0000878726 false --06-30 TUESDAY MORNING CORP/DE 0000878726 2020-12-31 2020-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

 

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): December 31, 2020

 

 

 

TUESDAY MORNING CORPORATION

(Exact name of registrant as specified in charter)

 

 

 

Delaware 0-19658 75-2398532
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
     

6250 LBJ Freeway

Dallas, Texas

  75240
(Address of principal executive offices)   (Zip Code)
 
(972) 387-3562
(Registrant’s telephone number, including area code)
 
Not applicable
 (Former name or former address, if changed since last report)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company       ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 

 

 

  

 

 

 

As previously disclosed, on May 27, 2020 (the “Petition Date”), Tuesday Morning Corporation and certain of its direct and indirect subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”). The Chapter 11 Cases are being administered jointly under the caption “In re: Tuesday Morning Corporation, et. al., Case No. 20-31476-HDH-11.”

 

On December 23, 2020, as previously disclosed, the Bankruptcy Court entered an order confirming the Company’s Revised Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Plan of Reorganization”). On December 31, 2020 (the “Effective Date”), all of the conditions precedent to the Plan of Reorganization were satisfied.

 

Pursuant to the Plan of Reorganization, each outstanding share of the Company’s common stock as of the “rights offering/exchange determination date” will be exchanged (the “Exchange”) for (1) one new share of the Company’s stock and (2) a share purchase right entitling the holder to purchase its pro rata portion of shares available to eligible holders in the Rights Offering (as defined below). As previously disclosed, the Company anticipates the “rights offering/exchange determination date” will be the close of business on January 4, 2021. In accordance with the Plan of Reorganization, the Company will conduct a $40 million rights offering (the “Rights Offering”), under which eligible holders of the Company’s common stock may purchase up to $24 million of shares of the Company’s common stock at a purchase price of $1.10 per share, and Osmium Partners, LLC or its affiliates (the “Backstop Party”), may purchase up to $16 million of shares of the Company’s common stock at a purchase price of $1.10 per share. Pursuant to a backstop commitment agreement, the Backstop Party has agreed to purchase all unsubscribed shares in the Rights Offering. The Rights Offering will remain open until 4:00 central time, on February 1, 2021.

 

Following the Exchange, the CUSIP Number for the Company’s common stock will be 89904V 101. The Company’s common stock is registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Company will remain subject to the periodic reporting requirements under the Exchange Act.

 

Item 1.01Entry into a Material Definitive Agreement.

 

ABL Facility

 

On December 31, 2020, the Company and its subsidiaries entered into a Credit Agreement (the “ABL Credit Agreement”) with JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and Bank of America, N.A. (collectively, the “Lenders”), which provides for a revolving credit facility in an aggregate amount of $110 million (the “ABL Facility”). The ABL Credit Agreement includes conditions to borrowings, representations and warranties, affirmative and negative covenants, and events of default customary for financings of this type and size. The ABL Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio if borrowing availability falls below certain minimum levels.

 

Under the terms of the ABL Credit Agreement, amounts available for advances would be subject to a borrowing base as described in the ABL Credit Agreement. Under the ABL Credit Agreement, borrowings under the ABL Facility initially will bear interest at a rate equal to the adjusted LIBOR rate plus a spread of 2.75% or the CB rate plus a spread of 1.75%.

 

2

 

 

The ABL Facility is secured by a first priority lien on all present and after-acquired tangible and intangible assets of the Company and its subsidiaries other than certain collateral that secures the Notes (as defined below). The commitments of the Lenders under the ABL Facility will terminate and outstanding borrowings under the ABL Facility will mature on the third anniversary of the closing of the ABL Facility.

 

The foregoing summary of the ABL Credit Agreement is qualified in its entirety by reference to the full text of the ABL Credit Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein.

 

TCM Credit Agreement

 

On December 31, 2020, the Company and Tensile Capital Partners Master Fund LP (“TCM”) entered into a Credit Agreement (the “TCM Credit Agreement”). Pursuant to the TCM Credit Agreement, TCM provided a term loan of $25 million to the Company (the “Loan”).

 

Pursuant to the terms of the TCM Credit Agreement, the Loan has a maturity of 48 months from the date of issuance and bears interest at a rate of 14% per annum, with interest payable in-kind. Under the terms of the TCM Credit Agreement, the Loan is secured by a second lien on the collateral securing the ABL Facility and a first lien on certain other assets of the Company as described in the TCM Credit Agreement. The Loan is subject to optional prepayment after the first anniversary of the date of issuance at prepayment price equal to the greater of (1) the original principal amount of the Loan plus accrued interest thereon, and (2) 125% of the original principal amount of the Loan. The Loan is subject to mandatory prepayment in connection with a change of control of the Company as described in the TCM Credit Agreement. The TCM Credit Agreement also includes customary covenants and events of default.

 

The foregoing summary of the TCM Credit Agreement is qualified in its entirety by reference to the full text of the TCM Credit Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated by reference herein.

 

Sale Leaseback

 

On December 31, 2020, in accordance with that certain purchase and sale agreement, dated as of December 7, 2020 (the “Purchase and Sale Agreement”), among the Company and certain subsidiaries and PBV – 14303 Inwood, LP (the “Purchaser”), the Company completed the sale of its Dallas headquarters and warehouse facilities (the “Properties”) to the Purchaser for an aggregate purchase price of $70.25 million.

 

In connection with the closing of the sale of the Properties, on December 31, 2020, the Company and certain subsidiaries and the Purchaser entered into lease agreements under which the Company will lease the Properties following the close of the sale under the Purchase and Sale Agreement. The lease agreement of the headquarters facility (the “Headquarters Facility Lease Agreement”) will be for a term of 10 years and the lease of the warehouse facilities (the “Warehouse Facility Lease Agreement”) will be for an initial term of 2.5 years with an option to extend the warehouse facilities lease for one additional year.

 

The foregoing summary is qualified in its entirety by reference to the full text of the Purchase and Sale Agreement, Headquarters Facility Lease Agreement and Warehouse Facility Lease Agreement, copies of which are attached hereto as Exhibits 2.1, 10.3 and 10.4, respectively, and incorporated by reference herein.

 

3

 

 

Indemnification Agreement

 

In connection with the Effective Date, the Company adopted an updated form of director indemnification agreement (the “Indemnification Agreement”). The Indemnification Agreement provides generally that the Company will indemnify its directors to the fullest extent permitted under applicable law. A copy of the Indemnification Agreement is attached hereto as Exhibit 10.5.

 

Item 2.01Completion of Acquisition or Disposition of Assets.

 

The information set forth under the heading “Sale Leaseback” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.03Material Modification to Rights of Security Holders.

 

The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.03Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.

