund any amounts required to be funded by it under this Agreement within two Business Days of the date that it is required to do so under this Agreement (including the failure to make available to the Administrative Agent amounts required pursuant to a settlement or to make a required payment in connection with a Letter of Credit

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Disbursement), (b) has notified the Borrowers, the Administrative Agent, or any Lender in writing that it does not intend to comply with all or any portion of its funding obligations under this Agreement, (c) has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements generally (as reasonably determined by the Administrative Agent) under which it has committed to extend credit, (d) has failed, within two Business Days after written request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund any amounts required to be funded by it under this Agreement (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (d) upon receipt of such written confirmation by the Administrative Agent and the Lead Borrower), (e) has otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it under this Agreement within two Business Days of the date that it is required to do so under this Agreement, or (f) (i) becomes or is insolvent or has a parent company that has become or is insolvent, (ii) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian or appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or (iii) becomes the subject of a Bail-In Action (provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interests in that Lender or any direct or indirect parent company thereof by a governmental authority or regulatory body, so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender).

 

Defaulting Lender Rate” means (a) for the first three days from and after the date the relevant payment is due, the Prime Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Prime Rate Loans (inclusive of the Applicable Margin applicable thereto).

Designated Account” has the meaning provided in SECTION 2.18(d).

Designated Cash” means the aggregate amount of Unrestricted Cash of the Loan Parties at such time that is (x) held in a deposit account, securities account or other account, in each case, with the Administrative Agent and (y) not subject to any other Lien other than (I) Liens granted to the Collateral Agent, (II) Liens securing obligations under the Term Loan Agreement, any Term Incremental Equivalent Debt or any Term Credit Agreement Refinancing Indebtedness and (III) Permitted Encumbrances that do not have priority over the Lien of the Collateral Agent (other than inchoate or other Liens arising by operation of law).

Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property (including, without limitation, any Capital Stock of any other Person held by a specified Person) by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

Disqualified Capital Stock” means any Capital Stock which, by its terms (or by the terms of any security or other Capital Stock into which it is convertible or for which it is exchangeable), is putable or exchangeable, or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Capital Stock (other than Disqualified Capital Stock)), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the

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holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of all Obligations and the termination of the Commitments), (b) is redeemable at the option of the holder thereof (other than solely for Capital Stock (other than Disqualified Capital Stock)), in whole or in part, (c) provides for the scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Capital Stock, in each case, prior to the date that is 91 days after the Maturity Date.

Disqualified Lenders” means (i) those banks, financial institutions or other Persons separately identified in writing by the Lead Borrower or any of its Affiliates to the Administrative Agent prior to April 26, 2016 or as otherwise agreed by the Lead Borrower and the Administrative Agent after April 26, 2016, and any Affiliates of such banks, financial institutions or other Persons that are readily identifiable as Affiliates by virtue of their names or that are identified to the Administrative Agent in writing by the Lead Borrower or any of its Affiliates and (ii) bona fide competitors of the Lead Borrower and its Subsidiaries (excluding any affiliates of such competitors that are bona fide fixed income investors or debt funds) identified in writing from time to time (and Affiliates of such entities that are readily identifiable as Affiliates by virtue of their names or that are identified to the Administrative Agent in writing by the Lead Borrower or any of its Affiliates); provided that no such identification after the date hereof pursuant to clauses (i) and (ii) shall apply retroactively to disqualify any Person that has previously acquired an assignment or participation of an interest in any of the Obligations with respect to amounts of Commitments and Loans previously acquired by such Person.

Documents” has the meaning assigned to such term in the Security Agreement.

Dollars” or “$” refers to lawful money of the United States of America.

Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States of America, any State thereof or the District of Columbia.

Drawing Document” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit.

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Eligible Assignee” means a commercial bank, insurance company, or company engaged in the business of making commercial loans, or a commercial finance company, which Person, together with its Affiliates, has a combined capital and surplus in excess of $1,000,000,000, or any Affiliate of any Credit Party under common control with such Credit Party, or an Approved Fund of any Credit Party, provided that in any event, “Eligible Assignee” shall not include (w) any Loan Party, (x) any natural person, (y) the

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Sponsors or any of their respective Affiliates (other than Bona Fide Debt Funds) or (z) any Disqualified Lender.

Eligible Credit Card Receivables” means, as of any date of determination, Credit Card Receivables of any Borrower or Subsidiary Facility Guarantor as arise in the ordinary course of business and which have been earned by performance and that are not excluded as ineligible by virtue of one or more of the criteria set forth below (without duplication of any Reserves established by the Administrative Agent).  None of the following shall be deemed to be Eligible Credit Card Receivables:

(a)         Credit Card Receivables that have been outstanding for more than five Business Days from the date of sale, or for such longer period(s) as may be approved by the Administrative Agent in its Permitted Discretion;

(b)         Credit Card Receivables with respect to which a Borrower or a Subsidiary Facility Guarantor does not have good, valid and marketable title thereto, free and clear of any Lien (other than Permitted Encumbrances);

(c)         Credit Card Receivables that are not subject to a first priority security interest in favor of the Collateral Agent for its own benefit and the benefit of the other Secured Parties (other than Permitted Encumbrances having priority by operation of Applicable Law over the Lien of the Collateral Agent) (the foregoing not being intended to limit the ability of the Administrative Agent to change, establish or eliminate any Reserves in its Permitted Discretion on account of any such Liens);

(d)         Credit Card Receivables which are disputed, or with respect to which a claim, counterclaim, offset or chargeback (other than chargebacks in the ordinary course by the credit card processors) has been asserted, by the related credit card processor (but only to the extent of such dispute, claim, counterclaim, offset or chargeback);

(e)         Except as otherwise approved by the Administrative Agent, Credit Card Receivables as to which the credit card processor or debit card processor has the right under certain circumstances to require a Borrower or a Subsidiary Facility Guarantor to repurchase the Credit Card Receivables from such credit card or debit card processor;

(f)         Except as otherwise approved by the Administrative Agent in its Permitted Discretion (such approval not to be unreasonably withheld or delayed), Accounts arising from any private label credit card program of a Borrower or a Subsidiary Facility Guarantor; and

(g)         Upon notice to the Lead Borrower, Credit Card Receivables (other than JCB, VISA, Mastercard, American Express, Diners Club, DiscoverCard, Interlink, NYCE, Star/Mac, Tyme, Pulse, Accel, AFF, Shazam, CU244, First Data Merchant Services, Paymentech, Global Payments Canada, Eigen Development, Maestro, Interac Debit Network and Jeanie Debit Network) which the Administrative Agent determines in its Permitted Discretion to be unlikely to be collected.

Eligible Inventory” means, as of any date of determination, without duplication, (i) Eligible Retail Inventory and (ii) Eligible Wholesale Inventory, in each case that are not excluded as ineligible by virtue of one or more of the criteria set forth below (without duplication of any Reserves established by the Administrative Agent).  None of the following shall be deemed to be Eligible Inventory:

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(a)         Inventory with respect to which a Borrower or a Subsidiary Facility Guarantor does not have good, valid and marketable title thereto, free and clear of any Lien (other than Permitted Encumbrances), or is leased by or is on consignment to a Borrower or a Subsidiary Facility Guarantor, or that is not solely owned by a Borrower or a Subsidiary Facility Guarantor;

(b)         Inventory  that is not located in the United States of America at a location that is owned or leased by a Borrower or a Subsidiary Facility Guarantor, except (i) Inventory in transit in the continental United States of America between such owned or leased locations or (ii) to the extent that a Borrower or a Subsidiary Facility Guarantor has furnished the Collateral Agent with (A) any UCC financing statements or other filings that the Collateral Agent may reasonably determine to be necessary to perfect its security interest in such Inventory at such location, and (B) unless otherwise agreed by the Administrative Agent (such agreement not to be unreasonably withheld or delayed), a Collateral Access Agreement executed by the Person owning any such location;

(c)         Inventory that represents goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor and which are no longer reflected in a Borrower’s or a Subsidiary Facility Guarantor’s stock ledger, (iii) are special-order items, work in process or raw materials or that constitute spare parts, shipping materials or supplies used or consumed in a Borrower’s or a Subsidiary Facility Guarantor’s business or (iv) are bill and hold goods;

(d)         Except as otherwise agreed by the Administrative Agent in its Permitted Discretion, Inventory that represents goods that do not conform in all material respects to the representations and warranties contained in this Agreement or any of the Security Documents;

(e)         Inventory that is not subject to a perfected first priority security interest in favor of the Collateral Agent for its own benefit and the benefit of the other Secured Parties (subject only to Permitted Encumbrances having priority by operation of Applicable Law);

(f)         Inventory which consists of samples, labels, bags, packaging materials and other similar non-merchandise categories (for greater clarity, display models are not deemed a non-merchandise category);

(g)         Inventory as to which casualty insurance in compliance with the provisions of SECTION 5.07 hereof is not in effect;

(h)         Inventory which has been sold but not yet delivered or Inventory to the extent that a Borrower or a Subsidiary Facility Guarantor has accepted a deposit therefor and which is no longer reflected in a Borrower’s or a Subsidiary Facility Guarantor’s stock ledger;

(i)          Inventory which contains or bears any Intellectual Property rights licensed to such Loan Party unless the Collateral Agent is satisfied in its Permitted Discretion that it may sell or otherwise dispose of such Inventory without (i) infringing the rights of such licensor relating to such Intellectual Property rights, (ii) violating any contract with such licensor relating to such Intellectual Property rights, or (iii) incurring any liability with respect to payment of royalties relating to such Intellectual Property rights other than royalties incurred pursuant to sale of such Inventory under the then applicable licensing agreement; and

(ij)         Inventory acquired in a Permitted Acquisition, unless the Administrative Agent shall have received or conducted (A) appraisals, from appraisers reasonably satisfactory to the

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Administrative Agent, of such Inventory acquired or to be acquired in such Acquisition and (B) such other due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Administrative Agent.  As long as the Administrative Agent has received reasonable prior notice of such Permitted Acquisition and the Borrowers and the Subsidiary Facility Guarantors reasonably cooperate (and cause the Person being acquired to reasonably cooperate) with the Administrative Agent, the Administrative Agent shall use reasonable best efforts to complete such due diligence and a related appraisal on or prior to the closing date of such Permitted Acquisition.

