CREDIT AGREEMENT
[Execution]
by and among
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Lender
and
THE CATO CORPORATION
CATOSOUTH LLC
CATO OF TEXAS L.P.
CATOWEST, LLC
CATO WO LLC CATO OF
GEORGIA, LLC
CATO OF FLORIDA L.L.C.
CATO OF ILLINOIS, LLC
CATO OF NORTH CAROLINA, LLC
OHIO CATO STORES, LLC
CATO OF SOUTH CAROLINA, LLC
CATO OF TENNESSEE, LLC
CATO OF VIRGINIA, LLC as
Borrowers
CHW, LLC
CADEL LLC
▇▇▇▇▇▇▇▇.▇▇▇, LLC
CATO SOUTHWES
T,
INC.
as Guarantors
Dated as of March 13, 2025
Table of Contents
Page
1.
DEFINITIONS AND CONSTRUCTION ............................................................................................ 1
1.1
Definitions..................................................................................................................................... 1
1.2
Accounting Terms....................................................................................................................... 25
1.3
UCC Terms ................................................................................................................................. 26
1.4
Construction ................................................................................................................................ 26
1.5
Time References ......................................................................................................................... 27
1.6
Payment in Full ........................................................................................................................... 27
1.7
[Reserved] ................................................................................................................................... 27
1.8
Resolution of Drafting Ambiguities............................................................................................ 27
1.9
Rates............................................................................................................................................ 27
1.10
Schedules and Exhibits ............................................................................................................... 28
1.11
Divisions ..................................................................................................................................... 28
2.
CREDIT FACILITY ........................................................................................................................... 28
2.1
Revolving Loans. ........................................................................................................................ 28
2.2
Borrowing Procedures................................................................................................................. 29
2.3
Letter of Credit Facility............................................................................................................... 30
2.4
Payments; Prepayments. ............................................................................................................. 30
2.5
Interest and Fees. ........................................................................................................................ 33
2.6
Intent to Limit Charges to Maximum Lawful Rate..................................................................... 33
2.7
Illegality; Market Conditions ...................................................................................................... 34
2.8
Increased Costs ........................................................................................................................... 34
2.9
Capital Requirements .................................................................................................................. 34
2.10
Certificates for Reimbursement .................................................................................................. 35
2.11
Delay in Requests ....................................................................................................................... 35
2.12
Term SOFR Conforming Changes.............................................................................................. 35
2.13
Increase in Maximum Credit....................................................................................................... 35
2.14
Joint and Several Liability of Borrowers. ................................................................................... 36
3.
CONDITIONS; TERM OF AGREEMENT ....................................................................................... 39
3.1
Conditions Precedent to the Initial Revolving Loan ................................................................... 39
3.2
Conditions Precedent to all Revolving Loans ............................................................................. 39
3.3
Maturity....................................................................................................................................... 40
3.4
Effect of Maturity ....................................................................................................................... 40
3.5
Early Termination by Borrowers ................................................................................................ 40
4.
REPRESENTATIONS AND WARRANTIES................................................................................... 40
4.1
Due Organization and Qualification ........................................................................................... 40
4.2
Due Authorization; No Conflict.................................................................................................. 40
4.3
Binding Obligations; Perfected Liens. ........................................................................................ 41
4.4
Title to Assets; No Encumbrances .............................................................................................. 41
4.5
Litigation..................................................................................................................................... 41
4.6
Compliance with Laws................................................................................................................ 41
4.7
No Material Adverse Effect ........................................................................................................ 41
4.8
Solvency...................................................................................................................................... 42
4.9
Environmental Condition ............................................................................................................ 42
4.10
Complete Disclosure; Projections ............................................................................................... 42
4.11
Taxes ........................................................................................................................................... 42
4.12
Margin Stock; Investment Company Act, Etc ............................................................................ 42
4.13
OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws; Patriot Act ............ 43
4.14
Employee and Labor Matters ...................................................................................................... 43
4.15
ERISA ......................................................................................................................................... 43
4.16
Capitalization and Subsidiaries ................................................................................................... 43
4.17
Intellectual Property; Licenses.................................................................................................... 43
4.18
Deposit Accounts; Credit Card Arrangements............................................................................ 44
4.19
Material Contracts....................................................................................................................... 44
4.20
Reserved...................................................................................................................................... 44
4.21
Eligible Credit Card Receivables ................................................................................................ 44
4.22
Eligible Inventory ....................................................................................................................... 44
4.23
Brokers ........................................................................................................................................ 44
5.
AFFIRMATIVE COVENANTS......................................................................................................... 44
5.1
Financial Statements; Borrowing Base Certificate; Other Information ...................................... 44
5.2
Notices of Material Events.......................................................................................................... 45
5.3
Existence ..................................................................................................................................... 45
5.4
Maintenance of Properties .......................................................................................................... 45
5.5
Taxes ........................................................................................................................................... 45
5.6
Insurance ..................................................................................................................................... 46
5.7
Field Examinations; Appraisals .................................................................................................. 46
5.8
Compliance with Laws; OFAC; Sanctions, Etc .......................................................................... 46
5.9
Cash Management; Collection of Proceeds of Collateral. .......................................................... 46
5.10
Physical Inventories. ................................................................................................................... 48
5.11
Further Assurances...................................................................................................................... 48
5.12
Formation of Subsidiaries. .......................................................................................................... 49
5.13
Costs and Expenses ..................................................................................................................... 49
5.14
Post-Closing Actions .................................................................................................................. 50
6.
NEGATIVE COVENANTS ............................................................................................................... 50
6.1
Indebtedness................................................................................................................................ 50
6.2
Liens............................................................................................................................................ 50
6.3
Restrictions on Fundamental Changes ........................................................................................ 50
6.4
Asset Dispositions....................................................................................................................... 51
6.5
Nature of Business ...................................................................................................................... 51
6.6
Prepayments and Amendments ................................................................................................... 51
6.7
Restricted Payments .................................................................................................................... 52
6.8
Accounting Methods ................................................................................................................... 52
6.9
Investments ................................................................................................................................. 52
6.10
Transactions with Affiliates ........................................................................................................ 52
6.11
Deposit Accounts; Credit Card Processors ................................................................................. 53
6.12
Use of Proceeds........................................................................................................................... 53
7.
FINANCIA
L
COVENANT ................................................................................................................ 54
7.1
Minimum Excess Availability .................................................................................................... 54
8.
EVENTS OF DEFAULT AND REMEDIES ..................................................................................... 54
8.1
Events of Default ........................................................................................................................ 54
8.2
Remedies..................................................................................................................................... 55
9.
NOTICES, AMENDMENTS, ▇▇▇▇▇▇▇, INDEMNIFICATION, ETC. ......................................... 56
9.1
Demand; Protest; Counterclaims, Etc ......................................................................................... 56
9.2
Indemnification ........................................................................................................................... 56
9.3
Notices ........................................................................................................................................ 57
9.4
Assignments; Successors ............................................................................................................ 57
9.5
Amendments; Waivers ................................................................................................................ 57
10.
JURY TRIAL WA IVER; OTHER WAIVERS CONSENTS; GOVERNING L
AW.
.................... 57
10.1
GOVERNING LAW................................................................................................................... 58
10.2
FORUM NON CONVENIENS .................................................................................................. 58
10.3
WAIVER OF JURY TRIAL....................................................................................................... 58
10.4
SUBMISSION TO JURISDICTION .......................................................................................... 58
10.5
WAIVER OF CLAIMS .............................................................................................................. 58
11.
GENERA
L
PROVISIONS ............................................................................................................. 59
11.1
Effectiveness; Section Headings; Severability............................................................................ 59
11.2
Counterparts; Electronic Execution ............................................................................................ 59
11.3
Patriot Act ................................................................................................................................... 59
11.4
Integration ................................................................................................................................... 59
11.5
Confidentiality; Disclosure ......................................................................................................... 60
11.6
The Cato Corporation as Agent for Borrowers ........................................................................... 60
11.7
Acknowledgement Regarding Any Supported QFCs ................................................................. 61
Schedules
Schedule 1.1(a) Definition of Eligible Credit Card Receivables
Schedule 1.1(b) Definition of Eligible Inventory
Schedule 1.1(c) Excluded Subsidiaries
Schedule 1.1(d) [Reserved]
Schedule 1.1(e) Immaterial Subsidiaries
Schedule 1.1(f) Investment Policy
Schedule 2.5 Fees
Schedule 2.7 SOFR Replacement
Schedule 3.1 Conditions Precedent to Initial Revolving Loans
Schedule 4.5 Pending Litigation
Schedule 4.14 Collective Bargaining Agreements, Etc.
Schedule 4.16 Subsidiaries
Schedule 4.18(a) Deposit Accounts
Schedule 4.18(b) Credit Card Arrangements
Schedule 4.19 Material Contracts
Schedule 5.1 Financial and Collateral Reporting
Schedule 5.14 Post-Closing Actions
Schedule 6.1 Existing Indebtedness
Schedule 6.2 Existing Liens
Schedule 6.9 Existing Investments
Exhibits
Exhibit A Form of Borrowing Base Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Joinder Agreement
Exhibit D Form of SOFR Loan Notice
Exhibit E Form of Credit Card Notification
Exhibit F Cash Management Structure
v
THIS CREDIT AGREEMENT
is entered into as of March 13, 2025, by and among , among
THE CATO CORPORATION, a Delaware corporation (“Parent” or the “Administrative Borrower”),
CATOSOUTH LLC, a North Carolina limited liability company (“CatoSouth”), CATO OF TEXAS L.P., a
Texas limited partnership (“Cato of Texas”), CATOWEST LLC, a Nevada limited liability company
(“CatoWest”), CATO WO LLC, a Delaware limited liability company (“Cato WO”), CATO OF
GEORGIA, LLC, a Georgia limited liability company (“Cato of Georgia”), CATO OF FLORIDA L.L.C.,
a Florida limited liability company (“Cato of Florida”), CATO OF ILLINOIS, LLC, an Illinois limited
liability company (“Cato of Illinois”), CATO OF NORTH CAROLINA, LLC, a North Carolina limited
liability company (“Cato of North Carolina”), OHIO CATO STORES, LLC, an Ohio limited liability
company (“Ohio Cato”), CATO OF SOUTH CAROLINA, LLC, a South Carolina limited liability
company (“Cato of South Carolina”), CATO OF TENNESSEE, LLC, a Tennessee limited liability
company (“Cato of Tennessee”), and CATO OF VIRGINIA, LLC, a Virginia limited liability company
(“Cato of Virginia,” and together with Administrative Borrower, CatoSouth, Cato of Texas, CatoWest,
Cato WO, Cato of Georgia, Cato of Florida, Cato of Illinois, Cato of North Carolina, Ohio Cato, Cato of
South Carolina, and Cato of Tennessee, and together with any entity that may hereafter become party
hereto as a Borrower, individually, a “Borrower” and collectively, “Borrowers”), CATO SOUTHWES
T,
INC., a Delaware corporation (“Cato Southwest”), CHW LLC, a Delaware limited liability company
(“CHW”), CADEL LLC, a Delaware limited liability company (“CaDel”), ▇▇▇▇▇▇▇▇.▇▇▇, LLC, a
Delaware limited liability company (“catocorp”, and together with Cato Southwest, CH
W,
CaDel and any
entity that may hereafter become party hereto as a Guarantor, individually, a “Guarantor” and
collectively, “Guarantors,” and together with ▇▇▇▇▇▇▇▇▇, individually, a “Loan Party” and collectively,
“Loan Parties”) and ▇▇▇▇▇ FARGO BANK, NATIONA
L
ASSOCIATION (“Lender”).
The parties agree as follows:
1.
DEFINITIONS AND CONSTRUCTION
1.1
Definitions
. As used in this Agreement, the following terms shall have the following
definitions:
“Accounting Changes” means changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or any agency with similar
functions).
“Acquisition” means the acquisition of (a) a controlling equity interest in another Person
(including the purchase of an option, warrant or convertible or similar type security to acquire
such a controlling interest at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant for, or conversion of
securities into, such equity interest, or (b) assets of another Person which constitute all or any
material part of the assets of such Person or of a line or lines of business conducted by such
Person.
“Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a)
Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided, that, if Adjusted Term
SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to
be the Floor.
“Administrative Borrower” has the meaning set forth in Section 11.6.
“Affiliate” means, as applied to any Person, any other Person who controls, is controlled by, or is
under common control with, such Person. For purposes of this definition, “control” means the
possession, directly or indirectly through one or more intermediaries, of the power to direct the
management and policies of a Person, whether through the ownership of Equity Interests, by contract, or
otherwise; provided, that, for purposes of Section 6.10: (a) if any Person owns directly or indirectly 10%
or more of the Equity Interests having ordinary voting power for the election of directors or equivalent
governing body of a Person, then both such Persons shall be Affiliates of each other, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.
“Agreement” means this Credit Agreement.
“Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, (b) the U.K.
Bribery Act 2010, and (c) any other anti-bribery or anti-corruption laws, regulations or ordinances in any
jurisdiction in which any member of the Loan Party Group is located or doing business.
“Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in
which any member of the Loan Party Group is located or doing business that relates to money laundering,
any predicate crime to money laundering, or any financial record keeping and reporting requirements
related thereto.
“Applicable Margin” means, as of any date of determination and with respect to SOFR Loans,
1.50% per annum, and with respect to Base Rate Loans, 0.50% per annum.
“Authorized Person” means any one of the individuals identified as an officer of a Loan Party or
any other individual identified by Administrative ▇▇▇▇▇▇▇▇ in writing as an authorized person and
authenticated through ▇▇▇▇▇▇’s electronic platform or portal in accordance with its procedures for such
authentication.
“Bank Product” means any one or more of the following financial products or accommodations
provided by Lender or its Affiliates to a Loan Party: (a) credit cards (including commercial cards
(including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) any services related to the
acceptance and/or processing of payment cards or devices, (c) debit cards, (d) stored value cards, (e) any
cash management or related services, including treasury, depository, return items, overdraft, controlled
disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate
depository network, automatic clearing house transfer (including the Automated Clearing House
processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash
management arrangements, or (f) transactions under Hedge Agreements.
“Bank Product Obligations” means all obligations, liabilities, reimbursement obligations, fees, or
expenses owing by a Loan Party to Lender or any of its Affiliates pursuant to or in connection with a
Bank Product and irrespective of whether for the payment of money, and whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising.
“Bankruptcy Code” means Title 11 of the United States Code.
“Base Rate” means the greatest of (a) the Floor, (b) the Federal Funds Rate plus 1/2%, (c)
Adjusted Term SOFR for a one (1) month tenor in effect on such day, plus 1%, provided, that this clause
(c) shall not be applicable during any period in which Adjusted Term SOFR is unavailable or
unascertainable, and (d) the rate of interest announced, from time to time, within Wells Fargo at its
principal office in San Francisco as its “prime rate” in effect on such day, with the understanding that the
“prime rate” is one of ▇▇▇▇▇ 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.
“Base Rate Loan” means each portion of the Revolving Loans that bears interest at a rate
determined by reference to the Base Rate.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as
required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA) for which
any Loan Party or any of its Subsidiaries or ERISA Affiliates has been an “employer” (as defined in
Section 3(5) of ERISA) within the past six years.
“BHC Act Affiliate” of a Person means an “affiliate” (as such term is defined under and
interpreted in accordance with, 12 U.S.C. 1841(k)) of such Person.
“Borrower” and “Borrowers” have the respective meanings set forth in the preamble to this
Agreement.
“Borrowing Base” means, as of any date of determination, the result of:
(a)
90.0% multiplied by the Eligible Credit Card Receivables; plus
(b)
90.0% of the Net Recovery Percentage in the most recent appraisal of Eligible Inventory that
is acceptable to Lender in its Permitted Discretion multiplied by the Value of such Eligible Inventory at
such time; minus
(c)
Reserves.
“Borrowing Base Certificate” means a certificate setting forth the calculation of the Borrowing Base
in the form of Exhibit A to this Agreement, as such form, subject to the terms hereof, may from time to
time be modified by Lender, which is duly completed (including all schedules thereto) and delivered by or
on behalf of Borrowers to Lender.
“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are
authorized or required to close in the State of New York or Massachusetts.
“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, provided, that, all leases of any Person that are or would be characterized as an
operating lease in accordance with GAAP on or prior to the effectiveness of FASB ASC 842 as applicable
to Parent (whether or not such operating lease were in effect on such date) shall be accounted for as an
operating lease (and not as a Capital Lease) for purposes of this Agreement.
“Cash Dominion Event” means at any time on and after either (a) Excess Availability is less than
the greater of (i) 15.0% of the Loan Cap or (ii) $10,000,000 or (b) an Event of Default exists; provided,
that, (i) to the extent that the Cash Dominion Event has occurred due to clause (a) of this definition, if
Excess Availability is greater than the applicable amount specified above for at least 30 consecutive days,
the Cash Dominion Event shall no longer be deemed to exist until such time as Excess Availability may
again be less than the applicable specified amount, and (ii) to the extent that the Cash Dominion Event
has occurred due to clause (b) of this definition, if no Event of Default exists, the Cash Dominion Event
shall no longer be deemed to exist until such time as an Event of Default may thereafter occur again.
“Cash Management Bank” has the meaning set forth in Section 5.9.
“Cash Management Structure” means the description of the deposit accounts of Parent and its
Subsidiaries and transfers of funds between such deposit accounts set forth in Exhibit F.
“Cedar Hill” means Cedar Hill National Bank, a wholly-owned Subsidiary of Parent.
“Change in Law” means the occurrence after the date of this Agreement of: (a) the adoption or
effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law,
rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation
or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, (c) any
new, or adjustment to, requirements prescribed by the Board of Governors of the Federal Reserve System
(or any successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the Board of Governors
of the Federal Reserve System), requirements imposed by the Federal Deposit Insurance Corporation, or
similar requirements imposed by any domestic or foreign governmental authority or resulting from
compliance by Lender with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority and related in any manner to SOFR, the Term SOFR
Reference Rate, Adjusted Term SOFR or Term SOFR, or (d) the making or issuance by any
Governmental Authority of any request, rule, guideline or directive, whether or not having the force of
law; provided, that, notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank
Wa
ll
Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith, and (ii) all requests, rules, guidelines or directives concerning capital
adequacy 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.
“Change of Control” means that (a) any Person or two or more Persons acting in concert (other
than John Cato) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC
under the Securities Exchange Act of 1934) of 50% or more of the outstanding shares of the voting
stock of Parent; or (ii) as of any date a majority of the Board of Directors of Parent consists of individuals
who were not either (A) directors of Parent as of the corresponding date of the previous year, or (B)
approved or nominated to become directors by the Board of Directors of Parent of which a majority
consisted of individuals described in clause (A), or (b) Parent fails to own and control, directly or
indirectly, 100% of the Equity Interests of each other Loan Party or (c) the occurrence of any “Change of
Control” or equivalent term as defined in any agreement with respect to any Material Indebtedness.
“Closing Date” means the first date all the conditions precedent in Section 3.1 are satisfied (or
waived in accordance with Section 9.5).
“Collateral” shall have the meaning given to such term in the Security Agreement and shall
include any other assets subject to any other security agreement entered into after the Closing Date that
are or are intended under the terms of such other security agreement to be subject to a Lien in favor of
Lender.
“Collateral Access Agreement” means an agreement with a lessor, warehouseman, processor,
consignee, bailee, or other Person in possession of, having a Lien upon, or having rights or interests in
any Collateral, duly authorized, executed and delivery by such Person, in each case, in form and
substance reasonably satisfactory to Lender.
“Collection Account” means each deposit account of a Borrower identified on Schedule 4.18(a)
as a collection account and such other deposit accounts as may be established after the Closing Date in
accordance with the terms hereof in each case used exclusively to receive payments on Credit Card
Receivables, accounts and proceeds of other Collateral.
“Commitment” means the commitment of Lender to make Revolving Loans or otherwise provide
any credit or services to a Borrower under this Agreement.
“Commitment Increase” has the meaning set forth in Section 2.13.
“Compliance Certificate” means a certificate in the form of Exhibit B to this Agreement, as such
form, subject to the terms hereof, may from time to time be modified by Lender, which is duly completed
(including all schedules thereto), and delivered by or on behalf of Borrowers to Lender.
“Concentration Account” means the deposit accounts at Lender set forth on Schedule 4.18(a)
designated as the “Concentration Account” and such other deposit account of Parent at Lender as may be
established after the Closing Date in accordance with the terms hereof to which funds received in a
Collection Account are transferred and is designated in writing by Administrative Borrower to Lender as
a “Concentration Account” with the consent of Lender.
“Control Agreement” means a control agreement, in form and substance reasonably satisfactory
to Lender, executed and delivered by a Loan Party, Lender, and the applicable securities intermediary
(with respect to a securities account) or bank (with respect to a deposit account).
“Covered Entity” means any of the following:
(a)
a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §
252.82(b);
(b)
a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §
47.3(b); or
(c)
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 set forth in Section 11.7.
“Credit Card Issuer” means any person (other than a Loan Party or an Affiliate of a Loan Party)
who issues or whose members issue credit cards, including, without limitation, MasterCard or VISA bank
credit or debit cards or other bank credit or debit cards issued through MasterCard International, Inc., Visa,
U.S.A., Inc. or Visa International and American Express, Discover, Diners Club, Carte Blanche and other
non-bank credit or debit cards, including, without limitation, credit or debit cards issued by or through
American Express Travel Related Services Company, Inc., and Novus Services, Inc. and other issuers
approved by the Lender.
“Credit Card Notifications” has the meaning specified in Section 5.9(d).
“Credit Card Processor” means any servicing or processing agent or any factor or financial
intermediary who facilitates, services, processes or manages the credit authorization, billing transfer
and/or payment procedures with respect to any Borrower’s sales transactions involving credit card or
debit card purchases by customers using credit cards or debit cards issued by any Credit Card Issuer.
“Credit Card Receivables” means each “payment intangible” (as defined in the UCC) together with
all income, payments and proceeds thereof, owed by a Credit Card Issuer or Credit Card Processor to a
Loan Party resulting from charges by a customer of a Loan Party on credit or debit cards issued by such
Credit Card Issuer in connection with the sale of goods by a Loan Party, or services performed by a Loan
Party, in each case in the ordinary course of its business.
“Credit Facility” means the Revolving Loans provided to or for the benefit of each Borrower
pursuant to Section 2.1 or other financial accommodations provided for under the Loan Documents.
“DDA Notification” has the meaning specified in Section 5.9(b).
“Default” means any condition or event which constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless cured or waived in writing, become an Event of
Default.
“Default Rate” means, for any Revolving Loan (including, to the extent permitted by law, interest
not paid when due), two percent plus the interest rate otherwise applicable thereto, or in the case of the
Letter of Credit fee, two percent above the per annum rate otherwise applicable thereto.
“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.
“Dollars” or “$” means United States dollars.
“EBITDA” means, with respect to any fiscal period and with respect to any Person and its
Subsidiaries determined, in each case, on a consolidated basis in accordance with GAAP, (a) the
consolidated net income (or loss), for such period, minus (b) without duplication, the sum of the
following amounts for such period to the extent included in determining consolidated net income (or loss)
for such period: (i) unusual or non-recurring gains and (ii) interest income, plus (c) without duplication,
the sum of the following amounts for such period to the extent deducted in determining consolidated net
income (or loss) for such period: (i) non-cash unusual or non-cash non-recurring losses, (ii) Interest
Expense, (iii) income taxes, and (iv) depreciation and amortization.
“Eligible Credit Card Receivables” has the meaning set forth in Schedule 1.1(a).
“Eligible Inventory” has the meaning set forth in Schedule 1.1(b).
“Equity Interests” means, with respect to a Person, all of the shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or
nonvoting, including capital stock or partnership, limited liability company or other equity ownership or
profit interests or units, preferred stock, or any other “equity security” (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the Securities Exchange Act
of 1934).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto.
“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as
employed by the same employer as the employees of any Loan Party or its Subsidiaries under IRC
Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of any Loan Party or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to
ERISA that is a member of an affiliated service group of which any Loan Party or any of its Subsidiaries
is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement with any Loan Party or any
of its Subsidiaries and whose employees are aggregated with the employees of such Loan Party or its
Subsidiaries under IRC Section 414(o).
“Event of Default” has the meaning set forth in Section 8.1.
“Excess Availability” means, as of any date of determination, the amount, as determined by
Lender, equal to: (a) the lesser of: (i) the Borrowing Base and (ii) the Maximum Credit, minus, without
duplication, (b) the amount of Revolving Loans and Letter of Credit Usage.
“Excluded Deposit Account” has the meaning set forth in the Security Agreement.
“Excluded Property” has the meaning set forth in the Security Agreement.
“Excluded Subsidiary” means:
Date);
(a)
an Immaterial Subsidiary (other than a Subsidiary that is a Loan Party on or about the Closing
(b)
a Subsidiary of Parent to the extent such Subsidiary has been formed for the sole purpose of
entering into a joint venture with one or more third parties to the extent, after engaging in good faith
negotiations with such third parties, a guarantee would not be permitted by the terms of such Subsidiary’s
Governing Documents as in effect on the Closing Date or the date the applicable person becomes a direct
or indirect Subsidiary of Parent;
(c)
a Subsidiary of Parent that is prohibited by applicable law, rule or regulation or by any
contractual obligation with a third party (with respect to any such contractual obligations, only to the
extent existing on the Closing Date or the date the applicable person becomes a direct or indirect
subsidiary of Parent and not created or entered into in contemplation of the Credit Facility) from
guaranteeing the Credit Facility or which would require governmental (including regulatory) consent,
approval, license or authorization to provide a guarantee (unless such consent, approval, license or
authorization has been received), including the guarantee by any Loan Party of Excluded Swap
Obligations;
(d)
any Subsidiary with respect to which the guarantee therefrom would reasonably be expected
to result in a material adverse tax consequence to Parent and its Subsidiaries (as determined by the Parent
in good faith and in consultation with Lender);
(e)
any Foreign Subsidiary;
(f)
any Subsidiary that owns any portion of the Fort Mill Land so long as such Subsidiary does
not directly or indirectly own any assets consisting of the types of assets at any time included in the
Borrowing Base, any type of Intellectual Property or Equity Interests (other than Equity Interests of
another Subsidiary that constitutes an Excluded Subsidiary under this clause (f) because it owns any
portion of the Fort Mill Land and does not directly or indirectly own any assets consisting of the types of
assets at any time included in the Borrowing Base, any type of Intellectual Property or Equity Interests,
other than Equity Interests of such an Excluded Subsidiary);
(g)
any Subsidiary that only provides employee services, acts as employer to the employees of
any Loan Party or its Subsidiaries, or for other employment related functions, consistent with and
substantially the same as such services and functions performed by Cato Employee Services
Management, LLC and Cato Employee Services, L.P. as of the date hereof, so long as such Subsidiary
does not directly or indirectly own any other assets or have any other operations or business and so long
as books and records relating to employees are available directly from Administrative Borrower or
another Loan Party.
Notwithstanding the foregoing, no Subsidiary will be an “Excluded Subsidiary” hereunder if such
Subsidiary guarantees or is otherwise liable in respect of any Material Indebtedness. Upon any Subsidiary
ceasing to be an Excluded Subsidiary, such Subsidiary shall comply with Section 5.11, to the extent
applicable. As of the Closing Date, the Subsidiaries of Parent listed on Schedule 1.1(c) are
Excluded Subsidiaries.
“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to
the extent that, all or a portion of the guaranty of such Loan Party of, or the grant by such Loan Party of a
security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the
Commodity Exchange Act (7 U.S.C. § 1 et seq.), and any successor statute or any rule, regulation or order
of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof)
due to such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in
the Commodity Exchange Act (7 U.S.C. § 1 et seq.), and any successor statute and the regulations
thereunder at the time the guaranty of such Loan Party 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 guaranty or security interest is or becomes illegal.
“Existing Letter of Credit” means the Irrevocable Standby Letter of Credit no. IS000516587U, dated
February 13, 2025, issued by Lender payable to American Alternative Insurance Corporation for the
account of Parent in the amount of $3,000,000.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for
each day during such period, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions received by Lender from three
Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the
rate determined pursuant to this definition shall be deemed to be zero).
“Floor” means a rate of interest equal to 0.00%.
“Foreign Subsidiary” means any Subsidiary of any Loan Party that is organized under the laws of
any jurisdiction other than the United States, any state thereof or the District of Columbia.
“Fort Mill Land” means the real property owned by Parent or any Subsidiary of Parent located in
York County, South Carolina, consisting of approximately 310 gross acres of land as of the Closing Date.
“Funding Date” means the date on which a Revolving Loan is made.
“FTZ” means a foreign trade zone or special purpose sub-zone established by the U.S.
Department of Commerce Foreign Trade Zone Board in accordance with the Foreign Trade Zone Act of
1934.
“FTZ Fees” has the meaning set forth in the definition of “Reserves.”
“GAAP” means generally accepted accounting principles as in effect from time to time in the
United States, consistently applied.
“Governing Documents” means, with respect to any Person, the certificate or articles of
incorporation, certificate of formation, by-laws, limited liability company agreement, operating agreement
or other organizational or governing documents of such Person.
“Governmental Authority” means the government of any nation or any political subdivision
thereof, whether at the national, state, territorial, provincial, county, municipal or any other level, and any
agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining
to, government (including any supra-national bodies such as the European Union or the European Central
Bank).
“Guarantor” has the meaning given to such term in the introductory paragraph hereof.
“Guaranty” means the Guaranty, dated of even date herewith, by each Loan Party in favor of
Lender and any other guarantee of the Obligations at any time executed and delivered by a Loan Party in
favor of Lender.
“Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of
the Bankruptcy Code.
“Immaterial Subsidiary” means those Subsidiaries of Parent specified on Schedule 1.1(e) hereto
and each other Subsidiary of Parent that has been designated by Administrative Borrower in writing to
Lender as an “Immaterial Subsidiary” for purposes of this Agreement and the other Loan Documents,
provided, that, for purposes of this Agreement, at no time shall (a) the assets of any Immaterial Subsidiary
as of the end of the most recent fiscal month for which financial statements have been delivered pursuant
to Section 5.1 hereof, equal or exceed 2.5% of the consolidated total tangible assets of Parent and its
Subsidiaries (and in the event that the assets of any Immaterial Subsidiary tested at any fiscal month end
exceed such amount, such Subsidiary shall no longer be deemed to be an Immaterial Subsidiary and
Administrative Borrower shall cause such Subsidiary to become a Loan Party as set forth in Section 5.12
hereof) or the total assets of all Immaterial Subsidiaries, as of the end of the most recent fiscal month for
which financial statements have been delivered pursuant to Section 5.1 hereof, equal or exceed 5.0% of
the consolidated total tangible assets of Parent and its Subsidiaries (and in the event that the total assets of
all Immaterial Subsidiaries as tested at the end of any fiscal month exceed such amount, Administrative
Borrower shall promptly designate one or more Immaterial Subsidiaries to be a Loan Party as may be
necessary such that the foregoing 5.0% limit shall not be exceeded, such designated Subsidiaries shall no
longer be deemed to be Immaterial Subsidiaries and Administrative Borrower shall cause such designated
Subsidiary or Subsidiaries, as the case may be, to become a Loan Party as set forth in Section 5.12
hereof), or (b) the EBITDA of any Immaterial Subsidiary for any 12 consecutive fiscal month period
equals or exceeds 2.5% of the EBITDA of Parent and its Subsidiaries for such period (and in the event
that the EBITDA of any Immaterial Subsidiary for any 12 consecutive fiscal month period exceeds such
amount, such Subsidiary shall no longer be deemed to be an Immaterial Subsidiary and Administrative
Borrower shall cause such Subsidiary to become a Loan Party as set forth in Section 5.12 hereof) or the
EBITDA of all Immaterial Subsidiaries for any 12 consecutive fiscal month period equals or exceeds
5.0% of the EBITDA of Parent and its Subsidiaries for such period, in each case as determined in
accordance with GAAP (and in the event that the EBITDA of all Immaterial Subsidiaries for any 12
consecutive fiscal month period exceeds such amounts, Administrative Borrower shall promptly designate
one or more Immaterial Subsidiaries to be a Loan Party as may be necessary such that the foregoing 5.0%
limit shall not be exceeded, such designated Subsidiaries shall no longer be deemed to be Immaterial
Subsidiaries and Administrative Borrower shall cause such designated Subsidiary or Subsidiaries, as the
case may be, to become a Loan Party as set forth in Section 5.12 hereof); provided, that, no Loan Party
shall at any time be deemed to be an Immaterial Subsidiary; provided, further, that, Administrative
Borrower may re-designate Subsidiaries as Immaterial Subsidiaries so long as in compliance with the
foregoing.