 

In accordance with the terms of the Plan of Reorganization, effective as of December 31, 2020, the Company’s amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”) and the Company’s amended and restated bylaws (the “Amended and Restated Bylaws”) became effective.

 

Through the Amended and Restated Bylaws, the Company’s prior bylaws were amended to provide that the number of directors that will initially constitute the board of directors at the Effective Date is nine.

 

Through the Amended and Restated Certificate of Incorporation, the Company’s prior certificate of incorporation was amended by (1) increasing the number of authorized shares of common stock from 100 million shares to 200 million shares, (2) adding a provision restricting the issuance of non-voting equity securities as required by Section 1123 of the Bankruptcy Code, and (3) adding a provision designed to assist the Company in preserving certain tax attributes (the “Tax Benefits”), as discussed below.

 

In order to continue to assist the Company in preserving the Tax Benefits, the Amended and Restated Certificate of Incorporation imposes certain restrictions on the transferability and ownership of the Company’s capital stock (the “Ownership Restrictions”). Subject to certain exceptions, the Ownership Restrictions restrict (i) any transfer that would result in any person acquiring 4.5% or more of the Company’s common stock, (ii) any transfer that would result in an increase of the ownership percentage of any person already owning 4.5% or more of the Company’s common stock, or (iii) any transfer during the five-year period following the Effective Date that would result in a decrease of the ownership percentage of any person already owning 4.5% or more of the Company’s common stock. Pursuant to the Amended and Restated Certificate of Incorporation, any transferee receiving shares of common stock that would result in a violation of the Ownership Restrictions will not be recognized as a stockholder of the Company or entitled to any rights of stockholders. The Amended and Restated Certificate of Incorporation allows the Ownership Restrictions to be waived by the Company’s board of directors on a case by case basis. The board of directors has taken action to waive the restrictions with respect to sales of shares acquired in the Rights Offering by the Backstop Party.

 

4

 

 

The Ownership Restrictions will remain in effect until the earliest of (i) the repeal of Section 382 of the Internal Revenue Code or any successor statute if the board of directors determines the Ownership Restrictions are no longer necessary for preservation of the Tax Benefits, (ii) the beginning of a taxable year in which the board of directors determines no Tax Benefits may be carried forward, or (iii) such other date as shall be established by the board of directors.

 

The foregoing summary is qualified in its entirety by reference to the full text of the Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws, copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively, and incorporated by reference herein.

 

Item 9.01Financial Statements and Exhibits.

 

  (d)Exhibits.

 

  2.1 Purchase and Sale Agreement
     
  3.1 Amended and Restated Certificate of Incorporation
     
  3.2 Amended and Restated Bylaws
     
  10.1 ABL Credit Agreement
     
  10.2 TCM Credit Agreement
     
  10.3 Headquarters Facility Lease Agreement
     
  10.4 Warehouse Facility Lease Agreement
     
  10.5 Form of Indemnification Agreement
     
  104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

5

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  TUESDAY MORNING CORPORATION
   
   
Date: January 4, 2021 By: /s/ Bridgett C. Zeterberg
    Bridgett C. Zeterberg
    Executive Vice President Human Resources,
    General Counsel and Corporate Secretary

 

6

 

Exhibit 2.1

 

 

 

PURCHASE AND SALE AGREEMENT

 

BETWEEN

 

TUESDAY MORNING PARTNERS, LTD., Tuesday Morning, inc. and

FRIDAY MORNING, LLC

AS SELLER

 

AND

 

PBV-14303 INWOOD ROAD, LP

AS PURCHASER

 

DATED: December 3, 2020

 

Purchase and Sale Agreement
6250 Lyndon B. Johnson Freeway, Dallas, Texas
4404 South Beltwood Parkway, Farmers Branch, Texas
14621, 14639 and 14601 Inwood Road, Addison, Texas
14303 Inwood Road, Farmers Branch, Texas
112267487v1

 

 

 

 

 

 

TABLE OF CONTENTS

 

      Page No.
    Article 1  
    Basic Information  
1.1    Certain Basic Terms  1
1.2    Closing Costs  2
1.3    Notice Addresses:  3
       
    Article 2  
    Property  
2.1    Property  3
       
    Article 3  
    Earnest Money  
3.1    Deposit and Investment of Earnest Money  4
3.2    Independent Consideration  5
3.3    Form; Failure to Deposit  5
3.4    Disposition of Earnest Money  5
       
    Article 4  
    Due Diligence  
4.1    Due Diligence Materials Delivered  5
4.2    Physical Due Diligence  6
4.3    Reports  7
4.4    Service Contracts  8
4.5    Proprietary Information; Confidentiality  8
4.6    No Representation or Warranty by Seller  8
4.7    Purchaser’s Responsibilities  8
4.8    Purchaser’s Agreement to Indemnify  9
       
    Article 5  
    Title and Survey  
5.1    Title Commitment  9
5.2    Intentionally Omitted  10
5.3    Delivery of Title Policy at Closing  10
       
    Article 6  
    Operations and Risk of Loss  
6.1    Ongoing Covenants and Operations  10
6.2    Damage  11
6.3    Condemnation  12
6.4    Leaseback  12
       
    Article 7  
    Closing  
7.1    Closing  13
7.2    Conditions to Parties’ Obligation to Close  13
7.3    Seller’s Deliveries in Escrow  15
7.4    Purchaser’s Deliveries in Escrow  15

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

i 

 

 

7.5    Closing Statements  16
7.6    Purchase Price  16
7.7    Possession  16
7.8    Delivery of Books and Records  16
       
    Article 8  
    Prorations, Deposits, Commissions  
8.1    Prorations  16
8.2    Closing Costs  17
8.3    Final Adjustment After Closing  17
8.4    Commissions  17
       
    Article 9  
    Representations and Warranties  
9.1    Seller’s Representations and Warranties  17
9.2    Purchaser’s Representations and Warranties  19
9.3    Survival of Representations and Warranties  20
       
    Article 10  
    Default and Remedies  
10.1    Seller’s Remedies  20
10.2    Purchaser’s Remedies  21
10.3    Attorneys’ Fees  21
10.4    Other Expenses  21
       
    Article 11  
    Disclaimers, Release and Indemnity  
11.1    Disclaimers By Seller  22
11.2    Sale “As Is, Where Is.”  23
11.3    Seller Released from Liability  24
11.4    “Hazardous Materials” Defined  25
11.5    Survival  25
       