Eligible Letter of Credit” means, as of any date of determination thereof, a Commercial Letter of Credit issued under this Agreement which supports the purchase of Inventory, (i) for which no documents of title have then been issued, (ii) which Inventory would otherwise constitute Eligible Inventory, (iii) which Commercial Letter of Credit has an initial expiry, subject to the proviso hereto, within 120 days after the date of initial issuance of such Commercial Letter of Credit, provided that 90% of the maximum Stated Amount of all such Commercial Letters of Credit shall not, at any time, have an initial expiry greater than 90 days after the original date of issuance of such Commercial Letters of Credit and (iv) which Commercial Letter of Credit provides that it may be drawn only after the Inventory is completed and after documents of title have been issued for such Inventory reflecting a Borrower or a Subsidiary Facility Guarantor or the Collateral Agent as consignee of such Inventory; provided that the Administrative Agent may, in its Permitted Discretion and upon notice to the Lead Borrower, exclude any particular Inventory from the definition of “Eligible Letter of Credit” in the event the Administrative Agent reasonably determines that such Inventory is subject to any Person’s right or claim which is (or is capable of being) senior to, or pari passu with, the Lien of the Collateral Agent (such as, without limitation, a right of stoppage in transit) or may otherwise adversely impact the ability of the Collateral Agent to realize upon such Inventory.  For purposes of clarity, a Commercial Letter of Credit issued under any Commercial Letter of Credit Facility shall not constitute an Eligible Letter of Credit hereunder.

Eligible Retail Inventory” means, as of any date of determination thereof, without duplication of other Eligible Inventory, items of Inventory of a Borrower or a Subsidiary Facility Guarantor that are (i) finished goods, merchantable and readily saleable to the public in the ordinary course (including goods manufactured by the Lead Borrower pursuant to, and commodity goods of, its Artistree division, custom floral goods and custom framing goods) or (ii) items of “non PI” Inventory that are finished goods, merchantable and readily saleable to the public in the ordinary course, and in each case which would otherwise constitute Eligible Inventory.

Eligible Trade Receivable” means, as of any date of determination, an Account arising from the sale of Inventory of a Borrower or a Subsidiary Facility Guarantor (but excluding, for the avoidance of doubt, Credit Card Receivables) that satisfy the following criteria at the time of creation and on such date of determination:  (i) such Account has been earned by performance and represents the bona fide amounts due to a Borrower or Subsidiary Facility Guarantor from an Account Debtor and, in each case, originated in the ordinary course of business of such Borrower or Subsidiary Facility Guarantor, and (ii) in each case, such Account is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (q) below (without duplication of any Reserves established by the Administrative Agent).  Without limiting the foregoing, to qualify as an Eligible Trade Receivable, an Account shall indicate no Person other than a Borrower or Subsidiary Facility Guarantor as payee or remittance party.  In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (x) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrower or Subsidiary Facility Guarantor may be obligated to rebate to a customer pursuant to the terms of any agreement or understanding (written or oral)) and (y) the aggregate amount of all cash received in respect of such Account but not yet applied by

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the applicable Borrower or Subsidiary Facility Guarantor to reduce the amount of such Eligible Trade Receivable.  Except as otherwise agreed by the Administrative Agent, no Account shall be an Eligible Trade Receivable if:

(a)          such Account is not evidenced by an invoice;

(b)          such Account has been outstanding for more than 60 days from the date of sale or more than 30 days past the due date;

(c)          30% or more of the Accounts owing by the Account Debtor for such Account are not Eligible Trade Receivables under the foregoing clause (b);

(d)          when aggregated with all other Accounts owed by an Account Debtor, such Account exceeds (i) 25%, in respect of Walmart, (ii) 25%, in respect of Jo-Ann Stores, and (iii)  10%, in respect of all other Account Debtors, in each case, of the aggregate Eligible Trade Receivables (or such higher percentage as the Administrative Agent may, in its Permitted Discretion, establish for any Account Debtor from time to time) (it being understood that ineligibility shall be limited to the amount of such excess);

(e)          such Account is not subject to a first priority security interest in favor of the Collateral Agent for its own benefit and the benefit of the other Secured Parties (other than Permitted Encumbrances having priority by operation of Applicable Law over the Lien of the Collateral Agent) (the foregoing not being intended to limit the ability of the Administrative Agent to change, establish or eliminate any Reserves in its Permitted Discretion on account of any such Liens);

(f)           such Account is disputed, or with respect to which a claim, counterclaim, offset or chargeback has been asserted (but only to the extent of such dispute, claim, counterclaim, offset or chargeback);

(g)          such Account arises out of a sale made not in the ordinary course of business, made on a basis other than upon credit terms usual to the business of the Borrowers and the Subsidiary Facility Guarantors or is not payable in Dollars;

(h)          such Account is owed by an Account Debtor whose principal place of business is not within the continental United States, unless such Account is backed by a letter of credit reasonably acceptable to the Administrative Agent and such letter of credit is subject to a first priority perfected Lien in favor of the Collateral Agent (subject to Permitted Encumbrances having priority by operation of Applicable Law) (the foregoing not being intended to limit the ability of the Administrative Agent to change, establish or eliminate any Reserves in its Permitted Discretion on account of any such Liens);

(i)           such Account is owed by any Affiliate (including Holdco and its Restricted Subsidiaries, but excluding any other portfolio company of the Sponsors (subject to the requirements of SECTION 6.08)) or any employee of a Loan Party;

(j)           except as otherwise agreed by the Administrative Agent in its Permitted Discretion, such Account does not conform in all material respects to the representations and warranties contained in this Agreement or any of the Security Documents;

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(k)          such Account is due from an Account Debtor which is the subject of any bankruptcy or insolvency proceeding (other than post-petition accounts payable of an Account Debtor that is a debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the Administrative Agent in its Permitted Discretion), has had a trustee or receiver appointed for all or a substantial part of its property, has made an assignment for the benefit of creditors or has suspended its business;

(l)           such Account is owing by a Governmental Authority, unless the Account Debtor is the United States or any department, agency or instrumentality thereof and the Account has been assigned to the Collateral Agent in compliance with the Assignment of Claims Act;

(m)         such Account (i) is owing from any Person that is also a supplier to or creditor of a Loan Party or any of its Subsidiaries or (ii) represents any manufacturer’s or supplier’s credits, discounts, incentive plans or similar arrangements entitling a Loan Party or any of its Subsidiaries to discounts on future purchase therefrom;

(n)          such Account arises out of sales on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment basis;

(o)          such Account is evidenced by a promissory note or other instrument;

(p)          such Account is in excess of the credit limit for such Account Debtor established by the Borrowers and the Subsidiary Facility Guarantors in the ordinary course of business;

(q)          such Account is owed by an Account Debtor that is a Sanctions Target; or

(r)           (q) upon notice to the Lead Borrower, Accounts which the Administrative Agent determines in its Permitted Discretion to be unlikely to be collected.

Eligible Wholesale Inventory” means, as of any date of determination thereof, without duplication of other Eligible Inventory, items of Inventory of a Borrower or a Subsidiary Facility Guarantor that are finished goods, merchantable and readily saleable on a wholesale basis in the ordinary course of such Borrower’s or Subsidiary Facility Guarantor’s business, and which would otherwise constitute Eligible Inventory.

EMU” means the economic and monetary union as contemplated in the Treaty on European Union.

Environmental Laws” means all Applicable Laws relating to pollution, the protection of the environment, natural resources, or, to the extent relating to exposure to Hazardous Materials, human health or to the release of any materials into the environment, including those related to Hazardous Materials, air emissions and discharges to waste or public systems.

Environmental Liability” means any liability, contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

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Equity Offering” means any public or private sale of common stock or preferred stock of the Lead Borrower or any of its direct or indirect parent companies (excluding Disqualified Capital Stock), other than (a) public offerings with respect to the Lead Borrower’s or any direct or indirect parent company’s common stock registered on Form S-8 and (b) issuances to any Subsidiary of the Lead Borrower.

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

ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Lead Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

ERISA Event” means in the case of a Plan or Multiemployer Plan subject to ERISA, (a) any “reportable event”, as defined in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA) that would reasonably be expected to result in a Material Adverse Effect; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Lead Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Lead Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any written notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Lead Borrower or any ERISA Affiliate of any liability that would reasonably be expected to result in a Material Adverse Effect with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Lead Borrower or any ERISA Affiliate of any written notice, or the receipt by any Multiemployer Plan from the Lead Borrower or any ERISA Affiliate of any written notice, concerning the imposition of Withdrawal Liability that would reasonably be expected to result in a Material Adverse Effect or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Event of Default” has the meaning provided in SECTION 7.01.

Excess Availability” means, as of any date of determination thereof, the result, if a positive number, of:

(a)         the Loan Cap,

plus

(b)         the amount of Designated Cash,

minus

(c)         the aggregate unpaid balance of Credit Extensions to, or for the account of, the Borrowers.

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Exchange Act” means the Securities Exchange Act of 1934, as amended.

Excluded Subsidiary” means (a) any Subsidiary that is not a wholly  owned Subsidiary, (b) each Subsidiary listed on Schedule 1.01(b) hereto, (c) any Subsidiary that is prohibited by Applicable Law or contractual obligation existing on the Third RestatementFirst Amendment Effective  Date (or, in the case of any Subsidiary acquired after the Third RestatementFirst Amendment Effective  Date, any contractual obligation in existence at the time of the acquisition of such Subsidiary but not entered into in contemplation thereof) from guaranteeing the Obligations, (d)  any Foreign Subsidiary, (e) any Unrestricted Subsidiary; (f) any Domestic Subsidiary that is (i) a Subsidiary of a Foreign Subsidiary or (ii) a Foreign Subsidiary Holding Company, (g) any Restricted Subsidiary acquired pursuant to an Acquisition permitted hereunder financed with secured Indebtedness incurred pursuant to SECTION 6.03(g) and each Restricted Subsidiary thereof that guarantees such Indebtedness; provided that each such Restricted Subsidiary shall cease to be an Excluded Subsidiary under this clause (f) if such secured Indebtedness is repaid or becomes unsecured or if such Restricted Subsidiary ceases to guarantee such secured Indebtedness, as applicable, (h) any Immaterial Subsidiary and (i) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Borrower), the cost or other consequences (including any adverse tax consequences) of providing a Facility Guarantee shall be excessive in view of the benefits to be obtained by the Lenders therefrom.