“Increase Effective Date” has the meaning set forth in Section 2.13.
“Indebtedness” as to any Person means (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial
products, (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of such Person, irrespective of whether such obligation
or liability is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets
(other than (i) trade payables incurred in the ordinary course of business and repayable in accordance with
customary trade practices and (ii) royalty payments payable in the ordinary course of business in respect
of non-exclusive licenses), (f) all monetary obligations of such Person owing under Hedge Agreements
(which amount shall be calculated based on the amount that would be payable by such Person if the
Hedge Agreement were terminated on the date of determination), and (g) any obligation of such Person
guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under
any of clauses (a) through (f) above. For purposes of this definition, (i) the amount of any Indebtedness
represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the
obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person
may be liable pursuant to the terms of the instrument embodying such Indebtedness, and (ii) the amount
of any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an
identified asset shall be valued at the lesser of (A) if applicable, the limited amount of such obligations,
and (B) if applicable, the fair market value of such assets securing such obligation.
“Indemnified Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto, other than
Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of
Borrowers under any Loan Document. For purposes hereof, “Excluded Taxes” means taxes imposed on
or with respect to Lender measured by net income (however denominated), franchise taxes, and branch
profits taxes, in each case, (i) imposed as a result of Lender being organized under the laws of, or having
its principal office located in the jurisdiction imposing such tax (or any political subdivision thereof) or
(ii) that are taxes imposed as a result of a present or former connection between Lender and the
jurisdiction imposing such tax, (b) U.S. federal withholding taxes imposed on amounts payable to or for
the account of Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in
effect on the date on which (i) Lender has acquired such interest in the Loan or Commitment (other than
pursuant to an assignment request by Administrative Borrower) or (ii) Lender changes its lending office,
and (c) any U.S. federal withholding taxes imposed under Sections 1471 through 1474 of the Internal
Revenue 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 or official interpretations thereof and any agreement entered into pursuant to Section
1471(b)(1) of the Internal Revenue Code.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any
provision of the Bankruptcy Code or under any other Federal or State bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Intellectual Property” means all present and future: (a) trade secrets, know-how and other
proprietary information; (b) trademarks, trademark applications, 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, and
all registrations or applications for registrations which have heretofore been or may hereafter be issued
thereon throughout the world; (c) copyrights and copyright applications; (including copyrights for
computer programs); (d) unpatented inventions (whether or not patentable), patents and patent
applications; (e) industrial design applications and registered industrial designs; (f) books, customer lists,
records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source
codes, object codes, executable code, data and databases; (g) all other intellectual property; and (h) all
common law and other rights throughout the world in and to all of the foregoing.
“Intercompany Subordination Agreement” means the intercompany subordination agreement,
dated as of even date with this Agreement, executed and delivered by each Loan Party and each of its
Subsidiaries, and Lender, the form and substance of which is reasonably satisfactory to Lender.
“Interest Expense” means, for any period, the aggregate of the interest expense of a Person and its
Subsidiaries for such period, determined on a consolidated basis in accordance with GAA
P.
“Interest Payment Date” means, (a) as to any SOFR Loan, the last day of each Interest Period
applicable to such SOFR Loan and the Maturity Date; provided, that, if any Interest Period for a SOFR
Loan exceeds three months, the respective dates that are every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the first day after
the end of each month and the Maturity Date.
“Interest Period” means, as to any SOFR Loan, the period commencing on the date such SOFR
Loan is disbursed or converted to or continued as a SOFR Loan and ending one, three or six months
thereafter, as selected by the Administrative Borrower in its SOFR Loan Notice; provided that: (a) interest
shall accrue at the applicable rate based upon Adjusted Term SOFR, from and including the first day of
each Interest Period to, but excluding, the day on which any Interest Period expires; (b) 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 Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day; (c) 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 that is one, three or six months after the date on which the Interest Period began, as applicable; (d)
no Interest Period shall extend beyond the Maturity Date; and (e) no tenor that has been removed from
this definition pursuant to the terms of Schedule 2.7 shall be available for specification in any SOFR Loan
Notice or conversion or continuation notice. For purposes hereof, the date of a Revolving Loan initially
shall be the date on which such Revolving Loan is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Revolving Loan.
“Inventory Fees” has the meaning set forth in the definition of “Reserves.”
“Investment” means, with respect to any Person, any investment by such Person in any other
Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding
(a) commission, travel, and similar advances to officers and employees of such Person made in the
ordinary course of business, and (b) bona fide accounts receivable arising in the ordinary course of
business), or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such
other Person (or of any division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance with GAA
P.
The amount of
any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without
any adjustment for increases or decreases in value, or write-ups, write-downs, or write-offs with respect to
such Investment.
Policy.
“
I
n
v
es
t
m
ent
Polic
y
’’
means the Investment Policy attached hereto as Schedule 1.1(f) - Investment
“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.
“John Cato” means John P. Derham Cato and any of his children and trusts for their benefit.
“Joinder” means a joinder agreement substantially in the form of Exhibit C to this Agreement.
“Landlord Lien State” means a State(s) in which a claim for rent or other amounts at any time
owing to a landlord, owner, lessor or sublessor of Real Property (including any Store) may be pari passu
or have priority over the Lien of Lender in any of the Collateral.
“Lender” has the meaning set forth in the preamble to this Agreement.
“Lender Expenses” has the meaning set forth in Section 5.12.
“Lender Payment Account” means such account of Lender as Lender may from time to time
designate in writing to the Administrative Borrower as the Lender Payment Account for purposes of the
Loan Documents.
“Letter of Credit” has the meaning set forth in Section 2.3.
“Letter of Credit Usage” means, as of any date, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit, and (b) the aggregate amount of outstanding reimbursement obligations
with respect to Letters of Credit which remain unreimbursed or which have not been paid through a
Revolving Loan.
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security
arrangement and any other preference, priority, or preferential arrangement of any kind or nature
whatsoever, including any conditional sale contract or other title retention agreement, the interest of a
lessor under a Capital Lease and any synthetic or other financing lease having substantially the same
economic effect as any of the foregoing.
“Loan Account” has the meaning set forth in Section 2.4(e).
“Loan Cap” means, at any time, the lesser of (a) the Borrowing Base at such time and (b) the
Maximum Credit.
“Loan Documents” means this Agreement, the Control Agreements, each Borrowing Base
Certificate, each Security Document, each Guaranty, the DDA Notifications, the Credit Card
Notifications, any note or notes executed by a Borrower in connection with this Agreement and payable
to Lender, any subordination agreement, and any other instrument or agreement entered into, now or in
the future, by any Loan Party in connection with this Agreement (but specifically excluding agreements
for Bank Products).
“Loan Party” means any Borrower or any Guarantor.
“Loan Party Group” means (a) each Loan Party, (b) any Affiliate or Subsidiary of any Loan
Party, (c) any guarantor of the Obligations, (d) the owner of any collateral securing any part of the
Obligations, and (e) any officer, or director acting on behalf of any of the parties referred to in items (a)
through (d) with respect to the Credit Facility.
“Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
“Material Adverse Effect” means (a) a material adverse effect in the business, operations, results of
operations, assets, liabilities or financial condition of the Loan Parties, taken as a whole, (b) a material
impairment of the ability of Loan Parties to perform their obligations under the Loan Documents to which
they are a party or of Lender’s ability to enforce the Obligations or realize upon the Collateral (other than
as a result of an action taken or not taken that is solely in the control of Lender), or (c) a material
impairment of the enforceability or priority of the Liens of Lender with respect to all or a material portion
of the Collateral.
“Material Contract” means those material definitive agreements disclosed or required to be
disclosed by the Parent pursuant to the rules and regulations of the Securities and Exchange Commission.
“Material Indebtedness” means Indebtedness (other than the Revolving Loans) of a Loan Party in
an aggregate principal amount exceeding $5,000,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of a Loan Party in respect of any Hedge
Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements)
that a Loan Party would be required to pay if such Hedge Agreement were terminated at such time.
“Material Intellectual Property” means (a) any Intellectual Property that is material to the business
of the Loan Parties and (b) any Intellectual Property that is affixed to or incorporated or embedded in any
inventory or other product marketed, sold, licensed, or distributed by a Loan Party or otherwise material in
connection with the enforcement of any rights or remedies of Lender with respect to the Collateral (other
than off-the-shelf, shrink-wrapped or “click to accept” software licenses or other licenses to generally
commercially available software).
“Maturity Date” means March 13, 2028.
2.13.
“
Ma
x
i
m
u
m
Credit
”
m
eans
$35,0
0
0,0
0
0, as
such
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m
ount
m
ay
be inc
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ased
as
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ro
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ided
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e
ction
“Net Recovery Percentage” means, as of any date of determination, the fraction, expressed as a
percentage (a) the numerator of which is the amount equal to the estimated recovery on the aggregate
amount of the applicable category of eligible inventory at such time based on the appraised net orderly
liquidation value (on the basis customarily used for retailers), net of costs and expenses to be incurred in
connection with any such liquidation, as set forth in the most recent acceptable inventory appraisal
received by Lender in accordance with the requirements of the Loan Documents, and (b) the denominator
of which is the estimated cost of the aggregate amount of the eligible inventory subject to such appraisal.
“Obligations” means (a) all loans (including the Revolving Loans), debts, principal, interest
(including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding),
premiums, liabilities (including all amounts charged to any Loan Account), obligations (including
reimbursement and indemnification obligations with respect to Letters of Credit whether or not
contingent), fees, expenses (and any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description
owing by any Loan Party arising out of, under, pursuant to, in connection with, or evidenced by any Loan
Document and whether or not for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, and including all interest not paid when due, and
all other expenses or other amounts that any Loan Party is required to pay or reimburse by the Loan
Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product
Obligations, provided, that, notwithstanding anything to the contrary contained herein, the Obligations
shall exclude any Excluded Swap Obligation. Without limiting the generality of the foregoing, the
Obligations include the obligation to pay (i) the principal of the Revolving Loans, (ii) interest accrued on
the Revolving Loans, (iii) the amount necessary to reimburse Lender for amounts paid or payable pursuant
to Letters of Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v)
Lender Expenses, (vi) fees payable under any Loan Document, and (vii) indemnities and
other amounts payable by any Loan Party under any Loan Document. Any reference in this Agreement or
in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations of the Obligations, both prior and subsequent to any Insolvency
Proceeding.
“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001, as amended).
“Payment Conditions” means, at the time of determination with respect to any specified
transaction or payment, the following:
(a)
as of the date of any such transaction or payment, and after giving effect thereto, no Default
or Event of Default shall exist;
(b)
as of the date of any such transaction or payment, and after giving effect thereto, (i) there are
no Revolving Loans outstanding (provided, that, there may be outstanding undrawn amounts under
Letters of Credit) and (ii) the Loan Parties have unrestricted cash of greater than $20,000,000;
(c)
Lender shall have received not less than three Business Days’ prior written notice of the
proposed payment or transaction (or such shorter period as determined by Lender), including (i) the
estimated date and amount of the payment and (ii) a reasonably detailed description of the transaction or
event giving rise to such payment; and
(d)
Lender shall have received a certificate of an Authorized Person of the Administrative
Borrower certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail)
the calculations required thereby.
“Perfection Certificate” means the Perfection Certificate, dated of even date herewith, executed
by the Loan Parties.
“Permitted Acquisition” means any Acquisition, provided, that, as to any such Acquisition, each
of the following conditions is satisfied:
(a)
as of the date of such Acquisition and after giving effect thereto, except as the parties may
otherwise agree, each of the Payment Conditions is satisfied;
(b)
the board of directors (or other comparable governing body) of the person to be acquired shall
have duly approved such acquisition and such person shall not have announced that it will oppose such
Acquisition or shall not have commenced any action which alleges that such acquisition will violate
applicable law;
(c)
the purchase consideration payable in respect of all Permitted Acquisitions (including the
proposed Acquisition and including deferred payment obligations) shall not exceed $75,000,000 in the
aggregate in any fiscal year and such consideration in any single transaction or in a series of related
transactions shall not exceed $50,000,000;
(d)
Administrative Borrower shall have furnished Lender not less than 10 Business Days prior to
the consummation of any Acquisition where the consideration exceeds $10,000,000, (i) a current draft of
the acquisition documents or if a draft is not available, promptly at such time as it is available (and final
copies thereof as and when executed), (ii) a summary of any due diligence undertaken by the Loan Parties
in connection with such Acquisition, (iii) appropriate financial statements of the Person which is the
subject of such Acquisition, and pro forma projected financial statements for the twelve (12) month
period following such Acquisition after giving effect to such Acquisition (including balance sheets, cash
flows and income statements by month for the acquired Person, individually, and on a consolidated basis
with all Loan Parties), and such other information as Lender may reasonably request;
(e)
the assets being acquired or the Person whose Equity Interests are being acquired did not
have negative EBITDA during the 12 consecutive month period most recently ended prior to the date of
the proposed Acquisition for which financial statements are then available;
(f)
the assets being acquired, or the Person whose Equity Interests are being acquired, are useful
in or engaged in, as applicable, the business of the Loan Parties or a business reasonably related thereto;
(g)
the assets being acquired are located within the United States, or the Person whose Equity
Interests are being acquired is organized in a jurisdiction located within the United States or if the assets
are not located within the United States, or the Person whose Equity interests are being acquired is
organized in a jurisdiction outside of the United States, the purchase consideration payable in respect of
such Permitted Acquisition (including deferred payment obligations) shall not exceed $3,000,000 in the
aggregate in any fiscal year; and
(h)
the subject assets or Equity Interests, as applicable, are being acquired directly by a Borrower
or other Loan Party, and, in connection therewith, the applicable Loan Party shall have complied with
Section 5.11 or 5.12, as applicable, and, in the case of an acquisition of Equity Interests, the Person whose
Equity Interests are acquired shall become a Loan Party, unless such Person is an Excluded Subsidiary.
“Permitted Discretion” means a determination made in the exercise of reasonable (from the
perspective of a secured asset-based lender) business judgment.
“Permitted Dispositions” means each of the following:
(a)
sales of inventory to buyers in the ordinary course of business;
(b)
the sale, exchange or other disposition of cash, cash equivalents and other Investments, to the
extent not prohibited by the terms of any Loan Document;
(c)
sales, abandonment, or other dispositions of equipment that is substantially worn, damaged,
or obsolete or no longer used or useful in the ordinary course of business and leases or subleases of Real
Property not useful in the conduct of the business of a Loan Party;
(d)
the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business;
(e)
the granting of Permitted Liens;
(f)
the sale or discount, in each case without recourse, of accounts receivable (other than Credit
Card Receivables) arising in the ordinary course of business, but only in connection with the compromise
or collection thereof;
(g)
any involuntary loss, damage or destruction of property;
(h)
any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain
or otherwise, or confiscation or requisition of use of property;
(i)
the making of Restricted Payments that are expressly permitted to be made pursuant to this
Agreement;
(j)
the making of Permitted Investments;
(k)
the lapse, abandonment or other disposition of patents, trademarks, copyrights, and other
intellectual property rights that are not material and are no longer used or useful in any material respect in
the business of a Loan Party and do not appear on and are not otherwise affixed to or incorporated in any
inventory or necessary in connection with the books and records of a Loan Party or do not have any
material value;
(l)
bulk sales or other Dispositions of the inventory of a Loan Party not in the ordinary course of
business in connection with Store closings, at arm’s length, provided, that, such Store closures and related
inventory dispositions shall not exceed in any fiscal year of Parent and its Subsidiaries or in any 12
consecutive fiscal month period, 15% of the number of the Loan Parties’ Stores as of the beginning of
such fiscal year or such 12 consecutive fiscal month period (in each case net of new Store openings) unless
within 30 days prior to such sale, upon Lender’s request, it shall have received a then current appraisal of
the Inventory by an appraiser, and in scope and methodology acceptable to Lender, with respect to the
Inventory giving effect to such Store closings, at the expense of Borrowers (and which appraisal shall not
be considered in the limitation on the number of appraisals provided for in Section 5.7
hereof); provided, that, (A) all sales of Inventory in connection with Store closings in any fiscal year or 12
consecutive fiscal month period that exceed 15% of the number of the Loan Parties’ Stores as of the
beginning of such fiscal year or such 12 consecutive fiscal month period, as applicable (in each case net
of new Store openings) shall be in accordance with liquidation agreements and with professional
liquidators reasonably acceptable to Lender, (B) all net proceeds received in connection therewith are
applied to the Obligations and (C) in no event shall the number of Stores subject to such closures exceed
in the aggregate from and after the Closing Date, 25% of the number of Stores of Loan Parties in
existence as of the Closing Date (net of new Store openings);
(m)
sales or other dispositions of assets of a Loan Party not otherwise described in the provisions
set forth in this definition, provided, that, as to any such sale or other disposition, each of the following
conditions is satisfied: (i) as of the date of such sale or other disposition, and after giving effect thereto,
no Event of Default exists, (ii) each such sale is an arms’ length transaction and the applicable Loan Party
receives at least the fair market value of the assets disposed of, (iii) the consideration received by the
applicable Loan Party consists of at least 75% cash and is paid at the time of the consummation of the
transaction, (iv) the aggregate fair market value of all assets disposed of in reliance on this clause (m)
during any fiscal year of Parent shall not exceed 10% of the total assets of Parent and
its consolidated Subsidiaries, determined on a consolidated basis, as set forth or reflected on the
most recent consolidated balance sheet of Parent and its consolidated Subsidiaries, at the end of the most
recent fiscal year of Parent immediately preceding such fiscal year, (v) such transaction does not involve
the sale or other disposition of any Credit Card Receivables, inventory, Material Intellectual Property or
Equity Interests, and (vi) the cash proceeds from any such sale or other disposition (net only of reasonable
and customary direct costs related thereto and amounts required to be applied to any Permitted
Indebtedness secured by such assets as a result of such sale or other disposition) shall be paid to Lender
for application to the Obligations; and
(n)
Sale-Leaseback Transactions.
“Permitted Indebtedness” means:
(a)
the Obligations;
(b)
Indebtedness as of the Closing Date set forth on Schedule 6.1;
(c)
Indebtedness (including under any Capital Lease) arising after the Closing Date to the extent
secured by Liens on equipment or Real Property acquired after the Closing Date in an aggregate
outstanding principal amount not to exceed $15,000,000 at any time; provided, that, (i) such Liens do not
apply to any property of a Loan Party other than specific items of equipment or Real Property, (ii) the
Indebtedness secured thereby does not exceed the cost of the applicable equipment or Real Property, as
the case may be and (iii) as of the date any such Indebtedness is incurred and after giving effect thereto,
no Event of Default shall exist;
(d)
Indebtedness arising in connection with the endorsement of instruments or other payment
items for deposit and unsecured Indebtedness incurred in respect of netting services, overdraft protection,
and other like services, in each case, incurred in the ordinary course of business;
(e)
Indebtedness of a Loan Party in respect of bid, payment and performance bonds, workers
’
compensation claims, unemployment insurance, health, disability and other employee benefits or
property, casualty or liability insurance, or guarantees of the foregoing types of Indebtedness, in the
ordinary course of business and consistent with current practices as of the Closing Date;
(f)
the incurrence by any Loan Party of Indebtedness under Hedge Agreements that is incurred
for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated
with such Loan Party’s operations and not for speculative purposes;
(g)
Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card
processing services, debit cards, stored value cards, commercial cards (including so-called “purchase
cards”, “procurement cards” or “p-cards”), or any cash management or related services;
(h)
Subordinated Indebtedness; provided, that, the aggregate principal amount of such
Indebtedness shall not exceed $10,000,000 outstanding at any time;
(i)
contingent liabilities under surety bonds or similar instruments incurred in the ordinary
course of business in connection with the construction or improvement of Stores;
(j)
unsecured Indebtedness arising pursuant to Permitted Intercompany Advances;
(k)
Indebtedness of a Person whose assets or Equity Interests are acquired by a Loan Party in a
Permitted Acquisition; provided, that, such Indebtedness (i) is either purchase money Indebtedness or a
Capital Lease with respect to Equipment or mortgage financing with respect to Real Property, (ii) was in
existence prior to the date of such Permitted Acquisition, and (iii) was not incurred in connection with, or
in contemplation of, such Permitted Acquisition; and
(l)
unsecured Indebtedness incurred after the Closing Date and not otherwise specifically
described in this definition and guarantees of other Indebtedness constituting Permitted Indebtedness so
long as each of the following conditions is satisfied: (i) any such Indebtedness in excess of $5,000,000
shall have a maturity date that is at least 91 days after the Maturity Date, and (ii) the aggregate principal
amount of all such Indebtedness outstanding at any time shall not exceed $25,000,000.
“Permitted Intercompany Advances” means loans made by (a) a Loan Party to another Loan Party,
(b) a Subsidiary of a Loan Party that is not a Loan Party to another Subsidiary of a Loan Party that is not a
Loan Party, (c) a Loan Party to a Foreign Subsidiary formed or acquired after the Closing Date, provided,
that, the aggregate amount of all such loans, together with Permitted Investments under clause (r) of the
definition of such term, shall not exceed $5,000,000 at any time outstanding, and (d) a Subsidiary of a
Loan Party that is not a Loan Party to a Loan Party, so long as the parties thereto are party to the
Intercompany Subordination Agreement.
“Permitted Investments” means each of the following:
(a)
cash and Investments made in accordance with the Investment Policy, as such Investment
Policy may be amended or modified from time to time in Administrative Borrower’s commercially
reasonable judgment and upon notice to Lender, provided, that, on and after a Default or Event of Default
exists and is continuing or a Cash Dominion Event exists and is continuing, Loan Parties shall not
withdraw any funds from any securities account without the consent of Lender or take any other actions
with respect to such securities accounts except with the consent of Lender;
(b)
Investments in negotiable instruments deposited or to be deposited for collection in the
ordinary course of business;
(c)
advances made in connection with purchases of goods or services in the ordinary course of
business;
(d)
Investments received in settlement of amounts due to any Loan Party effected in the ordinary
course of business or owing to any Loan Party as a result of Insolvency Proceedings involving an account
debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party;
(e)
Investments owned by any Loan Party on the Closing Date and set forth on Schedule 6.9;
(f)
Equity Interests or other securities acquired in connection with the satisfaction or enforcement
of Indebtedness or claims due or owing to a Loan Party (in bankruptcy of customers or suppliers or
otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims;
leases;
(g)
deposits of cash made in the ordinary course of business to secure performance of operating
(h)
loans and advances to employees and officers of a Loan Party in the ordinary course of
business for any business purpose not to exceed $500,000 to any such employee or officer, and in an
aggregate amount not to exceed $1,000,000 outstanding at any one time;
(i)
loans to officers, directors and employees of a Loan Party so that such officers, directors and
employees may acquire common stock of Parent (so long as no cash is actually advanced by any Loan
Party in connection with such loans);
(j)
Investments resulting from Bank Products permitted under clause (f) and clause (g) of the
definition of Permitted Indebtedness;
(k)
Investments consisting of real property and cash to pay for incidental expenses in connection
with the Fort Mill Land;
(l)
Permitted Intercompany Advances;
(m)
Permitted Acquisitions;
(n)
Investments (other than in respect of Permitted Acquisitions) made with cash after the
Closing Date by a Loan Party in or to any Person not otherwise described in the provisions above;
provided, that, (i) as of the date of any such Investment and after giving effect thereto, each of the
Payment Conditions is satisfied, and (ii) the Investment shall be in or to a Person that engages in a line of
business substantially similar to, or ancillary or related to, or used in or useful to, the business that a Loan
Party is engaged in on the Closing Date;
(o)
Investments by Cato West in Cedar Hill pursuant to the payment of the purchase price by
Cato West for the purchase of payment intangibles owed to Cedar Hill arising from charges by a customer
of a Loan Party on credit or debit cards issued by Cedar Hill in connection with the sale of goods by a
Loan Party, or services performed by a Loan Party, in each case in the ordinary course of its business;
(p)
credits issued by landlords or sellers of goods or services to a Loan Party or Subsidiary in
respect of amounts otherwise owing by such Loan Party or Subsidiary to such landlord or seller in the
ordinary course of business;
(q)
Investments by Cato Land Development LLC so long as it is an Excluded Subsidiary; and
(r)
Investments in the form of capital contributions by a Loan Party in, and the acquisition by a
Loan Party of Equity Interests of, any Foreign Subsidiary, provided, that, the aggregate amount of all such
Investments, together with loans permitted under clause (c) of the definition of Permitted Intercompany
Advances, shall not exceed $5,000,000 at any time outstanding.
“Permitted Liens” means:
(a)
Liens granted to, or for the benefit of, Lender to secure the Obligations;
(b)
Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are
not yet past due, or (ii) do not have priority over the Liens of Lender and the underlying taxes,
assessments, or charges or levies are being contested in good faith by appropriate proceedings diligently
pursued and available to a Loan Party, which proceedings (or orders entered in connection with such
proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien
and with respect to which adequate reserves have been set aside on its books in accordance with GAAP;
(c)
judgment Liens in connection with court proceedings that do not constitute an Event of
Default; provided, that, (i) such Liens are being contested in good faith by appropriate proceedings
diligently pursued and available to a Loan Party, in each case prior to the commencement of foreclosure
or other similar proceedings, which proceedings (or orders entered in connection with such proceeding)
have the effect of preventing the forfeiture or sale of the property subject to any such Lien, and (ii)
adequate reserves or other appropriate provision, if any, as are required by GAAP have been made
therefor;
(d)
Liens set forth on Schedule 6.2;
(e)
the interests of lessors under operating leases and non-exclusive licensors under license
agreements;
(f)
Liens on equipment and Real Property arising after the Closing Date to secure Indebtedness
permitted under clause (c) of the definition of Permitted Indebtedness, whether such Indebtedness is
assumed or incurred by a Loan Party;
(g)
Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with
the borrowing of money, and which Liens either (i) are for sums not yet past due, or (ii) are being
contested in good faith by appropriate proceedings diligently pursued and available to a Loan Party, in
each case prior to the commencement of foreclosure or other similar proceedings, which proceedings (or
orders entered in connection with such proceeding) have the effect of preventing the forfeiture or sale of
the property subject to any such Lien and with respect to which adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor;
(h)
Liens on cash deposited to secure a Loan Party’s obligations in connection with worker’s
compensation or other unemployment insurance, or to secure obligations in connection with the making
or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with
the borrowing of money or Liens on cash deposited to secure its reimbursement obligations with respect
to surety or appeal bonds obtained in the ordinary course of business;
(i)
with respect to any Real Property, easements, rights of way, and zoning restrictions that do
not materially interfere with or impair the use or operation thereof;
(j)
non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business;
(k)
Liens securing any obligations and liabilities arising under or in connection with any cash
management arrangements entered into in the ordinary course of business prior to, on or after the date
hereof, including, without limitation, any netting or set-off system for the calculation of interest with
respect to debit balances and credit balances under such arrangements; provided that the assets subject to
any such Lien shall be limited to the assets held from time to time at the financial institution providing
such cash management arrangements;
(l)
Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;
(m)
[reserved];
(n)
Liens arising in the ordinary course of business solely with respect to cash, cash equivalents
and Investments permitted by clause (a) of the definition of Permitted Investments in favor of a creditor
depositary institution solely by virtue of any statutory or common law provision relating to banker’s liens,
rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with such
creditor depository institution;
(o)
Liens assumed by any Loan Party in connection with a Permitted Acquisition that secure
Indebtedness of a Person whose assets or Equity Interests are acquired by a Loan Party in a Permitted
Acquisition which Indebtedness is permitted under clause (k) of the definition of Permitted Indebtedness;
(p)
Liens arising out of conditional sale, title retention, consignment or similar arrangements for
sale of goods entered into by any Loan Party in the ordinary course of business to the extent such Liens
do not attach to any assets other than the goods subject to such arrangements and are not intended as
security for financing transactions; and
(q)
Liens not described in subclauses (a) through (p) above that do not secure Indebtedness for
borrowed money or letters of credit, and as to which the aggregate amount of the obligations secured
thereby does not exceed $2,500,000 in the aggregate.
“Person” means natural persons, corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and governments and agencies and
political subdivisions thereof.
“Projections” means forecasted balance sheets, profit and loss statements, and cash flow
statements with respect to the Loan Parties, all prepared on a basis consistent with its historical financial
statements, and projected amounts available under the Borrowing Base, together with appropriate
supporting details and a statement of underlying assumptions.
“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 set forth in Section 11.7.
“Real Property” means any estates or interests in real property now owned or hereafter acquired
by any Loan Party and the improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located.
“Reserves” means, as of any date of determination, those reserves that Lender deems necessary or
appropriate, in its Permitted Discretion and subject to Section 2.1(b), to establish and maintain, including
reserves with respect to (a) sums that any Loan Party is required to pay under any Loan Document (such
as taxes, assessments, insurance premiums, freight, duties, tariffs, and fees or, in the case of leased assets,
rents or other amounts payable under such leases) (all such payments, individually and collectively,
“Inventory Fees”) and has not yet paid, (b) all Inventory Fees in respect of Inventory located in an FTZ
which are required to be paid, or which Lender estimates will be required to be paid, when such Inventory
arrives in, or leaves from, an FTZ and have not been paid (all such payments, individually and collectively,
“FTZ Fees”), (c) amounts owing by any Loan Party to any Person to the extent secured by a Lien on, or
trust over, any of the Collateral, which Lien or trust, in the Permitted Discretion of Lender likely would be
pari passu or have a priority superior to Lender’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of
the Collateral, (d) amounts to the extent dilution calculated by Lender in its Permitted Discretion exceeds
five percent, (e) obligations in respect of Bank Products, (f) reserves as may be established from time to
time by Lender in its discretion with respect to the determination of the saleability, at retail, of the Eligible
Inventory, or which reflect such other factors as affect the market value of the Eligible Inventory or which
reflect claims and liabilities that Lender determines will need to be satisfied in connection with the
realization upon the inventory, including reserves based on: (i) obsolescence; (ii) seasonality; (iii) shrink;
(iv) imbalance; (v) change in inventory character; (vi) change in inventory composition; (vii) change in
inventory mix; (viii) markdowns (both permanent and point of sale); (ix) markups inconsistent with prior
period practice and performance, industry standards, current business plans or advertising
calendar and planned advertising events, (f) amounts for (i) salaries, wages and benefits due to employees
of any Borrower, (ii) customer credit liabilities consisting of the aggregate remaining value at such time
of (A) outstanding gift certificates and gift cards of the Borrowers entitling the holder thereof to use all or
a portion of the certificate or gift card to pay all or a portion of the purchase price for any inventory, (B)
outstanding merchandise credits of Borrowers, and (C) liabilities in connection with frequent shopping
programs of Borrowers, (iii) deposits made by customers with respect to the purchase of goods or the
performance of services and layaway obligations of Borrowers, (iv) reserves for reasonably anticipated
changes in the appraised value of Eligible Inventory between appraisals and (v) royalties payable in
respect of licensed merchandise.
“Restricted Payment” means any (a) dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests of a Loan Party, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or on account
of any return of capital to the stockholders, partners or members (or the equivalent Person thereof) of a
Loan Party, or payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire any Equity Interests of a Loan Party, or any
setting apart of funds or property for any of the foregoing, or (b) the payment by a Loan Party of any
management, advisory or consulting fee to any Person or the payment of any extraordinary salary, bonus
or other form of compensation to any Person who is directly or indirectly a significant partner,
shareholder, owner or executive officer of any such Person, to the extent such extraordinary salary, bonus
or other form of compensation is not included in the corporate overhead of a Loan Party. In no event
shall any payments made by a Loan Party to any Foreign Subsidiary of Parent for services provided by
such Subsidiary as a buying agent for the purchase of inventory by such Loan Party outside of the United
States in the ordinary course of business that are the same or substantially similar or ancillary to the types
of services with respect to such purchases of inventory as are provided for in the Sourcing Agreement,
dated as of July 31, 2014, between Cato Overseas Limited and Parent as such agreement is in effect on
the date hereof (but including services that are substantially similar or ancillary to those provided for in
the agreement and whether or not pursuant to such agreement or any other agreement with respect to such
services) be construed to constitute Restricted Payments.