    Article 12  
    Miscellaneous  
12.1    Parties Bound; Assignment  25
12.2    Headings  25
12.3    Invalidity and Waiver  25
12.4    Governing Law; Jurisdiction; Venue  25
12.5    Survival  26
12.6    Entirety and Amendments  26
12.7    Time  26
12.8    Confidentiality  26
12.9    Notices  26
12.10    Construction  27
12.11    Calculation of Time Periods; Business Day  27
12.12    Execution in Counterparts  27
12.13    No Recordation  27
12.14    Further Assurances  27
12.15    Discharge of Obligations  27

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

ii 

 

 

12.16    ERISA  27
12.17    No Third Party Beneficiary  28
12.18    Reporting Person  28
12.19    Texas Real Estate License Act  28
12.20    DTPA Waiver  28

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

iii 

 

 

LIST OF DEFINED TERMS

 

  Page No.
Agreement 1
Assignment 13
Broker 2
Business Day 24
Casualty Notice 10
CERCLA 21
Closing 11
Closing Date 2
Deed 13
Earnest Money 1
Effective Date 2
Escrow Agent 2
Hazardous Materials 22
Improvements 3
Independent Consideration 5
Intangible Personal Property 4
Land 3
Material Damage 10
Materially Damaged 10
OFAC 16
Permitted Outside Parties 7
Property  
Property Documents 5
Purchase Price 1
Purchaser 1
Real Property 3
Report 6
Reports 6
Seller 1
Seller's Representative 17
Service Contracts 6
Survival Period 17
Tangible Personal Property 4
Taxes 14
Title Company 1
Title Policy 9

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

iv 

 

 

PURCHASE AND SALE AGREEMENT

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

6250 LBJ Freeway, Dallas, Texas

 

This Purchase and Sale Agreement (this “Agreement”) is made and entered into by and between Purchaser and Seller.

 

RECITALS

 

A.            Defined terms are indicated by initial capital letters. Defined terms shall have the meaning set forth herein, whether or not such terms are used before or after the definitions are set forth.

 

B.            Purchaser desires to purchase the Property and Seller desires to sell the Property, all upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual terms, provisions, covenants and agreements set forth herein, as well as the sums to be paid by Purchaser to Seller, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Purchaser and Seller agree as follows:

 

Article 1
Basic Information

 

1.1 Certain Basic Terms. The following defined terms shall have the meanings set forth below:

 

1.1.1 Seller: TUESDAY MORNING PARTNERS, LTD., a Texas limited partnership, TUESDAY MORNING, INC., a Texas corporation, and FRIDAY MORNING, LLC, a Texas limited liability company
1.1.2 Purchaser: PBV-14303 INWOOD ROAD, LP, a Texas limited liability company
1.1.3 Purchase Price: $70,250,000.00
1.1.4 Earnest Money: $6,600,000.00 (the “Earnest Money”), including interest thereon, to be deposited in accordance with Section 3.1 below.
1.1.5 Title Company:

Chicago Title Insurance Company

2828 Routh Street, Suite 800

Dallas, Texas 75201

Attn: Holden Heil

E-Mail: Holden.Heil@ctt.com

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

1

 

 

1.1.6 Escrow Agent:

Chicago Title Insurance Company

2828 Routh Street, Suite 800

Dallas, Texas 75201

Attn: Holden Heil

E-Mail: Holden.Heil@ctt.com

1.1.7 Broker:

CBRE, Inc.

2100 McKinney Avenue, Suite 700

Dallas, Texas 75201

Attn: Tim Vogds

1.1.8 Effective Date: The date on which this Agreement is executed by the latter to sign of Purchaser or Seller, as indicated on the signature page of this Agreement.  If the execution date is left blank by either Purchaser or Seller, the Effective Date shall be the execution date inserted by the other party.
1.1.9 Closing Date: On or before three (3) Business Days following the effective date of a Reorganization Plan (as defined herein) confirmed by a Plan Confirmation Order (as defined herein). Notwithstanding the foregoing, the Closing Date shall not occur later than December 31, 2020.

 

1.2 Closing Costs. Closing costs shall be allocated and paid as follows: 

 

Cost Responsible Party
Title Commitment required to be delivered pursuant to Section 5.1 Seller
Premium for standard form Title Policy required to be delivered pursuant to Section 5.3 Seller
Premium for any upgrade of Title Policy for any amendments or endorsements to the Title Policy desired by Purchaser, and the costs and expenses associated with any loan policy Purchaser
Costs for updates, recertifications or amendments to the Survey Purchaser
Costs for UCC Searches (if requested by Purchaser) Purchaser
Costs of recording lien releases with respect to Seller’s existing financing, if any Seller
Cost of recording the deed and any other documents required to be recorded by Purchaser Seller
Any escrow fee charged by Escrow Agent for holding the Earnest Money or conducting the Closing

Purchaser ½

Seller ½

Real Estate Sales Commission to Broker Seller
All other closing costs, expenses, charges and fees As customary in Dallas County, Texas

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

2

 

 

1.3 Notice Addresses:

 

Seller:

6250 LBJ Freeway

Dallas, Texas 75240

Attention: Jim Spisak

Telephone: 972-934-7149

E-Mail: jspisak@tuesdaymorning.com &

legal@tuesdaymorning.com

 

Copy to:

Haynes and Boone LLP

2323 Victory Avenue, Suite 700

Dallas, Texas 75219

Attention: Brack Bryant

Telephone: 214-651-5335

E-mail: brack.bryant@haynesboone.com

Purchaser:

PBV-14303 Inwood Road, LP

3800 N. Lamar Blvd, Suite 350
Austin, Texas 78756
Attention: Brett Zimmerman

Copy to:

Jackson Walker L.L.P.

100 Congress Ave., Suite 1100

Austin, Texas 78701

Attention: Kati Orso

Telephone: (512) 236-2236

E-mail: korso@jw.com


Article 2
Property

 

2.1 Property. Subject to the terms and conditions of this Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller, the following property (collectively, the “Property“):

 