Excluded Swap Obligation”  means, with respect to any Facility Guarantor or any Borrower other than the Lead Borrower, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Facility Guarantor of, or obligations of such Borrower under, or the grant by such Facility Guarantor or such Borrower of a security interest to secure, such Swap Obligation (or any Guarantee thereof or obligations thereunder) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Facility Guarantor’s or Borrower’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Facility Guarantor or obligations of such Borrower or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee, obligations or security interest is or becomes illegal.

Excluded Taxes” means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) income Taxes on (or measured by) its gross or net income or profits, and franchise or similar Taxes, imposed by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or imposed as a result of any present or former connection between the jurisdiction imposing such Tax and such recipient other than a connection arising solely as a result of such recipient having performed its obligations or received payment hereunder or under any Loan Document, or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction in which any Borrower is located,  (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by a Borrower under SECTION 2.24(b)), any United States withholding Tax that is imposed on amounts payable to such Foreign Lender (i) at the time such Foreign Lender becomes a party to this Agreement (or designates a New Lending Office other than at the request of a Borrower under SECTION 2.24), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a New Lending Office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding Tax pursuant to SECTION 2.23(a), or (ii) is attributable to such Foreign Lender’s failure to comply with SECTION 2.23(e), and (d) any U.S. federal withholding tax imposed under FATCA.

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Existing Credit Agreement” has the meaning set forth in the Recitals hereof.

Existing Letters of Credit” means each of the letters of credit issued or deemed issued under the Existing Credit Agreement.

Existing Revolver Tranche” has the meaning provided in SECTION 2.27(a).

Extended Commitments” has the meaning provided in SECTION 2.27(a).

Extended Revolving Credit Loan” means loans made under Extended Commitments and shall include any Incremental Revolving Credit Loan made under an increase to an Extended Commitment of a particular Class pursuant to SECTION 2.02.

Extending Lender” has the meaning provided in SECTION 2.27(b).

Extension Amendment” has the meaning provided in SECTION 2.27(d).

“Extension Request” has the meaning provided in SECTION 2.27(a).

Extension Election” has the meaning provided in SECTION 2.27(b).

“Extension Request” has the meaning provided in SECTION 2.27(a).

Extension Series” shall mean all Extended Commitments that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Commitments provided for therein are intended to be a part of any previously established Extension Series) and that provide for the same interest margins and extension fees (unless otherwise established pursuant to any subsequent Extension Amendment solely as provided in the parenthetical above).

Facility Guarantee” means any Guarantee of the Obligations executed by Holdco and its Subsidiaries which are or hereafter become Facility Guarantors in favor of any Agent or any other Secured Parties, including, without limitation, that certain Amended and Restated Guarantee Agreement dated as of the Second Restatement Date by and among the Loan Parties party thereto and the Administrative Agent, as reaffirmed pursuant to the Second Confirmation of Ancillary Documents, together with any Guarantee Agreement Supplements (as defined in such Amended and Restated Guarantee Agreement) executed in connection therewith, in each case, as amended and in effect from time to time.

Facility Guarantors” means any Person executing a Facility Guarantee, but in all events shall not include the Excluded Subsidiaries.

Factored Receivables” means any Accounts originally owed or owing by a Loan Party to another Person which have been purchased by or factored with any Lender or any of its Affiliates pursuant to a factoring arrangement or otherwise with the Person that sold the goods or rendered the services to the Loan Party which gave rise to such Account.

FATCA” means sections 1471, 1472, 1473 and 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations promulgated thereunder and published guidance with respect thereto and any agreements entered into pursuant thereto, including any

31

intergovernmental agreements and any rules or guidance implementing such intergovernmental agreements.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

Federal Funds Effective Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Wells Fargo onof the quotations for such day on such transactions as determinedreceived by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.  If the Federal Funds Effective Rate is less than zero, it shall be deemed to be zero hereunder.

Fee Letter”  means the Fee Letter dated April 26, 2016,as of the First Amendment Effective Date, by and between the Lead Borrower and Wells Fargo, as amended, restated, supplemented or otherwise modified and in effect from time to time.

Financial Covenant Trigger Event” has the meaning provided in SECTION 5.24.

Financial Officer” means, with respect to any Loan Party, the chief financial officer, chief accounting officer, treasurer, assistant treasurer, controller, assistant controller or other financial officer of such Loan Party.

“First Amendment” means that certain First Amendment to Third Amended and Restated Credit Agreement, dated as of the First Amendment Effective Date, among the Borrowers, the Facility Guarantors, the Agents and the Lenders party thereto.

“First Amendment Effective Date” means August 30, 2019.

First Confirmation of Ancillary Documents” means that certain Confirmation, Ratification and Amendment of Ancillary Loan Documents dated as of the First Restatement Date among Bank of America, N.A., as administrative agent and collateral agent (as predecessor-in-interest to the Agents) and the Loan Parties party thereto.

First Restatement Date” means February 18, 2010.

Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally consist of either four or five weeks and shall generally end on the Saturday closest to the last day of each calendar month in accordance with the fiscal accounting calendar of the Lead Borrower and its Subsidiaries.

Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally consist of 13 weeks or 14 weeks and shall generally end on the Saturday closest to the last day of each April, July, October and January of such Fiscal Year in accordance with the fiscal accounting calendar of the Lead Borrower and its Subsidiaries.

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Fiscal Year” means any period of 12 consecutive months ending on the Saturday closest to January 31 of any calendar year.

“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

Foreign Subsidiary Holding Company” means any Subsidiary substantially all of whose assets consist of Equity Interests and/or Indebtedness of one or more Foreign Subsidiaries that are CFCs (or one or more Domestic Subsidiaries that are Foreign Subsidiary Holding Companies).

FRB” means the Board of Governors of the Federal Reserve System of the United States of America.

Fronting Fee” shall have the meaning set forth in SECTION 2.19(d) hereof.

Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

GAAP” means generally accepted accounting principles in effect from time to time in the United States of America which are consistent with those promulgated or adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made.

General Intangibles” has the meaning assigned to such term in the Security Agreement.

Governmental Authority” means any nation or government, any state, provincial, municipal or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

Guarantee” means, as to any Person, without duplication, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance of such Indebtedness or other monetary obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation

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or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other monetary obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part); (b) any Lien on any assets of such Person securing any Indebtedness or other monetary obligation of any other Person, whether or not such Indebtedness or other monetary obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien) or (c) to be an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit, in either case in the ordinary course of business, or customary and reasonable indemnity obligations in effect on the Third RestatementFirst Amendment Effective  Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, mold, fungi or similar bacteria, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Highfields Capital” means Highfields Capital I LP, Highfields Capital II LP and Highfields Capital III LP and each Affiliate thereof (excluding portfolio companies of any of the foregoing).

Holdco” means Michaels Funding, Inc., a Delaware corporation, and its successors.

Immaterial Subsidiary” means a Subsidiary of the Lead Borrower for which (a) the assets of such Subsidiary constitute less than or equal to 1% of the total assets of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to 5% of the total assets of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis, and (b) the revenues of such Subsidiary account for less than or equal to 1% of the total revenues of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to 5% of the total revenues of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis.

Increase Effective Date has the meaning specified in SECTION 2.02(a).

Incremental Loans” means loans made under Incremental Revolving Credit Commitments.

Incremental Revolving Credit Commitments” has the meaning specified in SECTION 2.02(a).

Incremental Revolving Loan Lender” has the meaning specified in SECTION 2.02(d).

Indebtedness” means as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(i)          all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

34

(ii)         the maximum amount (after giving effect to any prior drawings which may have been reimbursed or reductions) of all Letters of Credit (including Standby Letters of Credit and Commercial Letters of Credit, provided, that Commercial Letters of Credit will be counted as Indebtedness solely to the extent unreimbursed amounts remain outstanding thereunder after such amount is drawn), bankers’ acceptances, bank guaranties, surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;

(iii)       net obligations of such Person under any Swap Contract;

(iv)        all obligations of such Person to pay the deferred purchase price of property or services (other than (i) trade payables or similar obligations in the ordinary course of business and (ii) any earn-out obligation until such obligation becomes due and payable and only to the extent that the contingent consideration relating to such earn-out is not paid within 30 days after such date);

(v)         indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements and mortgage, industrial revenue bond, industrial development bond and similar financings), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(vi)        all Attributable Indebtedness;

(vii)       all obligations of such Person in respect of Disqualified Capital Stock; and

(viii)     all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall (A) include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Person’s liability for such Indebtedness is otherwise limited, and (B) in the case of Holdco and its Subsidiaries, exclude (i) any sale-leaseback transactions to the extent the lease or sublease thereunder is not required to be recorded under GAAP as a Capitalized Lease, (iiI) any obligations relating to overdraft protection and netting services,;  (iiiII) any preferred stock required to be included as Indebtedness in accordance with GAAP or;  (ivIII) items that would appear as a liability on a balance sheet prepared in accordance with GAAP as a result of the application of EITF 97-10, “The Effects of Lessee Involvement in Asset Construction”; and (IV) Non-Finance Leases; provided further that Indebtedness will be calculated without giving effect to the effects of Accounting Standards Codification Topic No. 815, Derivatives and Hedging, and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Agreement as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  Other than with respect to any determination of Indebtedness for purposes of calculating Debt Service Charges, the amount of Indebtedness of any Person for purposes of clause (v) that is limited in recourse to the property encumbered thereby shall be deemed to be equal to the lesser of (x) the aggregate unpaid amount of such Indebtedness and (y) the fair market value of the property encumbered thereby as determined by such Person in good faith.

Indemnified Taxes” means Taxes other than Excluded Taxes.

Indemnitee” has the meaning provided in SECTION 9.05.

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Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in similar businesses of nationally recognized standing that is, in the good faith judgment of the Lead Borrower, qualified to perform the task for which it has been engaged.

Information” has the meaning provided in SECTION 9.08.

Initial Maturity Date” means the earlier of (x) May 27, 2021August 30, 2024 and (y) the 60th day prior to the stated maturity date of any Specified Debt if, (i) as of such date, the outstanding principal amount of such Specified Debt exceeds $100,000,000 and (ii) such excess amount referred to in clause (i) has not been cash collateralized or Repaid or the Administrative Agent has not implemented a Debt Maturity Reserve with respect to such Specified Debt.  For the avoidance of doubt, no failure to Repay any Specified Debt prior to its maturity shall constitute an Event of Default.