“Revolving Loans” means the revolving loans made by Lender to a Borrower under this
Agreement.
“Sale and Leaseback Transaction” means, with respect to any Loan Party or any Subsidiary, any
arrangement, directly or indirectly, with any Person whereby the Loan Party or such Subsidiary shall sell
or transfer any Real Property used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property that it intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
“Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes and anti-terrorism laws imposed, administered or enforced from
time to time by: (a) the United States of America, including those administered by OFAC, the U.S. State
Department, the U.S. Department of Commerce, or through any existing or future Executive Order, (b)
the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other
Governmental Authority in any jurisdiction in which (i) any member of the Loan Party Group is located
or conducts business, (ii) in which any of the proceeds of the Credit Facility will be used, or (iii) from
which repayment of the Credit Facility will be derived.
“Sanctioned 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 Sanctioned Target(s), or (d) otherwise a target of Sanctions, including
vessels, planes and ships, that are designated under any Sanctions program.
“Security Agreement” means the Security Agreement, dated of even date herewith, by and among
each Loan Party and Lender.
“Security Documents” means the Security Agreement and any other agreement or instrument at
any time executed by a Loan Party or any other Person in connection with this Agreement that is intended
to (or purports to) create, perfect or evidence a Lien to secure the Obligations.
“SOFR” means a rate per annum equal to the secured overnight financing rate as administered by
the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor
administrator of the secured overnight financing rate).
“SOFR Loan” means each portion of a Revolving Loan that bears interest at a rate determined by
reference to Adjusted Term SOFR (other than pursuant to clause (c) of the definition of “Base Rate”).
“SOFR Loan Notice” means a written notice in the form of Exhibit D to this Agreement.
“Solvent” means, with respect to any Person as of any date of determination, that (a) at fair
valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of such Person’s
assets, (b) such Person is not engaged or about to engage in a business or transaction for which the
remaining assets of such Person are unreasonably small in relation to the business or transaction or for
which the property remaining with such Person is an unreasonably small capital, (c) such Person has not
incurred and does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to
pay such debts as they become due (whether at maturity or otherwise), and (d) such Person is “solvent” or
not “insolvent”, as applicable within the meaning given those terms and similar terms under applicable
laws relating to voidable transfers, fraudulent transfers and conveyances. For purposes of this definition,
the amount of any contingent liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability (irrespective of whether such contingent liabilities meet the
criteria for accrual under Statement of Financial Accounting Standard No. 5).
“Store” means any retail store (which may include any real property, fixtures, equipment,
inventory and other property related thereto) operated, or to be operated, by any Loan Party.
“Store Accounts” shall mean the deposit accounts listed on Schedule 4.18(a) under the heading
“Store Deposit Accounts” which are used only for the deposit of receipts by a Store and any other deposit
accounts established after the date hereof in accordance with Section 5.9 and that are used only for such
purpose by a Store.
“Subordinated Indebtedness” means any Indebtedness of any Loan Party incurred from time to
time that is subordinated in right of payment to the Obligations and is subject to a subordination
agreement in form and substance satisfactory to Lender, and is otherwise on terms (including maturity,
interest, fees, repayment, covenants and subordination) satisfactory to Lender.
“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or controls the Equity Interests
having ordinary voting power to elect a majority of the board of directors (or equivalent) of such
corporation, partnership, limited liability company, or other entity.
“Supported QFC” has the meaning set forth in Section 11.7.
“Swap Obligation” means, with respect to any Loan Party, 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.
“Termination Date” means the earliest to occur of (a) the Maturity Date, (b) the date on which the
maturity of the Obligations is accelerated (or deemed accelerated) and the Commitment is terminated (or
deemed terminated), or (c) the termination of the Commitment in accordance with the provisions of
Section 3.5.
“Term SOFR” means,
(a)
for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor
comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR
Determination Day”) that is two U.S. Government Securities Business Days prior to the first day of such
Interest Period, as such rate is published by the Term SOFR Administrator; provided, that, if as of 5:00
p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference
Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark
Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR
will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on
the first preceding U.S. Government Securities Business Day for which such
Te
rm SOFR Reference Rate
for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S.
Government Securities Business Day is not more than three U.S. Government Securities Business Days
prior to such Periodic Term SOFR Determination Day, and
(b)
for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference
Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that
is two U.S. Government Securities Business Days prior to such day, as such rate is published by the Term
SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Base Rate
Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been
published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term
SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for
such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government
Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the
Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is
not more than three U.S. Government Securities Business Days prior to such Base Rate Term SOFR
Determination Day.
“Term SOFR Adjustment” means a percentage equal to 0.10% per annum.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a
successor administrator of the Term SOFR Reference Rate selected by Lender in its reasonable
discretion).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“UCC” means the Uniform Commercial Code as in effect in the State of New York and any
successor statute, as in effect from time to time (except that terms used herein which are not otherwise
defined herein and defined in the Uniform Commercial Code as in effect in the State of New York on the
Closing Date shall continue to have the same meaning notwithstanding any replacement or amendment of
such statute except as Lender may otherwise determine).
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday
or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed
income departments of its members be closed for the entire day for purposes of trading in United States
government securities.
“U.S. Special Resolution Regimes” has the meaning set forth in Section 11.7.
“Valu e” means, the lower of (a) cost computed on a first-in first-out basis in accordance with
GAAP or (b) market value; provided, that, for purposes of the calculation of the Borrowing Base, (i) the
Value of the inventory shall not include: (A) the portion of the value of inventory equal to the profit
earned by any Affiliate on the sale thereof to a Borrower or (B) write-ups or write-downs in value with
respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the
cost of the inventory shall be computed in the same manner and consistent with the most recent appraisal
of the inventory that is received by, and acceptable to, Lender prior to the Closing Date, if any.
1.2
Accounting Terms
. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP; provided, that, if the Administrative Borrower notifies Lender that Borrowers
request an amendment to any provision hereof to eliminate the effect of any Accounting Changes
occurring after the Closing Date or in the application thereof on the operation of such provision (or if
Lender requests an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such Accounting Change or in the application thereof, then Lender and
Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement
that are directly affected by such Accounting Change with the intent of having the respective positions of
Lender and Borrowers after such change conform as nearly as possible to their respective positions
immediately before such Accounting Change took effect and, until any such amendments have been
agreed upon and agreed to by Lender, the provisions in this Agreement shall be calculated as if no such
Accounting Change had occurred. A Loan Party shall deliver to Lender at the same time as the delivery of
any financial statements given in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting principles employed in the
preparation of such financial statements from those applied in the most recently preceding monthly,
quarterly or annual financial statements and (b) a reasonable estimate of the effect on the financial
statements on account of such changes in application. When used herein, the term “financial statements”
shall include the notes and schedules thereto. Notwithstanding anything to the contrary contained herein,
(i) all financial statements delivered hereunder shall be prepared, and all financial covenants contained
herein shall be calculated, without giving effect to any election under the Statement of Financial
Accounting Standards Board’s Accounting Standards Codification Topic 825 (or any similar accounting
principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, and
(ii) the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is (A) unqualified, and (B) does not include any explanation,
supplemental comment, or other comment concerning the ability of the applicable Person to continue as a
going concern or concerning the scope of the audit.
1.3
UCC Terms
. Any terms used in this Agreement that are defined in the UCC shall be
construed and defined as set forth in the UCC unless otherwise defined herein; provided, that, to the extent
that the UCC is used to define any term herein and such term is defined differently in different Articles of
the UCC, the definition of such term contained in Article 9 of the UCC shall govern.
1.4
Construction
. 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” and vice-versa. Unless the context requires
otherwise, (a) any definition of or reference to any agreement, instrument or other document shall be
construed as referring to such agreement, instrument or other document as from time to time amended,
modified, supplemented, extended, renewed, restated or replaced (subject to any restrictions on such
amendments, supplements or modifications set forth in any Loan Document), (b) any reference herein to
any Person shall be construed to include such Person’s successors and assigns, (c) 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, (d) all
references in a Loan Document to Sections, Exhibits and Schedules shall be construed to refer to Sections
of, and Exhibits and Schedules to, the Loan Document in which such references appear, (e) any reference
to any law shall include all statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing 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, and (f) 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 contract rights. Section headings in any Loan Document are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
Each schedule and exhibit to this Agreement is incorporated by reference herein and is made a part of this
Agreement. Any capitalized term used in any schedule or exhibit to this Agreement shall have the
meaning assigned to such term herein, unless otherwise defined in such schedule or exhibit. An Event of
Default shall exist or continue until such Event of Default is waived in accordance with Section 9.5 in
accordance with the terms hereof. Each Loan Party shall have the burden of establishing any alleged
negligence, misconduct or lack of good faith by Lender under any Loan Document. Any reference to an
obligation of a Borrower or a Loan Party or to Borrowers or Loan Parties, or to any Borrower or any Loan
Party, as the case may be, shall mean that each Borrower or each Loan Party, as the case may be, is
jointly and severally liable with each other Borrower or Loan Party in respect of such obligation. In
connection with any division or plan of division under Delaware law (or any comparable event under a
different jurisdiction’s laws): (i) if any asset, right, obligation or liability of any Person becomes the asset,
right, obligation or liability of a different Person, then it shall be deemed to have been transferred from
the original Person to the subsequent Person, and (ii) if any new Person comes into existence, such new
Person shall be deemed to have been organized on the first date of its existence by the holders of its
Equity Interests at such time. Any reference in any Loan Document to a merger, transfer, consolidation,
assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a
limited liability company, or an allocation of assets to a series of a limited liability company (or the
unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, assignment,
sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. No provision
of any Loan Documents shall be construed against any party by reason of such party having, or being
deemed to have, drafted the provision. Any reference to an agreement or other matter being “reasonably
satisfactory” to Lender shall mean a determination made in the exercise of reasonable judgment from the
perspective of a secured asset-based lender. Any reference to expenses of Lender in any Loan Document
shall include all Lender Expenses. Reference to a Loan Party’s “knowledge” or similar concept means
actual knowledge of an Authorized Person, or knowledge that an Authorized Person would have obtained
if he or she had engaged in good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain the matter.
1.5
Time References
. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, all references to time of day refer to Eastern Time, as in effect in New York on
such day. For purposes of the computation of a period of time from a specified date to a later specified
date, unless otherwise expressly provided, the word “from” means “from and including” and the words
“to” and “until” each means “to and including”; provided, that, with respect to a computation of fees or
interest payable to Lender, such period shall in any event consist of at least one full day.
1.6
Payment in Full
. Any reference in any Loan Document to the satisfaction, repayment, or
payment in full of the Obligations shall mean (a) the payment in full in cash of the principal and accrued
and unpaid interest with respect to the Revolving Loans, (b) the payment in full in cash of all fees,
charges and expenses that have accrued and are unpaid regardless of whether payment has been
demanded or is otherwise due, (c) the delivery to Lender of cash collateral, or at Lender’s option, a letter
of credit payable to Lender issued by a bank acceptable to Lender and in form and substance satisfactory
to Lender, in either case in respect of (i) 105% of the then existing Letter of Credit Usage, (ii) contingent
Obligations for which a claim or demand for payment has been made at such time or in respect of matters
or circumstances known to Lender at the time, and which are reasonably expected to result in any loss,
cost, damage or expense (including attorneys’ fees and legal expenses) to Lender for which Lender would
be entitled to indemnification by a Loan Party hereunder and (iii) an amount determined by Lender equal
to the reasonably estimated credit exposure, operational risk or processing risk with respect to the then
existing Bank Product Obligations, and (d) the termination of the Commitment and the financing
arrangements provided by Lender to each Borrower hereunder.
1.7
[Reserved]
.
1.8
Resolution of Drafting Ambiguities
. Each Loan Party acknowledges and agrees that it
was represented by counsel in connection with the execution and delivery of the Loan Documents, that it
and its counsel reviewed and participated in the preparation and negotiation of the Loan Documents and
that any rule of construction to the effect that ambiguities are to be resolved against Lender as the drafting
party shall not be applicable in the interpretation of the Loan Documents.
1.9
Rates
. Lender does not warrant or accept any responsibility for, and shall not have any
liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any
other matter related to the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR or any other
Benchmark, any component definition thereof or rates referred to in the definition thereof, or with respect
to any alternative, successor or replacement rate thereto (including any then-current Benchmark or any
Benchmark Replacement), including whether the composition or characteristics of any such alternative,
successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted
pursuant to the terms of Schedule 2.7, will be similar to, or produce the same value or economic
equivalence of, or have the same volume or liquidity as, the Term SOFR Reference Rate, Adjusted Term
SOFR, Term SOFR or any other Benchmark, prior to its discontinuance or unavailability, or (b) the
effect, implementation or composition of any Conforming Changes. Lender and its affiliates or other
related entities may engage in transactions that affect the calculation of the Term SOFR Reference Rate,
Adjusted Term SOFR, Term SOFR, any alternative, successor or replacement rate (including any
Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to a
Borrower. Lender may select information sources or services in its reasonable discretion to ascertain the
Term SOFR Reference Rate, Adjusted Term SOFR, or Term SOFR, or any other Benchmark, any
component definition thereof or rates referred to in the definition thereof, in each case pursuant to the
terms of this Agreement, and shall have no liability to any Borrower or any other person or entity for
damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages,
costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any
error or calculation of any such rate (or component thereof) provided by any such information source or
service.
1.10
Schedules and Exhibits
. All of the schedules and exhibits attached to this Agreement
shall be deemed incorporated herein by reference.
1.11
Divisions
. For all purposes under the Loan Documents, in connection with any division or
plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if
any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a
different Person, then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to
have been organized on the first date of its existence by the holders of its Equity Interests at such time.
2.
CREDIT FACILITY
2.1
Revolving Loans.
(a)
Subject to, and upon the terms and conditions contained herein, on and after the Closing Date
until the Termination Date, Lender agrees to make Revolving Loans to a Borrower from time to time in
amounts requested by or on behalf of such Borrower, provided, that, after giving effect to any such
Revolving Loan, the aggregate principal amount of the Revolving Loans outstanding plus the Letter of
Credit Usage shall not exceed the lesser of the Borrowing Base at such time or the Maximum Credit.
(b)
Lender shall have the right (but not the obligation) at any time, in its Permitted Discretion, to
establish and increase or decrease Reserves, provided, that, the amount of any Reserve established by
Lender shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the
basis for such Reserve. To the extent that an event, condition or circumstance as to any eligible asset is
addressed pursuant to the treatment thereof within the applicable definition of such terms, Lender shall
not also establish a Reserve to address the same event, condition or circumstance. Lender shall provide
prior written notice to the Administrative Borrower of the establishment of any new categories of
Reserves, or any change in the methodology for the calculation of an existing Reserve (in each case after
the Closing Date except that such notice shall not be required at any time an Event of Default exists or at
any time if Lender, in its Permitted Discretion, determines that it is necessary to act sooner to preserve or
protect the Collateral or its value or the rights of Lender therein). In such event, Lender shall be available
to discuss the change. A Borrower may take such action as may be required so that the event, condition,
circumstance, or fact that is the basis for such Reserve no longer exists. If Lender determines in its
Permitted Discretion that the event, condition, other circumstance or fact that is the basis for the
establishment or change to such Reserve no longer exists or has otherwise been adequately addressed by a
Borrower, Lender shall adjust or eliminate the Reserve accordingly. At any time that the Maximum
Credit is less than the amount of the Borrowing Base, Reserves in respect of amounts that may be payable
to third parties may be deducted from the Maximum Credit.
2.2
Borrowing Procedures.
(a)
Each Revolving Loan shall be made by a written request by an Authorized Person delivered
to Lender (which may be delivered through Lender’s electronic platform or portal) and received by
Lender no later than 11:00 a.m. (provided, that Lender may, in its sole discretion, elect to accept as timely
requests that are received later than 11:00 a.m.) (i) on the Business Day that is one Business Day prior to
the requested Funding Date in the case of a request for a Base Rate Loan, and (ii) on the U.S. Government
Securities Business Day that is three U.S. Government Securities Business Days prior to the requested
Funding Date in the case of a request for a SOFR Loan (or the continuation thereof or the conversion
thereof to a Base Rate Loan), specifying (A) the amount of such Revolving Loan (which in the case of a
SOFR Loan shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof), (B) the requested Funding Date (which shall be a Business Day); and (C) in the case of a SOFR
Loan, the duration of the Interest Period with respect thereto. In addition, each request for a SOFR Loan
(or the continuation thereof or the conversion thereof to a Base Rate Loan) shall be made pursuant to the
delivery to Lender of a SOFR Loan Notice. If the Administrative Borrower fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month. If the Administrative
Borrower fails to give a timely notice with respect to any continuation of a SOFR Loan, then the applicable
SOFR Loan shall be converted to a Base Rate Loans effective as of the last day of the Interest Period then
in effect with respect to the applicable SOFR Loans. All requests for Revolving Loans
which are not made on-line via Lender’s electronic platform or portal shall be subject to (and unless
Lender elects otherwise in the exercise of its sole discretion, such Revolving Loans shall not be made
until the completion of) Lender’s authentication process (with results satisfactory to Lender) prior to the
funding of any such requested Revolving Loan.
(b)
Except as otherwise provided herein, a SOFR Loan may be continued or converted only on
the last day of an Interest Period for such SOFR Loan. During the existence of a Default or an Event of
Default, no Revolving Loans may be requested as, converted to or continued as SOFR Loans without the
consent of Lender.
(c)
Each SOFR Loan Notice shall be irrevocable and binding on Borrowers. In connection with
each SOFR Loan, each Borrower shall indemnify, defend, and hold Lender harmless against any loss,
cost, or expense actually incurred by Lender as a result of (i) the payment or required assignment of any
principal of any SOFR Loan other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (ii) the conversion of any SOFR Loan other than on the last day of the
Interest Period applicable thereto, or (iii) the failure to borrow, convert, continue or prepay any SOFR
Loan on the date specified in any SOFR Loan Notice delivered pursuant hereto. A certificate of Lender
delivered to the Administrative Borrower setting forth in reasonable detail any amount or amounts that
Lender is entitled to receive pursuant to this Section 2.2(c) shall be conclusive absent manifest error.
Borrowers shall pay such amount to Lender within 30 days of the date of its receipt of such certificate.
(d)
After giving effect to all SOFR Loans, there shall not be more than five Interest Periods in
effect with respect to SOFR Loans.
(e)
All Revolving Loans shall be conclusively presumed to have been made to, and at the request
of and for the benefit of, a Borrower when deposited to the credit of a Borrower or otherwise disbursed or
established in accordance with the instructions of the Administrative Borrower to the deposit account
specified to Lender for such purpose (which shall be at a bank acceptable to Lender) or in accordance
with the terms and conditions of this Agreement.
2.3
Letter of Credit Facility
. As a subfacility under the Credit Facility, subject to, and upon
the terms and conditions contained herein, on and after the Closing Date until the Termination Date,
Lender agrees to issue or cause an Affiliate to issue standby letters of credit or sight commercial letters of
credit for the account of a Borrower for purposes acceptable to Lender (each a “Letter of Credit” and
collectively, “Letters of Credit”); provided, that, (a) the aggregate Letter of Credit Usage will not at any
time exceed $5,000,000 and (b) as of the date of the issuance of any Letter of Credit, and after giving
effect thereto, the aggregate amount of the Revolving Loans and the Letter of Credit Usage will not
exceed the lesser of the Borrowing Base or the Maximum Credit. Loan Parties and Lender hereby
acknowledge and agree that the Existing Letter of Credit shall constitute a Letter of Credit under this
Agreement on and after the Closing Date with the same effect as if such Existing Letter of Credit was
issued by Lender at the request of Administrative Borrower on the Closing Date. The form and substance
of each Letter of Credit will be subject to approval by Lender and each Borrower shall execute and
deliver such additional letter of credit agreements, applications and other documents required by Lender
as a condition to the issuance, amendment, extension or renewal of any Letter of Credit. Each Letter of
Credit will be issued for a term not to exceed 365 days, as designated by the Administrative Borrower;
provided, that, (x) a Letter of Credit may provide for automatic extensions of its expiration date for one or
more successive 365-day periods provided that upon not less than thirty (30) days written notice to
Administrative Borrower, Lender has the right to terminate such Letter of Credit on each such annual
expiration date and there shall be no extension of the term of the Letter of Credit to a date that is later
than the fifth Business Day prior to the scheduled Termination Date and (y) no Letter of Credit will have
an expiration date after the Maturity Date. Each Letter of Credit will be issued under, and subject to, the
additional terms and conditions of the letter of credit agreements, applications and any related documents
required by Lender. Each drawing paid under a Letter of Credit will be deemed a Revolving Loan and
will be repaid by Borrowers in accordance with the terms and conditions of this Agreement applicable to
Revolving Loans; provided, that, if Revolving Loans are not available for any reason at the time any
drawing is paid by Lender, then Borrowers will immediately pay to Lender the full amount drawn,
together with interest on such amount from the date such drawing is paid to the date such amount is fully
repaid by Borrowers, at the rate of interest then applicable to Revolving Loans. In such event Borrowers
agree that Lender may charge the Loan Account or debit any deposit account maintained by any Loan
Party for the amount of any such drawing.
2.4
Payments; Prepayments.
(a)
Borrower shall be made to the Lender Payment Account or such other place as Lender may designate in
writing to the Administrative Borrower from time to time and shall be made in immediately available
funds, no later than 1:30 p.m. on the date specified herein. Any payment received by Lender later than
1:30 p.m. shall be deemed to have been received (unless Lender, in its discretion, elects to credit it on the
date received) on the following Business Day and any applicable interest or fee shall continue to accrue
until such following Business Day. All payments of Obligations shall be made in Dollars, without offset,
counterclaim or defense of any kind, free and clear of (and without deduction for) any taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or therein, and all interest, penalties
or similar liabilities with respect thereto. No Loan Party will fund any repayment of the Credit Facility
with proceeds, or provide as Collateral any property, that is directly or indirectly derived from any
transaction or activity that is prohibited by Sanctions, Anti-Money Laundering Laws or Anti-Corruption
Laws, or that could otherwise cause Lender or any other party to any Loan Document to be in breach of
Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws.
(b)
Application of Payments. Subject to the other terms and conditions contained herein, Lender
shall apply payments received or collected from a Borrower or for the account of a Borrower (including
the monetary proceeds of collections or of realization upon any Collateral) as follows, so long as no Event
of Default exists: first, to the payment in full of any fees, indemnities, or expense reimbursements then
due to Lender; second, to the payment in full of interest due in respect of any Revolving Loans; third, to
the payment in full of principal in respect of the Revolving Loans, whether or not then due; and fourth, at
any time an Event of Default (or an event which with notice or passage of time or both would constitute
an Event of Default) exists, as cash collateral in an amount up to 105% of the Letter of Credit Usage; and
fifth, to pay or prepay any other Obligations, whether or not then due, in such order and manner as Lender
directs. Such payments shall be applied as Lender determines at any time an Event of Default exists,
including to be used as cash collateral in respect of Obligations related to Letters of Credit (in an amount
up to 105% of the Letter of Credit Usage) or such other Obligations as Lender may determine, on such
terms as Lender may require.
(c)
any time in whole or in part, without premium or penalty, upon irrevocable notice from Administrative
Borrower to Lender, at any time or from time to time; provided, that, (i) such notice must be received by
Lender not later than 11:00 a.m. (provided, that Lender may, in its sole discretion, elect to accept as timely
notices that are received later than 11:00 a.m.) (A) one U.S. Government Securities Business Days prior to
any date of prepayment of SOFR Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any
prepayment of SOFR Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof; and (iii) unless a Cash Dominion Event has occurred and is continuing, any
prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of
$100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and whether the Revolving Loans
to be prepaid are SOFR Loans or Base Rate Loans and, if SOFR Loans, the Interest Period(s) of such
SOFR Loans. If such notice is given by Administrative Borrower, Borrowers shall make such
prepayment and the payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a SOFR Loan shall be accompanied by all accrued interest on the
amount prepaid, together with any additional amounts required pursuant to Section 2.8.
(d)
Mandatory Prepayments.
(i)
If, at any time, the aggregate principal amount of the Revolving Loans outstanding
plus the Letter of Credit Usage exceeds the lesser of the Borrowing Base or the Maximum Credit, then a
Borrower shall promptly, but in any event, within one Business Day prepay the Obligations in an
aggregate amount equal to the amount of such excess (or after the prepayment of all Revolving Loans,
upon Lender’s demand, immediately provide cash collateral up to 105% of the Letter of Credit Usage as
required to address such excess, even if amounts greater than such excess are required as a result of the
amount of any Letters of Credit then outstanding).
(ii)
After the occurrence and during the continuance of a Cash Dominion Event, Borrowers
shall prepay the Revolving Loans (and after the prepayment of all Revolving Loans, upon Lender’s
demand, amounts received thereafter may be held as cash collateral up to 105% of the Letter of Credit
Usage) with the proceeds and collections received by the Loan Parties to the extent so required under
Section 5.9. In no event shall the foregoing be construed to limit any of the rights of Lender on or after
an Event of Default.
(e)
its books in the name of each Borrower (the “Loan Account”) evidencing the Obligations, including
Revolving Loans, Letters of Credit, interest, fees and Lender Expenses. Any such records shall be
presumptively correct, absent manifest error, provided, that, the failure to make any such entry or the
existence of any error in such records, shall not affect any of the Obligations. Lender shall make
available to the Administrative Borrower monthly statements regarding the Loan Account, including the
principal amount of the Revolving Loans, interest, fees and Lender Expenses. Each such statement,
absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account
stated between each Borrower and Lender unless, within 30 days after Lender first makes such a
statement available to the Administrative Borrower, the Administrative Borrower shall deliver to Lender
written objection thereto describing any error contained in such statement.
(f)
promissory note. In such event, each Borrower shall execute and deliver to Lender a promissory note
payable to the order of Lender (or, if requested by Lender, to Lender and its registered assigns) and in a
form approved by Lender. Thereafter, the Revolving Loans evidenced by such promissory note and
interest thereon shall at all times be represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(g)
Charges to Loan Account. At the election of Lender, all payments of principal, interest, fees,
expenses and other amounts payable under the Loan Documents may be paid from the proceeds of
Revolving Loans made hereunder whether made following a request by a Borrower or a deemed request
as provided in this Section or may be deducted from any deposit account of any Borrower maintained
with Lender, provided, that, payments of interest and fees that may be charged to the Loan Account based
on the foregoing shall not be deemed to be Revolving Loans for a period of three Business Days, but if
not paid by Borrowers at the end of such period shall automatically and without further action of the
parties be deemed Revolving Loans as provided herein and shall bear interest at the rate applicable to
Revolving Loans that are Base Rate Loans. Each Borrower is hereby irrevocably deemed to request that
Lender, and Lender is hereby authorized to, (i) make a Revolving Loan for the purpose of paying each
payment of principal, interest, fees, expenses and other amounts as it becomes due under any Loan
Document and agrees that all such amounts charged shall constitute Revolving Loans as provided above,
(ii) make a Revolving Loan to preserve or protect the Collateral, or any portion thereof and (iii) charge
any deposit account of any Borrower maintained with Lender for each payment of principal, interest, fees,
expenses and other amounts due under any Loan Document.
(h)
Repayment on Termination Date. Each Borrower shall make payment in full of the
Obligations on the Maturity Date or if earlier, any other Termination Date.
(i)
Indemnity for Returned Payments. If after any payment, or proceeds of Collateral, are applied
to the payment of any of the Obligations, Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if
such payment or proceeds had not been received by Lender. Each Loan Party shall be liable to pay to
Lender, and does hereby agree to indemnify and hold Lender harmless for, the amount of any payments
or proceeds surrendered or returned. This Section shall remain effective notwithstanding any contrary
action which may be taken by Lender in reliance upon such payment or proceeds. This Section shall
survive the payment in full of the Obligations and the termination of this Agreement.
(j)
Crediting Payments. The receipt of any payment item by Lender shall not be required to be
considered a payment on account unless such payment item is a wire transfer of immediately available
funds made to the Lender Payment Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for payment, then a
Loan Party shall be deemed not to have made such payment. Notwithstanding anything to the contrary
contained herein, any payment item shall be deemed received by Lender only if it is received into the
Lender Payment Account on a Business Day on or before 1:30 p.m. If any payment item is received into
the Lender Payment Account on a non-Business Day or after 1:30 p.m. on a Business Day (unless Lender,
in its discretion, elects to credit it on the date received), it shall be deemed to have been received by Lender
as of the opening of business on the immediately following Business Day.
2.5
Interest and Fees.
(a)
(i)
Subject to the provisions of Section 2.5(a)(ii), 2.7 and 2.8, (A) each SOFR Loan shall
bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum
equal to Adjusted Term SOFR for the Interest Period thereof plus the Applicable Margin; and (B) each
Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable
Funding Date at a rate per annum equal to the Base Rate plus the Applicable Margin.
(ii)
If any principal or interest payable under any Loan Document is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise,
such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. If any other Event of Default exists, then
Lender may notify Administrative Borrower that all outstanding Revolving Loans shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the Default Rate and thereafter such
Revolving Loans shall bear interest at the Default Rate to the fullest extent permitted by applicable Laws.
(iii)
Accrued and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
(iv)
Interest on each Revolving Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and in each case, in any event on the Termination Date or at such other
times as may be specified herein. If no payment date is otherwise specified, such interest shall be due and
payable on earlier of the first day of the calendar month after incurred or demand or the Termination
Date. Notwithstanding the foregoing, interest accrued at the Default Rate shall be due and payable on
demand. Interest hereunder shall be due and payable in accordance with the terms hereof before and after
judgment, and before and after the commencement of any Insolvency Proceeding.
(b)
Computation of Interest and Fees. Interest and fees calculated on a per annum basis shall be
calculated on the basis of a 360-day year (or in the case of a Base Rate Loan, 365 or 366 days, as the case
may be) and actual days elapsed. If at any time there are Base Rate Loans, the interest rate with respect
thereto shall increase or decrease in an amount equal to each increase or decrease in the Base Rate
effective on the date of any change in the Base Rate. Each determination by Lender of any interest, fees
or interest rate hereunder shall be final, conclusive and binding for all purposes, absent manifest error.
All fees shall be fully earned when due and shall not be subject to rebate, refund or proration.
(c)
amounts and at the time specified in Schedule 2.5.
2.6
Intent to Limit Charges to Maximum Lawful Rate
. In no event shall the interest rate or
rates payable under any Loan Document, plus any other amounts paid in connection herewith, exceed the
highest rate permissible under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. If at any time the interest rate set forth in any of the Loan Documents
exceeds the maximum interest rate allowable under applicable law, the interest rate will be deemed to be
such maximum interest rate allowable under applicable law.
2.7
Illegality; Market Conditions
. Notwithstanding anything to the contrary contained herein, subject
to the occurrence of a Benchmark Transition Event, as such terms are defined in Schedule 2.7, if (a) any
Change in Law has made it unlawful, or any Governmental Authority has asserted that it is unlawful, for
Lender to make or maintain a SOFR Loan or to maintain the Commitment with respect to a SOFR Loan, or
to determine or charge interest rates based on Term SOFR or SOFR or (b) Lender determines in good faith
(which determination shall, absent manifest error, be final and conclusive and binding upon all parties
hereto) that Term SOFR cannot be determined pursuant to the definition thereof other than as a result of a
Benchmark Transition Event, then Lender shall give notice thereof to the Administrative Borrower and may
(A) declare that SOFR Loans will not thereafter be made by Lender, such that any request for a SOFR Loan
from Lender shall be deemed to be a request for a Base Rate Loan unless Lender’s declaration has been
withdrawn (and it shall be withdrawn promptly upon the cessation of the circumstances described in clause
(a) or (b) above) and (B) require that all outstanding SOFR Loans made by Lender be converted to Base
Rate Loans immediately, in which event all outstanding SOFR Loans shall be so converted and all
Obligations (except for the undrawn amount of any issued and outstanding Letters of Credit) shall bear
interest at the Base Rate in effect from time to time, plus the
Applicable Margin.