2.1.1 Real Property. The parcels of land described in Exhibit A hereto (individually or collectively, as the context may require, the “Land“), together with (a) all improvements located thereon (“Improvements“), (b) all right, title and interest of Seller, if any, in and to the rights, benefits, privileges, easements, tenements, hereditaments, and appurtenances thereon or in anywise appertaining thereto, and (c) all right, title, and interest of Seller, if any, in and to all strips and gores and any land lying in the bed of any street, road or alley, open or proposed, adjoining the Land, as well as all other rights, privileges and appurtenances owned by Seller and in any way related to such land and other rights and interests of Seller hereunder conveyed (collectively, the “Real Property”). Seller and Purchaser acknowledge and agree that the Real Property consists of six (6) separate tracts, as identified on Exhibit A hereto (each, a “Tract”), and generally described as follows: (i) 4400-4404 South Beltwood Parkway, Farmers Branch, Texas (the “4404 Property”); (ii) 14303 Inwood Road, Farmers Branch, Texas (the “14303 Property”); (iii) 14621 Inwood Road, Addison, Texas (the “14261 Property”); (iv) 14639-14645 Inwood Road, Addison, Texas (the “14639 Property”); (v) 14601-14603 Inwood Road, Addison, Texas (the “14601 Property”); and (vi) 6250 Lyndon B. Johnson Freeway, Dallas, Texas (the “6250 LBJ Property”). The 4404 Property and 14621 Property are owned by Tuesday Morning Partners, Ltd., a Texas limited partnership (the “Tuesday Morning Partners Seller”), and the 14639 Property and 14601 Property are owned by Friday Morning, LLC, a Texas limited liability company (the “Friday Morning Seller”). The 14303 Property and 6250 LBJ Property are owned by Tuesday Morning, Inc., a Texas corporation (the “Tuesday Morning Inc. Seller”). Wherever in this Agreement a representation, warranty, covenant or agreement is made by Seller, such representation, warranty, covenant or agreement shall be deemed to be made by the Tuesday Morning Partners Seller, the Friday Morning Seller or the Tuesday Morning Inc. Seller with respect to the Real Property actually owned by such party, and in no event shall either the Tuesday Morning Seller, Friday Morning Seller or Tuesday Morning Inc. Seller be deemed to make representation or warranties, or undertake any agreement or obligation whatsoever, with respect to any portion of the Real Property not owned by such party.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

3

 

 

2.1.2 Tangible Personal Property. Seller and Purchaser acknowledge and agree that at Closing, the equipment, machinery, furniture, furnishings, supplies and other tangible personal property, if any, owned by Seller and now or hereafter located on the Land that (a) are not used in connection with the operation, ownership and maintenance of the Land and Improvements (as opposed to the operation or management of the particular business of Seller on the Land), and (b) are used primarily in connection with the operation or management of the particular business of Seller on the Land (collectively, the “Excluded Tangible Personal Property”) shall not transfer to Purchaser, as all of such Excluded Tangible Personal Property shall be retained by Seller for its continued operations pursuant to the Leases (as hereinafter defined); provided however, that all improvements, structures, building systems (such as heating, air conditioning, and mechanical systems), parking facilities and fixtures now or hereafter placed, constructed, installed or located at or on the Real Property (including any and all apparatuses, equipment and appliances affixed to the Real Property that cannot be removed without material harm to the Real Property) and used in connection with the ownership, operation, management or occupancy of the Real Property (as opposed to the operation or management of Seller’s particular business on the Land), shall be deemed a component of the Improvements (the “Tangible Personal Property”).

 

2.1.3 Intangible Personal Property. All of Seller’s right, title and interest, if any, in the following intangible personal property related to the Real Property and the Improvements: the plans and specifications and other architectural and engineering drawings for the Improvements, if any, to the extent assignable and in Seller’s possession as of the Effective Date and at no cost to Seller; warranties, to the extent assignable and in Seller’s possession as of the Effective Date and at no cost to Seller; governmental permits, approvals and licenses, if any, to the extent assignable and in Seller’s possession as of the Effective Date and at no cost to Seller; (all of the items described in this Section 2.1.3 collectively referred to as the “Intangible Personal Property”). Tangible Personal Property and Intangible Personal Property shall not, in any event whatsoever, be deemed or constructed to include any trade name, mark or other identifying material that includes the name “Tuesday Morning”, its subsidiaries and affiliates, or any derivatives thereof.

 

Article 3
Earnest Money

 

3.1 Deposit and Investment of Earnest Money. On the Effective Date, Purchaser shall deposit the Earnest Money with Escrow Agent. Escrow Agent shall invest the Earnest Money in government insured interest-bearing accounts satisfactory to Seller and Purchaser, shall not commingle the Earnest Money with any funds of Escrow Agent or others, and shall promptly provide Purchaser and Seller with confirmation of the investments made. Such account shall have no penalty for early withdrawal, and Purchaser accepts all risks with regard to such account. The Earnest Money shall become non-refundable to Purchaser upon the expiration of the Due Diligence Period (as defined below), except as expressly provided in this Agreement (including, Sections 5.3, 6.2, 6.3 and 10.2), provided, however, the Earnest Money shall be applied to the Purchase Price in the event Closing occurs. For purposes hereof, the “Due Diligence Period” shall expire at 5:00 pm Central Time on December 3, 2020.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

4

 

 

3.2 Independent Consideration. If this Agreement is terminated for any reason, and Purchaser is entitled to receive a return of the Earnest Money pursuant to the terms hereof, the Escrow Agent shall first disburse to Seller $100.00 as independent consideration for Seller’s performance under this Agreement (“Independent Consideration”), which shall be retained by Seller in all instances other than in the case of a Seller default existing beyond applicable grace, notice and cure period. Notwithstanding the foregoing, in the event this Agreement is terminated due to an uncured Seller default, Purchaser shall be entitled to a return of the entire Earnest Money, including the Independent Consideration.

 

3.3 Form; Failure to Deposit. The Earnest Money shall be in the form of a certified or cashier’s check or the wire transfer to Escrow Agent of immediately available U.S. federal funds. If Purchaser fails to timely deposit any portion of the Earnest Money within the time periods required herein, Seller may terminate this Agreement by written notice to Purchaser delivered on or prior to the deposit of such Earnest Money by Purchaser, in which event any Earnest Money that has previously been deposited by Purchaser with Escrow Agent shall be immediately returned to Purchaser, and thereafter the parties hereto shall have no further rights or obligations hereunder, except for rights and obligations which, by their terms, survive the termination hereof.

 

Article 4
Due Diligence

 

4.1 Due Diligence Materials Delivered. Seller shall make available to Purchaser the following (the “Property Documents”) for each Property (provided that it is acknowledged and agreed by Purchaser (i) that Seller was and is not obligated to deliver (or create/prepare) the Property Documents to the extent that the same are not currently available in digital format and in Seller’s reasonable possession, custody or control as of the Effective Date, and (ii) that Seller was and is not obligated to deliver any documents or information that is subject to attorney-client privilege:

 

4.1.1 Environmental, soils, air quality (mold) and hazardous substance reports, including, without limitation, Phase I Reports, Phase II Reports and any additional substance reports, if any;

 

4.1.2 Property inspection reports, including those covering engineering, structural/seismic, mechanical systems, building plans, and insurance loss run reports;

 

4.1.3 Agreements, warranties, and guaranties with respect to the Real Property;

 

4.1.4 Schedule of currently active building Service Contracts and copies of all currently active Service Contracts and any licensing agreements currently affecting the Property;

 

4.1.5 Leasing listing agreements and property management agreements from the last three (3) calendar years;

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

5

 

 

4.1.6            List of facility-related expenses incurred at the 6250 LBJ Property during the last twelve (12) months;

 

4.1.7            Utility bills (electricity, water, sewer, gas, fuel oil, trash and telephone/security lines) for the shorter of the last three (3) calendar years and the period of Seller’s ownership;

 

4.1.8            Real and personal property tax assessment notices and bills for the Property; including supplementary notices and bills for the shorter of the last three (3) calendar years and the period of Seller’s ownership;

 

4.1.9            Copies of Seller’s most current title policies for the Property with the insured amount redacted; and

 

4.1.10          Schedule of capital improvements pertaining to the Property for the preceding twenty-four (24) months.

 

Seller shall notify Purchaser of any material changes to or errors in the Property Documents to the extent Seller obtains knowledge thereof and Seller shall provide updated materials (if any) in such event.