Instruments” has the meaning assigned to such term in the Security Agreement.

Intellectual Property” means all present and future: trade secrets, know-how and other proprietary information; trademarks, Internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing), indicia and other source and/or business identifiers, all of the goodwill related thereto, and all registrations and applications for registrations thereof; works of authorship and other copyrighted works (including copyrights for computer programs), and all registrations and applications for registrations thereof; inventions (whether or not patentable) and all improvements thereto; patents and patent applications, together with all continuances, continuations, divisions, revisions, extensions, reissuances, and reexaminations thereof; industrial design applications and registered industrial designs; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property; all rights to sue and recover at law or in equity for any past, present or future infringement, dilution or misappropriation, or other violation thereof; and all common law and other rights throughout the world in and to all of the foregoing.

Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Original Closing Date by and among Wells Fargo (as successor to Bank of America, N.A.), as ABL Agent (as defined therein), Deutsche Bank AG New York Branch, as administrative agent and as collateral agent under the Term Loan FacilityAgreement, and the Loan Parties, as amended and in effect from time to time, including pursuant to the Ratification of Intercreditor Agreement, dated as of the Second Restatement Date, by and among Deutsche Bank AG New York Branch, Wells Fargo, the Loan Parties party thereto and Bank of America, N.A., and the Ratification of Intercreditor Agreement, dated as of May 23, 2018, by and among JPMorgan Chase Bank, N.A., Wells Fargo, the Loan Parties party thereto and Deutsche Bank AG New York Branch.

 “Interest Payment Date” means (a) with respect to any Prime Rate Loan (including a Swingline Loan), the first day of each calendar quarter, and (b) with respect to any LIBO Loan, the last day of the Interest Period applicable to the Borrowing of which such LIBO Loan is a part, and, in addition, if such LIBO Loan has an Interest Period of greater than 90 days, on the last day of every third month of such Interest Period.

Interest Period” means, as to each LIBO Loan, the period commencing on the date such LIBO Loan is disbursed or converted to or continued as a LIBO Loan and ending on the date seven days or one, two, three or six months thereafter, as selected by the Lead Borrower in its Borrowing Request; provided that:

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(a)                      any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such succeeding Business Day is in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(b)                      any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c)                      no Interest Period shall extend beyond the Maturity Date.

Inventory” has the meaning assigned to such term in the Security Agreement.

Inventory Advance Rate” means the following percentages for Inventory for the following periods:

 

Period

Advance Rate

Each January 1 through September 30

90%

Each October 1 through December 31

92.5%

 

Inventory Reserves” means such reserves as may be established from time to time by the Administrative Agent, in its Permitted Discretion and not inconsistent with past practice, with respect to changes in the determination of the salability, at retail, of the Eligible Inventory or which reflect such other factors as negatively affect the market value of the Eligible Inventory.

Investment” means, as to any Person, any direct or indirect Acquisition or investment by such Person, whether by means of (a) the purchase or other Acquisition of Capital Stock or debt or other securities or equity interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person or (c) any other Acquisition.  Notwithstanding the foregoing, neither the creation of accounts receivable, credit card receivables and debit card receivables due to a Loan Party nor the obtaining of trade credit and the deferred payment of other expenses, in each case, incurred in the ordinary course of business, nor the incurrence of contingent obligations or performance guaranties in the ordinary course of business in respect of obligations not constituting Indebtedness, shall be deemed “Investments.”  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends and distributions) received by such Person.

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Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB– (or the equivalent) by S&P, or, in either case, an equivalent rating by any other nationally recognized statistical rating agency.

IP Rights” shall have the meaning given such term in SECTION 3.15.

ISP”  means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any subsequent revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issued.

Issuer Documents” means with respect to any Letter of Credit, the Letter Credit Application, the Standby Letter of Credit Agreement or Commercial Letter of Credit Agreement, as applicable, and any other document, agreement and instrument entered into by the applicable Issuing Bank and the Borrower (or any Restricted Subsidiary) or in favor of such Issuing Bank and relating to any such Letter of Credit.

Issuing Bank”  means, Wells Fargo and any other Lender selected by the Lead Borrower which has agreed to become an Issuing Bank under any Class of Commitments and has been approved by the Administrative Agent in its commercially reasonable discretion, each in its capacity as issuer of Letters of Credit hereunder.  Any Issuing Bank may, in its commercially reasonable discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.  At any time there is more than one Issuing Bank, references herein and in the other Loan Documents to the Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the Letter of Credit or to all Issuing Banks, as the context requires.

Joinder Agreement” shall mean an agreement, in substantially the form attached hereto as Exhibit E, pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a Borrower or a Facility Guarantor, as the Administrative Agent may reasonably determine.

Junior Financing” shall mean the Senior Subordinated Notes and any other any Indebtedness that is required to be subordinated in right of payment to the Obligations pursuant to the terms of the Loan Documents.

Landlord Lien State” means any state in which a landlord’s claim for rent has priority by operation of Applicable Law over the lien of the Collateral Agent in any of the Collateral.

Latest Maturity Date” means, at any date of determination, the latest maturity date applicable to any Class of Loans or Commitments hereunder at such time, including the latest termination date of any Extended Commitment or New Commitment, as applicable, as extended in accordance with this Agreement from time to time.

“LCT Election” has the meaning set forth in SECTION 1.12(a).

“LCT Test Date” has the meaning set forth in SECTION 1.12(a).

Lead Borrower” has the meaning set forth in the preamble to this Agreement.

Lease” means any agreement pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time.

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Lenders” means the Lenders having Commitments from time to time or at any time, each assignee that becomes a party to this Agreement as set forth in SECTION 9.07,  each Additional Commitment Lender that becomes a party to this Agreement as set forth in SECTION 2.02 and each New Commitment Lender that becomes a party to this Agreement as set forth in SECTION 2.27.

Letter of Credit” means (a) each Existing Letter of Credit and (b) a letter of credit that (i) is issued by an Issuing Bank pursuant to this Agreement for the account of a Borrower or a Restricted Subsidiary, (ii) constitutes a Standby Letter of Credit or Commercial Letter of Credit (and for which such Issuing Bank is not otherwise prohibited from issuing such letter of credit due to the internal general policies of such Issuing Bank) and (iii) is in form reasonably satisfactory to such Issuing Bank.

Letter of Credit Application” means an application for the issuance or amendment of a Letter of Credit in the form from time to time in use by the applicable Issuing Bank.

Letter of Credit Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect for the applicable Class of Commitments (or, if such day is not a Business Day, the next preceding Business Day); provided that the Letter of Credit Expiration Date may be extended beyond such date with the consent of the Issuing Bank, so long as, with respect to any extension beyond the Maturity Date, all outstanding Letters of Credit have been Cash Collateralized.

Letter of Credit Exposure” shall mean, with respect to any Lender, at any time, the sum of (i) the amount of the principal amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the Issuing Bank pursuant to SECTION 2.13(e) at such time and (ii) such Lender’s Commitment Percentage of the Letter of Credit Outstandings at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the Issuing Bank pursuant to SECTION 2.13(e)).

Letter of Credit Fees” means the fees payable in respect of Letters of Credit pursuant to SECTION 2.19(c).

Letter of Credit Indemnified Costs” has the meaning set forth in SECTION 2.13(f).

Letter of Credit Outstandings” means, at any time, the sum of (a) the Stated Amount of all Letters of Credit outstanding at such time, plus, without duplication, (b) all amounts theretofore drawn or paid under Letters of Credit for which the applicable Issuing Bank has not then been reimbursed (each such amount described in clause (b), an “Unpaid Drawing”).  For purposes of computing the amounts available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of any Rule under the ISP or any article of UCP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

Letter of Credit Related Person” has the meaning set forth in SECTION 2.13(f).

Letter-of-Credit Rights” has the meaning assigned to such term in the Security Agreement.

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Letter of Credit Sublimit” means, at any time, $200,000,000, as such amount may be increased or reduced in accordance with the provisions of this Agreement.  The Letter of Credit Sublimit is part of, and not in addition to, the Commitments.

LIBO Borrowing” means a Borrowing comprised of LIBO Loans.

LIBO Loan” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of ARTICLE II.

LIBO Loan Notice” means a notice for a Borrowing of LIBO Loans pursuant to SECTION 2.04(b) or continuation of LIBO Loans pursuant to SECTION 2.09, which shall be substantially in the form of Exhibit B.

LIBO Rate” means(a)   for any Interest Period with respect to a LIBO Loan, the per annum rate which appears on the Reuters Screen LIBOR01 page the rate per annum as published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as the Administrative Agent may designate from time to time) as of 11:00 a.m., London time, on the secondtwo Business Day precedingDays prior to the first daycommencement of such Interest Period (or if such rate does not appear on the Reuters Screen LIBOR01 Page, then the rate as determined by the Administrative Agent from another recognized source or interbank quotation)the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBO Loan requested (whether as an initial LIBO Loan or as a continuation of a LIBO Loan or as a conversion of a Prime Rate Loan to a LIBO Loan) by the Borrowers in accordance with this Agreement.  If such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the rate per annum determined (and, if any such published rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero). Each determination of the LIBO Rate shall be made by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBO Loan being made, continued or converted by Wells Fargo and with a term equivalent to such Interest Period would be offered to Wells Fargo by major banks in the London interbank eurodollar market in which Wells Fargo participates at its request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period; andand shall be conclusive in the absence of manifest error.

(b)         for any interest calculation with respect to a Prime Rate Loan on any date, (i) the per annum rate which appears on the Reuters Screen LIBOR01 page London time determined two Business Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day (or if such rate does not appear on the Reuters Screen LIBOR01 Page, then the rate as determined by the Administrative Agent from another recognized source or interbank quotation), or (ii) if the rate described in clause (i) above is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Prime Rate Loan being made or maintained and with a term equal to one month would be offered to Wells Fargo by major banks in the London interbank eurodollar market in which Wells Fargo participates at its request at the date and time of determination.

(c)         Notwithstanding the foregoing clauses (a) and (b) or anything else herein to the contrary, the LIBO Rate shall in no event be less than 0.0%.

Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security

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interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any Capitalized Lease having substantially the same economic effect as any of the foregoing) whether or not filed, recorded or perfected under Applicable Law, and in the case of securities, any purchase option, call or similar right of a third party with respect to such securities; provided that in no event will an operating lease (or other lease in respect of a Non-Finance Lease) be deemed to constitute a Lien.

“Limited Condition Transaction” means any Permitted Acquisition or other similar Investment permitted hereunder whose consummation is not conditioned on the availability of, or on obtaining, third party financing.

Liquidation” means the exercise by the Administrative Agent or the Collateral Agent of those rights and remedies accorded to the Administrative Agent or the Collateral Agent under the Loan Documents and Applicable Law as a creditor of the Loan Parties, including (after the occurrence and during the continuation of an Event of Default) the conduct by any or all of the Loan Parties, acting with the consent of the Administrative Agent, of  any public, private or “Going-Out-Of-Business Sale” or other Disposition of Collateral for the purpose of liquidating the Collateral.  Derivations of the word “Liquidation” (such as “Liquidate”) are used with like meaning in this Agreement.

Loan” shall mean any Revolving Loan or Swingline Loan or any other loan made by a Lender hereunder, as the context may require.

Loan Account” has the meaning provided in SECTION 2.20.

Loan Cap” means, at any time of determination, the lesser of (A) the then Borrowing Base and (B) the then Total Commitments.

Loan Documents” means this Agreement, the Notes, the Letters of Credit, the Issuer Documents, the Fee Letter, all Borrowing Base Certificates, the Blocked Account Agreements, the Credit Card Notifications, the Security Documents, the Facility Guarantees, the Intercreditor Agreement, the Additional First Lien Intercreditor Agreement (if then in effect), the Additional Junior Lien Intercreditor Agreement (if then in effect), the First Confirmation of Ancillary Documents, the Second Confirmation of Ancillary Documents, any Extension Amendment, and any other agreement now or hereafter executed and delivered in connection herewith (excluding agreements entered into in connection with any transaction arising out of any Bank Products or Cash Management Services), each as amended and in effect from time to time.

Loan Party” or “Loan Parties” means the Borrowers and the Facility Guarantors.

Margin Stock” has the meaning assigned to such term in Regulation U.

Master Agreement” has the meaning specified in the definition of “Swap Contract.”

Material Adverse Effect” means any event, facts, development, circumstances, or effect that, individually or in the aggregate with all other facts, events, circumstances, developments, and effects has a material adverse effect on (i) the business, operations, assets, liabilities (actual or contingent) or financial condition of the Loan Parties taken as a whole or (ii) the validity or enforceability of this Agreement or the other Loan Documents, taken as a whole, or the rights or remedies of the Secured Parties hereunder or thereunder, taken as a whole.

Material DDAs” has the meaning provided in SECTION 2.18(c)(ii).

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Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties, individually or in the aggregate, having an aggregate principal amount exceeding $75,000,000.  In any event, all Indebtedness under the Senior Subordinated Notes and the Term Loan Facility shall be deemed Material Indebtedness, regardless of the outstanding balance thereunder from time to time.

Material Intellectual Property” means Intellectual Property that is material to the business or operations of the Loan Parties taken as a whole, it being acknowledged and agreed that any determination by the Lead Borrower and the Administrative Agent as to which Intellectual Property constitutes Material Intellectual Property shall be conclusive and binding upon the Secured Parties.

“Material Real Property” means any Real Estate that (i) that is owned in fee by a Loan Party, (ii) is located in the United States and (iii) has a fair market value in excess of $10,000,000, with respect to any newly acquired Real Estate, at the time of its acquisition, or with respect to any Real Estate owned by an entity that becomes a Loan Party, at the time such Person becomes a Loan Party, in each case, as reasonably estimated by the Lead Borrower in good faith.

Maturity Date” means the Initial Maturity Date or the Latest Maturity Date, as applicable.

Maximum Rate” has the meaning provided in SECTION 9.10.

Monthly Reporting Period” means any period commencing with the first Fiscal Month ending after the date that Availability shall have been less than the Threshold Amount for five consecutive Business Days and ending on the date thereafter that Availability shall have been at least the Threshold Amount for 30 consecutive calendar days.

Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

Mortgages” means the mortgages, charge/mortgage of land, collateral mortgages and deeds of trust and any other security documents granting a Lien on Material Real Property between the Loan Party owning the Real Estate encumbered thereby and the Collateral Agent for its own benefit and the benefit of the other Secured Parties.

Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Restricted Payments.

Net Proceeds” means,

(a)         with respect to the Disposition of any asset by Holdco or any other Loan Party or any Casualty Event, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such Disposition or Casualty Event (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received and, with respect to any Casualty Event, any insurance proceeds or condemnation awards in respect of such Casualty Event actually received by or paid to or for the account of Holdco or any other Loan Party) over (ii) the sum of (A) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness that is secured by the asset subject to such Disposition or Casualty Event, but only to the extent that the Lien securing such Indebtedness is senior to the Lien of the Collateral Agent and that is required to be repaid (and is timely repaid) in connection with such Disposition or

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Casualty Event (other than Indebtedness under the Loan Documents), (B) the out-of-pocket expenses (including attorneys’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, other customary expenses and brokerage, consultant and other customary fees) actually incurred by Holdco or any other Loan Party in connection with such Disposition or Casualty Event, (C) taxes paid or reasonably estimated to be actually payable in connection therewith (after taking into account any available tax credits or deductions), provided that the Administrative Agent may, in its Permitted Discretion, establish an Availability Reserve in the amount of any taxes so deducted in calculating Net Proceeds, and (D) any reserve for adjustment in respect of (x) the sale price of such asset or assets established in accordance with GAAP and (y) any liabilities associated with such asset or assets and retained by Holdco or any other Loan Party after such sale or other Disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction and it being understood that “Net Proceeds” shall include any cash or Cash Equivalents (i) received upon the Disposition of any non-cash consideration received by Holdco or any other Loan Party in any such Disposition and (ii) upon the reversal (without the satisfaction of any applicable liabilities in cash in a corresponding amount) of any reserve described in clause (D) of the preceding sentence or, if such liabilities have not been satisfied in cash and such reserve is not reversed within 365 days after such Disposition or Casualty Event, the amount of such reserve; and

(b)         with respect to the incurrence or issuance of any Capital Stock or Indebtedness by Holdco or any other Loan Party, the excess, if any, of (i) the sum of the cash received in connection with such incurrence or issuance over (ii) the investment banking fees, underwriting discounts, commissions, costs,  taxes paid or reasonably estimated to be actually payable in connection therewith and other out-of-pocket expenses and other customary expenses, incurred by Holdco or any other Loan Party in connection with such incurrence or issuance.

New Commitment” has the meaning provided in SECTION 2.27(c).

New Commitment Lender” has the meaning provided in SECTION 2.27(c).

New Lending Office” shall have the meaning provided in  SECTION 2.23(e)(i).

Noncompliance Notice” shall have the meaning provided in SECTION 2.06(c).

Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

“Non-Finance Lease” means a lease that is not required to be accounted for as a finance lease on both the balance sheet and the income statement for financial reporting purposes in accordance with GAAP. For the avoidance of doubt, a straight-line or operating lease shall be considered a Non-Finance Lease.

Notes” means, collectively, (i) the Revolving Credit Notes and (ii) the Swingline Note, each as may be amended, supplemented or modified from time to time.

NPL” means the National Priorities List under CERCLA.

Obligations” means (x) advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts that accrue after the commencement by or against any Loan Party of

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any proceeding under the Bankruptcy Code or any other federal, state, or provincial bankruptcy, insolvency, receivership or similar law, naming such Person as the debtor in such proceeding, regardless of whether such charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts are allowed claims in such proceeding and (y) obligations of any Loan Party arising with respect to any Other Liabilities;  provided, that the Obligations shall not include any Excluded Swap Obligations. Without limiting the generality of the foregoing, the Obligations of the Loan Parties under the Loan Documents (and of their Subsidiaries to the extent that they have obligations under the Loan Documents) include (a) the obligation (including guarantee obligations) to pay principal, interest, Letter of Credit commissions, reimbursement obligations, charges, expenses, fees, attorneys’ fees, indemnities and other amounts payable by any Loan Party or its Subsidiaries under any Loan Document, including charges, interest, expenses, fees, attorneys’ fees, indemnities and other amounts that accrue after the commencement by or against any Loan Party or Subsidiary of any proceeding under the Bankruptcy Code or any other federal, state, or provincial bankruptcy, insolvency, receivership or similar law, naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, and (b) the obligation of any Loan Party or any of its Subsidiaries to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party or such Subsidiary in accordance with, and to the extent permitted, by the Loan Documents.

OFAC” means the Office of Foreign Assets Control of the U.S. Treasury Department.

Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement (or equivalent or comparable governing documents with respect to any jurisdiction); (c) with respect to any unlimited liability company, the memorandum of association and (d) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

Original Closing Date” means October 31, 2006.

Other Liabilities” means outstanding liabilities with respect to or arising from (a) any Cash Management Services furnished to any of the Loan Parties or, to the extent guaranteed by any Loan Party, any of their Restricted Subsidiaries which are not Loan Parties, and/or (b) any transaction which arises out of any Bank Product entered into with any Loan Partyof the Loan Parties or, to the extent guaranteed by any Loan Party, any of their Restricted Subsidiaries which are not Loan Parties, as each may be amended from time to time.

Other Taxes” means any and all current or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies in the nature of a Tax arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document, but not including, for the avoidance of doubt, any Excluded Taxes.

Overadvance” means a Revolving Loan, advance, or providing of credit support (such as the issuance of a Letter of Credit) to the Borrowers to the extent that, immediately after the making of such loan or advance or the providing of such credit support, Availability is less than zero.

Participant” shall have the meaning provided in SECTION 9.07(d).

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Participant Register” shall have the meaning provided in SECTION 9.07(e).

Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) and the regulations promulgated thereunder, as amended from time to time.

Payment Conditions” means, at the time of determination with respect to a Specified Payment,  that (a) no Event of Default then exists or would arise as a result of the consummation of such Specified Payment and (b) the Pro Forma Availability Condition shall have been satisfied after giving effect to the consummation of such Specified Payment.

Payment in Full” has the meaning set forth in SECTION 5.01.

Payment Intangibles” has the meaning assigned to such term in the Security Agreement.

PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions or any Governmental Authority of another jurisdiction exercising similar functions in respect of any Plan of a Loan Party.

Pension Event” means (a) the whole or partial withdrawal of a Loan Party or any Subsidiary from a Plan during a plan year; (b) the filing of a notice of interest to terminate in whole or in part a Plan or the treatment of a Plan amendment as a termination or partial termination; (c) the institution of proceedings by any Governmental Authority to terminate in whole or in part or have a trustee appointed to administer a Plan or (d) any other event or condition which might constitute grounds for the termination of, winding up or partial termination or winding up or the appointment of trustee to administer, any Plan.

Perfect Store Initiative” means the initiative related to the Lead Borrower’s and its Restricted Subsidiaries’ store standardization and remodeling program, pursuant to which retail store layouts will be modified into a configuration intended to enhance the customer in-store experience.

Permitted Acquisition” means an Acquisition in which each of the following conditions are satisfied:

(a)         on the date the definitive agreement for such Permitted Acquisition is executed, no Event of Default shall have occurred and be continuing;

(b)         If the Acquisition is an Acquisition of Capital Stock, the Person being acquired shall become a Subsidiary of the Lead Borrower;

(c)         Any material assets acquired shall be utilized in, and if the Acquisition involves a merger, amalgamation, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Borrower or Subsidiary Facility Guarantor under this Agreement; and

(d)         Either (x) the aggregate consideration for such Acquisition, together with all other Acquisitions made during the Fiscal Year in which such Acquisition is consummated, shall not exceed $50,000,000 in the aggregate, or (y) the Borrowers shall have satisfied the Payment Conditions.

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Permitted Discretion” means a determination made by the Administrative Agent or the Collateral Agent, as applicable, in good faith in the exercise of its reasonable (from the perspective of an asset-based lender) business judgment.

Permitted Disposition” shall have the meaning set forth in SECTION 6.05.

Permitted Encumbrances” has the meaning set forth in SECTION 6.01.

Permitted Equity Issuance” means any sale or issuance of any Capital Stock of the Lead Borrower to the extent permitted hereunder (including any capital contribution to the Lead Borrower).

Permitted Holders” means any of the Sponsors and any investment funds advised or managed by any of the Sponsors and, subject to the proviso hereto, Highfields Capital and members of management of the Lead Borrower who are holders of Capital Stock of the Lead Borrower on the Third RestatementFirst Amendment Effective Date; provided that Highfields Capital and members of management of the Lead Borrower shall be considered Permitted Holders only as long as the aggregate number of shares of Capital Stock of the Lead Borrower entitled to vote for the election of directors held directly or indirectly by the Sponsors shall exceed the aggregate amount of such Capital Stock held by the Permitted Holders who are not the Sponsors.

Permitted Indebtedness” has the meaning set forth in SECTION 6.03.

Permitted Investments” has the meaning set forth in SECTION 6.02.

Permitted Overadvance” means an Overadvance made by the Administrative Agent, in its Permitted Discretion, which:

(a)         is made to maintain, protect or preserve the Collateral and/or the Secured Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Secured Parties; or

(b)         is made to enhance the likelihood of, or maximize the amount of, repayment of any Obligation; or

(c)         is made to pay any other amount chargeable to any Borrower hereunder; and

(d)         together with all other Permitted Overadvances then outstanding, shall not (i) exceed 5% of the then Borrowing Base in the aggregate outstanding at any time, or (ii) unless a Liquidation is taking place, remain outstanding for more than 45 consecutive Business Days;

provided however, that the foregoing shall not (i) modify or abrogate any of the provisions of (A) SECTION 2.13 regarding any Lender’s obligations with respect to Letters of Credit or (B) SECTION 2.06 and SECTION 2.22 regarding any Lender’s obligations with respect to participations in Swingline Loans and settlements thereof or (ii) result in any claim or liability against the Administrative Agent (regardless of the amount of any Overadvance) for “inadvertent Overadvances” (i.e. where an Overadvance results from changed circumstances beyond the control of the Administrative Agent (such as a reduction in the collateral value));  provided,  further, that in no event shall the Administrative Agent make an Overadvance if, after giving effect thereto, the principal amount of the Credit Extensions would exceed the Total Commitments (as in effect prior to any termination of the Commitments pursuant to SECTION 7.01 hereof).

Permitted Payment” has the meaning set forth in SECTION 6.11.

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Permitted Refinancing” means, with respect to any Person, any modification, refinancing, replacement, refunding, renewal or extension of any Indebtedness of such Person (including, for the avoidance of doubt, any one or more successive modifications, replacements, refinancings, refundings, renewals or extensions); provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, replaced, refunded, renewed or extended except by an amount equal to unpaid accrued interest and premium thereon (including tender premiums) plus other amounts paid, and fees and expenses incurred (including upfront fees and original issue discount), in connection with such modification, refinancing, replacement, refunding, renewal or extension and by an amount equal to any existing commitments unutilized thereunder; (b) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to SECTION 6.03(e), such modification, refinancing, replacement, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being modified, refinanced, replaced, refunded, renewed or extended; (c) other than with respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant to SECTION 6.03(e), at the time thereof, no Event of Default shall have occurred and be continuing; (d) such modification, refinancing, replacement, refunding, renewal or extension shall not include: (i) Indebtedness of a Subsidiary of the Lead Borrower that is not a Facility Guarantor or a Borrower that refinances Indebtedness of the Lead Borrower; (ii) Indebtedness of a Subsidiary of the Lead Borrower that is not a Facility Guarantor or a Borrower that refinances Indebtedness of a Facility Guarantor or a Borrower or (iii) Indebtedness of the Lead Borrower or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; (e) the collateral, if applicable, granted pursuant to any such refinancing Indebtedness is the same or less than the collateral under the Indebtedness being modified, refunded, extended, renewed or replaced and (f) to the extent such Indebtedness being modified, refinanced, replaced, refunded, renewed or extended is subordinated in right of payment to the Obligations, (i) such modification, refinancing, replacement, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being modified, refinanced, replaced, refunded, renewed or extended and (ii) the other terms and conditions (including, if applicable, as to collateral, but excluding as to interest rate,  redemption premium and, except to the extent prohibited by the terms of clause (f)(i) above, any change to the incurrence of liens covenant related to any change in any definition of “senior indebtedness”, “senior debt”, “designated senior debt” or any similar term) of any such modified, refinanced, replaced, refunded, renewed or extended Indebtedness, taken as a whole, are not materially less favorable to the Loan Parties and/or the Lenders than the terms and conditions of the Indebtedness being modified, refinanced, replaced, refunded, renewed or extended.

Person” means any natural person, corporation, limited liability company, unlimited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

Portal” has the meaning set forth in SECTION 2.04(b).

Post-Closing Letter” means that certain letter, dated as of the Third RestatementFirst Amendment Effective  Date, among the Administrative Agent and the Loan Parties.

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Prepayment Event” means the occurrence of any of the following events:

(a)         Any sale, transfer or other Disposition (including pursuant to a sale and leaseback transaction) of any Collateral (other than the transfer of any Collateral among Stores and other locations of the Loan Parties) unless the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Collateral Agent; or

(b)         Any Casualty Event unless the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Collateral Agent.

Prime Rate”  means, for any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate, as in effect from time to time, plus 0.50%, (b) the Adjusted LIBO Rate (which rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily basis) plus  1.00%, and (c) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo at its principal office in San Francisco as its “prime rate.”  The “prime rate” is a rate set by Wells Fargo based upon various factors including Wells Fargo’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such rate announced by Wells Fargo shall take effect at the opening of business on the day specified in the public announcement of such change”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero).

Prime Rate Loan” means any Loan bearing interest at a rate determined by reference to the Prime Rate in accordance with the provisions of ARTICLE II.

Prime Rate Loan Request” has the meaning set forth in SECTION 2.04(b).

Pro Forma Availability” shall mean, for any date of calculation, Excess Availability (i) as of the date of any Specified Payment and (ii) for the 9030-day period preceding such Specified Payment, in each case, after giving effect to such Specified Payment on a Pro Forma Basis.

Pro Forma Availability Condition” shall mean, for any date of calculation with respect to any Specified Payment, that either (i) (x) the Pro Forma Availability is greater than 12.5% of the Loan Cap and (y) the Consolidated Fixed Charge Coverage Ratio, on a Pro Forma Basis for the four Fiscal Quarters most recently preceding the consummation of such Specified Payment (provided, that if any such Specified Payment is to be consummated within 30 days after the end of any Fiscal Quarter, such calculation shall be made with respect to the four Fiscal Quarters most recently preceding such Specified Payment for which financial statements have been or are required to be delivered pursuant to SECTIONS 5.01(a), (b) or (c) hereof), is greater than 1.00:1.00 or (ii) the Pro Forma Availability is greater than 15.0% of the Loan Cap.

Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” mean, with respect to compliance with any test or covenant or calculation of any ratio hereunder, the determination or calculation of such test, covenant or ratio (including in connection with Specified Transactions) in accordance with SECTION 1.10.

Projections” shall have the meaning given such term in SECTION 5.01(d).

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“Provider” has the meaning provided in SECTION 8.19.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

“QFC Credit Support” has the meaning specified in SECTION 9.21(a).

Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Real Estate” means all Leases and all land, tenements, hereditaments and any estate or interest therein, together with the buildings, structures, parking areas, and other improvements thereon (including all fixtures), now or hereafter owned by any Loan Party, including all easements, rights-of-way, and similar rights relating thereto and all leases, tenancies, and occupancies thereof.

Register” has the meaning provided in SECTION 9.07(c).

“Regulation D” means Regulation D of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation T” means Regulation T of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation U” means Regulation U of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Regulation X” means Regulation X of the FRB as from time to time in effect and all official rulings and interpretations thereunder or thereof.

Reimbursement Date” has the meaning provided in SECTION 2.13(d).

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

Release” has the meaning provided in Section 101(22) of CERCLA.

Repayment” means, with respect to any Indebtedness, the defeasance, redemption, purchase, repurchase, prepayment, repayment, discharge, acquisition or refinancing or retirement of such Indebtedness.  Derivatives of such term have corresponding meanings.

Reports” has the meaning provided in SECTION 8.14.