2.8
Increased Costs
. If any Change in Law shall: (a) impose, modify or deem applicable any
reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by, Lender; (b) subject Lender to
any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (other
than (i) Indemnified Taxes and (ii) U.S. federal withholding taxes imposed on amounts payable to or for
the account of any assignee of Lender with respect to an applicable interest in a Loan or Commitment
pursuant to a law in effect on the date on which (A) such Lender acquires such interest in the Loan or
Commitment (other than pursuant to an assignment consented to by Administrative Borrower or (B) such
Lender changes its lending office), and all interest, penalties or similar liabilities with respect thereto of
any kind whatsoever with respect to any Loan Document or any SOFR Loan made by it, or change the
basis of taxation of payments to Lender in respect thereof; or (c) impose on Lender any other condition,
cost or expense affecting any Loan Document or SOFR Loans, and the result of any of the foregoing shall
be to increase the cost to Lender of making or maintaining any SOFR Loan (or of maintaining its
obligation to make any such Revolving Loan), or to increase the cost to Lender or to reduce the amount of
any sum received or receivable by Lender hereunder (whether of principal, interest or any other amount)
then, upon request of Lender, each Borrower will pay to Lender, such additional amount or amounts as
will compensate Lender, as the case may be, for such additional costs incurred or reduction suffered.
2.9
Capital Requirements
. If Lender determines that any Change in Law affecting Lender or
any lending office of Lender or Lender’s holding company, if any, regarding capital requirements has or
would have the effect of reducing the rate of return on Lender’s capital or on the capital of Lender’s
holding company, if any, as a consequence of any Loan Document, the Commitment or the Revolving
Loans, to a level below that which Lender or Lender’s holding company could have achieved but for such
Change in Law (taking into consideration Lender’s policies and the policies of Lender’s holding company
with respect to capital adequacy), then from time to time each Borrower will pay to Lender such
additional amount or amounts as will compensate Lender or Lender’s holding company for any such
reduction suffered.
2.10
Certificates for Reimbursement
. A certificate of Lender setting forth the amount or
amounts necessary to compensate Lender or its holding company, as the case may be, as specified in
Sections 2.8 or 2.9 and delivered to any Borrower shall be conclusive absent manifest error. Each
Borrower shall pay Lender the amount shown as due on any such certificate within 30 days after receipt
thereof.
2.11
Delay in Requests
. Failure or delay on the part of Lender to demand compensation
pursuant to Sections 2.8 or 2.9 shall not constitute a waiver of Lender’s right to demand such
compensation, provided that a Borrower shall not be required to compensate Lender pursuant to this
Section for any increased costs incurred or reductions occurring more than 180 days prior to the date that
Lender becomes aware of the event giving rise to Lender’s claim for compensation therefor (except that,
if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180 day
period referred to above shall be extended to include the period of retroactive effect thereof).
2.12
Term SOFR Conforming Changes
. In connection with the use or administration of
Adjusted Term SOFR, Lender will have the right to make Conforming Changes from time to time and,
notwithstanding anything to the contrary herein or in any other Loan Document, any amendments
implementing such Conforming Changes will become effective without any further action or consent of
any other party to this Agreement or any other Loan Document. Lender will promptly notify
Administrative Borrower of the effectiveness of any Conforming Changes in connection with the use or
administration of Adjusted Term SOFR.
2.13
Increase in Maximum Credit.
(a)
At any time during the period from and after the Closing Date, Administrative Borrower may
from time to time request an increase in the Maximum Credit by an amount (for all such requests) not to
exceed $15,000,000 (each a “Commitment Increase” and collectively the “Commitment Increases”),
provided, that, (i) any such request for an increase shall be in a minimum amount of $5,000,000 and in
integral multiples of $1,000,000 in excess thereof, (ii) Administrative Borrower may make a maximum of
three (3) such requests, and (iii) the amount of the Maximum Credit, as the same may be increased
pursuant to this Section 2.13, shall not exceed $50,000,000 at any time. If the Maximum Credit is to be
increased, Lender, in consultation with Administrative Borrower, shall determine the effective date (the
“Increase Effective Date”). In no event shall Lender have any obligation to agree to any Commitment
Increase. Any such Commitment Increase, including the amount and conditions thereto, shall be in the
discretion of Lender.
(b)
Without limitation of the rights of Lender provided for above, each of the following shall be
conditions precedent to any Commitment Increase:
(i)
Administrative Borrower shall deliver to Lender a certificate of each Loan Party dated
as of the Increase Effective Date signed by an Authorized Person of such Loan Party (A) certifying and
attaching the resolutions adopted by such Loan Party approving or consenting to such Commitment
Increase, and (B) certifying that, before and after giving effect to such Commitment Increase, (1) the
representations and warranties contained herein and the other Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof) on and as of the
Increase Effective Date, except to the extent that such representations and warranties specifically refer to
an earlier date, in which case they are true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified or modified
by materiality in the text thereof) as of such earlier date, and (2) as of the Increase Effective
Date and after giving effect to such Commitment Increase, no Default or Event of Default exists;
(ii)
Borrowers shall have paid such fees and other compensation to Lender as
Administrative Borrower and Lender shall agree;
(iii)
if requested by Lender, Borrowers shall deliver to Lender an opinion or opinions, in
form and substance reasonably satisfactory to Lender, from counsel to Borrowers reasonably satisfactory
to Lender and dated such date;
(iv)
Loan Parties shall have delivered such other instruments, documents and agreements as
Lender may reasonably have requested;
(v)
as of the Increase Effective Date and after giving effect to such Commitment Increase,
no Default or Event of Default exists;
(vi)
if any Loan Party or any of its Subsidiaries owns any Margin Stock, Borrowers shall
deliver to Lender an updated Form U-1duly executed and delivered by Loan Parties, together with such
other documentation as Lender shall reasonably request, in order to enable Lender to comply with any of
the requirements under Regulations T, U or X of the Board of Governors of the Federal Reserve System
of the United States (or any successor); and
(vii)
each of the conditions precedent set forth in Section 3.2 are satisfied.
(c)
Unless otherwise specifically provided herein, all references in this Agreement and any other
Loan Document to Revolving Loans shall be deemed, unless the context otherwise requires, to include
Revolving Loans made pursuant to the increased Commitments and Maximum Credit pursuant to this
Section 2.13.
(d)
The Revolving Loans, the Commitment, and Maximum Credit established pursuant to this
Section 2.13 shall constitute Revolving Loans, the Commitment, and Maximum Credit under, and shall
be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall,
without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests
created by the Loan Documents. Borrowers shall take any actions reasonably required by Lender to
ensure and demonstrate that the Liens and security interests granted by the Loan Documents continue to
be perfected under the UCC or otherwise after giving effect to the establishment of any Commitment
Increase and increase in the Maximum Credit.
2.14
Joint and Several Liability of Borrowers.
(a)
Each Borrower is accepting joint and several liability hereunder and under the other Loan
Documents in consideration of the financial accommodations to be provided by Lender under this
Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for the Obligations.
(b)
Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with
respect to the payment and performance of all of the Obligations (including any Obligations arising under
this Section 2.14), it being the intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among them. Accordingly, each
Borrower hereby waives any and all suretyship defenses that would otherwise be available to such
Borrower under applicable law.
(c)
If and to the extent that any Borrower shall fail to make any payment with respect to any of
the Obligations as and when due, whether upon maturity, acceleration, or otherwise, or to perform any of
the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will
make such payment with respect to, or perform, such Obligations until such time as all of the Obligations
are paid in full, and without the need for demand, protest, or any other notice or formality.
(d)
The Obligations of each Borrower under the provisions of this Section 2.14 constitute the
absolute and unconditional, full recourse Obligations of each Borrower enforceable against each
Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or
enforceability of the provisions of this Agreement (other than this Section 2.14(d)) or any other
circumstances whatsoever.
(e)
Without limiting the generality of the foregoing and except as otherwise expressly provided in
this Agreement, each Borrower hereby waives presentments, demands for performance, protests and
notices, including notices of acceptance of its joint and several liability, notice of any Revolving Loans,
any portion or any Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence
of any Default, Event of Default, notices of nonperformance, notices of protest, notices of dishonor,
notices of acceptance of this Agreement, notices of the existence, creation, or incurring of new or
additional Obligations or other financial accommodations or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Lender under or in respect of any of the
Obligations, any right to proceed against any other Borrower or any other Person, to proceed against or
exhaust any security held from any other Borrower or any other Person, to protect, secure, perfect, or
insure any security interest or Lien on any property subject thereto or exhaust any right to take any action
against any other Borrower, any other Person, or any collateral, to pursue any other remedy in Lender’s
power whatsoever, any requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every kind in connection with
this Agreement (except as otherwise provided in this Agreement), any right to assert against Lender, any
defense (legal or equitable), set-off, counterclaim, or claim which each Borrower may now or at any time
hereafter have against any other Borrower or any other party liable to Lender, any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack
of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor, and any
right or defense arising by reason of any claim or defense based upon an election of remedies by Lender
including any defense based upon an impairment or elimination of such Borrower’s rights of subrogation,
reimbursement, contribution, or indemnity of such Borrower against any other Borrower. Without
limiting the generality of the foregoing, each Borrower hereby assents to, and waives notice of, any
extension or postponement of the time for the payment of any of the Obligations, the acceptance of any
payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or
other action or acquiescence by Lender at any time or times in respect of any default by any Borrower in
the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and
all other indulgences whatsoever by Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations
or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on
the part of Lender with respect to the failure by any Borrower to comply with any of its respective
Obligations, including any failure strictly or diligently to assert any right or to pursue any remedy or to
comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this
Section 2.14 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part,
from any of its Obligations under this Section 2.14, it being the intention of each Borrower that, so long
as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this
Section 2.14 shall not be discharged except by performance and then only to the extent of such
performance. The Obligations of each Borrower under this Section 2.14 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any other Borrower or Lender. Each Borrower waives, to the fullest
extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the
enforcement hereof. Any payment by any Borrower or other circumstance which operates to toll any
statute of limitations as to any Borrower shall operate to toll the statute of limitations as to each of the
Borrowers. Each of the Borrowers waives any defense based on or arising out of any defense of any
Borrower or any other Person, other than payment of the Obligations to the extent of such payment, based
on or arising out of the disability of any Borrower or any other Person, or the validity, legality, or
unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of
the liability of any Borrower other than payment of the Obligations to the extent of such payment. Lender
may foreclose upon any Collateral held by Lender by one or more judicial or nonjudicial sales or other
dispositions, whether or not every aspect of any such sale is commercially reasonable or otherwise fails to
comply with applicable law or may exercise any other right or remedy Lender may have against any
Borrower or any other Person, or any security, in each case, without affecting or impairing in any way the
liability of any of the Borrowers hereunder except to the extent the Obligations have been paid.
(f)
Each Borrower represents and warrants to Lender that such Borrower is currently informed of
the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal
and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and
warrants to Lender that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of
Borrowers’ financial condition and of all other circumstances which bear upon the risk of nonpayment or
nonperformance of the Obligations.
(g)
The provisions of this Section 2.14 are made for the benefit of Lender and it successors and assigns,
and may be enforced by it or them from time to time against any or all Borrowers as often as occasion
therefor may arise and without requirement on the part of Lender, or any of its successors or assigns first to
marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust
any remedies available to it or them against any Borrower or to resort to any other source or means of
obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.14 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully
satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section 2.14 will forthwith be
reinstated in effect, as though such payment had not been made.
(h)
Each Borrower hereby agrees that it will not enforce any of its rights that arise from the existence,
payment, performance or enforcement of the provisions of this Section 2.14, including rights of
subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in
any claim or remedy of Lender against any Borrower, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including the right to take or receive from any Borrower,
directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security
solely on account of such claim, remedy or right, unless and until such time as all of the Obligations have
been paid in full in cash. Any claim which any Borrower may have against any other Borrower with
respect to any payments to Lender hereunder or under any agreement related to Bank Products are hereby
expressly made subordinate and junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in
the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or
distribution of any character, whether in cash, securities or other property, shall be made to any other
Borrower therefor. If any amount shall be paid to any Borrower in violation of the immediately preceding
sentence, such amount shall be held in trust for the benefit of Lender, and shall forthwith be paid to Lender
to be credited and applied to the Obligations and all other amounts payable under this Agreement, whether
matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any
Obligations or other amounts payable under this Agreement thereafter arising. Notwithstanding anything
to the contrary contained in this Agreement, no Borrower may exercise any rights of subrogation,
contribution, indemnity, reimbursement or other similar rights against, and may not proceed or seek
recourse against or with respect to any property or asset of, any other Borrower, including after payment
in full of the Obligations, if all or any portion of the Obligations have been satisfied in connection with an
exercise of remedies in respect of the Equity Interests of such other Borrower whether pursuant to this
Agreement or otherwise.
(i)
In the event that in any action or proceeding involving any state or foreign corporate law, or in any
Insolvency Proceeding or other law affecting the rights of creditors generally, the obligations of any
Borrower under this Agreement shall be held or determined to be void, voidable, avoidable, invalid or
unenforceable (including, without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then, notwithstanding any other provision of this Agreement to the
contrary, the amount of such liability of a Borrower shall, without any further action by any Loan Party or
Lender be automatically limited and reduced to the highest amount that is valid and enforceable without
rendering such Borrower’s obligations hereunder void, voidable, avoidable, invalid or unenforceable. This
Section 2.14(i) with respect to the maximum liability of each Borrower is intended solely to preserve the
rights of Lender to the maximum extent not subject to avoidance under applicable law, and no Loan Party
nor any other person or entity shall have any right or claim under this Section with respect to such
maximum liability, except to the extent necessary so that the obligations of any Borrower hereunder shall
not be rendered void, voidable, avoidable, invalid or unenforceable under applicable law.
3.
CONDITIONS; TERM OF AGREEMENT
3.1
Conditions Precedent to the Initial Revolving Loan
. The obligation of Lender to make
the initial Revolving Loan or issue the initial Letter of Credit is subject to the satisfaction of each of the
conditions precedent set forth on Schedule 3.1.
3.2
Conditions Precedent to all Revolving Loans
. The obligation of Lender to make any
Revolving Loans or issue, amend, renew or extend any Letter of Credit at any time shall be subject to the
following conditions precedent:
(a)
the representations and warranties of each Loan Party contained in the Loan Documents shall
be true and correct in all material respects (except that such materiality qualifier shall not be applicable to
any representations and warranties that already are qualified or modified by materiality in the text thereof)
on and as of the date of such Revolving Loan, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such earlier date (except that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof));
(b)
as of the date of any such Revolving Loan or the issuance, amendment, renewal or extension
of such Letter of Credit, as applicable, or the use of the proceeds thereof, and after giving effect to any of
the foregoing, no Event of Default, or event or condition which with notice, or passage of time, or both,
would constitute an Event of Default, shall exist;
(c)
Lender shall have received a request for such Revolving Loan or such Letter of Credit (or for
the amendment, renewal or extension thereof) in accordance with the requirements of the Loan
Documents; and
(d)
as of the date of any such Revolving Loan or the issuance, amendment, renewal or extension
of such Letter of Credit, as applicable, or the use of the proceeds thereof, and after giving effect to any of
the foregoing, the aggregate principal amount of the Revolving Loans and the Letter of Credit Usage shall
not exceed the lesser of the Maximum Credit or the Borrowing Base.
Each request for a Revolving Loan or the issuance, amendment, renewal or extension of any Letter of Credit
delivered by a Borrower shall be deemed to be a representation and warranty by each Borrower that the
conditions specified in Section 3.2 have been satisfied on and as of the date of the applicable Revolving
Loan or issuance, amendment, renewal or extension of a Letter of Credit and after giving effect thereto.
The making of any Revolving Loan or the issuance, amendment, renewal or extension of any Letter of
Credit shall not be deemed a modification or waiver by Lender of any of the terms of any Loan Document
or any Event of Default or event or condition which with notice, or passage of time, or both, would
constitute an Event of Default.
3.3
Maturity
. The Commitment shall continue in full force and effect for a term ending on
the Maturity Date (unless terminated earlier in accordance with the terms hereof).
3.4
Effect of Maturity
. On the Maturity Date, the Commitment shall automatically terminate
and all of the Obligations shall become due and payable without notice or demand and each Borrower
shall be required to pay in full all of the Obligations. No termination of the Commitment shall relieve or
discharge any Loan Party of its duties, obligations, or covenants under any Loan Document and the Liens
of Lender in the Collateral shall continue to secure the Obligations and shall remain in effect until
payment in full of all Obligations.
3.5
Early
Te
rmination by Borrowers
. Borrowers have the option, at any time upon 10
Business Days prior written notice to Lender, to make payment in full of all of the Obligations and
terminate the Commitments; provided, however, that (a) Borrowers may rescind such written notice if it
states that the proposed payment in full is to be made with the proceeds of third party Indebtedness and if
the closing for such incurrence does not happen on or before the date of the proposed termination set forth
in such notice (in which case, a new notice shall be required to be sent in connection with any subsequent
termination), and (b) for the avoidance of doubt, nothing in this Section 3.5 shall effect a termination of any
Hedge Agreement, which Hedge Agreements may only be terminated in accordance with their respective
terms.
4.
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to Lender the following:
4.1
Due Organization and Qualification
. Each Loan Party (a) is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization, (b) is qualified to do business in any
State where the failure to be so qualified could reasonably be expected to have a Material Adverse Effect,
and (c) has all requisite power and authority to own and operate its assets, to carry on its business as now
conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and
to carry out the transactions contemplated thereby.
4.2
Due Authorization; No Conflict
. The execution, delivery, and performance by each Loan
Party of the Loan Documents to which it is a party have been duly authorized by all necessary
action on the part of such Loan Party. The execution, delivery, and performance by each Loan Party of
the Loan Documents to which it is a party do not and will not (a) violate any material provision of
Federal, State, or local law or regulation applicable to any Loan Party, the Governing Documents of any
Loan Party, or any order, judgment, or decree of any court or other Governmental Authority binding on
any Loan Party, (b) result in or require the creation or imposition of any Lien of any nature whatsoever
upon any assets of any Loan Party, other than Permitted Liens, or (c) require any approval of any holder
of Equity Interests of a Loan Party, other than consents or approvals that have been obtained and that are
still in force and effect.
4.3
Binding Obligations; Perfected Liens.
(a)
Each Loan Document has been duly executed and delivered by each Loan Party that is a party
thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or
limiting creditors’ rights generally.
(b)
As of the Closing Date, the Liens of Lender are validly created, perfected and first priority
Liens, subject as to priority, only to Permitted Liens which are non-consensual Permitted Liens, permitted
purchase money Liens, or the interests of lessors under Capital Leases, except for Liens in respect of (i)
motor vehicles that are subject to a certificate of title, (ii) money, (iii) letter-of-credit rights (other than
supporting obligations), (iv) commercial tort claims (other than those that, by the terms of any Loan
Document, are required to be perfected), and (v) any deposit accounts and securities accounts not subject
to a Control Agreement as permitted by any Loan Document, and subject only to the filing of financing
statements in the appropriate filing offices.
4.4
Title to Assets; No Encumbrances
. Each Loan Party has (a) good, sufficient and legal
title to (in the case of fee interests in Real Property), (b) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (c) good and marketable title to (in the case of all
other personal property), all of its assets reflected in its most recent financial statements delivered to
Lender, in each case except for assets disposed of since the date of such financial statements to the extent
permitted by any Loan Document. All of such assets are free and clear of Liens except for Permitted
Liens.
4.5
Litigation
. Except as set forth on Schedule 4.5, there are no actions, suits, proceedings or
investigations pending or, to the knowledge of a Loan Party, threatened in writing against a Loan Party,
that (a) relate to any Loan Document or transaction contemplated thereby or (b) either individually or in
the aggregate has or could reasonably be expected to have a Material Adverse Effect.
4.6
Compliance with Laws
. No Loan Party (a) is in violation of any applicable laws, rules,
regulations, executive orders, or codes that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No
inventory has been produced in violation of the Fair Labor Standards Act of 1938.
4.7
No Material Adverse Effect
. All historical financial statements relating to each Loan
Party that have been delivered by a Loan Party to Lender have been prepared in accordance with GAA
P
(except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-
end audit adjustments) and present fairly in all material respects, the financial condition of such Loan
Party as of the date thereof and results of operations for the period then ended. Since November 2, 2024,
no event, circumstance, or change has occurred that has or could reasonably be expected to have a
Material Adverse Effect.
4.8
Solvency
. Loan Parties, taken as a whole, are Solvent.
4.9
Environmental Condition
. Each Loan Party and its Subsidiaries are in compliance in all
respects with all applicable Federal, State and local environmental, hazardous waste, health and safety
statutes, and any rules or regulations related to such statutes, which govern or affect the operations or
properties of such Loan Party and its Subsidiaries, except where the failure to comply could, individually
or in the aggregate, not reasonably be expected to have a Material Adverse Effect. None of the operations
of any Loan Party or its Subsidiaries is the subject of any Federal, State or local investigation evaluating
whether any remedial action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment. No Loan Party has any contingent liability in
connection with any release of any toxic or hazardous waste or substance into the environment that has or
could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.10
Complete Disclosure; Projections
. All factual information taken as a whole (other than
forward-looking information and projections and information of a general economic nature and general
information about each Loan Party) furnished by or on behalf of any Loan Party in writing to Lender in
connection with any Loan Document, and all other such factual information taken as a whole (other than
forward-looking information and projections and information of a general economic nature and general
information about any Loan Party) hereafter furnished by or on behalf of a Loan Party in writing to
Lender will be true and accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light of the circumstances under
which such information was provided. Projections delivered to Lender represent the good faith estimate
of each Loan Party, on the date such Projections are delivered, of the future performance of such Loan
Party for the periods covered thereby based upon assumptions believed by such Loan Party to be
reasonable at the time of the delivery thereof to Lender (it being understood that such Projections are
subject to significant uncertainties and contingencies, many of which are beyond the control of a Loan
Party, and no assurances can be given that such Projections will be realized).
4.11
Taxes
. Except as otherwise permitted under Section 5.5, all tax returns and reports of each
Loan Party required to be filed by it have been timely filed, and all taxes shown on such tax returns to be
due and payable and all other taxes upon a Loan Party and upon its assets, income, businesses and
franchises that are due and payable have been paid when due and payable. Each Loan Party has made
adequate provision in accordance with GAA
P
for all taxes not yet due and payable. To the knowledge of
any Loan Party, there is no proposed tax assessment against a Loan Party that is not being contested in
good faith by appropriate proceedings diligently pursued and available to a Loan Party, in each case prior
to the commencement of foreclosure or other similar proceedings, which proceedings (or orders entered
in connection with such proceeding), and adequate reserves or other appropriate provision, if any, as are
required by GAAP have been made therefor.
4.12
Margin Stock; Investment Company Act, Etc
. No Loan Party owns any Margin Stock or
engages principally, or as one of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any Margin Stock. No Loan Party is subject to regulation under the Federal
Power Act or the Investment Company Act of 1940 or under any other Federal or State statute or
regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party is a “registered investment company” or a
company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of 1940.
4.13
OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws; Patriot
Act
. (a) No member of the Loan Party Group is a Sanctioned Target or is owned or controlled by, or is
acting on behalf of, a Sanctioned Target, (b) each member of the Loan Party Group has instituted,
maintains and complies with policies, procedures and controls reasonably designed to assure compliance
with Sanctions, Anti-Money Laundering Laws and Anti-Corruption Laws, and (c) to the knowledge of
any Loan Party, no member of the Loan Party Group is under investigation by a Governmental Authority
for non-compliance with Sanction(s), Anti-Money Laundering Laws or Anti-Corruption Laws. As of the
Closing Date, the information included in the Beneficial Ownership Certificate regarding beneficial
ownership as required by the Beneficial Ownership Regulation received by Lender from any Loan Party
that is a “legal entity customer” as defined in such regulation, is true and correct in all respects.
4.14
Employee and Labor Matters
. There is (a) no unfair labor practice complaint pending
or, to the knowledge of any Loan Party, threatened against any Loan Party or its Subsidiaries before any
Governmental Authority and no grievance or arbitration proceeding pending or threatened against any
Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that
could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect and
(b) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in
writing against any Loan Party or its Subsidiaries that could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. Except as described on Schedule 4.14, as of the
Closing Date, no Loan Party or its Subsidiaries is party to or bound by any collective bargaining
agreement, management agreement or consulting agreement. No Loan Party or its Subsidiaries has
incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or
similar State law, which remains unpaid or unsatisfied and that could, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. The hours worked and payments made to
employees of each Loan Party and its Subsidiaries have not been in violation of the Fair Labor Standards
Act or any other applicable legal requirements, except to the extent such violations could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments
due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare
insurance and other benefits have been paid or accrued as a liability on the books of Borrowers, except
where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
4.15
ERISA
. No Loan Party, nor any of its Subsidiaries, nor any of its ERISA Affiliates,
maintains or contributes to any Benefit Plan.
4.16
Capitalization and Subsidiaries
. Schedule 4.16 sets forth, as of the Closing Date, (a) a
correct and complete list of the name and entity type of each Subsidiary of each Loan Party, its parent
company or companies (other than for Parent) and its Subsidiaries and (b) a true and complete list of each
class of the authorized Equity Interests of each Loan Party (other than the Parent), all of which issued
Equity Interests are validly issued, outstanding, fully paid and non-assessable, and owned beneficially and
of record by the Persons identified on Schedule 4.16.
4.17
Intellectual Property; Licenses
. Each Loan Party and its Subsidiaries own, or possess
the right to use, all of the Intellectual Property, licenses, permits and other authorizations that are
reasonably necessary for the operation of its businesses, without conflict with the rights of any other
Person. To the best knowledge of any Loan Party, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now contemplated to be employed,
by any Loan Party or any Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or, to the best knowledge of the Administrative
Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
4.18
Deposit Accounts; Credit Card Arrangements.
(a)
Schedule 4.18(a) hereto sets forth all deposit accounts maintained by Loan Parties as of the
Closing Date, which Schedule includes, with respect to each deposit account (i) the name of the Loan
Party that is the owner and customer with respect to such deposit account, (ii) the name of the depository
bank where such deposit account is maintained, (iii) the account number(s) of such deposit accounts, (iv)
the purpose and type of such deposit account, and (v) whether such deposit account is an Excluded
Deposit Account or not, and if so the basis on which it is an Excluded Deposit Account.
(b)
Schedule 4.18(b) hereto sets forth all arrangements as of the Closing Date to which any Loan
Party is a party with any Credit Card Issuer or Credit Card Processor or otherwise with respect to the
processing and/or payment to such Loan Party of the proceeds of any credit card charges and debit card
charges for sales made by such Loan Party.
4.19
Material Contracts
. Schedule 4.19 sets forth all Material Contracts to which any Loan
Party is a party or is bound as of the Closing Date. Loan Parties have delivered true, correct and complete
copies of such Material Contracts to Lender on or before the Closing Date. Loan Parties are not in breach
or in default in any material respect of or under any Material Contract and have not received any notice of
the intention of any other party thereto to terminate any Material Contract.
4.20
[Reserved].
4.21
Eligible Credit Card Receivables
. As to each Credit Card Receivable that is identified by
Borrowers as an Eligible Credit Card Receivable in a Borrowing Base Certificate submitted to Lender,
such Credit Card Receivable is (i) a bona fide existing payment obligation of the applicable account debtor
created by the sale and delivery of inventory in the ordinary course of a Borrower’s business, (ii) owed to a
Borrower without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation,
and (iii) not excluded as ineligible by virtue of one or more of the excluding criteria (other than any
Lender-discretionary criteria) set forth in the definition of Eligible Credit Card Receivable.
4.22
Eligible Inventory
. As to each item of inventory that is identified by Borrowers as Eligible
Inventory in a Borrowing Base Certificate submitted to Lender, such inventory is (a) of good and
merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more
of the excluding criteria (other than any Lender-discretionary criteria) set forth in the definition of Eligible
Inventory, as applicable.
4.23
Brokers
. There are no brokerage commissions, finder’s fees or investment banking fees
payable in connection with any transactions contemplated by the Loan Documents.
5.
AFFIRMATIVE COVENANTS
Unless otherwise hereafter agreed in writing by Lender:
5.1
Financial Statements; Borrowing Base Certificate; Other Information
. The Loan
Parties (a) will deliver to Lender each of the financial statements, reports, and other items set forth on
Schedule 5.1 no later than the times specified therein, (b) will maintain a system of accounting that
enables each Loan Party to produce financial statements in accordance with GAAP, and (c) will (i) keep a
reporting system that is substantially similar to the reporting system of Loan Parties in effect as of the
Closing Date, and (ii) maintain its billing systems and practices substantially as in effect as of the Closing
Date and will only make material modifications thereto with notice to Lender.
5.2
Notices of Material Events
. A Loan Party will promptly (but in any event within three
Business Days) notify Lender in writing of: (a) any event, condition or circumstance that, with the giving
of notice, the passage of time, or both, would be an Event of Default or the occurrence of any Event of
Default, (b) any matter that has, or could reasonably be expected to have, a Material Adverse Effect, (c)
any breach of Section 4.13 or Section 6.11, (d) any dispute, litigation, investigation, proceeding or
suspension between a Loan Party and any Governmental Authority or the commencement of, or any
material development in, any litigation or proceeding affecting a Loan Party seeking to recover $2,500,000
or more in damages, (e) any material change in accounting policies or financial reporting practices of a
Loan Party, (f) any change in the senior executive officers of a Loan Party, (g) the discharge by a Loan
Party of its independent accountants or any withdrawal or resignation by such accountants, (h) any
collective bargaining agreement or other labor contract to which a Loan Party becomes a party, or the
application for the certification of a collective bargaining agent, (i) the filing of any Lien for unpaid taxes
against any Loan Party in excess of $500,000, (j) any termination or cancellation of insurance which a
Loan Party is required to maintain under the Loan Documents (other than insurance which is replaced as of
the date of termination or cancellation), or any loss, damage, or destruction to, or commencement of any
action or proceeding for the taking under eminent domain, condemnation or similar proceeding, of
Collateral in the amount of $2,500,000 or more, whether or not covered by insurance, (k) any dispute or
claims by any customers of a Loan Party exceeding $2,500,000 individually or in the aggregate during any
fiscal year or any inventory returned to or recovered by a Loan Party outside of the ordinary course of
business with a fair market value that exceeds $2,500,000 individually or in the aggregate, and (l) any
transaction occurring after the Closing Date consisting of: (i) the incurrence of Material Indebtedness, and
(ii) mergers or acquisitions permitted under Section 6.3; provided, that, each such notice under these
clauses (i) and (ii) will be received by Lender not less than 10 Business Days prior thereto, together with
such other information with respect thereto as Lender may reasonably request. Each notice pursuant to
this Section will be accompanied by a statement of an Authorized Person of the Administrative Borrower
setting forth details of the occurrence referred to therein and stating what action each Loan Party has taken
and proposes to take with respect thereto.
5.3
Existence
. Each Loan Party will, and will cause its Subsidiaries to, preserve and keep in
full force and effect such Person’s valid existence and good standing in its jurisdiction of organization
and, except as could not reasonably be expected to have a Material Adverse Effect, good standing with
respect to all other jurisdictions in which it is qualified to do business and any rights, franchises, permits,
licenses, accreditations, authorizations, or other approvals material to their businesses.
5.4
Maintenance of Properties
. Each Loan Party will, and will cause its Subsidiaries to,
maintain and preserve all of its assets that are necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted
Dispositions excepted.
5.5
Taxes
. Each Loan Party will, and will cause its Subsidiaries to, pay in full before
delinquency or before the expiration of any extension period all material taxes imposed, levied, or
assessed against it, or any of its assets or in respect of any of its income, businesses, or franchises
(including taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or
subsequently imposed by any Governmental Authority and all related interest, penalties or similar
liabilities), except where (a) the validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) such Loan Party or Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, and (c) any such contest is instituted promptly and prosecuted
diligently by such Loan Party or its Subsidiary, as applicable, in good faith; provided, that, each Loan
Party will make timely payment or deposit of all withholding taxes and other payroll taxes to the
appropriate Governmental Authority as and when claimed to be due, notwithstanding the foregoing
exceptions, and will, upon request, furnish Lender with proof reasonably satisfactory to Lender indicating
that such Loan Party has made such payments or deposits.
5.6
Insurance
. Each Loan Party will, and will cause its Subsidiaries to, maintain with
financially sound and reputable carriers (a) insurance in such amounts (with no greater risk retention) and
against such risks and such other hazards, as is customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance
required pursuant to the Loan Documents. Each Loan Party will from time to time upon Lender’s request
furnish to Lender correct and complete copies of any insurance policies and such other information in
reasonable detail as to the insurance so maintained as Lender may request.