 

4.2    Physical Due Diligence. Commencing on the Effective Date and continuing until the Closing, Purchaser and its agents and representatives shall have reasonable access to the Property at all reasonable times during normal business hours, for the purpose of conducting reasonably necessary tests, including surveys and architectural, engineering, geotechnical and environmental inspections and tests, provided that (a) Purchaser must give Seller one (1) full Business Day’s prior telephone or written notice of any such inspection or test, and with respect to any intrusive inspection or test (i.e., core sampling) must obtain Seller’s prior written consent (which consent may not be unreasonably withheld), (b) prior to performing any inspection or test, Purchaser must deliver a certificate of insurance to Seller evidencing that Purchaser and its contractors, agents and representatives have in place (and Purchaser and its contractors, agents and representatives shall maintain during the pendency of this Agreement) (1) commercial general liability insurance with limits of at least $2,000,000 for bodily or personal injury or death, (2) property damage insurance in the amount of at least $1,000,000, and (3) workers’ compensation insurance for its activities on the Property in accordance with applicable law, all covering any accident arising in connection with the presence of Purchaser, its contractors, agents and representatives on the Property, which insurance shall (A) name as additional insureds thereunder Seller and such other parties holding insurable interests as Seller may designate, and (B) be primary non-contributory and be written by a reputable insurance company licensed to issue policies in the State of Texas, and (c) all such tests shall be conducted by Purchaser in compliance with Purchaser’s responsibilities set forth in Sections 4.7 and 4.8 below. Notwithstanding the foregoing, Purchaser shall be permitted to conduct a Phase II Environmental Site Assessment and any other additional testing if recommended by Purchaser’s Phase I Environmental Site Assessment. Purchaser shall bear the cost of all such inspections or tests, which obligation shall survive the termination of this Agreement. Subject to the provisions of Section 4.5 hereof, Purchaser or Purchaser’s representatives may communicate with any governmental authority (aa) for the sole purpose of gathering information in connection with the transaction contemplated by this Agreement; provided, however, Purchaser must contact Seller at least two (2) full Business Days in advance by telephone or in writing to inform Seller of Purchaser’s intended communication with any governmental authority and to allow Seller the opportunity to participate in such communication if Seller desires at a mutually agreeable time between Purchaser and Seller, or (bb) to the extent required by applicable laws. As used in this Section, “communicate” and “communication” shall mean the initiation of, response to, or sharing or exchange of information, knowledge or messages, whether by oral, written or electronic methods or media, or by any other means for the purpose of knowingly subverting the provisions of this Section regarding Purchaser’s obligations to provide Seller with prior notice of such communication and Seller’s ability to participate in such communication.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

6

 

 

4.3    Reports. As additional consideration for the transaction contemplated herein, following termination of this Agreement for any reason other than Seller default existing beyond applicable grace, notice and cure periods, Purchaser shall provide to Seller promptly following Seller’s written request, copies of any third party-prepared final environmental site assessments, property condition reports, title reports, surveys, zoning reports and other final studies and reports about the Real Property prepared by or for or otherwise obtained by, Purchaser or Purchaser’s engineers, contractors and environmental consultants in connection with Purchaser’s due diligence (collectively, the “Reports” and, individually, a “Report”). Any such deliveries to Seller shall be made at no cost to Purchaser and without any representation or warranty of any kind, including, without limitation, as to the accuracy or completeness of any such materials, and with no right of Seller to rely thereon without the consent of the applicable third party. Seller acknowledges and agrees that Purchaser has not made any representation or warranty in connection with the delivery of such Reports or other materials and the delivery of such Reports shall not establish a contractual relationship with Seller and no third-party benefits have been or shall be expressly or impliedly established. Notwithstanding anything herein to the contrary, Purchaser shall not be required to provide to Seller any (aa) attorney-client privileged communications, or (bb) proprietary or confidential work product and information (such as drafts, internal valuation studies, internal memoranda, financial projections, budgets and internal appraisals), or (cc) any other information that is not a final report or study obtained by Purchaser from a third party; provided however, that if this Agreement terminates or expires for any reason other than a Seller default beyond applicable notice and cure periods, Purchaser shall, subject to Purchaser’s document retention policies, destroy (and certify to Seller the destruction of) such materials to the extent such materials contain or are based upon confidential information. Purchaser’s obligation to deliver the Property Documents and the Reports to Seller shall survive the termination of this Agreement (not to exceed two (2) years) but shall not survive Closing.

 

4.4    Service Contracts. Purchaser and Seller acknowledge and agree that as a result of the nature of this transaction as a sale and leaseback to Seller pursuant to the terms of the Leases (as defined below), Seller will retain certain contract rights related to the operation, ownership or management of the Real Property, including maintenance, service, construction, supply, electric utility service, and equipment rental contracts (collectively, the “Service Contracts”), in its capacity as the tenant under the Leases, and such Service Contracts will not be terminated by Seller, or assumed by Purchaser, on the Closing Date. Any Service Contracts shall be held solely in the name of Seller (and not binding upon Purchaser or the Real Property), as tenant under the Leases, during the term of the Leases, and shall be terminated by Seller prior to the expiration of the Leases; provided however, that such Service Contracts shall be assigned, amended or terminated by Seller at Closing pursuant to the terms and conditions of Section 7.9.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

7

 

 