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Required Lenders” means, at any time, Lenders (other than Defaulting Lenders) having Commitments aggregating more than 50% of the Total Commitments (other than Commitments held by Defaulting Lenders) or, if the Commitments have been terminated, Lenders (other than Defaulting Lenders) whose percentage of the outstanding Credit Extensions (calculated assuming settlement and repayment of all Swingline Loans by the Lenders) aggregate more than 50% of all such Credit Extensions (other than Credit Extensions made by Defaulting Lenders).

Reserves” means all (if any) Inventory Reserves and Availability Reserves (including, without limitation, and without duplication, Cash Management Reserves, Bank Product Reserves, Debt Maturity Reserves and reserves for Customer Credit Liabilities).

Responsible Officer” means the chief executive officer, the chief administrative officer, the chief operating officer, the president, any vice president, the chief financial officer, the treasurer or assistant treasurer or other similar officer of a Loan Party and, as to any document delivered on the Original Closing Date, the First Restatement Date, the Second Restatement Date or, the Third Restatement Date or the First Amendment Effective Date, any secretary or assistant secretary of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

Restricted Cash” means when referring to cash or Cash Equivalents of the Lead Borrower or any of its Subsidiaries, that such cash or Cash Equivalents (i) appears (or would be required to appear) as “restricted” on a consolidated balance sheet of the Lead Borrower or of any such Subsidiary (unless such appearance is related to the Loan Documents or Liens created thereunder), (ii) are subject to any Lien in favor of any Person other than the Collateral Agent for the benefit of the Secured Parties (except for (a) those Liens securing the Term Loan Facility or Liens securing any Term Incremental Equivalent Debt or Term Credit Agreement Refinancing Indebtedness and (b) Liens permitted pursuant to SECTION 6.01(l), (s) and (t)) or (iii) are not otherwise generally available for use by the Lead Borrower or such Subsidiary.

Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock of the Lead Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Capital Stock, or on account of any return of capital to the Lead Borrower’s stockholders, partners or members (or the equivalent Persons thereof).

Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of the Lead Borrower (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided,  however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary”.

Revolving Credit Commitment” shall mean, as to each Lender, its obligation to make Revolving Credit Loans to the Borrower pursuant to SECTION 2.01, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01(a) under the caption Revolving Credit Commitment or in the Assignment and Acceptance pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement (including SECTION 2.02).  The aggregate Revolving Credit Commitments of all Lenders shall be $850,000,000 on the Third RestatementFirst Amendment Effective Date, as such amount may be adjusted after the Third RestatementFirst Amendment Effective Date from time to time in accordance with the terms of this Agreement.

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Revolving Credit Loans” means all loans at any time made by any Lender pursuant to SECTION 2.01.

Revolving Credit Notes” means the promissory notes of the Borrowers substantially in the form of Exhibit C (with such modifications thereto as may be necessary to reflect differing Classes of Loans), each payable to a Lender, evidencing the Revolving Loans of a given Class made to the Borrowers.

Revolving Loans” means, collectively or individually as the context may require, any (i) Revolving Credit Loan or (ii) Extended Revolving Credit Loan, in each case made pursuant to and in accordance with the terms and conditions of this Agreement.

S&P” means Standard & Poor’sS&P Global Ratings Services, a division of The McGraw-Hill Companies,S&P Global Inc., and any successor theretoto its rating agency business.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) United States Governmental Authorities (including OFAC, the United States Department of State and the United States Department of Commerce), (b) the United Nations Security Council, or (c) Canadian Governmental Authorities.

“Sanctions Target” means any target of Sanctions, including: (a) Persons on any list of targets identified or designated pursuant to any Sanctions, (b) Persons, countries, or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctions Target(s), or (d) vessels and aircraft that are designated under any Sanctions program.

SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.

Second Confirmation of Ancillary Documents” means that certain Second Confirmation, Ratification and Amendment of Ancillary Loan Documents dated as of the Third Restatement Date among the Agents and the Loan Parties.

Second Restatement Date” means September 17, 2012.

Secured Party” means (a) each Credit Party; (b) any Person providing Cash Management Services; (c) any Person entering into or furnishing any Bank Products;  (d) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (e) the successors and, subject to any limitations contained in this Agreement, assigns of each of the foregoing.

Securities Act” means the Securities Act of 1933, as amended.

Security Agreement” means the Amended and Restated Security Agreement dated as of the Second Restatement Date among the Loan Parties and the Collateral Agent for its benefit and for the benefit of the other Secured Parties, together with any Security Agreement Supplements (as defined in such Amended and Restated Security Agreement) executed in connection therewith and any amendments thereto.

Security Documents” means the Security Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to this Agreement or any other Loan Document that creates a Lien in favor of the Collateral Agent to secure any of the Obligations.

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“Senior Notes” means the $500,000,000 aggregate principal amount of the Lead Borrower’s 8.00% Senior Notes due 2027 issued on July 8, 2019.

“Senior Note Documents” means the documents, instruments and other agreements now or hereafter executed and delivered in connection with the Senior Notes, including, without limitation, the Indenture dated as of July 8, 2019 among the Lead Borrower, the guarantors party thereto and U.S. Bank National Association, as Trustee and any supplemental indenture relating thereto.

Senior Subordinated Notes” means, collectively, (i) the $260,000,000 aggregate principal amount of the Lead Borrower’s 5 7/8% Senior Subordinated Notes due 2020 issued on December 19, 2013 and (ii) the $250,000,000 aggregate principal amount of the Lead Borrower’s 5 7/8% Senior Subordinated Notes due 2020 issued on June 16, 2014.

“Senior Subordinated Note Documents” means the documents, instruments and other agreements now or hereafter executed and delivered in connection with the Senior Subordinated Notes, including, without limitation, the Indenture dated as of December 19, 2013 among the Lead Borrower, the guarantors party thereto and Wells Fargo Bank, National Association, as Trustee and any supplemental indenture relating thereto.

Settlement Date” has the meaning provided in SECTION 2.22(b).

Software” has the meaning assigned to such term in the Security Agreement.

Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Specified Agreement” has the meaning provided in SECTION 8.19.

Specified Debt”  means (i) any class of the Loans as defined in and under the Term Loan Agreement, (ii) the Senior Subordinated Notes or (iii) any Indebtedness constituting a Permitted Refinancing of the Indebtedness described in clauses (i) or (ii) above.

Specified Default” means the occurrence of any Event of Default specified in SECTION 7.01(a),  SECTION 7.01(b) (but only with respect to (i) SECTION 2.18(d), (ii) SECTION 2.18(f), (iii) the third sentence of SECTION 2.18(h), (iv) SECTION 5.01(e), (v) SECTION 5.07 (but only with respect to fire and extended coverage policies maintained with respect to any ABL Priority Collateral), or (vi) SECTION 5.24), SECTION 7.01(d) (but only with respect to any representation made or deemed to be made by or on behalf of any Loan Party in any Borrowing Base Certificate), SECTION  7.01(f) or SECTION 7.01(g) hereof.

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Specified Payment” means any Restricted Payment, Permitted Acquisition, Investment, loan, advance, incurrence of or payment with respect to Indebtedness, Disposition or other transaction made subject to satisfaction of the Payment Conditions or any component thereof.

Specified Projections” has the meaning set forth in SECTION 4.01(m).

Specified Transaction” means, with respect to any period, (i) any Investment that results in a Person becoming a Restricted Subsidiary, (ii) any designation of a Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary, (iii) any Permitted Acquisition, (iv) any Disposition that results in a Restricted Subsidiary ceasing to be a Subsidiary, (v) any Investment in, Acquisition of or Disposition of assets constituting a business unit, line of business or division of, or all or substantially all of the assets of, another Person, in each case, whether by merger, consolidation, amalgamation or otherwise, or (vi) any other event that by the terms of this Agreement requires Pro Forma Compliance with a test or covenant hereunder or requires such test or covenant to be calculated on a Pro Forma Basis or giving Pro Forma Effect to any such transaction or event.

Sponsor” means any of Bain Capital, LLC Private Equity, L.P., The Blackstone Group, LP, and each of their respective Affiliates, and any fund administered, managed or advised by any such Person, but not including, however, any portfolio companies of any of the foregoing.

Spot Rate” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

Standard Letter of Credit Practice” means, for each Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which such Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.

Standby Letter of Credit” means any Letter of Credit that is not a Commercial Letter of Credit.

Standby Letter of Credit Agreement” means the Standby Letter of Credit Agreement relating to the issuance of a Standby Letter of Credit in the form from time to time in use by the applicable Issuing Bank.

Stated Amount” means at any time the maximum amount for which a Letter of Credit may be honored.

Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the FRB). Such reserve percentages shall include those imposed pursuant to such Regulation D.  LIBO

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Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Store” means any retail store (which includes any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party or any Restricted Subsidiary.

Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations on terms reasonably acceptable to the Administrative Agent, it being understood that subordination terms set forth in the Senior Subordinated Note Documents shall also be deemed to be acceptable for other Subordinated Indebtedness incurred.

“Subsequent Transaction” has the meaning set forth in SECTION 1.12(a).

Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company, unlimited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Lead Borrower.

Subsidiary Facility Guarantor” means any Person (other than a Borrower) executing a Facility Guarantee which is a Restricted Subsidiary of the Lead Borrower, but in all events shall not include (x) the Excluded Subsidiaries or (y) Holdco.

Successor Borrower” has the meaning set forth in SECTION 6.04(a).

Successor Lead Borrower” has the meaning set forth in SECTION 6.04(b).

“Supported QFC” has the meaning set forth in SECTION 9.21(a).

Supporting Obligations” has the meaning assigned to such term in the Security Agreement.

Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

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Swap Obligation”  means, with respect to any Facility Guarantor or any Borrower other than the Lead Borrower, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

Swingline Lender” means Wells Fargo, in its capacity as lender of Swingline Loans hereunder to the Borrowers hereunder.

Swingline Loan” means a Loan made by the Swingline Lender to the Borrowers pursuant to SECTION 2.06.

Swingline Loan Ceiling” means $75,000,000, as such amount may be increased or reduced in accordance with the provisions of this Agreement.

Swingline Note” means the promissory note of the Borrowers substantially in the form of Exhibit D, payable to the Swingline Lender, evidencing the Swingline Loans made by the Swingline Lender to the Borrowers.

“Syndication Agent” has the meaning provided in the preamble to this Agreement.