5.7
Field Examinations; Appraisals
. Upon the request of Lender after reasonable prior notice
to any Borrower, each Borrower will permit Lender or a firm engaged by Lender for such purpose to (a)
conduct field examinations, including with respect to such Borrower’s practices in the calculation of the
Borrowing Base and the assets included in the Borrowing Base and related financial information such as,
but not limited to, sales, gross margins, payables, accruals and reserves, provided, that, commencing after
the Closing Date, (i) Lender shall not conduct, at the expense of a Borrower, more than (A) one field
examinations in any 12 month period (commencing after the Closing Date) so long as Excess Availability
during such 12 month period is at all times not less than the greater of (1) 15.0% of the Loan Cap or (2)
$10,000,000, or (B) two field examinations in any 12 month period (commencing after the Closing Date)
if Excess Availability during such 12 month period is at any time less than the greater of such amounts, (ii)
Lender may conduct, at the expense of a Borrower, such other field examinations as Lender may request at
any time as may be required by law or regulation or when an Event of Default exists and (iii) Lender may
conduct additional field examinations at any time at its own expense and (b) conduct appraisals of the
Collateral in form, scope and methodology acceptable to Lender, provided, that, (i) Lender shall not
conduct, at the expense of a Borrower, more than (A) one appraisal of the inventory in any 12 month
period (commencing after the Closing Date) so long as Excess Availability during such 12 month period is
at all times not less than the greater of (1) 15.0% of the Loan Cap or (2) $10,000,000, or (B) two appraisals
in any 12 month period (commencing after the Closing Date) if Excess Availability during such 12 month
period is at any time less than the greater of such amounts, (ii) Lender may conduct, at the expense of a
Borrower, such other appraisals as Lender may request at any time as required by law or regulation or
when an Event of Default exists and (iii) Lender may conduct additional appraisals at any time at its own
expense. Upon the request of Lender, after reasonable prior notice to the Administrative Borrower when
no Event of Default exists, as part of any field examination or at other reasonable times during normal
business hours when no Event of Default exists or such other times as Lender may request otherwise, each
Loan Party will permit representatives and other professionals (including investment bankers, consultants,
accountants, and lawyers) engaged by Lender for such purpose to visit and inspect any of its properties
and to discuss its affairs, business valuations, finances and accounts with its directors, officers, and
accountants, at the expense of a Borrower.
5.8
Compliance with Laws; OFAC; Sanctions, Etc
. Each Loan Party will, and will cause its
Subsidiaries to, subject to the terms below, comply with the requirements of all applicable laws, rules,
regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Each Loan Party will, and will cause each other member of the Loan Party Group
to, (a) comply with Sanctions and (b) comply with Anti-Money Laundering Laws and Anti- Corruption
Laws in all material respects.
5.9
Cash Management; Collection of Proceeds of Collateral.
(a)
Each Loan Party will establish and maintain, at its expense, deposit accounts and cash
management services of a type and on terms, and with the banks, set forth on Schedule 4.18(a) and,
subject to Section 5.9(b), such other banks as a Loan Party may hereafter select (such other banks,
together with the banks set forth on Schedule 4.18(a), collectively, the “Cash Management Banks” and
individually, a “Cash Management Bank”); provided, that, on or before the date that is 60 days after the
Closing Date (or such longer period as Lender may hereafter agree), Loan Parties shall establish deposit
accounts and the transfer of funds between such deposit accounts substantially consistent with the Cash
Management Structure set forth on Exhibit F hereto, as the same may be amended or supplemented from
time to time with the consent of Lender and Administrative Borrower.
(b)
Each Loan Party will deliver, or cause to be delivered to Lender, a Control Agreement with
respect to each of its deposit accounts duly authorized, executed and delivered by each Cash Management
Bank where a deposit account is maintained, such Loan Party and Lender; provided, that, a Loan Party
will not be required to deliver a Control Agreement with a Cash Management Bank as to any Excluded
Deposit Account or any Store Account (provided, that, if any of such Store Accounts at any Cash
Management Bank are used for receipts of more than 10 Stores, upon Lender’s request, Loan Parties will
obtain a Control Agreement as to such Store Accounts). Each Loan Party will cause all amounts in each
Collection Account (other than a Collection Account at Lender), and all other amounts otherwise
constituting, or received in respect of, proceeds of Collateral received in any deposit account other than a
deposit account at Lender, to be transferred at least one time each week (or more frequently as Lender may
from time to time request) to a Concentration Account. All amounts in each Collection Account at
Lender, and all other amounts otherwise constituting, or received in respect of, proceeds of Collateral
received in any deposit account at Lender shall be transferred each Business Day to the Concentration
Account. Upon the request of Lender, Loan Parties shall deliver to Lender notifications (each, a “DD
A
Notification”), in form and substance reasonably satisfactory to Lender, which have been executed on
behalf of such Loan Party and delivered to each Cash Management Bank (other than Lender) listed on
Schedule 4.18(a) with respect to each deposit account (other than Excluded Deposit Accounts) at such
Cash Management Bank used by one or more Stores that is not subject to a Control Agreement, which
notifications shall provide that all amounts in such deposit accounts are to be transferred to a
Concentration Account as required hereunder.
(c)
Each Loan Party will direct all Credit Card Issuers and Credit Card Processors to make
payments to a Concentration Account and all other account debtors or other obligors in respect of any
amounts payable to a Loan Party to make payment of all such amounts to a Collection Account and
otherwise take all reasonable actions to cause such payments to be made to a Collection Account. Each
Loan Party will, acting as trustee for Lender, receive, as the property of Lender, any monies, checks,
notes, drafts or any other payment relating to, or proceeds of, accounts or other Collateral which come
into its possession or under its control and promptly upon receipt thereof, will deposit or cause the same
to be deposited in a Collection Account, or remit the same or cause the same to be remitted, in kind, to
Lender. Without limiting any other rights or remedies of Lender, Lender may, at its option, instruct the
depository bank at which the Collection Account is maintained to transfer all available funds received or
deposited into the Collection Account to the Lender Payment Account at any time that a Cash Dominion
Event exists. At all times that Lender shall have notified any depository bank to transfer funds from the
Collection Account to the Lender Payment Account, all payments made to the Collection Account shall
be treated as payments to Lender in respect of the Obligations and therefore shall constitute the property
of Lender to the extent of the then outstanding Obligations. Loan Parties acknowledge and agree that as
the depository bank where deposit accounts are maintained, Lender in its capacity as Lender hereunder
shall have access to the bank statements and/or other reports relating to the deposit accounts of Loan
Parties and their Subsidiaries maintained at Lender.
(d)
Each Loan Party shall, on or prior to the Closing Date, deliver to Lender copies of
notifications (each, a “Credit Card Notification”) substantially in the form attached hereto as Exhibit E
which have been executed on behalf of such Loan Party and delivered to such Loan Party’s Credit Card
Issuers and Credit Card Processors listed on Schedule 4.18(b) (with evidence of such delivery received by
Lender). In the event that a Loan Party enters into arrangements with any other Credit Card Issuers or
Credit Card Processors, upon entering into such arrangements Loan Parties shall notify Lender in writing
and deliver a Credit Card Notification to Lender that has been sent to such Credit Card Issuer or Credit
Card Processor.
(e)
So long as no Event of Default exists, subject to the requirements of Section 5.9(a) above, a
Loan Party shall amend Schedule 4.18(a) to add or replace a deposit account or Cash Management Bank
and will provide to Lender such amended Schedule 4.18(a) once each month at the same time as the
delivery of the Borrowing Base Certificate at the time required under Schedule 5.1; provided, that, within
ten Business Days (or such longer period as Lender may hereafter agree) of the opening of such deposit
account a Loan Party and such prospective Cash Management Bank will have executed and delivered to
Lender a Control Agreement (other than for Excluded Deposit Accounts). A Loan Party will close any of
its deposit accounts (and establish replacement deposit accounts in accordance with the foregoing
sentence) as promptly as practicable and in any event within 120 days after notice from Lender that the
operating performance, funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to deposit accounts or Lender’s liability under any Control Agreement with such Cash
Management Bank is no longer satisfactory to Lender in its Permitted Discretion.
5.10
Physical Inventories.
(a)
Each Loan Party will cause physical inventories to be undertaken, at the expense of the Loan
Parties, for inventory in Stores and in distribution centers and warehouses, in each case consistent with
current practices as of the Closing Date, and as required by GAAP. Loan Parties will promptly relieve or
write-off inventory from its inventory perpetual ledger through its “mark-out-of-stock” process based on
the results of any physical inventory.
(b)
Each Loan Party will permit Lender, in its discretion, if any Event of Default exists or has
occurred and is continuing, to cause additional such inventories to be taken as Lender determines (each, at
the expense of the Loan Parties).
5.11
Further Assurances
.
(a)
Without limiting the foregoing, each Loan Party will, and will cause its Subsidiaries (other
than Excluded Subsidiaries) to, take such actions and execute and deliver to Lender such instruments and
documents as Lender may from time to time request in its Permitted Discretion (including obtaining
agreements from third parties) to create, maintain, perfect, establish, preserve and protect Lender’s Liens
in the Collateral (and the priority thereof) and rights in the Collateral and to carry out the terms and
conditions of the Loan Documents. Notwithstanding anything to the contrary contained herein, Lender
shall not accept a Lien on Real Property from any Loan Party unless Lender has completed its flood
insurance diligence, has received copies of all flood insurance documentation and has confirmed that flood
insurance compliance has been completed as required by applicable laws or as otherwise satisfactory to
Lender and Lender shall not accept delivery of any joinder to any Loan Document with respect to any
Subsidiary of any Loan Party that is not a Loan Party, if such Subsidiary qualifies as a “legal entity
customer” under the Beneficial Ownership Regulation, unless such Subsidiary has delivered a certification
regarding beneficial ownership as required by such regulation in relation to such Subsidiary and Lender
has completed its Patriot Act searches, OFAC/PEP searches and customary individual background checks
for such Subsidiary, the results of which shall be satisfactory to Lender.
(b)
Upon Lender’s request, each Loan Party will use commercially reasonable efforts to cause
any of its landlords of leased locations (other than Stores) or warehouses or bailees in possession or
control of Collateral to deliver a Collateral Access Agreement to Lender in such form as Lender may
reasonably require.
5.12
Formation of Subsidiaries.
(a)
In the event that any Loan Party forms or acquires any direct or indirect Subsidiary (other than
an Excluded Subsidiary), after the Closing Date, such Loan Party will (a) cause such new Subsidiary to
execute and deliver to Lender promptly and in any event within 30 days after the formation or acquisition,
(i) a Joinder Agreement, pursuant to which such Subsidiary shall be made a party to this Agreement as a
Borrower or a Guarantor, as determined by Lender, (ii) a supplement to the applicable Security Document,
together with (A) to the extent certificated, certificates evidencing all of the Equity Interests of any Person
owned by such Subsidiary required to be pledged under the terms of the Security Documents, (B) undated
stock powers or other appropriate instruments of assignment for such Equity Interests executed in blank
with signature guaranteed, and (C) such opinions of counsel as Lender may reasonably request, unless
Lender determines, upon completion of Lender’s due diligence, that the costs to the Loan Parties of
perfecting such security interest are excessive in relation to the benefits to Lender afforded thereby, and
(iii) such other agreements, instruments, approvals or other documents reasonably requested by Lender in
order to create, perfect, establish the first priority (subject to Permitted Liens that have priority by
operation of law) or otherwise protect any Lien purported to be covered by any such Security Document or
otherwise to effect the intent that such Subsidiary shall become bound by all of the terms, covenants and
agreements contained in the Loan Documents and that all property and assets of such Subsidiary (other
than Excluded Property) shall become Collateral.
(b)
Each Loan Party that is an owner of the Equity Interests of any such Subsidiary described in
clause (a) above shall execute and deliver promptly and in any event within 30 days after the formation or
acquisition of such Subsidiary a Pledge Amendment (as defined in the Security Agreement), together with
(i) to the extent certificated, certificates evidencing all of the Equity Interests of such Subsidiary, (ii)
undated stock powers or other appropriate instruments of assignment for such Equity Interests executed in
blank with signature guaranteed, (iii) such opinions of counsel as Lender may reasonably request and (iv)
such other agreements, instruments, approvals or other documents reasonably requested by Lender
(c)
Notwithstanding anything to the contrary contained herein or in any other Loan Document,
Lender shall not accept delivery of any Joinder Agreement to any Loan Document with respect to any
Subsidiary of any Loan Party that is not a Loan Party, if such Subsidiary that qualifies as a “legal entity
customer” under the Beneficial Ownership Regulation unless such Subsidiary has delivered a Beneficial
Ownership Certification in relation to such Subsidiary and Lender has completed its Patriot Act searches,
OFAC/PEP searches and customary individual background checks for such Subsidiary, the results of
which shall be satisfactory to Lender. Any document, agreement, or instrument executed or issued
pursuant to this Section 5.12 shall constitute a Loan Document.
5.13
Costs and Expenses
. Each Loan Party will pay to Lender at the time specified in Schedule
2.5 all costs, expenses, filing fees and taxes paid or payable in connection with the preparation,
negotiation, execution, delivery, recording, administration, collection, liquidation, enforcement and
defense of the Obligations, Lender’s rights in the Collateral, the Loan Documents and all other documents
related thereto, including any amendments, supplements or consents which may hereafter be contemplated
(whether or not executed) or entered into in respect thereof (all of the foregoing being referred to herein
collectively, as “Lender Expenses”), including: (a) all costs and expenses of filing or recording (including
UCC financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable), (b) reasonable, documented out-of-pocket costs and
expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys,
assessments, engineering reports and inspections, appraisal fees and search fees, background checks, costs
and expenses of remitting loan proceeds, collecting checks and other items of payment, together with
Lender’s customary charges and fees with respect thereto, (c) reasonable, documented out-of-pocket costs
and expenses of preserving and protecting the Collateral, (d) reasonable, documented out-of-pocket costs
and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the Liens
of Lender in the Collateral, selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of the Loan Documents or defending any claims made or threatened against Lender arising out of
the transactions contemplated thereby (including preparations for and consultations concerning any such
matters), (e) subject to the limitations set forth in Section 5.7, all reasonable documented out-of-pocket
expenses and costs heretofore and from time to time hereafter incurred by Lender during the course of
periodic field examinations and appraisals, plus a per diem charge at Lender’s then standard rate for
Lender’s examiners in the field and office, and(f) the reasonable, documented out-of-pocket fees and
disbursements of counsel (including legal assistants) to Lender in connection with any of the foregoing
(provided, that so long as no Event of Default has occurred and is continuing, such attorneys’ fees shall be
limited to one set of primary counsel (plus, to the extent reasonably necessary, local counsel in each
relevant jurisdiction and specialist counsel in each applicable specialty)).
5.14
Post-Closing Actions
. Each Loan Party hereby agrees to execute and deliver all
documents and certificates, and to perform all obligations, listed on Schedule 5.14 on or prior to the
applicable dates set forth on such Schedule (as any such dates may be extended by Lender in its
discretion). Any delay in taking such actions or delivering such agreements shall not constitute a Default
or an Event of Default or a breach of any representation and warranty or covenant in any Loan Document
until the date specified for each item listed on Schedule 5.14 (as such date may be extended by Lender in
its discretion). The failure to execute and deliver such documents and certificates or to perform such
actions by the applicable date specified in Schedule 5.14 shall constitute an Event of Default.
6.
NEGATIVE COVENANTS
6.1
Indebtedness
. Each Loan Party will not, and will not permit any of its Subsidiaries to,
create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly,
liable with respect to any Indebtedness, except for Permitted Indebtedness.
6.2
Liens
. Each Loan Party will not, and will not permit any of its Subsidiaries to, create,
incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of
any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for
Permitted Liens.
6.3
Restrictions on Fundamental Changes
.
(a)
Each Loan Party will not, and will not permit any of its Subsidiaries to, (a) enter into any
merger, consolidation, reorganization, recapitalization, division or plan of division, or reclassify its Equity
Interests, except for (i) any merger between Loan Parties, provided, that, a Borrower must be the surviving
entity of any such merger to which it is a party, (ii) any merger between a Loan Party and a Subsidiary that
is not a Loan Party so long as such Loan Party is the surviving entity of any such merger, and after giving
effect thereto, no Event of Default exists or has occurred and is continuing, and (iii) any merger between a
Subsidiary that is not a Loan Party and another Subsidiary that is not a Loan Party.
(b)
Each Loan Party will not, and will not permit any of its Subsidiaries to form any Subsidiary
or directly or indirectly, purchase or otherwise acquire all or substantially all of the assets of (or any
division or business line of) any other Person, or 50% or more of any class of Equity Interests of any
other Person, except for Permitted Investments.
(c)
Each Loan Party will not liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for the liquidation or dissolution of a Loan Party (other than any Borrower) so long as
all of the assets (including any interest in any Equity Interests) of such liquidating or dissolving Loan Party
are transferred to a Loan Party that is not liquidating or dissolving.
(d)
Each Loan Party will not suspend or cease operating a substantial portion of its business,
except as permitted pursuant to clauses (a) or (b) above or in connection with a transaction permitted
under Section 6.4.
(e)
Each Loan Party will not change its classification/status for U.S. Federal income tax purposes
unless such Loan Party (or the Administrative Borrower on behalf of such Loan Party) has provided the
Lender 15 Business Days’ notice.
6.4
Asset Dispositions
. Each Loan Party will not, and will not permit any of its Subsidiaries
to, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of its assets (including by an
allocation of assets among newly divided limited liability companies pursuant to a “plan of division”),
except for Permitted Dispositions and transactions permitted under Section 6.3. Notwithstanding
anything to the contrary in this Agreement, no Loan Party or its Subsidiaries shall sell, assign, convey,
transfer, license or otherwise dispose of any of its Material Intellectual Property (or the Equity Interests
of any Loan Party which owns any Material Intellectual Property), in each case, whether as a Permitted
Disposition, a Permitted Investment, a Permitted Lien or otherwise, to any Person that is not a Loan
Party without the prior written consent of Lender.
6.5
Nature of Business
. Each Loan Party will not, and will not permit any of its Subsidiaries
to, (a) engage in any business other than the business of such Loan Party or Subsidiary on the Closing
Date and any business reasonably related or ancillary to such business of such Loan Party or Subsidiary
on the Closing Date or (b) acquire any properties or assets that are not reasonably related or ancillary
thereto.
6.6
Prepayments and Amendments
. Each Loan Party will not, and will not permit any of its
Subsidiaries to:
(a)
prepay, redeem, defease, purchase or otherwise acquire any Indebtedness of any Loan Party or
Subsidiary or make, directly or indirectly, any optional or voluntary payment in respect of any such
Indebtedness or in the case of any Indebtedness owing by a Loan Party to a Subsidiary that is not a
Loan Party, any payment, except for payments of: (i) the Obligations; (ii) obligations under Hedge
Agreements; (iii) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of
the assets securing such Indebtedness to the extent such sale or transfer is permitted hereunder; (iv)
Indebtedness owing to another Loan Party; and (v) other Permitted Indebtedness (including such
Indebtedness owing by a Loan Party to a Subsidiary that is not a Loan Party) in cash, provided, that,
as of the date of any such payment under this clause (v) and after giving effect thereto, each of the
Payment Conditions is satisfied (and in the case of any Subordinated Indebtedness, in any event only
to the extent permitted under the terms of the subordination thereof);
(b)
directly or indirectly, amend, modify, or change any of the terms or provisions of:
(i)
any agreement, instrument, document or other writing evidencing or concerning
Permitted Indebtedness except (A) the Obligations in accordance with this Agreement, (B) obligations
under Hedge Agreements, (C) Indebtedness permitted under clauses (c), (e) and (f) of the definition of
Permitted Indebtedness, (D) Subordinated Indebtedness to the extent permitted under the subordination
agreement with respect thereto, (E) unsecured Permitted Indebtedness that is not Material Indebtedness or
(F) in the case of any other Material Indebtedness, after prior written notice to Lender, to amend or
modify the terms thereof to forgive or cancel any portion of such Indebtedness (other than pursuant to
payment thereof) or to reduce the interest rate or any fees in connection therewith, or to make the terms
thereof less restrictive or burdensome to such Loan Party or Subsidiary; or
(ii)
the Governing Documents of any Loan Party or Subsidiary if the effect thereof, either
individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of
Lender.
6.7
Restricted Payments
. Each Loan Party will not, and will not permit any of its Subsidiaries
to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, except (a) a
Loan Party and its Subsidiaries may declare and make dividend payments or other distributions payable
solely in the Equity Interests of such Loan Party or Subsidiary, (b) a Loan Party and its Subsidiaries may
make Restricted Payments pursuant to and in accordance with any management equity subscription
agreement, employee agreement or stock option agreement or other agreement with such officer, director
or employee or former officer, director or employee; provided, that, the aggregate cash consideration paid
for all such payments, repurchases or redemptions shall not in any fiscal year of such Loan Party or
Subsidiary exceed $1,000,000, (c) a Loan Party and its Subsidiaries may make Restricted Payments
consisting of any management, advisory or consulting fee to any Person or any extraordinary salary, bonus
or other form of compensation to any Person who is directly or indirectly a significant partner,
shareholder, owner or executive officer of any such Person, to the extent such extraordinary salary, bonus
or other form of compensation is not included in the corporate overhead of a Loan Party in an aggregate
amount not to exceed $2,000,000 in any fiscal year, (d) a Loan Party and its Subsidiaries may make a
Restricted Payment to another Loan Party, (e) a Subsidiary that is not a Loan Party may make Restricted
Payments to other Subsidiaries, and (f) a Loan Party and its Subsidiaries may make other Restricted
Payments not otherwise expressly provided for in this Section, provided, that, as of the date of any such
Restricted Payment and after giving effect thereto, each of the Payment Conditions is satisfied.
6.8
Accounting Methods
. Each Loan Party will not, and will not permit any of its
Subsidiaries to, modify or change its fiscal year or its method of accounting (other than as may be
required to conform to GAAP).
6.9
Investments
. Each Loan Party will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment except for Permitted Investments.
6.10
Transactions with Affiliates
. Each Loan Party will not, and will not permit any of its
Subsidiaries to, directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or provide any services to, or receive any services from, any officer, director or
other Affiliate of a Loan Party, except pursuant to the reasonable requirements of the business of such
Loan Party or Subsidiary and upon fair and reasonable terms at least as favorable to such Loan Party or
Subsidiary than such Loan Party or Subsidiary would obtain in a comparable arm’s length transaction with
a Person that is not an Affiliate (and including, without limitation, any payments made by a Loan Party to
any Foreign Subsidiary of Parent for services provided by such Subsidiary as a buying agent for the
purchase of inventory by such Loan Party outside of the United States in the ordinary course of business
that are the same or substantially similar or ancillary to the types of services with respect to such
purchases of inventory as are provided for in the Sourcing Agreement, dated as of July 31, 2014, between
Cato Overseas Limited and Parent as such agreement is in effect on the date hereof (but including
services that are substantially similar or ancillary to those provided for in the agreement and whether or
not pursuant to such agreement or any other agreement with respect to such services)), except for:
(a)
the payment of reasonable compensation, severance, or employee benefit arrangements to
employees, officers, and outside directors of a Loan Party or Subsidiary, and any indemnity provided for
the benefit of directors (or comparable managers) of a Loan Party;
(b)
transactions among Loan Parties;
(c)
Permitted Indebtedness or Permitted Investments between a Loan Party and a Subsidiary that
is not a Loan Party, so long as such transaction is on fair and reasonable terms at least as favorable as to
the Loan Party as such Loan Party would obtain in a comparable arm’s length transaction with a Person
that is not an Affiliate;
(d)
Permitted Indebtedness or Permitted Investments between a Subsidiary that is not a Loan
Party and another Subsidiary that is not a Loan Party;
(e)
Permitted Intercompany Advances by a Loan Party to a Foreign Subsidiary permitted under
clause (c) of the definition of Permitted Intercompany Advances;
(f)
Permitted Investments by a Loan Party in a Foreign Subsidiary permitted under clause (r) of
the definition of Permitted Investments;
(g)
Permitted Investments by a Loan Party in Subsidiaries that are not Loan Parties permitted
under clause (n) of the definition of Permitted Investments;
(h)
Permitted Investments by Cato
We
st in Cedar Hill permitted under clause (o) of the definition
of Permitted Investments; and
(i)
Restricted Payments permitted under Section 6.7.
6.11
Deposit Accounts; Credit Card Processors
. Each Loan Party will not open new deposit
accounts except to the extent permitted under Section 5.9 and upon the request of Lender will deliver to
Lender appropriate DDA Notifications with respect to such any Collection Accounts (other than Excluded
Deposit Accounts) that are not subject to a Control Agreement. No Loan Party or its Subsidiaries shall
maintain any bank accounts or enter into any agreements with Credit Card Issuers or Credit Card
Processors except as provided in Section 5.9.
6.12
Use of Proceeds
. Each Loan Party will not use the proceeds of any Revolving Loans or
Letter of Credit for any purpose other than (a) on the Closing Date, (i) the repayment of the existing credit
facility for which Wells Fargo is the agent, provided, that, Administrative Borrower may make other
arrangements for the payment of such amounts using its cash on hand that are reasonably satisfactory to
Lender, (ii) payments to each of the Persons listed in the disbursement direction letter furnished by the
Administrative Borrower to Lender on or about the Closing Date and (iii) to pay the fees, costs and
expenses in connection with the Loan Documents and the transactions contemplated thereby and (b)
thereafter, consistent with the terms hereof, for their lawful and permitted purposes, provided, that, no part
of the proceeds of the Revolving Loans will be used to purchase or carry any such Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose
that violates the provisions of Regulation T, U or X of the Board of Governors. Each Loan Party and its
Subsidiaries will not, and will cause each other member of the Loan Party Group not to, directly or
indirectly, use any of the Credit Facility to fund, finance or facilitate any activities, business or
transactions that would be prohibited by (i) Sanctions, Anti-Money Laundering Laws or Anti-Corruption
Laws or (ii) Sanctions if conducted by Lender, or any other party hereto.
7.
FINANCIAL COVENANT
7.1
Minimum Excess Availability
. Loan Parties shall not permit Excess Availability at any
time to be less than the greater of (a) 10.0% of the Loan Cap or (b) $5,000,000.
8.
EVENTS OF DEFAU
LT
AND REMEDIES
8.1
Events of Default
. The occurrence of any of the following will constitute an “Event of
Default” under any Loan Document:
(a)
fails to make any payment of interest hereunder within five Business Days after the due date thereof, or
(iii) fails to pay fees, Lender Expenses or any of the other Obligations within five Business Days after the
due date thereof.
(b)
Covenants. (i) a Loan Party fails to perform any of the covenants contained in Sections 5.1,
5.2, 5.3, 5.6, 5.8, 5.9, 6 and 7, or (ii) a Loan Party fails to perform any of the terms, covenants, conditions
or provisions contained in any Loan Document other than those otherwise described in this Article 8 and
such failure shall continue for 30 days; provided, that, such 30 day period shall not apply in the case of
any failure to observe any such covenant which is not capable of being cured at all or within such 30 day
period or which has been the subject of a prior failure within a six month period.
(c)
$10,000,0000 in any one case or in the aggregate (except to the extent fully covered (other than to the
extent of customary deductibles) by insurance pursuant to which the insurer has not denied or disputed
coverage) is entered or filed against a Loan Party or any Subsidiary of a Loan Party, or with respect to any
of its assets, shall remain undischarged or unvacated for a period in excess of 30 days or execution shall at
any time not be effectively stayed, or any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against a Loan Party or any of the Collateral having a
value in excess of the $3,750,000 in any one case or in the aggregate.
(d)
Volu ntary Bankruptcy, Involuntary Bankruptcy, Etc. (i) An Insolvency Proceeding is
commenced by a Loan Party or any Subsidiary of a Loan Party (other than an Immaterial Subsidiary) or
(ii) an Insolvency Proceeding is commenced against a Loan Party or any Subsidiary of a Loan Party (other
than an Immaterial Subsidiary) or all or any part of its properties and such petition or application is not
dismissed within 60 days after the date of its filing or such Loan Party or Subsidiary shall file any answer
admitting or not contesting such petition or application or indicates its consent to, acquiescence in or
approval of, any such action or proceeding or the relief requested is granted sooner.
(e)
payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness in an amount in excess of $10,000,000 individually or in the
aggregate (including undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement), or otherwise is in default under any
instrument or agreement evidencing, securing or relating thereto, which default continues for more than the
applicable cure period, if any, with respect thereto, which default permits the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to be
demanded or to become due or to be repurchased, prepaid, defeased or redeemed, or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or cash
collateral in respect thereof to be demanded.
(f)
any Loan Document or delivered in writing to Lender in connection with any Loan Document proves to
be untrue in any material respect (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality or Material Adverse
Effect) as of the date of issuance or making or deemed making thereof.
(g)
Guaranty. If the obligation of any Loan Party under a Guaranty, or other Person under any
guaranty of any Obligations, is limited or terminated by operation of law or by such Loan Party or other
Person (other than in accordance with the terms of any Loan Document) or any Loan Party or such other
Person repudiates or revokes or purports to repudiate or revoke such Guaranty or any such guaranty.
(h)
Loan Documents. (i) The validity or enforceability of any Loan Document shall at any time
for any reason (other than solely as the result of an action or failure to act on the part of Lender) be
declared to be null and void, or a proceeding shall be commenced by a Loan Party, or by any
Governmental Authority having jurisdiction over a Loan Party, seeking to establish the invalidity or
unenforceability of any Loan Document, or a Loan Party shall deny that such Loan Party has any liability
or obligation purported to be created under any Loan Document or (ii) any Loan Document that purports
to create a Lien shall, for any reason, fail or cease to create a valid and perfected and (except to the extent
of Permitted Liens which are non-consensual Permitted Liens, permitted purchase money Liens or the
interests of lessors under Capital Leases) first priority Lien on the Collateral covered thereby, except (A)
as a result of a disposition of the applicable Collateral in a transaction permitted under any Loan
Document, or (B) as the result of an action or failure to act on the part of Lender.
(i)
Change of Control. A Change of Control shall occur, whether directly or indirectly.
(j)
[Reserved].
(k)
Loss of Collateral. There occurs any uninsured loss to any material portion of the Collateral.
(l)
Indictment. The indictment or institution of any legal process or proceeding against, any
Loan Party or any Subsidiary thereof, under any federal, state, municipal, and other criminal statute, rule,
regulation, order, or other requirement having the force of law for a felony.
(m)
Subordination. (i) The subordination provisions of the documents evidencing or governing
any Subordinated Indebtedness, any such provisions being referred to as the “Intercreditor Provisions”,
shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and
enforceable against any holder of the applicable Indebtedness; or (ii) any Borrower or any other Loan
Party shall, directly or indirectly, (A) make any payment on account of any Subordinated Indebtedness
that has been contractually subordinated in right of payment to the payment of the Obligations, except to
the extent that such payment is permitted by the terms of the Intercreditor Provisions applicable to such
Subordinated Indebtedness or (B) disavow or contest in any manner (1) the effectiveness, validity or
enforceability of any of the Intercreditor Provisions, (2) that the Intercreditor Provisions exist for the
benefit of the Loan Parties, or (3) in the case of Subordinated Indebtedness, that all payments of principal
of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation
of any property of any Loan Party, shall be subject to any of the Intercreditor Provisions.
8.2
Remedies.
(a)
At any time an Event of Default exists, Lender shall have any and all rights and remedies
provided in any Loan Document, the UCC and other applicable law, all of which rights and remedies may
be exercised without notice to or consent by a Loan Party, except as such notice or consent is expressly
provided for under any applicable Loan Document or required by applicable law. All rights, remedies and
powers granted to Lender under any Loan Document, the UCC or other applicable law are cumulative, are
not exclusive and are enforceable, in Lender’s discretion, alternatively, successively, or concurrently on
any one or more occasions, and shall include the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by a Loan Party of any Loan Document. Lender may, at any time,
an Event of Default exists, proceed directly against one or more Loan Party to collect the Obligations
without prior recourse to the Collateral.
(b)
Without limiting the generality of the foregoing, at any time an Event of Default exists,
Lender may (i) accelerate the payment of all or any portion of the Obligations and demand immediate
payment thereof to Lender (provided, that, upon the occurrence of any Event of Default described in
Sections 8.1(d), all Obligations shall automatically become immediately due and payable), (ii) by written
notice to a Loan Party, require Loan Parties to provide cash collateral in an amount equal to 105% of the
Letter of Credit Usage, (iii) terminate the Commitment (provided, that, upon the occurrence of any Event
of Default described in Sections 8.1(d), the Commitment and any other obligation of Lender under any
Loan Document shall automatically terminate), (iv) cease making Revolving Loans or providing Letters
of Credit or reduce the lending formulas or amounts of Revolving Loans or (v) establish such Reserves as
Lender determines, without limitation or restriction, notwithstanding anything to the contrary contained
herein.