4.5    Proprietary Information; Confidentiality. Purchaser acknowledges that the Property Documents are and shall remain proprietary and confidential and will be delivered to Purchaser solely to assist Purchaser in evaluating the Property. The term confidential or proprietary information does not include any information that Purchaser can reasonably establish (i) at the time of disclosure or thereafter is available to the public other than as a result of a disclosure by Purchaser or its representatives, (ii) is already in Purchaser’s possession or becomes available to Purchaser on a non-confidential basis from a source other than Seller or its representatives, provided that, such source is not known to Purchaser after reasonable inquiry to be bound by an obligation of confidentiality to Seller or its affiliates or otherwise prohibited from transmitting the information to Purchaser by a contractual, legal or fiduciary obligation, or (iii) has been independently developed by Purchaser or its representatives without reference to or reliance upon the confidential or proprietary information and without otherwise violating your obligations hereunder. Purchaser shall not disclose the contents to any person other than to those persons who are responsible for evaluating Purchaser’s acquisition or financing of the Property, including Purchaser’s investors, and those who have agreed to preserve the confidentiality of such information as required hereby (collectively, “Permitted Outside Parties”). Notwithstanding the foregoing, Purchaser may disclose such contents as (a) expressly required under applicable laws or (b) expressly required by appropriate written judicial order, subpoena or demand issued by a court of competent jurisdiction (but will first give Seller written notice of the requirement and will cooperate with Seller so that Seller, at its expense, may seek an appropriate protective order and, in the absence of a protective order, Purchaser may disclose only such content as may be necessary to avoid any penalty, sanction, or other material adverse consequence, and Purchaser will use reasonable efforts to secure confidential treatment of any such content so disclosed). Purchaser shall not divulge the contents of the Property Documents and other information except in strict accordance with the standards set forth in this Section 4.5. In permitting Purchaser to review the Property Documents or any other information, Seller has not waived any privilege or claim of confidentiality with respect thereto, and no third-party benefits or relationships of any kind, either express or implied, have been offered, intended or created. Purchaser’s obligations under this Section 4.5 shall survive the termination of this Agreement for a period of one (1) year but shall not survive Closing. Notwithstanding anything in this Agreement to the contrary, any confidentiality obligations or liabilities of Purchaser to Seller, shall automatically terminate (and not survive) upon Closing.

 

4.6    No Representation or Warranty by Seller. Purchaser acknowledges that, except for the representations and warranties by Seller expressly set forth in this Agreement and any document executed by Seller and delivered to Purchaser at Closing (collectively, the “Seller Undertakings”), Seller has not made and does not make any warranty or representation regarding the truth, accuracy or completeness of the Property Documents or the source(s) thereof. Purchaser further acknowledges that some if not all of the Property Documents were prepared by third parties other than Seller. Subject to the Seller Undertakings, Seller expressly disclaims any and all liability for representations or warranties, express or implied, statements of fact and other matters contained in such information, or for omissions from the Property Documents, or in any other written or oral communications transmitted or made available to Purchaser. Subject to the Seller Undertakings, Purchaser shall rely solely upon its own investigation with respect to the Property, including, without limitation, the Property’s physical, environmental or economic condition, compliance or lack of compliance with any ordinance, order, permit or regulation or any other attribute or matter relating thereto. Subject to the Seller Undertakings, Seller has not undertaken any independent investigation as to the truth, accuracy or completeness of the Property Documents and are providing the Property Documents solely as an accommodation to Purchaser.

 

4.7    Purchaser’s Responsibilities. In conducting any inspections, investigations or tests of the Property and/or Property Documents, Purchaser and its agents and representatives shall: (a) not interfere with the operation and maintenance of the Property by Seller; (b) not damage any part of the Property or any personal property owned by Seller; (c) not injure or otherwise cause bodily harm to Seller or its agents, guests, tenants, invitees, contractors and employees; (d) comply with all applicable laws; (e) promptly pay when due the costs of all tests, investigations, and examinations done with regard to the Property by Purchaser and its agents and representatives; (f) not permit any liens to attach to the Real Property by reason of the exercise of its rights hereunder; (g) repair any damage to the Real Property resulting directly from any such inspection or tests; and (h) not reveal or disclose prior to Closing any Property Documents to anyone other than the Permitted Outside Parties, in accordance with the confidentiality standards set forth in Section 4.5 above. Notwithstanding anything in this Agreement to the contrary, Purchaser shall have no obligation to repair any damage to the extent caused by Seller’s negligence or willful misconduct, or to remediate, contain, abate or control any materials not placed on or introduced to the Property by Purchaser or its agents and representatives (except to the extent any action of Purchaser or its Representatives disturbs any such existing materials in a manner which causes damage or contamination), or to repair or restore any latent condition discovered by Purchaser or its consultants, except to the extent any action by Purchaser or its Representatives exacerbates such condition. Purchaser’s obligations under this Section 4.7 shall survive the termination of this Agreement but shall not survive Closing, except and only to the extent such damage caused by Purchaser materially and adversely affects Seller’s post-Closing operations at the Property, in which case Purchaser shall perform such work after Closing.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

8

 

 

4.8    Purchaser’s Agreement to Indemnify. PURCHASER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER FROM ANY AND ALL LOSSES, COSTS, LIENS, CLAIMS, CAUSES OF ACTION, LIABILITY, DAMAGES, EXPENSES AND LIABILITY (INCLUDING, WITHOUT LIMITATION, COURT COSTS AND REASONABLE ATTORNEYS’ FEES) (collectively, “Losses) INCURRED BY SELLER, THAT ARISE FROM OR OUT of THE ACT OR OMISSION OF PURCHASER OR ITS AGENTS OR REPRESENTATIVES IN CONNECTION WITH PURCHASER’S INSPECTIONS OR TESTS PERMITTED UNDER THIS AGREEMENT OR ANY VIOLATION BY PURCHASER, ITS AGENTS, REPRESENTATIVES, OF THE PROVISIONS OF SECTION 4.2 OR SECTION 4.7; PROVIDED, HOWEVER, THE INDEMNITY SHALL NOT EXTEND TO PROTECT SELLER FROM LOSSES RESULTING FROM (A) ANY PRE-EXISTING CONDITION MERELY DISCOVERED BY PURCHASER (I.E., LATENT ENVIRONMENTAL CONTAMINATION), SO LONG AS PURCHASER’S ACTIONS DO NOT AGGRAVATE or exacerbate ANY SUCH PRE-EXISTING CONDITION, OR (B) THE GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF SELLER OR THEIR RESPECTIVE EMPLOYEES, AGENTS, OR REPRESENTATIVES. THIS INDEMNITY PROVISION SHALL SURVIVE TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR A PERIOD OF TWO (2) YEARS.