Taxes” means any and all current or future taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges) or withholdings (including backup withholding) in the nature of taxes imposed by any Governmental Authority, and any and all interest and penalties related thereto.

“Termination Date” means the earlier to occur of (i) the Latest Maturity Date or (ii) the date on which the maturity of the Obligations (other than the Other Liabilities) is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with ARTICLE VII.

Term Credit Agreement Refinancing Indebtedness” has the meaning assigned to the term “Credit Agreement Refinancing Indebtedness” in the Term Loan Agreement.

Term Incremental Equivalent Debt” has the meaning assigned to the term “Incremental Equivalent Debt” in the Term Loan Agreement.

Term Loan Agreement” means that certain Amended and Restated Credit Agreement dated January 28, 2013 by and among the Lead Borrower, as borrower, JPMorgan Chase Bank, N.A. (as successor to Deutsche Bank AG New York Branch), as administrative agent and as collateral agent, and the lenders party thereto from time to time (or any predecessor agreement thereto), as such agreement may be amended, restated, amended and restated, supplemented, waived or otherwise modified from time to time or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original administrative agent and lenders or other

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agents and lenders or otherwise, and whether provided under the original credit agreement or one or more other credit agreements, indentures, financing agreements or otherwise, including any agreement extending the maturity thereof, otherwise restructuring all or any portion of the Indebtedness thereunder, increasing the amount loaned or issued thereunder, altering the maturity thereof or providing for revolving credit loans, term loans, letters of credit or other Indebtedness (including any Term Credit Agreement Refinancing Indebtedness and Term Incremental Equivalent Debt)), in each case as and to the extent permitted by this Agreement, unless such agreement, instrument or document expressly provides that it is not intended to be and is not a Term Loan Agreement.

Term Loan Documents” means the Term Loan Agreement and the related guaranties, pledge agreements, security agreements, mortgages, notes and other agreements and instruments entered into in connection with or pursuant to the Term Loan Agreement.

Term Loan Facility”  means (a) any one or more facilities or any one or more series or classes of Indebtedness made available to the Lead Borrower pursuant to the Term Loan Agreement in a principal amount not to exceed the sum of $2,478,000,000  plus the Available Incremental Amount (as defined in the Term Loan Agreement as in effect as of the Third RestatementFirst Amendment Effective  Date) and (b) any Indebtedness constituting a Permitted Refinancing thereof.

Term Priority Collateral” has the meaning set forth in the Intercreditor Agreement.

“Termination Date” means the earlier to occur of (i) the Latest Maturity Date or (ii) the date on which the maturity of the Obligations (other than the Other Liabilities) is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with ARTICLE VII.

Third Restatement Date” means the first date all the conditions precedent in SECTION 4.01 are satisfied or waived in accordance with SECTION 9.01.May 27, 2016.

Threshold Amount”  means an amount equal to the greater of (x) 10.0% of the Loan Cap and (y) $50,000,000.

Threshold Minimum Extension Condition” has the meaning provided in SECTION 2.27(b).

Total Assets” means the total assets of the Lead Borrower and its Restricted Subsidiaries on a Consolidated basis, as shown on the most recent balance sheet of the Lead Borrower or such other Person as may be expressly stated and calculated on a Pro Forma Basis in respect of any test or covenant hereunder.

Total Commitments” means the aggregate of the Commitments of all Lenders, as such amount may be increased or reduced in accordance with the terms of this Agreement.  As of the Third RestatementFirst Amendment Effective  Date, the Total Commitments are $850,000,000.

Trade Receivables Advance Rate” means 85%.

Type”  means, as to any Loan or Borrowing, whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Prime Rate.

UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York provided,  however, that if a term is defined in Article 9 of the Uniform Commercial Code

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differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided,  further, that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

UCP”  means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any subsequent revision thereof adopted by the International Chamber of Commerce on the date such Letter of Credit is issued.

Unanimous Consent” means the consent of Lenders (other than Defaulting Lenders) holding 100% of the Commitments (other than Commitments held by a Defaulting Lender), or if the Commitments have been terminated, the consent of Lenders (other than Defaulting Lenders) holding 100% of the outstanding Credit Extensions (calculated assuming settlement and repayment of all Swingline Loans by the Lenders) (other than Credit Extensions made by Defaulting Lenders).

Uncontrolled Cash” means an amount equal to the lesser of (x) the sum of $7,000,000,  plus all Restricted Cash then held by Michaels Stores Card Services, LLC and Michaels Finance Company, Inc. which was received in the ordinary course of business and (y) $30,000,000.

Unfunded Pension Liability” means, at a point in time, the excess of a Plan’s benefit liabilities, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Plan pursuant to applicable laws for the applicable plan year and includes any unfunded liability or solvency deficiency as determined for the purposes of the PBGC.

United States” and “U.S.” mean the United States of America.

Unpaid Drawing” has the meaning set forth in the definition of “Letter of Credit Outstandings”.

Unrestricted Cash” shall mean, as at any date of determination, all cash and Cash Equivalents of the Loan Parties other than Restricted Cash.

 

Unrestricted Subsidiaries” means (i) each Subsidiary of the Lead Borrower listed on Schedule 5.14 and (ii) any Subsidiary of the Lead Borrower designated by the board of directors of the Lead Borrower as an Unrestricted Subsidiary pursuant to SECTION 5.14 subsequent to the date hereof, provided that no Subsidiary may be designated as an Unrestricted Subsidiary if any of its assets are included in the calculation of the Borrowing Base immediately prior to such Subsidiary’s being designated as an Unrestricted Subsidiary, unless such Subsidiary is an Immaterial Subsidiary, and (i) immediately after giving effect to such designation, no Event of Default shall have occurred and be continuing or would result therefrom, and (ii) prior to making any such designation, the Lead Borrower delivers an updated Borrowing Base Certificate giving effect to such designation.

 

Unused Commitment” shall mean, on any day, (i) the Total Commitments, minus (ii) the sum of (A) the principal amount of Loans (other than Swingline Loans) of the Borrowers then outstanding and (B) the then Letter of Credit Outstandings.

Unused Fee” has the meaning provided in SECTION 2.19.

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“U.S. Special Resolution Regimes” has the meaning provided in SECTION 9.21(a).

Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:  (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness; provided that for purposes of determining the Weighted Average Life to Maturity of any Indebtedness that is being modified, refinanced, refunded, renewed, replaced or extended (the “Applicable Indebtedness”), the effects of any prepayments or amortization made on such Applicable Indebtedness prior to the date of the applicable modification, refinancing, refunding, renewal, replacement or extension shall be disregarded.

Wells Fargo” means Wells Fargo Bank, National Association, a national banking association, and its successors.

Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.

Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02           Terms Generally.

With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)          The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and

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contract rights, (vii) all references to “$” or “dollars” or to amounts of money and all calculations of Availability, Excess Availability, Borrowing Base, permitted “baskets” and other similar matters shall be deemed to be references to the lawful currency of the United States of America, and (viii) references to “knowledge” of any Loan Party means the actual knowledge of a Responsible Officer.

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

(c)          For purposes of determining compliance with SECTION 6.01, SECTION 6.02, SECTION 6.03, SECTION 6.05, SECTION 6.06, SECTION 6.08, SECTION 6.09 and SECTION 6.11, in the event that any Lien, Investment, Indebtedness, Disposition, Restricted Payment, affiliate transaction, contractual obligation or prepayment of Indebtedness meets the criteria of more than one of the categories of transactions permitted pursuant to any clause of such SECTION 6.01, SECTION 6.02, SECTION 6.03, SECTION 6.05, SECTION 6.06, SECTION 6.08, SECTION 6.09 and SECTION 6.11, such transaction (or portion thereof) at any time shall be permitted under one or more of such clauses as determined by the Lead Borrower in its sole discretion at such time.

(d)          Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

(e)          This Agreement and the other Loan Documents are the result of negotiation among, and have been reviewed by counsel to, among others, the Loan Parties and the Administrative Agent and are the product of discussions and negotiations among all parties.  Accordingly, this Agreement and the other Loan Documents are not intended to be construed against the Administrative Agent or any of the Lenders merely on account of the Administrative Agent’s or any Lender’s involvement in the preparation of such documents.

(f)           Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean the repayment in Dollars in full in cash or immediately available funds (or, in the case of contingent reimbursement obligations with respect to Letters of Credit and Bank Products (other than Swap Contracts), providing cash collateralization) of all of the Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Swap Contracts) other than (i) unasserted contingent indemnification Obligations, (ii) any Obligations relating to Bank Products (other than Swap Contracts) that, at such time, are allowed by the applicable Bank Product provider to remain outstanding without being required to be repaid or cash collateralized and (iii) any Obligations relating to Swap Contracts that, at such time, are allowed by the applicable provider of such Swap Contracts to remain outstanding without being required to be repaid.

SECTION 1.03        Accounting Terms.

(a)          Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, except as

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otherwise specifically prescribed in SECTION 1.03(b) below.  All amounts used for purposes of financial calculations required to be made shall be without duplication.

(b)          Issues Related to GAAP.  If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Lead Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided, that until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower shall provide to the Administrative Agent and the Lenders as reasonably requested hereunder a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  In addition, the definitions set forth in the Loan Documents and any financial calculations required by the Loan Documents shall be computed to exclude (a) the effect of purchase accounting adjustments, including to merchandise inventories, property and equipment, intangible assets, goodwill and deferred revenue and deferred debt line items, in connection with any Permitted Acquisition, any Acquisition consummated prior to the Third RestatementFirst Amendment Effective Date or any merger, amalgamation, consolidation or other similar transaction permitted by this Agreement, or the amortization, write-up, write-down or write-off of any amounts thereof, (b) the application of FAS 133, FAS 150, FASB Interpretation No. 45 or FAS 123r (to the extent that the pronouncements in FAS 123r result in recording an equity award as a liability on the Consolidated balance sheet of the Lead Borrower and its Subsidiaries in the circumstance where, but for the application of the pronouncements, such award would have been classified as equity), (c) any mark-to-market adjustments to any derivatives (including embedded derivatives contained in other debt or equity instruments under FAS 133) and (d) any non-cash compensation charges resulting from the application of FAS 123r.

(c)          [Reserved].

(d)          The principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP.

(e)          Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Loan Parties or any Restricted Subsidiary at “fair value”, as defined therein.  Notwithstanding any other provision contained herein,