9.
NOTICES, AMENDMENTS, WAIVERS, INDEMNIFICATION, ETC.
9.1
Demand; Protest; Counterclaims, Etc
. Each Loan Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and
guarantees at any time held by Lender on which any Loan Party may in any way be liable. No notice to
or demand on a Loan Party which Lender may elect to give shall entitle a Loan Party to any other or
further notice or demand in the same, similar or other circumstances. Each Loan Party waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature (other than compulsory
counterclaims) in any action or proceeding with respect to any Loan Document, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.
9.2
Indemnification
. Each Loan Party shall pay, indemnify, defend, and hold Lender and its
Affiliates, officers, directors, employees, attorneys, and agents (each, an “Indemnified Person”) harmless
(to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and
disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in
connection therewith or in connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to the execution and delivery,
enforcement, performance, or administration (including any restructuring or workout with respect hereto)
of any Loan Document, or the transactions contemplated thereby, (b) with respect to any actual or
prospective investigation, litigation, or proceeding related to any Loan Document, the making of any
Revolving Loans or issuance of any Letter of Credit or the use of the proceeds of any Revolving Loan or
Letter of Credit (whether or not any Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or
release of hazardous materials at, on, under, to or from any assets or properties owned, leased or operated
by any Loan Party or otherwise related to compliance with applicable environmental laws (each and all of
the foregoing, the “Indemnified Liabilities”). The foregoing to the contrary notwithstanding, no Loan
Party shall have any obligation to any Indemnified Person under this Section with respect to any
Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person or its officers, directors, employees,
attorneys, or agents. This provision shall survive the termination of this Agreement and the repayment in
full of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person
with respect to an Indemnified Liability as to which a Loan Party was required to indemnify the
Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to
be indemnified and reimbursed by each Loan Party with respect thereto. THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
9.3
Notices
. Unless otherwise provided in this Agreement, all notices or demands relating to
any Loan Document shall be in writing and shall be personally delivered or sent by registered or certified
mail (postage prepaid, return receipt requested), overnight courier, or electronic mail (at such email
addresses as a party may designate in accordance herewith). In the case of notices or demands to any
Loan Party or Lender, as the case may be, they shall be sent to the address set forth next to its signature
hereto. Any party hereto may change the address at which they are to receive notices hereunder, by notice
in writing in the foregoing manner given to the other parties. All notices or demands sent in accordance
with this Section shall be deemed received on the earlier of the date of actual receipt or three Business
Days after the deposit thereof in the mail; provided, that, (a) notices sent by overnight courier service
shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be deemed
to have been given at the opening of business on the next Business Day for the recipient) and (c) notices
by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the
intended recipient (such as by the “return receipt requested” function, as available, return email or other
written acknowledgment).
9.4
Assignments; Successors
. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, that, no Loan Party may assign this
Agreement or any rights or duties hereunder without Lender’s prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by Lender shall release any Loan
Party from its Obligations. Lender may not assign the Loan Documents in whole or in part or its rights
and duties thereunder or grant participations in the Obligations without the Administrative Borrower’s
consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided that, no such
consent shall be required if an Event of Default exists.
9.5
Amendments; Waivers
. No amendment or modification of any Loan Document shall be
effective unless it has been agreed to by Lender and each Loan Party party thereto in a writing that
specifically states that it is intended to amend or modify such Loan Document. No failure by Lender to
exercise any right, remedy, or option under any Loan Document, or delay by Lender in exercising the
same, will operate as a waiver thereof. No waiver by Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Lender on any occasion shall affect or diminish
Lender’s rights thereafter to require strict performance by any Loan Party of any provision of any Loan
Document. Lender’s rights under the Loan Documents will be cumulative and not exclusive of any other
right or remedy that Lender may have.
10.
JURY TRIAL WAIVER; OTHER WAIVERS CONSENTS; GOVERNING LAW.
10.1
GOVERNING LAW
. THE VALIDITY OF THE LOAN DOCUMENTS (UNLESS
EXPRESSLY OTHERWISE PROVIDED THEREIN), THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT THEREOF, THE RIGHTS OF THE PARTIES THERETO WITH RESPECT
TO ALL MATTERS ARISING THEREUNDER OR RELATED THERETO, AND ANY CLAIMS,
CONTROVERSIES OR DISPUTES ARISING THEREUNDER OR RELATED THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
10.2
FORUM NON CONVENIENS
. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, FEDERA
L
COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE OF NEW
YORK; PROVIDED, THAT, ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERA
L
OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERA
L
OR OTHER PROPERTY MAY BE FOUND. EACH LOAN PARTY AND LENDER
WA
IVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LA
W,
ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION.
10.3
WAIVER OF JURY TRIAL
. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH LOAN PARTY AND LENDER HEREBY
WA
IVE THEIR RESPECTIVE
RIGHTS, IF ANY, TO A JURY TRIA
L
OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF
ACTION DIRECT
LY
OR INDIRECT
LY
BASED UPON OR ARISING OUT OF ANY LOAN
DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS (EACH A “CLAIM”). EACH LOAN PARTY AND LENDER REPRESENTS
THAT IT HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSU
LTA
TION WITH LEGA
L
COUNSEL. IN
THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIA
L
BY THE COURT.
10.4
SUBMISSION TO JURISDICTION
. EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERA
L
COURTS LOCATED IN THE COUNTY OF NEW YORK AND THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
ANY LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LA
W.
NOTHING IN ANY LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT LENDER
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO ANY
LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
10.5
WAIVER OF CLAIMS
. NO CLAIM MAY BE MADE BY ANY LOAN PARTY
AGAINST LENDER OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL,
REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL,
INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF
LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY
ANY LOAN DOCUMEN
T,
OR ANY ACT, OMISSION, OR EVENT OCCURRING IN
CONNECTION THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND
AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
11.
GENERAL PROVISIONS
11.1
Effectiveness; Section Headings; Severability
. This Agreement shall be binding and
deemed effective when executed by each Loan Party and Lender whose signature is provided for on the
signature pages hereof. Headings and numbers have been set forth herein for convenience only. Unless
the contrary is compelled by the context, everything contained in each Section applies equally to this
entire Agreement. Each provision of this Agreement shall be severable from every other provision of this
Agreement for the purpose of determining the legal enforceability of any specific provision.
11.2
Counterparts; Electronic Execution
. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but
one and the same Agreement. Execution of any such counterpart may be by means of (a) an electronic
signature that complies with the federal Electronic Signatures in Global and National Commerce Act,
state enactments of the Uniform Electronic Transactions Act, or any other relevant and applicable
electronic signatures law; (b) an original manual signature; or (c) a faxed, scanned, or photocopied manual
signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all
purposes have the same validity, legal effect, and admissibility in evidence as an original manual
signature. Lender reserves the right, in its discretion, to accept, deny, or condition acceptance of any
electronic signature on this Agreement. Any party delivering an executed counterpart of this Agreement
by faxed, scanned or photocopied manual signature shall also deliver an original manually executed
counterpart, but the failure to deliver an original manually executed counterpart shall not affect the
validity, enforceability and binding effect of this Agreement. The foregoing shall apply to each other
Loan Document, and any notice delivered hereunder or thereunder, mutatis mutandis.
11.3
Patriot Act
. Lender hereby notifies each Loan Party that pursuant to the requirements of
the Patriot Act it is required to obtain, verify and record information that identifies each Person or
corporation who opens an account or enters into a business relationship with it, which information
includes the name and address of such Loan Party and other information that will allow Lender to identify
such Person in accordance with the Patriot Act and any other applicable law. Each Loan Party is hereby
advised that any Revolving Loans or Letters of Credit are subject to satisfactory results of such
verification. Lender shall have the right to period
1
ically conduct due diligence on each Loan Party, its
senior management and key principals and legal and beneficial owners. Each Loan Party agrees to
cooperate in respect of the conduct of such due diligence and further agrees that the reasonable costs and
charges for any such due diligence by Lender shall constitute Lender Expenses for which Lender is
entitled to reimbursement as provided herein and be for the account of Borrowers.
11.4
Integration
. The Loan Documents reflect the entire understanding of the parties with
respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the Closing Date. The foregoing to the contrary notwithstanding, all
agreements for Bank Products, if any, are independent agreements governed by the written provisions of
the agreements for them, which will remain in full force and effect, unaffected by any repayment,
prepayments, acceleration, reduction, increase, or change in the terms of any credit extended hereunder,
except as otherwise expressly provided in such agreement.
1
11.5
Confidentiality; Disclosure
.
(a)
Lender agrees to maintain the confidentiality of all information received by Lender from the
Loan Parties relating to the Loan Parties or their respective businesses, except that information may be
disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees,
agents, funding sources, attorneys, advisors and representatives (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory authority), (iii) to the extent required
by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party
hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document
or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as
those of this Section, to (A) any assignee of or participant in, or any prospective assignee of or participant
in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (vii) with
the written consent of the Administrative Borrower or (viii) to the extent such information (A) becomes
publicly available other than as a result of a breach of this Section or (B) becomes available to Lender or
any of its respective Affiliates on a non-confidential basis from a source other than the Loan Parties or any
or their respective partners, directors, officers, employees, agents, funding sources, attorneys, advisors and
representatives or any Affiliates thereof.
(b)
Any Person required to maintain the confidentiality of information as provided in this Section
shall be considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such information as such Person would accord to its own
confidential information.
(c)
Notwithstanding anything to the contrary herein, Lender may disclose information concerning
the terms and conditions of the Loan Documents in its marketing or promotional materials, with such
information to consist of deal terms and other information customarily found in such marketing or
promotional materials and may otherwise use the name, logos, and other insignia of any Loan Party and
the Commitment provided hereunder in any “tombstone” or other advertisements, on its website or in other
marketing materials of Lender.
11.6
The Cato Corporation as Agent for Borrowers
. Each Loan Party hereby irrevocably
“Administrative Borrower”) which appointment shall remain in full force and effect unless and until
Lender shall have received prior written notice signed by each Loan Party that such appointment has been
revoked and that another Loan Party has been appointed Administrative Borrower. Each Loan Party
hereby irrevocably appoints and authorizes Administrative Borrower (a) to provide Lender with all
notices with respect to Revolving Loans, Letters of Credit and all other notices and instructions under the
Loan Documents (and any notice or instruction provided by Administrative Borrower shall be deemed to
be given by Loan Parties hereunder and shall bind each Loan Party), (b) to receive all notices, instructions
and other information from Lender (and any notice, instructions or other information provided by Lender
to Administrative Borrower shall be deemed to have been given to each Loan Party), and (c) to take such
action as Administrative Borrower deems appropriate on its behalf to obtain Revolving Loans and Letters
of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes
of this Agreement. Each Loan Party agrees that the handling of the Credit Facility, with Loan Parties and
Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to
Loan Parties in order to utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender shall not incur liability to any Loan Party as a
result hereof. Each Loan Party expects to derive benefit, directly or indirectly, from the handling of the
Credit Facility, with Loan Parties and Collateral in a combined fashion, since the successful operation of
each Loan Party is dependent on the continued successful performance of the integrated group. Each
Loan Party hereby agrees to indemnify Lender and hold Lender harmless against any and all liability,
expense, loss or claim of damage or injury, made against Lender by any Loan Party or by any third party
whosoever, arising from or incurred by reason of (i) the handling of the Credit Facility as herein
provided, or (ii) Lender relying on any instructions of Administrative Borrower. This Section shall
survive the termination of this Agreement and the payment in full of the Obligations.
11.7
Acknowledgement Regarding Any Supported QFCs
. To the extent that the Loan
Documents provide support, through a guarantee or otherwise, for Hedge Agreements or any other
agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a
“Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of
the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the
Dodd-Frank
Wa
ll Street Reform and Consumer Protection Act (together with the regulations promulgated
thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit
Support (with the provisions below applicable notwithstanding that the Loan Documents and any
Supported QFC may in fact be stated to be governed by the laws of the State of New York or of the
United States or any other state of the United States): In the event a Covered Entity that is party to a
Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special
Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and
any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights
in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be
effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if
the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in
property) were governed by the laws of the United States or a state of the United States. In the event a
Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such
Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are
permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S.
Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of
the United States or a state of the United States.
[remainder of page intentionally left blank]
The parties have caused this Agreement to be executed as of the date on page 1.
BORROWERS:
THE CATO CORPORATION
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATOSOUTH LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO O
F
TEXAS L.P.
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATOWEST, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO WO LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO OF GEORGIA, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO OF FLORID
A
L.L.C.
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO O
F
ILLINOIS, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO O
F
NORTH CAROLINA, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
OHIO CATO STORES, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO O
F
SOUTH CAROLINA, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO O
F
TENNESSEE, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CATO OF VIRGINIA, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
Address:
8100 Denmark Road
Charlotte, North Carolina 28273-5975
Attention: Jeremy Craddock
Email:
jcrad@catocorp.com
GUARANTORS:
CATO SOUTHWEST, INC.
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CH
W,
LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
CADEL LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
Catocorp.com, LLC
By: /s/ Charles D. Knight
Name: Charles D. Knight
Title: Authorized Signer
Address:
8100 Denmark Road
Charlotte, North Carolina 28273-5975
Attention: Jeremy Craddock
Email:
WELLS FARGO BANK, NATIONA
L
ASSOCI
AT
ION
By: /s/ William Chan
Name: William Chan
Title: Authorized Signer
Address:
125 High Street, 11
th
Floor
Boston, MA 02110
Attention: Chanda Ruff
Email:
chanda.ruff@wellsfargo.com
SCHEDULE 1.1(a)
TO
Definition of Eligible Credit Card Receivables
“Eligible Credit Card Receivables” means Credit Card Receivables created by a Borrower in the ordinary
course of its business that arise out of such Borrower’s sale of goods or rendition of services that in each
case at the time of creation and at all times thereafter satisfy the criteria set forth below as determined by
Lender in its Permitted Discretion. Except as otherwise agreed by Lender, Eligible Credit Card
Receivables shall not include the following:
the UCC);
(i)
Credit Card Receivables that do not constitute a “payment intangible” (as defined in
(ii)
Credit Card Receivables that have been outstanding for more than five (5) Business
Days from the date of sale;
(iii)
Credit Card Receivables (A) that are not subject to a perfected first priority security
interest in favor of the Lender, or (B) with respect to which a Borrower does not have good, valid and
marketable title thereto, free and clear of any Lien (other than Liens granted to the Lender pursuant to the
Security Documents);
(iv)
Credit Card Receivables that are disputed, are with recourse, or with respect to which a
claim, counterclaim, offset or chargeback has been asserted (to the extent of such claim, counterclaim,
offset or chargeback);
(v)
Credit Card Receivables that have not been earned by performance and do not
represent bona fide amounts due to a Borrower from a Credit Card Issuer or Credit Card Processor;
(vi)
Credit Card Receivables as to which the Credit Card Issuer or Credit Card Processor
has the right under certain circumstances to require a Loan Party to repurchase the Credit Card
Receivables from such Credit Card Issuer or Credit Card Processor;
(vii)
Credit Card Receivables due from a Credit Card Issuer or Credit Card Processor which
is the subject of any Insolvency Proceeding;
(viii)
Credit Card Receivables which are not a valid, legally enforceable obligation of the
applicable Credit Card Issuer or Credit Card Processor with respect thereto;
(ix)
Credit Card Receivables that do not conform to all representations, warranties or other
provisions in the Loan Documents relating to Credit Card Receivables; or
(x)
Credit Card Receivables that Lender determines in its Permitted Discretion to be
uncertain of collection or which do not meet such other reasonable eligibility criteria for Credit Card
Receivables as the Lender may determine.
In determining the amount to be so included, the face amount of a Credit Card Receivable shall be
reduced by, without duplication, to the extent not reflected in such face amount, (i) 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 may be
obligated to rebate to a customer, a Credit Card Issuer or Credit Card Processor pursuant to the terms of
any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in
respect of such Credit Card Receivable but not yet applied by the Loan Parties to reduce the amount of
such Credit Card Receivable.
SCHEDULE 1.1(b)
TO
Definition of Eligible Inventory
“Eligible Inventory” means inventory of a Borrower consisting of finished goods, merchantable and
readily saleable to the public in the ordinary course of such Borrower’s business that at all times satisfies
the criteria set forth below as determined by Lender in its Permitted Discretion. Except as otherwise
agreed by Lender, any inventory shall not be included in Eligible Inventory if:
(i)
a Borrower does not have good, valid, and marketable title thereto;
(ii)
a Borrower does not have actual and exclusive possession thereof (either directly or
through a bailee or agent of a Borrower);
(iii)
it is not located at one of the locations in the continental United States set forth on the
schedule of locations set forth on the schedule of locations to the Security Agreement;
(iv)
it is (A) in-transit to or from a location of a Loan Party set forth on the schedule of
locations to the Security Agreement (other than in-transit from one location of a Loan Party set forth on
such schedule of locations to another location of a Loan Party set forth on such schedule), or (B) located
in an FTZ unless Lender has established a Reserve in respect of FTZ Fees and related costs that may be
required by any Governmental Authority to be paid with respect to such inventory;
(v)
it is located in a contract warehouse or with a bailee, in each case, unless either, at
Lender’s option, (A) it is subject to a Collateral Access Agreement with the owner and lessor of such Real
Property, such warehouseman or bailee, in each case, in form and substance reasonably satisfactory to
Lender executed by the owner and lessor, warehouseman or bailee, as the case may be, or (B) Lender has
established a Reserve with respect to amounts payable to the warehouse or bailee in an amount not less
than three months’ rent, storage charges, fees or other amounts under the applicable agreement relative to
such location;
(vi)
it is located on Real Property leased by a Borrower other than in a Store (such that
inventory in a Store that otherwise satisfies the criteria for eligibility set forth herein shall be Eligible
Inventory, provided, that, as to any such inventory that is located in a Store that is on leased Real Property
either (A) it is subject to a Collateral Access Agreement with the owner and lessor of such Real Property,
in each case, in form and substance reasonably satisfactory to Lender executed by the owner and lessor, as
the case may be, or (B) Lender may establish a Reserve with respect to amounts payable to the owner or
lessor of such leased Store premises located in a Landlord Lien State in an amount not less than two
months’ rent, storage charges, fees or other amounts under the lease or other applicable agreement relative
to such location and such other amounts that may be secured by a lien in favor of such owner or lessor in
such Landlord Lien State or to the extent that any claims or liabilities owing to the owner or lessor are
secured by inventory at a leased Store location);
(vii)
it is the subject of a bill of lading or other document of title;
(viii)
it is not subject to a valid and perfected first priority security interest of Lender;
(ix)
it consists of goods returned or rejected by a Borrower’s customers (except to the
extent such returned or rejected goods are thereafter placed back in stock with new inventory of the same
type or category and held for resale in the ordinary course of business);
(x)
it consists of goods that are obsolete, slow moving, custom items or items otherwise
manufactured in accordance with customer-specific requirements, work-in-process, raw materials, or
goods that constitute samples, spare parts, promotional, marketing, labels, bags and packaging and
shipping materials, supplies used or consumed in the business of a Borrower, bill and hold goods,
defective goods, “seconds,” inventory acquired on consignment, goods that are held for return to the
vendor, or are seasonal in nature and which have been packed away for sale in the subsequent season, or
are not in compliance with all standards imposed by any Governmental Authority having regulatory
authority over such inventory or are trailered inventory;
(xi)
it is not insured in compliance with the provisions of Section 5.10 hereof;
(xii)
it has been sold but not yet delivered or as to which a Borrower has accepted a
deposit;
(xiii)
it is subject to third party intellectual property, licensing or other proprietary rights, unless
Lender is satisfied in its Permitted Discretion that such inventory can be freely sold by Lender on and
after the occurrence of an Event of Default despite such third party rights (without Lender infringing any
rights of, or incurring any liability to, or giving any rights to terminate any of such rights of such third
party, to any licensor or owner of such third party rights or any other Person);
(xiv)
it does not comply with the representations and warranties in the Loan Documents with
respect to Eligible Inventory; or
(xv)
it was acquired in connection with a Permitted Acquisition or Permitted Investment, or
such Inventory is owned by a Person that is not joined to this Agreement as a Borrower pursuant to the
provisions of this Agreement, or which is not of the type usually sold in the ordinary course of
Borrowers’ business, unless and until Lender has completed or received (A) an appraisal of such
Inventory from appraisers satisfactory to Lender and establishes an advance rate and Inventory Reserves
(if applicable) therefor, and otherwise agrees that such Inventory shall be deemed Eligible Inventory, and
(B) such other due diligence as Lender may require, all of the results of the foregoing to be reasonably
satisfactory to Lender.
SCHEDULE 1.1(c)
TO
Excluded Subsidiaries
1. Cedar Hill National Bank, a national bank
2. Cato Overseas Limited, a Hong Kong company
3. Shanghai Cato Overseas Business Consulting Co., Ltd, a China company
4. Cato Overseas Services Limited, a Hong Kong company
5. Cato Bangladesh Services Private Limited, a Bangladesh Company
6. Cato Services Vietnam Co. Ltd., a Vietnam company
7. Cato India Services Private Limited, an India company
8. Cato Employee Services Management LLC, a Texas limited liability company
9. Cato Employee Services L.P., a Texas limited partnership
10. Cato Land Development LLC, a South Carolina limited liability company
Revised P
o
licy Eff
ec
tive No
ve
mber 2021
THE CATO
CORPORATION
CASH INVESTMENT
POLICY
I.
OBJECTIVES
•i
The objectives of the cash investment policy include maximum safety and preservation of
principal
,
maximum after-tax y
i
eld from cash assets and appropriate liquidity to meet
normal cash needs.
II.
AUTHORIZED OFFICIALS AND
CONTROLS
A.
The Chief Executive Officer, Chief Financial Officer and/or Treasurer each may execute
a single non-equity investment purchase or sale up to
$10
,
000,000
;
and any
sin
'
gle
purchase or sale transaction in excess of $10
,
000
,
000
g
·
by
two of the three designated officers and evidence of such approval must be filed in the
company's records.
B
.
All equity
investments
,
regardless of value, must be approved by two of the three
designated officers listed in A
above
.
C. The Treasurer will review a daily summary of investment activity presented in the
Investment Position Report to ensure investments adhere to the
policy.
D. The daily administration of the investment activities w
i
ll be done
'
under the direction of
the Treasurer
.
In the absence of the Treasurer, the Treasury personnel will perform the
daily administration
.
·
··
E
.
Investment activity may be conducted by outside managers provided the manager(s)
are approved by two of the three designated corporate officers listed in A above. The
manager must
provide
,
under a signed
contract
,
that they will adhere to quality and
liquidity guidelines contained in this policy.
Ill. INVESTMENT
PARAMETERS
A.
No investments will be made which violate covenants contained in bank loans or other
agreements
.
B
.
Safety of principal is the primary
consideration.
C
.
Liquidity must be provided to meet the Company's projected cash
requirements.
D. The highest yield should be obtained providing for safety of principal and required
liquidity.
Revised Policy Effectiv
e
November 2021
E. All outside
managers
are required to conduct sufficient due
diligence
to support
the
viability of an
investment
beyond any rating assigned by rating
agencies
and
provide
Cato with an outline of the due
diligence procedures followed.
F. No foreign
currency
based
investments
are
permitted
.
G. No
manager
is
permitted
to invest in
derivative investments
except as outlined
in
Section
I.
IV.
DEFINITIONS
A. The following
definitions
apply to the terms used in this
policy
:
Security-
An
individual
financial
instrument
(bond, share of stock, note, etc.) issued
by
a specific
company, government
entity or bank. Separate
purchases
of the
same
instrument
made at different times are
considered
one
security.
Portfolio
-
The total of the
Company's
cash, cash
equivalents
,
bond and
equity
investments.
Portfolio
Division-
separate
and distinct
maturity
and
duration limits
.
Portfolio Division
Limit-
The
maximum percentage
that any portfolio division can be
of
the total
portfolio's
value at any one
time.
Individual
Security Limit
-The maximum percentage
that any security can be of
the
total
portfolio's
value at the time of a new
security's purchase,
regardless
of
portfolio
division.
Aggregate
Category
Limit
-
The
maximum percentage
that the total value of
all
securities
in a particular category can be of the total
portfolio's
value at the
time
of a new
security's purchase, regardless
of portfolio
division
.
Maturity
-
The date on which the life of a financial
instrument
ends through cash
or
physical settlement
or
expiration
with no value
.
The maturity of a bond refers
to
the date that the debt will cease to exist, at which time the issuer will redeem
the
bond by paying the
principal
(or face
value).
V.
PORTFOLIO
DIVISIONS
A. The
Company's
total portfolio will be divided into four portfolio
divisions
each with a
progressively
longer
maximum
maturity and average duration and a fifth
division
composed
of any
investments described
in Section VI,
subsections
G and H.
·
Revised Policy Effective November 2021
B. The
securities
in each of the first four divisions can be from any of the
approved
categories
in Section VI with the
exception
of
subsections
G and
H
.
C. The portfolio in total should have an average duration of no more than 2.5
years
.
D. The five portfolio divisions are defined as
follows
:
•
Division
1
-Liquid
portfolio to meet the operating needs of the
Company
with
a
maximum
maturity of one year. No portfolio division
limit.
•
2- Short-term portfolio
with a
maximum
maturity of 3 years and
average
duration of 1.5 years. No portfolio division
limit.
•
Division
3- Medium-term
portfolio with a
maximum
maturity of 10 years
from
settlement
date and average
durat
i
on
of 3
.
5 years
.
A portfolio division limit
of
20%
.
•
Division
4-
Long-term
portfolio with a
maximum
maturity of 10 years
from
settlement
date and average duration of 5 years. A portfolio division limit of
5%.
•
Division 5-
Special
investment division
of equity and hedge fund
investments with
a portfolio division limit of
10%.
VI.
AUTHORIZED INVESTMENT
CATEGORIES
A
.
Money Market
Funds
:
Readily
marketable
funds that trade on a constant net asset value and which
invest
solely in
securities
otherwise eligible for
purchase/investment
under this
policy's
guidelines.
•
minimum
of obligation or obligor: P-1
,
or A3 by Moody
'
s or A- by
Standard
&
Poor
'
s.
•
Individual
security limit:
None
•
Agg
r
egate
category limit:
None
B. Taxable and Tax
Advantaged Corporate Debt:
Instruments
issued by US and foreign (only foreign
corporate
bonds)
corporations.
Includes
corporate
notes,
corporate
bonds
,
floating rate notes, mutual funds
and
auction-rate preferred
stock, USD
denominated
and issued in the
US.
•
Rating
minimum
of obligation or obligor of securities with
minimum
security
ratings
of
Baa3/BBB-/BBB-
with
maximum
maturity of 5 years for those
securities rated
lower than
A3/A-/A-
by
Moody's
or Standard & Poor
'
s. For securities rated
A3/A
/A- or higher, permit
maximum
security maturity of 10
years.
•
Individual
security limit: 5% of the Market Value of the
portfolio
.
•
Aggregate
category limit:
None
C. Taxable And Tax
Advantaged Municipal Issues:
Investments
in this category shall consist
principally
of
obligations of
States/Municipalities/1 nstitutions
.
•
minimum
of obligation or obligo
r
of
securities
with
minimum
security
ratings
of
Baa3/BBB-/BBB-
with
maximum
maturity of 5 years for those
securities rated
lower than
A3/A-/A-
by
Moody's
or Standard & Poor
'
s. For securities rated
A3/A
Revised P
o
licy Eff
ec
tive Nov
e
mber 2021
/A- or higher
,
permit maximum security maturity of 10 years
.
The implied rating of
the underlying Letter of Credit may be used if the issue is not rate
d
.
•
First preference should be given to states in which the Company has taxable
income for tax advantaged
issues
.
•
Individual security limit: 5% of the Market Value of the portfolio.
•
Aggregate category limit
:
None
D. Asset-Backed
Securities
Investments in this category shall include, but not be limited to
asset-backed
obligations related to real estate
,
automobile loans and credit card
portfolios
.
•
•
structure;
•
;
and
•
Tranche size needs to be greater than
$50MM
.
•
o
.
•
None
E
.
Repurchase
Agreements:
Placed through recognized broker/dealers or banks acting as principal and backed
:
1)
direct obligations of the U.S
.
Government having a present market value equal to the
investment
or
,
2) obligations of federal agencies having a present market value
equal
to the investment
,
or 3) commercial paper of A2 or P2 or better quality having a
present market value equal to the
investment.
•
Individual security limit: 25% of the Market Value of the
portfolio.
•
Aggregate category limit:
None
F. Money market instruments issued by US and foreign corporations and
banks
,
issued
in the US and paid in US dollars
.
Includes COs
,
Commercial Paper (including Asset
Backed Commercial
Paper)
,
Bankers
Acceptances
,
time deposits.
•
of P-1 by Moody
'
s or A-1 by Standard
&
Poor's
.
•
portfolio.
•
G
.
Sovereign and supranational debt denominated in US dollars, issued under US
securities law, may be issued by Foreign agencies, Sovereigns, Supranational
entities
•
of P-1 by Moody's or A-1 by Standard
&
Poor
'
s
.
•
o
.
•
Aggregate category limit: None
H. U.S. Government and Government Sponsored Agency Securities
Direct obligations of the U
.
S
.
Government and those federal agencies
whose
obligations are guaranteed by the U
.
S. Government, repurchase
agreements
collateralized by eligible investments of the US Government or US
Government
agencies
.
Revised Policy Effective November 2021
•
Rating
minimum
of
obligation
or obligor of
securities
with
minimum
security
ratings
of P-1 by
Moody's
or A-1 by Standard &
Poor's.
•
Rating
minimum
of obligation or obligor of
securities
with
minimum
security
ratings
of A-3 by
Moody's
or A- by Standard & Poor's if security only has long term
ratings
.
•
Individual security limit: No limit if direct
obligation
of US;
otherwise
50%
if
not
guaranteed
by
US
•
Aggregate category limit:
None
I.
Equities:
Common
Stocks or
equivalents including
Unit
Investment
Trusts, preferred
stocks,
securities
convertible
into common stock,
partnerships
investing in equities
and
mutual
funds
•
Rating
minimum
of
obligation
or obligor
:
Not
Applicable
•
Individual
security limit:
5%
•
Aggregate category limit:
10%
VII.
SECURITY
LIMITATIONS
A.
Single and
aggregate
security
limitations
apply to the
portfolio's
total value at the
time
of the security
purchase.
It is the
Company's
intention to monitor the overall
allocation
of the
portfolio.
VIII.
INVESTMENTS OUTSIDE OF POLICY
A.
It is
understood
that there may be
corporate
investments
of a
longer-term
nature
that
are
These
investments
,
which may include for
example,
equity-related acquisitions,
require separate Board
approval
and are not intended to
be
governed under this Policy.
Likewise,
any
permanent changes
to these
guidelines
must be approved by the Board of
Directors.
SCHEDULE 2.5
TO
CREDIT AGREEMENT
Fees and Expenses
1.
Unused Line Fee. Borrowers shall pay to Lender monthly an unused line fee at the applicable
rate (on a per annum basis) determined as provided below multiplied by the amount by which the
Maximum Credit as then in effect exceeds the daily average of the principal balance of the outstanding
Revolving Loans and the Letters of Credit during the immediately preceding month (or part thereof) until
payment in full of the Obligations. Such fees shall be payable on the first day of each calendar month in
arrears and on the Termination Date. The rate shall be the percentage set forth in the following table that
corresponds to the daily average of the principal balance of the Revolving Loans and Letters of Credit for
the most recently completed calendar quarter:
Tier
Quarterly Average Revolving Loans
Unused Line Fee
1
Greater than 50% of the Maximum Credit
0.250%
2
Less than or equal to 50% of the Maximum
Credit
0.375%
Provided, that, (i) the rate shall be calculated and established once each calendar quarter and shall remain
in effect until adjusted for the next calendar quarter, (ii) each adjustment of the rate shall be effective as of
the first day of each such calendar quarter based on the daily average of the principal balance of the
outstanding Revolving Loans and Letters of Credit during the immediately preceding quarter, and (iii)
notwithstanding anything to the contrary contained herein, for the period from the Closing Date until the
last day of the second full calendar quarter immediately following the Closing Date, the rate shall be
based on the applicable percentage set forth in Tier 2.