 

Article 5
Title and Survey

 

5.1    Title Commitment and Survey. Seller will use reasonable diligence to cause to be delivered to Purchaser within ten days after the Effective Date (i) Commitments for Title Insurance with hyperlinked copies of all recorded instruments affecting each Tract and recited as exceptions in the Commitments for Title Insurance (collectively, the “Commitments”) and (ii) a copy of the most recent survey of each Tract in Seller's possession (the “Survey”). If Purchaser or the Title Company requires a new survey of any Tract for any reason, then Purchaser, at Purchaser's cost and within thirty (30) days after the Effective Date, shall obtain a new survey (“New Survey”) of such Tracts made on the ground by a registered professional land surveyor that conforms to the requirements of an ALTA/ACSM minimum standard detail survey. If Purchaser has an objection to items disclosed in any Commitment or Survey, then Purchaser may give Seller written notice of its objections for a period of five (5) days after receipt of the latter of all of the Commitments and Surveys, but in any event prior to the expiration of the Due Diligence Period. If Purchaser gives timely written notice of its objections, then Seller may, but has no obligation to, cure those objections. Seller shall utilize reasonable diligence to cure any errors in the Commitments, provided Seller has no obligation to expend any money, to incur any contractual or other obligations, or to institute any litigation in pursuing its efforts other than to remove at Closing: (a) liens securing a mortgage, deed of trust or trust deed evidencing an indebtedness of Seller; (b) judgment liens against Seller; (c) tax liens; (d) broker’s liens; (e) mechanics liens arising by, through or under Seller; and (f) any other monetary liens arising by, through or under Seller (collectively, “Seller Mandatory Cure Items”). If any objection is not satisfied, then Purchaser may elect on or before expiration of the Due Diligence Period, as its sole and exclusive remedy to either: (i) terminate this Agreement, in which case the Earnest Money shall be returned to Purchaser, and neither party will have any further rights or obligations pursuant to this Agreement, other than as set forth herein with respect to rights or obligations that survive termination; or (ii) waive the unsatisfied objection (which shall thereupon become a Permitted Exception) and proceed to Closing. Any exception to title not objected to by Purchaser in the manner and within the time period specified in this Section 5.1 shall be deemed accepted by Purchaser. The phrase “Permitted Exceptions” means those exceptions to title set forth in the Commitments or Surveys and that have been accepted or deemed accepted by Purchaser, other than Seller Mandatory Cure Items. The failure of Seller to deliver a Commitment or a Survey satisfying the requirements of this Section 5.1 will not under any circumstances extend the period for review of the Commitments or Surveys beyond the Due Diligence Period, and Purchaser's sole and exclusive remedy for Seller's failure, if any, shall be to terminate this Agreement before the expiration of the Due Diligence Period, in which case the Earnest Money shall be returned to Purchaser. Purchaser shall notify Seller in writing of any failure of any Commitment or Survey to satisfy the requirements of this Section 5.1 within five (5) days after the Commitments and Surveys are received by Purchaser, and if Purchaser fails to do so, then they shall be deemed to satisfy these requirements. If Purchaser obtains a New Survey and the New Survey shows exceptions not previously shown on the applicable Survey, or if after the issuance of the Title Commitment, the Title Company updates the Title Commitment to include a new exception (“New Exceptions”), Seller shall be obligated to cure such New Exceptions to the extent any constitute Seller Mandatory Cure Items, otherwise such New Exceptions shall be deemed Permitted Exceptions unless they are a result of a Seller breach under Section 6.1.3 hereof.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

9

 

 

5.2    Intentionally Omitted.

 

5.3    Delivery of Title Policy at Closing. In the event that the Title Company does not unconditionally commit at Closing to issue to Purchaser an owner’s title policy insuring Purchaser’s indefeasible fee simple title to the Real Property in the amount of the Purchase Price, subject only to the Permitted Exceptions (the “Title Policy“), then Purchaser shall have the right, as its sole and exclusive remedy, to terminate this Agreement, in which case the Earnest Money shall be immediately returned to Purchaser and the parties hereto shall have no further rights or obligations, other than those that by their terms survive the termination of this Agreement.

 

Article 6
Operations and Risk of Loss

 

6.1    Ongoing Covenants and Operations. From the Effective Date through Closing:

 

6.1.1            New Contracts. Seller will not amend any existing contract or agreement or enter into any new contract or agreement that will be an obligation of, or binding upon, Purchaser or the Property (as opposed to being binding upon Seller only) subsequent to Closing. Seller may enter into any contracts desired by Seller in the ordinary course of business that will not be binding upon Purchaser or the Property after Closing. On or prior to Closing, Seller shall either terminate or assign all contracts (including any Service Contracts) that would be binding upon Purchaser or the Property pursuant to the terms and conditions of Section 7.9, which terminations or assignments shall be effective no later than Closing. Seller shall pay all termination costs, liquidated damages, fees and/or expenses related thereto, it being understood and agreed that Purchaser shall have no liability or obligations for any Service Contracts.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

10

 

 

6.1.2            Maintenance of Improvements; Tangible Personal Property. Subject to Sections 6.2 and 6.3, Seller shall operate and manage the Property in substantially the same manner consistent with the Seller’s maintenance of the Improvements during Seller’s period of ownership, provided, that, Seller shall not be obligated to make any capital repairs or replacements to the extent Seller does not deem such repairs or replacements necessary in its discretion. Seller makes no representation or warranty regarding the condition or state of repair of any or all of the Improvements, the Tangible Personal Property, or the Excluded Tangible Personal Property located at or on the Property and undertakes no obligation regarding the security of the Excluded Tangible Personal Property from and after the date of this Agreement, and Seller expressly disclaims any obligation to repair or replace any of the Excluded Tangible Personal Property following destruction or loss of any nature. Seller shall promptly (and in any event prior to Closing), deliver any Post-Effective Date Citation (as hereinafter defined) obtained by Seller. The parties acknowledge and agree that the terms and conditions of this paragraph shall not modify the post-Closing obligations of the parties as set forth in the Leases. Seller will not remove any Tangible Personal Property except as may be required for necessary repair or replacement (in Seller’s discretion), and replacement shall be of equal or better quality as the removed item of Tangible Personal Property.

 

6.1.3            No Assignment or Disposition. Seller shall not sell, assign, alienate, lien, encumber or otherwise transfer all or any part of the Property or any interest therein. Without limitation of the foregoing, Seller shall not grant any easement, right of way, restriction, covenant or other comparable right affecting the Land or the Improvements without obtaining Purchaser’s prior written consent (such consent not to be unreasonably withheld, condition or delayed). Except for this Agreement, Seller shall not enter into any agreement, arrangement or understanding for the sale of the Property, whether conditional or otherwise. Seller shall not apply for or consent to any change or modification with respect to the zoning development or use of any portion of the Property without Purchaser’s prior written consent, which consent may be withheld in Purchase’s sole and absolute discretion.

 

6.2    Damage. If, prior to Closing, the Property is damaged by fire or other casualty, Seller shall, in consultation with its insurance adjuster or other representative, reasonably estimate the cost to repair and the time required to complete repairs and will provide Purchaser written notice of such estimation (the “Casualty Notice”) as soon as reasonably possible after the occurrence of the casualty.