2.
Collateral Monitoring Fee. Borrowers shall pay to Lender a monthly collateral monitoring
and servicing fee in the amount of $2,916.67 in respect of Lender’s services for each year (or part
thereof) which collateral monitoring fee shall be payable monthly in advance beginning on the Closing
Date and on the first day of each month thereafter until payment in full of the Obligations.
3.
Closing Fee. Borrowers shall pay to Lender a closing fee in an amount equal to $105,000.
The entire closing fee shall be deemed fully earned by Lender and shall be due and payable in full on the
Closing Date.
4.
Letter of Credit Fees. Borrowers shall pay to Lender a Letter of Credit fee at a rate equal to the
Applicable Margin for SOFR Loans times the daily balance of the undrawn amount of all outstanding
Letters of Credit (calculated on the basis of a 360-day year and the actual number of days elapsed),
payable monthly in arrears on the first Business Day of each month and on the Termination Date and
continuing until all undrawn Letters of Credit have expired or have been returned for cancellation in a
manner satisfactory to Lender. All fees upon the occurrence of any other activity with respect to any
Letter of Credit (including the issuance, transfer, amendment, extension or cancellation of any Letter of
Credit and honoring of draws under any Letter of Credit) will be determined in accordance with Lender’s
standard fees and charges then in effect.
5.
Lender Expenses. Borrowers shall pay to Lender the Lender Expenses on the earlier of (a)
the first day of the month following the date on which the applicable Lender Expenses were first
incurred, or (b) the date on which demand therefor is made by Lender (it being acknowledged and agreed
that any charging of such costs, expenses or Lender Expenses to the Loan Account shall be deemed to
constitute a demand for payment thereof for the purposes hereof). Borrowers agree that their obligations
contained in this Section shall survive payment in full of all other Obligations.
SCHEDULE 2.7
TO
CREDIT AGREEMENT
SOFR Replacement
Defined terms used in this Schedule 2.7 that are not otherwise defined in this Agreement are set forth at
the end of this Schedule 2.7.
1. Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other
Loan Document, upon the occurrence of a Benchmark Transition Event, Lender may amend this
Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such
amendment will become effective at 5:00 p.m. on the fifth Business Day after Lender has provided such
amendment to Administrative Borrower without any further action or consent of any Loan Party. No
replacement of a Benchmark with a Benchmark Replacement will occur prior to the applicable
Benchmark Transition Start Date.
2. Benchmark Replacement Conforming Changes. In connection with the implementation of a
Benchmark Replacement, Lender will have the right to make Conforming Changes from time to time and,
notwithstanding anything to the contrary herein or in any other Loan Document, any amendments
implementing such Benchmark Replacement Conforming Changes will become effective without any
further action or consent of any Loan Party.
3. Notices; Standards for Decisions and Determinations. Lender will promptly notify
Administrative Borrower of (a) the implementation of any Benchmark Replacement and (b) the
effectiveness of any Conforming Changes in connection with the use, administration, adoption or
implementation of a Benchmark Replacement. Lender will notify Administrative Borrower of (i) the
removal or reinstatement of any tenor of a Benchmark pursuant to Section 4 of this Schedule 2.7 and (ii)
the commencement of any Benchmark Unavailability Period. Any determination, decision or election
that may be made by Lender pursuant to this Schedule 2.7, including any determination with respect to a
tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and
any decision to take or refrain from taking any action or any selection, will be conclusive and binding
absent manifest error and may be made in its or their sole discretion and without consent from any other
party to this Agreement or any other Loan Document, except, in each case, as expressly required
pursuant to this Schedule 2.7.
4. Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in
any other Loan Document, at any time (including in connection with the implementation of a Benchmark
Replacement), (a) if the then-current Benchmark is a term rate (including the Term SOFR Reference
Rate) and either (i) any tenor for such Benchmark is not displayed on a screen or other information
service that publishes such rate from time to time as selected by Lender in its reasonable discretion or (ii)
the regulatory supervisor for the administrator of such Benchmark has provided a public statement or
publication of information announcing that any tenor for such Benchmark is not or will not be
representative, then Lender may modify the definition of “Interest Period” (or any similar or analogous
definition) for any Benchmark settings at or after such time to remove such unavailable or non-
representative tenor and (b) if a tenor that was removed pursuant to clause (a) above either (i) is
subsequently displayed on a screen or information service for a Benchmark (including a Benchmark
Replacement) or (ii) is not, or is no longer, subject to an announcement that it is not or will not be
representative for a Benchmark (including a Benchmark Replacement), then Lender may modify the
definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or
after such time to reinstate such previously removed tenor.
5. Benchmark Unavailability Period. Upon Administrative Borrower’s receipt of notice of the
commencement of a Benchmark Unavailability Period, (a) Administrative Borrower may revoke any
pending request for a borrowing of, conversion to or continuation of SOFR Loans to be made, converted
or continued during any Benchmark Unavailability Period and, failing that, Administrative Borrower will
be deemed to have converted any such request into a request for a borrowing of or conversion to Base
Rate Loans and (b) any outstanding affected SOFR Loans will be deemed to have been converted to Base
Rate Loans at the end of the applicable Interest Period. During any Benchmark Unavailability Period or
at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the
Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will
not be used in any determination of the Base Rate.
6. No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, Lender is not required actually to match fund any Obligation as to which interest accrues
at Adjusted Term SOFR or the Term SOFR Reference Rate.
7. Certain Defined Terms. As used in this Schedule 2.7:
“Available Tenor” means, as of any date of determination and with respect to the then-current
Benchmark, as applicable, (a ) if such Benchmark is a term rate, any tenor for such Benchmark (or
component thereof) that is or may be used for determining the length of an interest period pursuant to this
Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark
(or component thereof) that is or may be used for determining any frequency of making payments of
interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such
date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed
from the definition of “Interest Period” pursuant to the terms of this Schedule 2.7.
“Benchmark” means, initially, the Term SOFR Reference Rate, provided, that, if a Benchmark
Transition Event, has occurred with respect to Term SOFR Reference Rate or the then-current
Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such
Benchmark Replacement has become effective pursuant to the provisions of this Schedule 2.7.
“Benchmark Administrator” means, initially, the Federal Reserve Bank of New York, or any
successor administrator of the then-current Benchmark or any insolvency or resolution official with
authority over such administrator.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of:
(a) the alternate benchmark rate that has been selected by Lender giving due consideration to (i) any
selection or recommendation of a replacement benchmark rate or the mechanism for determining such a
rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for
determining a benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated
syndicated or bilateral credit facilities and (b) the related Benchmark Replacement Adjustment; provided
that if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark
Replacement shall be deemed to be the Floor for the purposes of this Agreement and the other Loan
Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-
current Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor, the
spread adjustment, or method for calculating or determining such spread adjustment, (which may be a
positive or negative value or zero) that has been selected by Lender giving due consideration to (a) any
selection or recommendation of a spread adjustment, or method for calculating or determining such
spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market
convention for determining a spread adjustment, or method for calculating or determining such spread
adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement for Dollar-denominated syndicated or bilateral credit facilities at such time.
“Benchmark Replacement Date” means the earlier to occur of the following events with respect
to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of
(i) the date of the public statement or publication of information referenced therein and (ii) the date on
which the administrator of such Benchmark (or the published component used in the calculation thereof)
permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such
component thereof); or
(b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on
which such Benchmark (or the published component used in the calculation thereof) has been determined
and announced by the regulatory supervisor for the administrator of such Benchmark (or such component
thereof) to be non-representative; provided that such non-representativeness will be determined by
reference to the most recent statement or publication referenced in such clause (c) and even if any
Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the
case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or
events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the
published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with
respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such
Benchmark (or the published component used in the calculation thereof) announcing that such
administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such
component thereof), permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor of such
Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof), the Board
of Governors of the Federal Reserve System of the United States (or any successor), the Federal Reserve
Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or
such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or
such component) or a court or an entity with similar insolvency or resolution authority over the
administrator for such Benchmark (or such component), which states that the administrator of such
Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such
Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide any Available
Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof)
announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a
specified future date will not be, representative.
For the avoidance of doubt, if the then-current Benchmark has any Available Tenors, a “Benchmark
Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement
or publication of information set forth above has occurred with respect to each then-current Available
Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the
earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is
a public statement or publication of information of a prospective event, the 90th day prior to the expected
date of such event as of such public statement or publication of information (or if the expected date of
such prospective event is fewer than 90 days after such statement or publication, the date of such
statement or publication).
“Benchmark Unavailability Period” means the period (if any) (a) beginning at the time that a
Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the
then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this
Schedule 2.7 and (b) ending at the time that a Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder and under any Loan Document in accordance with this Schedule
2.7.
“Conforming Changes” means, with respect to either the use or administration of Term SOFR or
the use, administration, adoption or implementation of any Benchmark Replacement, any technical,
administrative or operational changes (including changes to the definition of “Base Rate,” the definition
of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of
“Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”),
timing and frequency of determining rates and making payments of interest, timing of borrowing requests
or prepayment, conversion or continuation notices, the applicability and length of lookback periods and
other technical, administrative or operational matters) that Lender decides may be appropriate to reflect
the adoption and implementation of any such rate or to permit the use and administration thereof by
Lender in a manner substantially consistent with market practice (or, if Lender decides that adoption of
any portion of such market practice is not administratively feasible or if Lender determines that no market
practice for the administration of any such rate exists, in such other manner of administration as Lender
decides is reasonably necessary in connection with the administration of this Agreement and the other
Loan Documents).
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System
and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the
Board of Governors of the Federal Reserve System and/or the Federal Reserve Bank of New York, or any
successor thereto.
SCHEDULE 3.1
TO
CREDIT AGREEMENT
Conditions Precedent to Initial Revolving Loans and Letter of Credit
The obligation of Lender to make its initial Revolving Loans (or issue any Letter of Credit) on the
Closing Date is subject to the satisfaction of the conditions precedent to all Revolving Loans and Letters
of Credit provided for in Section 3.2 and each of the following conditions precedent (except as Lender
may otherwise agree in writing):
1.
Closing Excess Availability. The amount equal to (a) the Excess Availability as of the
Closing Date minus (b) the aggregate amount of all then outstanding and unpaid trade payables and other
obligations of each Borrower which are outstanding more than 30 days past due as of the end of the
immediately preceding month (other than trade payables or other obligations being contested or disputed
by a Borrower in good faith) and without duplication, all book overdrafts of Borrowers, shall be not less
than $30,000,000 after giving effect to the initial Revolving Loans and Letters of Credit made in
connection with the initial transactions hereunder and after payment of all fees and expenses payable on
the Closing Date (or any Reserves in respect thereof).
2.
Field Examination. Lender shall have conducted, or received the final report of a firm engaged
by Lender to conduct, a field examination of the Collateral, the books and records and other matters
relating to the operation of the business of Borrowers the results of which are reasonably satisfactory to
Lender, and Lender (or a firm engaged by Lender for such purpose) shall have completed an field review
of the books and records of Borrowers and such other updated information with respect to the Credit Card
Receivables and any other accounts and inventory as Lender may require to determine the amount of
Revolving Loans available to Borrowers (including roll-forwards of accounts), with results as of a date not
more than thirty (30) days prior to the Closing Date (or such earlier date as may be
acceptable to Lender), the results of which shall be reasonably satisfactory to Lender.
3.
Appraisals. Lender shall have received the final report of third party appraisals with respect
to inventory of Borrowers, in form and containing assumptions and appraisal methods reasonably
satisfactory to Lender by an appraiser acceptable to Lender, addressed to Lender and on which Lender is
expressly permitted to rely, with results as of a date not more than 30 days prior to the Closing Date (or
such earlier date as may be acceptable to Lender).
4.
Know Your Customer; Patriot Act. Lender shall have received at least 15 Business Days prior
to the Closing Date (a) all documentation and information as is requested by Lender in connection with
applicable “know your customer” and anti-money-laundering rules and regulations, (b) customary
individual background searches for each Loan Party’s senior management and key principals, and (c) for
each Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a
certification in form and substance reasonably satisfactory to Lender regarding beneficial ownership as
required by such regulation and in the case of (a), (b) and (c),which certification shall be complete and
accurate in all respects, and the results of which are reasonably satisfactory to Lender.
5.
Financial Statements. Lender shall have received prior to the Closing Date: (a) audited
financial statements of Parent and its Subsidiaries for each of the three fiscal years immediately preceding
the Closing Date, and (b) interim unaudited financial statements of Parent and its Subsidiaries as of the
most recent month end that is 30 days prior to the Closing Date for the fiscal year to date since the last
audited financial statements received by Lender.
6.
Projections. Lender shall have received Projections, certified by an Authorized Person of the
Administrative Borrower as complying with the requirements of this Agreement, set forth on a quarterly
basis for the period through the end of the 2025 fiscal year of Parent and annually for the 2026 and 2027
fiscal years, in each case with the results and assumptions in such projections in form and substance
reasonably satisfactory to Lender.
7.
Payment of Fees and Expenses. Lender shall have received payment of all fees due and
payable by Borrowers on the Closing Date and reimbursement for all Lender Expenses incurred in
connection with the transactions evidenced by any Loan Document invoiced or demanded on or before
the Closing Date.
8.
Legal Due Diligence. Lender and its counsel shall have completed all legal due diligence, the
results of which shall be reasonably satisfactory to Lender.
9.
Borrowing Base Certificate. Lender shall have received a Borrowing Base Certificate which
calculates the Borrowing Base as of the end of the most recently ended fiscal period immediately
preceding the Closing Date, completed in a manner reasonably satisfactory to Lender and duly authorized
and delivered by or on behalf of the Administrative Borrower to Lender (in accordance with the
provisions of Schedule 5.2).
10.
Good Standing Certificates. Lender shall have received a certificate of status with respect to
each Loan Party, dated within 30 days of the Closing Date (or such earlier date as is acceptable to
Lender), issued by the appropriate officer of the jurisdiction of organization of such Loan Party and each
other jurisdiction where the failure to be duly qualified or licensed would constitute a Material Adverse
Effect, in each case which certificate shall indicate that such Loan Party is in good standing in such
jurisdiction.
11.
Certificate of Directors’ Resolutions, Incumbency, Etc. Lender shall have received a certificate
of an Authorized Person of the Administrative Borrower, in form and substance reasonably satisfactory
to it, certifying (a) that attached copies of the Governing Documents of each Loan Party are true and
complete, and in full force and effect, without amendment except as shown; (b) that an attached copy of
resolutions authorizing execution, delivery and performance of the Loan Documents is true and
complete, and that such resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with respect to this Credit Facility;
and (c) to the title, name and signature of each Person authorized to sign the Loan Documents.
12.
Lien Searches. Lender shall have received the results of a recent Lien search in each
jurisdiction where each Loan Party is organized and to the extent requested by Lender, where the assets of
such Loan Party are located, and such search shall reveal no Liens on any of the assets of a Loan Party
except for Permitted Liens or Liens to be discharged on or prior to the Closing Date pursuant to a pay-off
letter or other documentation reasonably satisfactory to Lender.
13.
Pay-Off Letter. Lender shall have received pay-off letters, in form and substance reasonably
satisfactory to Lender, for all existing Indebtedness to be repaid from the proceeds of the initial Revolving
Loans confirming that all Liens upon any of the assets of each Loan Party constituting Collateral will be
terminated concurrently with such payment and all letters of credit issued or guaranteed as part of such
Indebtedness shall have been cash collateralized or supported by a letter of credit.
14.
Pledged Equity Interests; Stock Powers; Pledged Notes. Lender shall have received (a) the
original certificates representing Equity Interests pledged pursuant to any Loan Document, together with
an undated stock power for each such certificate executed in blank by a duly authorized officer of the
pledgor thereof and (b) each original promissory note (if any) pledged to Lender pursuant to any Loan
Document endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank)
by the pledgor thereof.
15.
Insurance. Lender shall have received certificates of insurance policies and such other
evidence of insurance coverage in form, scope and substance reasonably satisfactory to Lender, and all
lender’s loss payee and any other endorsements required under the Loan Documents, in form and
substance reasonably satisfactory to Lender.
16.
Tax Withholding. Lender shall have received a properly completed and signed IRS Form
W-8 or W-9, as applicable, for each Loan Party.
17.
[Reserved].
18.
No Material Adverse Change. No material adverse change in the business, operations, profits,
assets or prospects of a Loan Party shall have occurred since November 2, 2024.
19.
Loan Documents. Lender shall have received the following documents, in form and
substance reasonably satisfactory to Lender, duly executed and delivered, and each such document shall
be in full force and effect and each Loan Party shall be in compliance with the terms thereof:
(a)
this Agreement,
(b)
the Security Agreement,
(c)
the Guaranty,
(d)
the Trademark Security Agreement by CH
W,
(e)
the Trademark Security Agreement by Cato of Texas,
(f)
the Copyright Security Agreement by Parent,
(g)
the Standby Letter of Credit Agreement,
(h)
the Commercial Letter of Credit Agreement,
(i)
the Intercompany Subordination Agreement,
(j)
the Perfection Certificate,
(k)
Form U-1,
(l)
the Funds Flow Agreement;
(m)
a closing certificate by an Authorized Person certifying the satisfaction of the conditions
precedent set forth in this Schedule 3.1 and in Section 3.2 of the Agreement in form and substance
satisfactory to Lender, and
(n)
opinion letters of counsel to Loan Parties with respect to the Loan Documents and such
matters as Lender may reasonably request with respect to the laws of the States of Delaware, Florida,
Georgia, North Carolina, New York, South Carolina, Tennessee, Texas and Virginia.
SCHEDULE 4.5
TO
CREDIT AGREEMENT
Pending Litigation
None.
SCHEDULE 4.14
TO
CREDIT AGREEMENT
Collective Bargaining Agreements, Etc.
None.
SCHEDULE 4.16
TO
CREDIT AGREEMENT
Subsidiaries
(a)
Loan Party
Subsidiary
Subsidiary Entity Type
THE CATO CORPORATION
CHW, LLC
Delaware limited liability
company
THE CATO CORPORATION
CatoSouth LLC
North Carolina limited liability
company
CaDel LLC
Cato Southwest, Inc.
Cato of Texas L.P.
Texas limited partnership
CHW, LLC
CaDel LLC
Delaware limited liability
company
THE CATO CORPORATION
CatoWest, LLC
Nevada limited liability company
Cato Southwest, Inc.
Catocorp.com LLC
Delaware limited liability
company
THE CATO CORPORATION
Cato WO LLC
Delaware limited liability
company
CatoSouth LLC
Cato of Georgia, LLC
Georgia limited liability company
THE CATO CORPORATION
Cato of Florida L.L.C.
Florida limited liability company
THE CATO CORPORATION
Cato of Illinois, LLC
Illinois limited liability company
THE CATO CORPORATION
Cato of North Carolina, LLC
North Carolina limited liability
company
THE CATO CORPORATION
Ohio Cato Stores, LLC
Ohio limited liability company
Loan Party
Subsidiary
Subsidiary Entity Type
THE CATO CORPORATION
Cato of South Carolina, LLC
South Carolina limited liability
company
THE CATO CORPORATION
Cato of Tennessee, LLC
Tennessee limited liability
company
THE CATO CORPORATION
Cato of Virginia, LLC
Virginia limited liability company
THE CATO CORPORATION
Cato Southwest, Inc.
Delaware limited liability
company
Cato of Texas L.P.
Cato Employee Services
Management LLC
Texas limited liability company
Cato of Texas L.P.
Cato Employee Services L.
P.
Texas limited partnership
THE CATO CORPORATION
Cedar Hill National Bank
National bank
THE CATO CORPORATION
Cato Overseas Limited
Hong Kong company
THE CATO CORPORATION
Shanghai Cato Overseas
Business Consulting Co., Ltd
China company
THE CATO CORPORATION
Cato Overseas Services
Limited
Hong Kong company
THE CATO CORPORATION
Cato Bangladesh Services
Private Limited
Bangladesh company
THE CATO CORPORATION
Cato Services Vietnam Co.
Ltd.
Vietnam company
THE CATO CORPORATION
CatoSouth LLC
Cato India Services Private
Limited
India company
THE CATO CORPORATION
Cato Land Development LLC
South Carolina limited liability
company
(b)
Loan Party /
Issuer
Record Owner
Class of
Equity
No. Shares/Interests
Percent Ownership
CHW, LLC
The Cato
Corporation
Membership
Interests
N/A
100%
CatoSouth LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of Texas
L.P.
CaDel LLC
Partnership
Interests
N/A
99%
Cato of Texas
L.P.
Cato Southwest,
Inc.
Partnership
Interests
N/A
1%
CaDel LLC
CHW, LLC
Membership
Interests
N/A
100%
CatoWest, LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Catocorp.com,
LLC
Cato Southwest,
Inc.
Membership
Interests
N/A
100%
Cato WO LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of Georgia,
LLC
CatoSouth LLC
Membership
Interests
N/A
100%
Cato of Florida
L.L.C.
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of Illinois,
LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of North
Carolina, LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Loan Party /
Issuer
Record Owner
Class of
Equity
No. Shares/Interests
Percent Ownership
Ohio Cato Stores,
LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of South
Carolina, LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of
Tennessee, LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato of Virginia,
LLC
The Cato
Corporation
Membership
Interests
N/A
100%
Cato Southwest,
Inc.
The Cato
Corporation
Shares of
Stock
1,000
100%
SCHEDULE 4.18(a)
TO
CREDIT AGREEMENT
Deposit Accounts
SCHEDULE 4.18(b)
TO
CREDIT AGREEMENT
Credit Card Arrangements
1. Arrangement for credit card processing services pursuant to that certain Merchant Agreement by
and between Wells Fargo Merchant Services, L.L.C. and The Cato Corporation.
2. Arrangement pursuant to that certain Telecheck Electronic Check Acceptance
Wa
rranty Service
Agreement, dated July 24, 2008, by and between
Te
lecheck Services, Inc. and The Cato
Corporation.
3. Arrangement between PayPal, Inc. and The Cato Corporation whereby Paypal, Inc. provides credit
card issuance services.
SCHEDULE 4.19
TO
CREDIT AGREEMENT
Material Contracts
1. The Cato Corporation 2013 Employee Stock Purchase Plan (Amended and Restated as of April 1, 2021.
2. 2013 Incentive Compensation Plan.
3. 2018 Incentive Compensation Plan.
4. Deferred Compensation Plan effective July 28, 2011.
SCHEDULE 5.1
TO
CREDIT AGREEMENT Financial
and Collateral Reporting
Each Loan Party will deliver, or cause to be delivered, to Lender each of the following:
1.
Annual Financial Statement. As soon as available, but in any event within 90 days after the
end of each fiscal year of Parent and its Subsidiaries, audited consolidated and consolidating balance
sheet, income statement, statement of cash flow and statement of equity of Parent and its Subsidiaries as
of the end of and for such year, setting forth in each case in comparative form the figures for the previous
fiscal year, and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material
respects the financial position and results of operations of such Parent and its Subsidiaries, together with
a management discussion and analysis of such financial statements. Notwithstanding the foregoing, the
financial statements required to be delivered by this Section 1 shall be deemed to have been delivered on
the date Lender receives notice from Administrative Borrower that such documents have been made
public as part of the Parent’s Form 10-K posted on the website of the U.S. Securities and Exchange
Commission and such documents have been posted thereon.
2.
Monthly Financial Statements. As soon as available, but in any event within 30 days after the
end of each fiscal month of Parent and its Subsidiaries (or for any end of a fiscal month that is the end of
a fiscal quarter, 45 days after the end of such fiscal month) its consolidated and consolidating balance
sheet, income statement, statement of cash flow and statement of equity as of the end of and for such
fiscal month, all in reasonable detail, fairly presenting in all material respects the financial position and
the results of the operations of Parent and its Subsidiaries as of the end of and through such fiscal month,
setting forth in each case in comparative form the figures for the corresponding period or periods of (or,
in the case of the balance sheet, as of the end of) the previous fiscal year, in each case subject to normal
year-end audit adjustments and the absence of footnotes.
3.
Accountant’s Certificate. Concurrently with the delivery of the financial statements referred
to in Section 1 above, the unqualified opinion of independent certified public accountants with respect to
the audited consolidated financial statements, which independent accounting firm will be selected by the
Administrative Borrower and reasonably acceptable to Lender (it being understood that
PricewaterhouseCoopers LLP is acceptable to Lender), that such audited consolidated financial
statements have been prepared in accordance with GAAP, and present fairly in all material respects the
results of operations and financial condition of Loan Parties as of the end of and for the fiscal year then
ended.
4.
Compliance Certificate. Concurrently with the delivery of the financial statements referred to
in Section 1 and Section 2 above, a Compliance Certificate by or on behalf of the Administrative
Borrower, along with a schedule in form reasonably satisfactory to Lender of the calculations used in
determining, as of the end of such fiscal month, the amounts set forth in Section 7 of this Agreement for
such month (whether or not there is a Compliance Period) and a written summary of material changes in
GAAP and in the consistent application thereof that materially affected the financial covenant
calculations for the applicable period.
5.
Annual Projections. As soon as available, but in any event no later than 45 days after the close
of each fiscal year of Parent and its Subsidiaries, preliminary Projections (including balance sheet, profit
and loss statement, cash flow statement and projected availability under the Credit Facility) on a monthly
basis for each month of the upcoming fiscal year and no later than 90 days after the close of each
fiscal year of Parent and its Subsidiaries, final Projections (including balance sheet, profit and loss
statement, cash flow statement and projected availability under the Credit Facility), in each case in form
reasonably satisfactory to Lender.
6.
Borrowing Base Certificate. As soon as possible after the end of each calendar month (but in
any event within 10 Business Days after the end thereof), or once each week by the Wednesday of each
such week as Lender may require at any time an Event of Default exists or Excess Availability shall be
less than the greater of (a) 15.0% of the Loan Cap or (b) $10,000,000 and thereafter for a period of not
less than four consecutive weeks or if longer, until such Event of Default does not exist or Excess
Availability is more than the greater of such amounts for a period of 30 consecutive days, a Borrowing
Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the
immediately preceding period, duly completed and delivered by or on behalf of the Administrative
Borrower (and nothing contained in any Borrowing Base Certificate shall be deemed to limit, impair or
otherwise affect the rights of Lender contained herein and in the event of any conflict or inconsistency
between the calculation of the Borrowing Base as set forth in any Borrowing Base Certificate and as
determined by Lender in its Permitted Discretion, the determination of Lender shall govern and, absent
manifest error, be conclusive and binding upon Borrowers).
7.
Collateral Reports. As soon as possible after the end of each fiscal month (but in any event
within 10 Business Days after the end thereof), or once each week by the Wednesday of each such week
as Lender may require at any time an Event of Default exists or the Excess Availability shall be less than
the greater of (a) 15.0% of the Loan Cap or (b) $10,000,000 and thereafter for a period of not less than
four consecutive weeks or if longer, until such Event of Default does not exist or Excess Availability is
more than the greater of such amounts for a period of 30 consecutive days, collateral reports that support
the information in the Borrowing Base Certificate in form and substance substantially similar to the
reports delivered in connection with the field examination received by Lender prior to the Closing Date
(or as such reports may be supplemented or modified pursuant to any field examination thereafter) and
otherwise in form and substance satisfactory to Lender, and in any event including supporting
documentation for Credit Card Receivables, including credit card processor reports, and inventory,
including the reconciliation from each Borrower’s perpetual inventory ledger to balance sheet, accounts
payable aging by vendor, and only on a quarterly basis (and not each month), the reconciliation between
internal and external margins.
8.
Management Letters, Etc. Promptly (but in any event within 10 Business Days after receipt
by any Loan Party), copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors or equivalent governing body (or the audit committee of the board of
directors or such equivalent governing body) of a Loan Party by independent accountants in connection
with the accounts or books of each Loan Party, or any audit of any of them.
9.
Insurance. As soon as possible after the annual renewal, replacement or modification by each
Loan Party of its insurance (and in any event within 10 Business Days thereafter), a certificate by an
Authorized Person of the Administrative Borrower attaching the insurance binder or other evidence of
insurance for any insurance coverage of each Loan Party that was renewed, replaced or modified.
10.
Additional Information.
(a)
within 10 Business Days after the end of each fiscal month, a certificate by an Authorized
Person of the Administrative Borrower consisting of: (i) the addresses of all Store locations of each Loan
Party acquired, opened, closed, sold or transferred since the date of the most recent certificate delivered to
Lender containing the information required under this clause, (ii) a report of any new deposit account or
securities account established or used by each Loan Party with any bank or other financial institution and
any existing deposit account or securities account currently established or used by each Loan Party with any
bank or other financial institution that is at any time identified after the Closing Date and was not set forth
in Schedule 4.18(a) or 4.18(b) or in the schedules to the Security Agreement, including in each case, the
account number, the name and address of the financial institution at which such account is maintained, the
purpose of such account and, if any, the amount held in such account on or about the date of such report,
and (iii) a list of (A) all applications, if any, for intellectual property made since the date of the prior
certificate (or, in the case of the first such certificate, the Closing Date), and (B) all issuances of
registrations or letters on existing applications for Intellectual Property received since the date of the prior
certificate (or, in the case of the first such certificate, the Closing Date);
(b)
promptly following any request therefor, such other information regarding the operations,
business affairs, financial condition and Collateral of a Loan Party or compliance with the terms of the
Agreement.
Any documents, schedules, invoices or other papers delivered to Lender may be destroyed or otherwise
disposed of by Lender one year after the same are delivered to Lender.
Each Loan Party and Lender agree that the delivery of a Borrowing Base Certificate through Lender’s
electronic platform or portal, subject to Lender’s authentication process, or by such other electronic
method as may be directed by Lender from time to time, or by such other electronic input of information
necessary to calculate the Borrowing Base as may be directed by Lender from time to time, shall in each
case be used for purposes of the obligations of Borrowers to deliver Borrowing Base Certificates
hereunder, with the same legal effect as if such Borrowing Base Certificate had been manually executed
by the Administrative Borrower and delivered to Lender.
Schedule 5.14
to
Credit Agreement
Post-Closing Actions
Notwithstanding anything to the contrary in any Loan Document, to the extent not delivered on
the Closing Date, the Loan Parties hereby agree to execute and/or deliver, as applicable, all documents
and certificates, and to perform all obligations, in each case as set forth below, on or prior to the
applicable date set forth below (or such later dates as may hereafter be agreed by Lender):
1. On or before April 14, 2025, Lender shall have received each of the following in form and
substance satisfactory to Lender:
(a)
a Securities Account Control Agreement with respect to the securities accounts of Parent
at Morgan Stanley Smith Barney LLC, duly authorized, executed and delivered by Parent and Morgan
Stanley Smith Barney LLC;
(b)
a Securities Account Control Agreement with respect to the securities accounts of Parent
at SS&C GIDS, Inc., as transfer agent for JPMorgan Chase U.S. Government Money market Fund
(“JPM”), duly authorized, executed and delivered by Parent and JPM; and
(c)
a Securities Account Control Agreement with respect to the securities accounts of Parent
at U.S. Bank National Association (“US Bank”), duly authorized, executed and delivered by Parent and
US Bank.
Schedule 6.1
to
Credit Agreement
Existing Indebtedness
1. Indebtedness in connection with the Existing Letter of Credit.
Schedule 6.2
to
Credit Agreement
Existing Liens
Lien Type
File Date
File Number
Debtor
Secured Party
Collateral
UCC-1
Financing
Statement
9/10/2019
2019 6291194
The Cato
Corporation
TIA
A
Commercial
Finance, Inc.
Specific leased
equipment
UCC-1
Financing
Statement
3/12/2020
2020 1848011
The Cato
Corporation
SG Equipment
Finance USA
Corp. (as
assignment by
CSI Leasing,
Inc.)
Specific leased
equipment
UCC-1
Financing
Statement
8/4/2021
2021 6135900
The Cato
Corporation
CT
Corporation
System on
behalf of CSI
Leasing, Inc.
Specific leased
equipment and
software
Schedule 6.9
to
Credit Agreement
Existing Investments
1. Revolving Promissory Note, dated February 2, 1997 (amended as of June 12, 1997, as amended by that
certain Amendment to Revolving Promissory Note, dated June 30, 2007, as amended by that certain
Amendment to Revolving Promissory Note, dated June 30, 2012, as amended by that certain Amendment
to Revolving Promissory Note, dated June 30, 2017, as amended by that certain Amendment to Revolving
Promissory Note, dated June 30, 2019 and as amended by that certain Amendment to Revolving Promissory
Corporation promises to pay to Cato of Texas the principal sum of $75,000,000.
2. Intercompany Loan Agreement, dated April 9, 2020, by and between Cato Overseas Limited and The Cato
Corporation, whereby Cato Overseas Limited establishes a revolving line of credit in the amount of
$30,000,000 in favor of The Cato Corporation.
3. Loan Facility, dated August 18, 2000 (as amended by that certain Amendment to Loan Facility, dated
November 5, 2005, as amended by that certain Second Amendment to Loan Facility, dated June 11, 2009,
as amended by that certain Third Amendment to Loan Facility, dated January 31, 2015, as amended by that
certain Fourth Amendment to Loan Facility, dated January 31, 2020, and as amended by that certain Fifth
Amendment to Loan Facility, dated February 1, 2025), by and between Cato
We
st, LLC and The Cato
Corporation, whereby Cato
We
st, LLC establishes a revolving line of credit in the amount of $15,000,000 in
favor of The Cato Corporation.
4. Intercompany Loan Agreement, dated October 15, 2018 (as amended by that certain Amendment to
Intercompany Loan Agreement, dated December 31, 2023), by and between Cato Overseas Limited and
Cato Overseas Services Limited, whereby Cato Overseas Limited establishes a revolving line of credit in
the amount of $1,000,000 in favor of Cato Overseas Services Limited.
EXHIBIT A
TO
CREDIT AGREEMENT
Form of Borrowing Base Certificate
[See Attached]
17847442v3 10238.01098
A-1
Summary
Page
Borrowing
Base
Certificate
BBC Cutoff Date
1/0/00
BBC Submission Date
1/0/1900
Name THE
("Borrower")
Accounts Receivable and
Inventory
Borrowing Base
Consolidated
Currency
USD
Net Available Accounts Receivable
AR As of: 1/0/1900 IE As of: 1/0/1900
0.00
Net Available Inventory
Inventory As of: 1/0/1900 IE As of: 1/0/1900
0.00
Other
Assets
Net Available -
Overadvance
0.00
Net Available - Other Assets
0.00
Summary
Total Collateral Availability
0.00
Borrowing Base Reserves
HTO0E
1 Gift Card (50%)
0.00
2 Gift Cards to be Issued for Returns (50%)
0.00
3 Loyalty Rewards (50%)
0.00
4 Layaway Deposits
0.00
5 Customer Deposits
0.00
6 Charitable Donations
0.00
7 Bankcard
Overpayments
0.00
8 Landlord Lien Reserve (2 mos)
0.00
9 Amts Due to Common Carriers / Pool Points > 30 Days Past Due
0.00
10 Amount Due to US Customs
0.00
11 Texas Sales Tax
0.00
12 Texas Personal Property Tax
0.00
13 Wage Lien State
0.00
Total Reserves Calculated before the Credit Line
0.00
Total Availability after Borrowing Base Reserves
0.00
Credit Line
35,000,000.00
Suppressed Availability
0.00
Availability before Reserves
0.00
Credit Line Reserves
HTO0E
1
0.00
Total Credit Line Reserves
0.00
Total Availability after Reserves before Loan Balance and LCs
0.00
Total Loan Balance As of: 1/0/00
0.00
Net
Availability
(BBC Native Currency)
0.00
Net
Availability
(Facility Currency)
0.00
Minimum Excess
Availability
Requirement (The greater of 10% of the Loan Cap or $5.0MM)
0.00
Net
Availability
After the Minimum Excess
Availability
Covenant
0.00
The above named Borrower, pursuant to that certain Credit Agreement dated as of (as amended, restated, modified, supplemented, refinanced, renewed, or extended from time
to time, the “Credit Agreement”), entered into among, inter alia, such Borrower, the lenders signatory thereto from time to time and Wells Fargo Bank, National Association as the arranger and
administrative agent (in such capacity, together with its successors and assigns, if any, in such capacity, “Agent”), hereby certifies to Agent that the following items, calculated in accordance with the
terms and definitions set forth in the Credit Agreement, are true and correct, and that each Borrower is in compliance with and, after giving effect to any currently requested extensions of credit
under the Credit Agreement, will be in compliance with, the terms, conditions, and provisions of the Credit Agreement.
Through the electronic submission and delive ry of this certificate by the above named Borrower, each Borrower is deemed to, and does, represent and warrant to Agent that (i) the preparation and
delivery of this certificate have been duly authorized by all necessary action on the part of such Borrower, (ii) the certification set forth above at the top of this page is true and correct, (iii) as of the
date hereof, each representation or warranty contained in or pursuant to any Loan Document (as defined in the Credit Agreement), any agreement, instrument, certificate, document or other writing
furnished at any time under or in connection with any Loan Document, and as of the effective date of any currently requested extension of credit under the Credit Agreement, is true and correct in
all material respects (except to the extent any representation or warranty expressly related to an earlier date, in which ca se such representation or warranty is true and correct as of such earlier
date), (iv) each of the covenants and agreements contained in any Loan Document have been performed (to the extent required to be performed on or before the date hereof or each such effective
date), (v) no Default or Event of Defau lt (as such terms are defined in the Credit Agreement) has occurred and is continuing on the date hereof, nor will any thereof occur after giving effect to any
currently requested extension of credit, and (vi) all of the foregoing is true and correct as of the effective date of the calculations set forth above. This certificate is a Loan Document (as defined in
the Credit Agreement).
Responsible
Officer:
Printed
Name:
Signature:
EXHIBIT B
TO
CREDIT AGREEMENT
Form of Compliance Certificate
[on Administrative Borrower’s letterhead]
To: Wells Fargo Bank, National Association
129 High Street, 11th Floor
Boston, MA 02110
Attn: Portfolio Manager-The Cato Corporation
Re: Compliance Certificate dated
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement, dated as of March 13, 2025 (as
amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by
and among The Cato Corporation, a Delaware corporation (“Parent” or the “Administrative Borrower”),
CatoSouth LLC, a North Carolina limited liability company (“CatoSouth”), Cato of Texas L.P., a Texas
limited liability company (“Cato of Texas”), Cato
We
st, LLC, a Nevada limited liability company
(“CatoWest”), Cato WO LLC, a North Carolina limited liability company (“Cato WO”), Cato of Georgia,
LLC, a Georgia limited liability company (“Cato of Georgia”), Cato of Florida L.L.C., a Florida limited
liability company (“Cato of Florida”), Cato of Illinois, LLC, an Illinois limited liability company (“Cato of
Illinois”), Cato of North Carolina, LLC, a North Carolina limited liability company (“Cato of North
Carolina”), Ohio Cato Stores, LLC, a Ohio limited liability company (“Ohio Cato”), Cato of South
Carolina, LLC, a South Carolina limited liability company (“Cato of South Carolina”), Cato of Tennessee,
LLC, a Tennessee limited liability company (“Cato of Tennessee”), and Cato of Virginia, LLC, a Virginia
limited liability company (“Cato of Virginia,” and together with Administrative Borrower, CatoSouth,
Cato of Texas, CatoWest, Cato WO, Cato of Georgia, Cato of Florida, Cato of Illinois, Cato of North
Carolina, Ohio Cato, Cato of South Carolina, Cato of Tennessee, and those additional entities that become
parties to the Credit Agreement as Borrowers in accordance with the terms thereof by executing the form
of Joinder attached thereto as Exhibit J-1 (each, a “Borrower” and individually and collectively, jointly and
severally, the “Borrowers”), Cato Southwest, Inc., a Delaware corporation (“Cato Southwest”), CHW,
LLC, a Delaware limited liability company (“CHW”), Cadel LLC, a Delaware limited liability company
(“CaDel”), catocorp.com, LLC, a Delaware limited liability company (“catocorp,” and together with Cato
Southwest, CH
W,
and Cadel and any entity that may become party to the Credit Agreement as a
Guarantor, individually, each a “Guarantor” and collectively, “Guarantors”) and Wells Fargo Bank,
National Association, a national banking association in its capacity as lender (together with its successors
and assigns “Lender”). Capitalized terms used herein, but not specifically defined herein, shall have the
meanings ascribed to them in the Credit Agreement.
Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of Administrative
Borrower hereby certifies as of the date hereof that:
1. The financial information of Parent and its Subsidiaries furnished in Schedule 1 attached hereto
has been prepared in accordance with GAA
P
(except, in the case of unaudited financial
statements, for year-end audit adjustments and the lack of footnotes), and fairly presents in all
material respects the financial condition of Parent and its Subsidiaries as of the date set forth
therein.
2. Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made
under his/her supervision, a review in reasonable detail of the transactions and financial condition
of Parent and its Subsidiaries during the accounting period covered by the financial statements
delivered pursuant to Section 5.1 of the Credit Agreement.
3. Such review has not disclosed the existence on and as of the date hereof, and the undersigned does
not have knowledge of the existence as of the date hereof, of any event or condition that
constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2
attached hereto, in each case specifying the nature and period of existence thereof and what action
Parent and/or its Subsidiaries have taken, are taking, or propose to take with respect thereto.
4. The Loan Parties [have/have not] permitted Excess Availability at any time to be less than the
greater of (a) 10.0% of the Loan Cap or (b) $5,000,000.
[Signature page follows]
IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this day of , 20 .
THE CATO CORPORATION
a Delaware corporation, as Administrative Borrower
By: Name:
Title:
B-1
SCHEDULE 1
Financial Information
SCHEDULE 2
Default or Event of Default
EXHIBIT C
TO
CREDIT AGREEMENT
Form of Joinder Agreement
FORM OF JOINDER AGREEMENT
This Joinder Agreement (this “Agreement”), is entered into as of [
], 202_, by and
among
, a [(“New Borrower”)] [(“New Guarantor”)], and Wells Fargo Bank,
National Association, a national banking association (“Lender”).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of March 13, 2025 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Lender,
The Cato Corporation, a Delaware corporation (“Parent” or the “Administrative Borrower”), , CatoWouth
LLC, a North Carolina limited liability company (“CatoSouth”), Cato of Texas L.P., a Texas limited
liability company (“Cato of Texas”), CatoWest, LLC, a Nevada limited liability company (“CatoWest”),
Cato WO LLC, a North Carolina limited liability company (“Cato WO”), Cato of Georgia, LLC, a Georgia
limited liability company (“Cato of Georgia”), Cato of Florida L.L.C., a Florida limited liability company
(“Cato of Florida”), Cato of Illinois, LLC, an Illinois limited liability company (“Cato of Illinois”), Cato of
North Carolina, LLC, a North Carolina limited liability company (“Cato of North Carolina”), Ohio Cato
Stores, LLC, a Ohio limited liability company (“Ohio Cato”), Cato of South Carolina, LLC, a South
Carolina limited liability company (“Cato of South Carolina”), Cato of Tennessee, LLC, a Tennessee
limited liability company (“Cato of Tennessee”), and Cato of Virginia, LLC, a Virginia limited liability
company (“Cato of Virginia,” and together with Administrative Borrower, CatoSouth, Cato of Texas,
CatoWest, Cato WO, Cato of Georgia, Cato of Florida, Cato of Illinois, Cato of North Carolina, Ohio Cato,
Cato of South Carolina, and Cato of Tennessee, and together with any entity that may become party to the
Credit Agreement as a Borrower, individually, each a “Borrower” and collectively, “Borrowers”), and
Cato Southwest, Inc., a Delaware corporation (“Cato Southwest”), CHW, LLC, a Delaware limited
liability company (“CHW”), Cadel LLC, a Delaware limited liability company (“CaDel”), catocorp.com,
LLC, a Delaware limited liability company (“catocorp,” and together with Cato Southwest, CH
W,
and
CaDel and any entity that may become party to the Credit Agreement as a Guarantor, individually, each a
“Guarantor” and collectively, “Guarantors”), Lender has agreed to make or issue Revolving Loans, Letters
of Credit and other certain financial accommodations thereunder;
WHEREAS, initially capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement;
WHEREAS, pursuant to the Intercompany Subordination Agreement, dated as of March 13, 2025
(as amended, restated, supplemented or otherwise modified from time to time, the “Intercompany
Subordination Agreement”), by and among Lender, Borrowers, Guarantors, and each of Parent’s other
Subsidiaries listed on the signature pages hereto as an obligor (such Subsidiaries, together with Parent, are
referred to hereinafter each individually as a “Obligor”, and individually and collectively, jointly and
severally, as “Obligors”), each Obligor has agreed to the subordination of indebtedness of each other
Obligor owed to such Obligor on the terms set forth therein;
WHEREAS, [New Borrower] [New Guarantor] is required to become a party to the Credit
Agreement by, among other things, executing and delivering this Agreement to Lender; and
WHEREAS, [New Borrower] [New Guarantor] has determined that the execution, delivery and
performance of this Agreement directly benefit, and are within the corporate purposes and in the best
interests of, [New Borrower] [New Guarantor], by virtue of the financial accommodations available to
[New Borrower] [New Guarantor] from time to time pursuant to the terms and conditions of the Credit
Agreement.
NO
W,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the parties hereto hereby agrees as follow:
1.
Joinder of [New Borrower] [New Guarantor] to the Credit Agreement. By its execution of this
Agreement, [New Borrower] [New Guarantor] hereby (a) agrees that from and after the date of this
Agreement it shall be a party to the Credit Agreement as a [“Borrower”][“Guarantor”] and shall be bound
by all of the terms, conditions, covenants, agreements and obligations set forth in the Credit Agreement,
(b) accepts joint and several liability for the Obligations pursuant to the terms of the Loan Documents, and
(c) confirms that, after giving effect to the supplement to the Schedules to the Credit Agreement provided
for in Section 2 below, the representations and warranties contained in Section 4 of the Credit Agreement
are true and correct as they relate to [New Borrower] [New Guarantor] as of the date this Agreement.
[New Borrower] [New Guarantor] hereby agrees that each reference to a [“Borrower” or the “Borrowers”]
[“Guarantor” or the “Guarantors”] in the Credit Agreement and the other Loan Documents shall include
[New Borrower] [New Guarantor]. [New Borrower] [New Guarantor] acknowledges that it has received a
copy of the Credit Agreement and the other Loan Documents and that it has read and understands the
terms thereof.
2.
Updated Schedules. Attached as Exhibit A hereto are
updated
Schedules [
] to the Credit Agreement revised to include all information required to be provided
therein including information with respect to [New Borrower] [New Guarantor]. Each such Schedule shall
be attached to the Credit Agreement, and on and after the date hereof all references in any Loan Document
to any such Schedule to the Credit Agreement shall mean such Schedule as so amended; provided, that,
any use of the term “as of the date hereof” or any term of similar import, in any provision of the Credit
Agreement relating to [New Borrower] [New Guarantor] or any of the information amended by such
Schedule hereby, shall be deemed to refer to the date of this Agreement.
3.
Joinder of [New Borrower] [New Guarantor] to the Intercompany Subordination Agreement. By its
execution of this Agreement, [New Borrower] [New Guarantor] hereby (a) agrees that from and after the
date of this Agreement it shall be an Obligor under the Intercompany Subordination Agreement as if it
were a signatory thereto and shall be bound by all of the provisions thereof, and (b) agrees that it shall
comply with and be subject to all the terms, conditions, covenants, agreements and obligations set forth in
the Intercompany Subordination Agreement. [New Borrower] [New Guarantor] hereby agrees that each
reference to an “Obligor” or the “Obligors” in the Intercompany Subordination Agreement shall include
[New Borrower] [New Guarantor]. [New Borrower] [New Guarantor] acknowledges that it has received a
copy of the Intercompany Subordination Agreement and that it has read and understands the terms thereof.
4.
Representations and Warranties of [New Borrower] [New Guarantor]. [New Borrower]
[New Guarantor] hereby represents and warrants to Lender as follows:
(a)
It (i) is duly organized and existing and in good standing under the laws of the
jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so
qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite
power and authority to own and operate its assets, to carry on its business as now conducted and as
proposed to be conducted, to enter into this Agreement and the other Loan Documents to which it is made
a party and to carry out the transactions contemplated hereby and thereby.
(b)
The execution, delivery, and performance by it of this Agreement and any other Loan
Document to which [New Borrower] [New Guarantor] is made a party (i) have been duly authorized by
all necessary action on the part of New Borrower and (ii) do not and will not (A) violate any material
provision of federal, state, or local law or regulation applicable to [New Borrower] [New Guarantor] or its
Subsidiaries, the Governing Documents of [New Borrower] [New Guarantor] or its Subsidiaries, or any
order, judgment, or decree of any court or other Governmental Authority binding on [New Borrower]
[New Guarantor] or its Subsidiaries, (B) conflict with, result in a breach of, or constitute (with due notice
or lapse of time or both) a default under any Material Contract of [New Borrower] [New Guarantor] or its
Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably
be expected to have a Material Adverse Effect, (C) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any assets of New Borrower, other than Permitted Liens, or (D)
require any approval of [New Borrower’s] [New Guarantor’s] interest holders or any approval or consent
of any Person under any material agreement of [New Borrower] [New Guarantor], other than consents or
approvals that have been obtained and that are still in force and effect and except, in the case of material
agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate
reasonably be expected to cause a Material Adverse Effect.
(c)
This Agreement and each Loan Document to which [New Borrower] [New Guarantor] is
a party is the legally valid and binding obligation of [New Borrower] [New Guarantor], enforceable
against [New Borrower] [New Guarantor] in accordance with its respective terms, except as enforcement
may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors’ rights generally.
(d)
Each other representation and warranty applicable to [New Borrower] [New Guarantor]
as a [Borrower][Guarantor] under the Loan Documents is true, correct and complete, in all material
respects (except that such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text thereof) on and as of the date
hereof, as though made on such date (except to the extent that such representations and warranties relate
solely to an earlier date).
5.
Additional Requirements. Concurrent with the execution and delivery of this Agreement,
Lender shall have received the following, each in form and substance satisfactory to Lender:
(a)
a Joinder No.
to the Security Agreement, dated as of the date hereof, by and among
[New Borrower] [New Guarantor] and Lender (“Joinder No.
to Security Agreement”), together with
the original Equity Interest certificates, if any, representing all of the Equity Interests of the Subsidiaries
of [New Borrower] [New Guarantor] required to be pledged under the Security Agreement and any
original promissory notes of [New Borrower] [New Guarantor], accompanied by undated Equity Interest
powers/transfer forms executed in blank, and the same shall be in full force and effect;
(b)
a Pledged Interests Addendum by
, a _, dated as of the date hereof,
with respect to the pledge of Equity Interest of [New Borrower] [New Guarantor], owned by ,
together with the original stock certificates, if any, representing all of the Equity Interests of [New
Borrower] [New Guarantor] held by
_, accompanied by undated stock powers executed in blank
and other proper instruments of transfer, and the same shall be in full force and effect;
(c)
[Joinder No.
to the Guaranty Agreement dated as of the date hereof, by and among
[New Borrower][New Guarantor] and Lender (“Joinder No.
to Guaranty Agreement”);]
(d)
appropriate financing statement to be filed in the office of the
Secretary of State
against [New Borrower] [New Guarantor] to perfect Lender’s Liens in and to the Collateral of [New
Borrower] [New Guarantor];
(e)
a certificate from the Secretary of [New Borrower] [New Guarantor], dated as of the date
hereof, (i) attesting to the resolutions of [New Borrower’s] [New Guarantor’s] [Board of
Directors][Managers] authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which [New Borrower] [New Guarantor] is or will become a party, (ii)
authorizing officers of [New Borrower] [New Guarantor] to execute the same, and (iii) attesting to the
incumbency and signatures of such specific officers of [New Borrower] [New Guarantor];
(f)
a certificate of status with respect to [New Borrower] [New Guarantor], dated as of a
recent date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of
[New Borrower] [New Guarantor], which certificate shall indicate that [New Borrower] [New Guarantor]
is in good standing in such jurisdiction;
(g)
certificates of status with respect to [New Borrower] [New Guarantor], dated as of a
recent date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of [New Borrower] [New Guarantor]) in which the failure to be duly qualified
or licensed would constitute a Material Adverse Effect, which certificates shall indicate that [New
Borrower] [New Guarantor] is in good standing in such jurisdictions;
(h)
copies of [New Borrower’s] [New Guarantor’s] Governing Documents, as amended,
modified or supplemented to the date hereof, certified by the Secretary of [New Borrower] [New
Guarantor]; and
(i)
evidence that [New Borrower] [New Guarantor] has been added to the Loan Parties’
existing insurance policies required by Section 5.6 of the Credit Agreement;
(j)
a customary opinion of counsel regarding such matters as to [New Borrower] [New
Guarantor] as Lender or its counsel may reasonably request, and which is otherwise in form and
substance reasonably satisfactory to Lender (it being understood that such opinion shall be limited to this
Agreement, and the documents executed or delivered in connection herewith (including the financing
statement filed against [New Borrower] [New Guarantor]); and
(k)
such other agreements, instruments, approvals or other documents requested by Lender
prior to the date hereof in order to create, perfect and establish the first priority of, or otherwise protect,
any Lien purported to be covered by any Loan Document or otherwise to effect the intent that [New
Borrower] [New Guarantor] shall become bound by all of the terms, covenants and agreements contained
in the Loan Documents and that, to the extent set forth in the Credit Agreement and the Security
Agreement, all property and assets of [New Borrower] [New Guarantor] shall become Collateral for the
Obligations.
6.
Further Assurances. At any time upon the reasonable request of Lender, [New Borrower]
[New Guarantor] shall promptly execute and deliver to Lender such additional documents as Lender shall
reasonably request pursuant to the Credit Agreement and the other Loan Documents, in each case in form
and substance reasonably satisfactory to Lender.
7.
Notices. Notices to [New Borrower] [New Guarantor] shall be given in the manner set forth
for Borrowers in Section 9.3 of the Credit Agreement.
8.
Choice of Law and Venue; Jury Trial
Wa
iver; Judicial Reference. THIS AGREEMENT SHALL
BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JU
RY
TRIA
L
WA
IVER, AND JUDICIA
L
REFERENCE SET FORTH IN SECTION 10 OF THE CREDIT
AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE,
MUTATIS MUTANDIS
.
9.
Binding Effect. This Agreement shall be binding upon [New Borrower] [New Guarantor],
and the other Loan Parties and shall inure to the benefit of Lender, together with their respective
successors and permitted assigns.
10.
Effect on Loan Documents.
(a)
Except as contemplated to be supplemented hereby, the Credit Agreement, the
Intercompany Subordination Agreement and each other Loan Document shall continue to be, and shall
remain, in full force and effect. Except as expressly contemplated hereby, this Agreement shall not be
deemed (i) to be a waiver of, or consent to, or a modification or amendment of any other term or condition
of the Credit Agreement, the Intercompany Subordination Agreement or any of the instruments or
agreements referred to therein, as the same may be amended or modified from time to time.
(b)
Each reference in the Credit Agreement and the other Loan Documents to
[“Borrower”][“Guarantor”], “Obligor” or words of like import referring to a [Borrower][Guarantor] or an
Obligor shall include and refer to [New Borrower] [New Guarantor] and (b) each reference in the Credit
Agreement, Intercompany Subordination Agreement or any other Loan Document to this “Agreement”,
“hereunder”, “herein”, “hereof”, “thereunder”, “therein”, “thereof”, or words of like import referring to
the Credit Agreement, Intercompany Subordination Agreement or any other Loan Document shall mean
and refer to such agreement as supplemented by this Agreement.
11.
Miscellaneous.
(a)
This Agreement is a Loan Document. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but
one and the same agreement. Execution of any such counterpart may be by means of (i) an electronic
signature that complies with the federal Electronic Signatures in Global and National Commerce Act, as in
effect from time to time, state enactments of the Uniform Electronic Transactions Act, as in effect from
time to time, or any other relevant and applicable electronic signatures law; (ii) an original manual
signature; or (iii) a faxed, scanned, or photocopied manual signature. Each electronic signature or faxed,
scanned, or photocopied manual signature shall for all purposes have the same validity, legal effect, and
admissibility in evidence as an original manual signature. Any party delivering an executed counterpart of
this Agreement by telefacsimile or other electronic image scan transmission also shall deliver an original
executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement.
(b)
Any provision of this Agreement which is prohibited or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof
in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.
Each provision of this Agreement shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.
(c)
Headings and numbers have been set forth herein for convenience only. Unless the
contrary is compelled by the context, everything contained in each Section applies equally to this entire
Agreement.
(d)
Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against
Lender or [New Borrower] [New Guarantor], whether under any rule of construction or otherwise. This
Agreement has been reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties
hereto.
(e)
The pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform thereto.
(f)
This Agreement shall be subject to the rules of construction set forth in Section 1.4 of the
Credit Agreement, and such rules of construction are incorporated herein by this reference,
mutatis
mutandis
.
[remainder of this page intentionally left blank].
IN WITNESS WHEREOF, [New Borrower] [New Guarantor] and Lender have caused this
Agreement to be duly executed by its authorized officer as of the day and year first above written.
[NEW BORROWER] [NEW
,
GUARANTOR]:
a
By:
Name:
Title:
LENDER: WELLS FARGO BANK, NATIONAL ASSOCIATION
,
a national banking association
By:
Name:
Title:
Exhibit A
Schedule 4.16
Capitalization and Subsidiaries
EXHIBIT D
TO
CREDIT AGREEMENT
Form of SOFR Loan Notice
Wells Fargo Bank, National Association
129 High Street, 11
th
Floor
Boston, MA 02110
Attn: Portfolio Manager-The Cato Corporation
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement, dated as of March 13, 2025 (as amended,
restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among
The Cato Corporation, a Delaware corporation (“Parent” or the “Administrative Borrower”), CatoSouth
LLC, a North Carolina limited liability company (“CatoSouth”), Cato of Texas L.P., a Texas limited
liability company (“Cato of Texas”), CatoWest, LLC, a Nevada limited liability company (“CatoWest”),
Cato WO LLC, a North Carolina limited liability company (“Cato WO”), Cato of Georgia, LLC, a Georgia
limited liability company (“Cato of Georgia”), Cato of Florida, LLC, a Florida limited liability company
(“Cato of Florida”), Cato of Illinois, LLC, an Illinois limited liability company (“Cato of Illinois”), Cato of
North Carolina, LLC, a North Carolina limited liability company (“Cato of North Carolina”), Ohio Cato
Stores, LLC, a Ohio limited liability company (“Ohio Cato”), Cato of South Carolina, LLC, a South
Carolina limited liability company (“Cato of South Carolina”), Cato of Tennessee, LLC, a Tennessee
limited liability company (“Cato of Tennessee”), and Cato of Virginia, LLC, a Virginia limited liability
company (“Cato of Virginia,” and together with Administrative Borrower, CatoSouth, Cato of Texas,
CatoWest, Cato WO, Cato of Georgia, Cato of Florida, Cato of Illinois, Cato of North Carolina, Ohio Cato,
Cato of South Carolina, and Cato of Tennessee, and together with any entity that may become party to the
Credit Agreement as a Borrower, individually, each a “Borrower” and collectively, “Borrowers”), Cato
Southwest, Inc., a Delaware corporation (“Cato Southwest”), CHW, LLC, a Delaware limited liability
company (“CHW”), Cadel LLC, a Delaware limited liability company (“CaDel”), catocorp.com, LLC, a
Delaware limited liability company (“catocorp” and together with Cato Southwest, CH
W,
and CaDel and
any entity that may become party to the Credit Agreement as a Guarantor, individually, each a “Guarantor”
and collectively, “Guarantors”) and Wells Fargo Bank, National Association, a national banking
association (“Lender”).
Capitalized terms used herein, but not specifically defined herein, shall have the meanings assigned
to them in the Credit Agreement.
This SOFR Loan Notice represents Borrowers’ request for a SOFR Loan in the amount of
$ (the “SOFR Advance”).
The SOFR Advance will have an Interest Period of [1, 3, or 6
]
month(s).
Such Interest Period is requested to commence on .
This SOFR Loan Notice further confirms Borrowers’ acceptance, for purposes of determining the
rate of interest based on SOFR as determined pursuant to the Credit Agreement.
Administrative Borrower represents and warrants that (i) as of the date hereof, the representations
and warranties of Parent, the Borrowers or their Subsidiaries contained in the Credit Agreement and in the
other Loan Documents are true and correct in all material respects (except that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof) on and as of the date hereof, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified or modified
by materiality in the text thereof) as of such earlier date)), and (ii) no Event of Default has occurred and is
continuing on the date hereof, nor will any thereof occur after giving effect to the request above.
This SOFR Loan Notice may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same agreement. Execution of any such
counterpart may be by means of (i) an electronic signature that complies with the federal Electronic
Signatures in Global and National Commerce Act, as in effect from time to time, state enactments of the
Uniform Electronic Transactions Act, as in effect from time to time, or any other relevant and applicable
electronic signatures law; (ii) an original manual signature; or (iii) a faxed, scanned, or photocopied manual
signature. Each electronic signature or faxed, scanned, or photocopied manual signature shall for all
purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature.
If requested by Lender, any party delivering an executed counterpart of this SOFR Loan Notice by
telefacsimile or other electronic image scan transmission also shall deliver an original executed counterpart
of this SOFR Loan Notice but the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this SOFR Loan Notice.
[signature page follows]
Dated:
THE CATO CORPORATION,
as Administrative Borrower
By Name:
Title:
Acknowledged by:
WELLS FARGO BANK, NATIONAL
ASSOCIATION
,
a national banking
association
By: Name:
Title:
EXHIBIT E
TO
CREDIT AGREEMENT
Form of Credit Card Notification
[Prepare on Borrower’s letterhead – One for each Processor]
To: [Name and Address of Credit Card Processor or Credit Card Issuer] (The “Credit Card
Company”)
Re:
Merc
hant
Acco
unt
Num
ber:
(the “Company”)
Dear Sir/Madam:
Pursuant to the Credit Agreement, dated as of March 13, 2025 (as amended, restated, amended and
restated, supplemented, or otherwise modified and in effect from time to time, the “Credit Agreement”), by
and among The Cato Corporation, a Delaware corporation, the other Borrowers from time to time party
thereto, the Guarantors from time to time party thereto, and Wells Fargo Bank, National Association
(“Lender”), and the other Loan Documents (as defined in the Credit Agreement), the Company has granted
to Lender a security interest in and to, among other things, all payments with respect to credit card charges
(the “Charges”) submitted by the Company to the Credit Card Company for processing and the amounts
which the Credit Card Company owes to the Company on account thereof
(the “Credit Card Proceeds”).
1. Until the Credit Card Company receives written notification from an officer of Lender
that the interest of the Lender in the Charges and Credit Card Proceeds has been terminated, all amounts
as may become due from time to time from the Credit Card Company to the Company shall continue to
be transferred only as follows:
(a) By ACH, Depository Transfer Check, or Electronic Depository Transfer to:
[Name of Bank]
ABA #:
Account No.:
Re:
or
(b) As the Credit Card Company may be instructed from time to time in writing by an officer
of Lender.
2. Upon request of Lender, a copy of each periodic statement provided by the Credit Card
Company to the Company should be provided to Lender at the following address (which address may be
changed upon seven (7) days’ written notice given to the Credit Card Company by Lender):
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Wells Fargo Bank, National Association, as Agent
125 High Street, 11
th
Floor
Boston, Massachusetts 02110
Attention: Portfolio Manager – The Cato Corporation
Fax: 866-664-9353
Email:
3. The Credit Card Company shall be fully protected in acting on any order or direction by
Lender respecting the Charges and the Credit Card Proceeds without making any inquiry whatsoever as to
Lender’s right or authority to give such order or direction or as to the application of any payment made
pursuant thereto. Nothing contained herein is intended to, nor shall it be deemed to, modify the rights and
obligations of the Company and Lender under the terms of the Credit Agreement and the Loan Documents
executed in connection therewith between, among others, the Company and Lender.
This Credit Card Notification may be amended only by the written agreement of the Credit Card
Company, the Company, and an offic er of Lender and may be terminated solely by written notice signed
by an officer of Lender.
Very truly yours,
By:
Name:
Title:
cc: Wells Fargo Bank, National Association
EXHIBIT
F
TO
CREDIT AGREEMENT
Cash Management Structure
[See Attached]
Account overview – Springing
Pay-Down
Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its
subsidiaries.
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