 

6.2.1            Material. In the event of any Material Damage (as hereinafter defined) to or destruction of the Property or any portion thereof prior to Closing, either Seller or Purchaser may, at its option, terminate this Agreement by delivering written notice to the other on or before the expiration of ten (10) days after the date Seller delivers the Casualty Notice to Purchaser (and if necessary, the Closing Date shall be extended to give the parties the full ten (10) day period to make such election and to obtain insurance settlement agreements with Seller’s insurers and agree upon repair and restoration of the affected Property). Upon any such termination, the Earnest Money shall be returned to Purchaser and the parties hereto shall have no further rights or obligations hereunder, other than those that by their terms survive the termination of this Agreement. If neither Seller nor Purchaser so terminates this Agreement within said ten (10) day period, then the parties shall be deemed to have waived the right to terminate under this Section 6.2.1 and the parties shall proceed under this Agreement and close on schedule (subject to extension of Closing as provided above), and as of Closing, to the extent permitted by the terms of the applicable policies, Seller shall assign to Purchaser, without representation or warranty by or recourse against Seller, all of Seller’s rights in and to any resulting insurance proceeds (including any rent loss insurance applicable to any period on and after the Closing Date) due Seller as a result of such damage or destruction (or if such have not been awarded, all of Seller’s right, title and interest to any claims and proceeds Seller has with respect to any casualty insurance policies relating to the Property in question, to the extent the same are assignable pursuant to the terms of the applicable policies; provided, however, should Seller’s insurance policy prohibit the assignment of such proceeds, Seller shall provide Buyer with a credit to the Purchase Price at Closing in an amount equal to the proceeds.) and Purchaser shall assume full responsibility for all needed repairs, and Purchaser shall receive a credit at Closing for any deductible or self-insured amount under such insurance policies (“Insurance Proceeds Assignment”). For the purposes of this Agreement, “Material Damage” and “Materially Damaged” means damage that, in the opinion of an architect or other third-party contractor selected by Seller and reasonably approved by Purchaser, exceeds (or is estimated to exceed) $1,500,000.00 to repair.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

11

 

 

6.2.2            Not Material. If a casualty occurs but the Real Property is not Materially Damaged, then neither Purchaser nor Seller shall have the right to terminate this Agreement pursuant to this Section 6.2 (a “Non-Material Pre-Closing Casualty”), and subject to an Insurance Proceeds Assignment to Purchaser, the parties shall proceed to Closing subject to the terms of this Agreement, and such damage shall be restored by Purchaser post-Closing pursuant to (but only to the extent required by) the terms and conditions of the Leases, and Purchaser shall reasonably cooperate with Seller, in its capacity as tenant under the Leases, regarding such restoration, pursuant to the terms and conditions of the Leases. Notwithstanding the foregoing, if the insurance proceeds to be assigned pursuant to the Insurance Proceeds Assignment are less than the cost to repair the damage, in the opinion of an architect or other third-party contractor selected by Seller and reasonably approved by Purchaser, Purchaser shall receive a credit at Closing in the amount of such difference. The provisions of this Section 6.2.2 shall survive Closing.

 

6.3   Condemnation. If proceedings in eminent domain are instituted with respect to the Property or any portion thereof that would materially and adversely interfere with the present use of the Real Property as currently utilized by Seller, or if such proceedings are instituted with respect to any portion of the Improvements, Purchaser may, at its option, by written notice to Seller given within ten (10) days after Seller notifies Purchaser in writing of such proceedings (and if necessary the Closing Date shall be automatically extended to give Purchaser the full ten (10) day period to make such election), either: (a) terminate this Agreement, in which case the Earnest Money shall be immediately returned to Purchaser and the parties hereto shall have no further rights or obligations, other than those that by their terms survive the termination of this Agreement, or (b) proceed under this Agreement, in which event Seller shall, at the Closing, assign to Purchaser its entire right, title and interest in and to any condemnation award, and Purchaser shall have the sole right after the Closing to negotiate and otherwise deal with the condemning authority in respect of such matter. If Purchaser does not give Seller written notice of its election within the time required above, then Purchaser shall be deemed to have elected option (b) above.

 

6.4   Insurance Policies. Seller shall, at its sole cost and expense, use commercially reasonably efforts to maintain Seller’s existing insurance coverage with respect to the Property to the extent such policies remain available at similar rates as of the date hereof.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

12

 

 

6.5   Leaseback. Commencing on the Closing Date, Purchaser, as landlord, shall lease to, as applicable, Tuesday Morning Partners, Ltd. and Tuesday Morning, Inc. (collectively, “Tuesday Tenant”), as tenant, all of the Land and Improvements pursuant to leases in substantially the form attached hereto as Exhibits E-1 and E-2 (the “Leases”). In the event of any conflict or inconsistency between the terms of this Agreement and the terms of either of the Leases, the terms of the applicable Lease shall prevail. The parties acknowledge and agree that the Leases attached hereto represent the final material monetary terms of such Leases (including all provisions relating to lease term and rent payable thereunder) but certain non-monetary provisions may be revised prior to Closing to a de minimus extent.

 

6.6   Notices. Seller covenants and agrees with Purchaser from the date hereof and until the Closing, to promptly notify Purchaser of all written notices received or sent by Seller relating to (i) violations of laws, ordinances, orders, directives, regulations or requirements issued by, filed by or served by, any governmental authority against or affecting any of the Property; or (ii) any default or violation under any of the Permitted Exceptions.

 

Article 7
Closing

 

7.1   Closing. The consummation of the transaction contemplated herein (“Closing”) shall occur on the Closing Date by mail at the offices of Escrow Agent (or such other location as may be mutually agreed upon by Seller and Purchaser). Funds shall be deposited into and held by Escrow Agent in a closing escrow account with a bank satisfactory to Purchaser and Seller. Upon satisfaction or completion of all closing conditions and deliveries, the parties shall direct Escrow Agent to immediately record and deliver the closing documents to the appropriate parties and make disbursements according to the closing statements executed by Seller and Purchaser.

 

7.2   Conditions to Parties’ Obligation to Close. In addition to all other conditions set forth herein, the obligation of Seller, on the one hand, and Purchaser, on the other hand, to consummate the transactions contemplated hereunder are conditioned upon the following:

 

7.2.1            Representations and Warranties and Covenants. The other party’s representations and warranties contained herein shall be true and correct in all material respects as of the Effective Date and the Closing Date as if specifically remade at Closing.

 

7.2.2            Covenants and Deliveries. As of the Closing Date, the other party shall have performed its obligations and covenants hereunder in all material respects and tendered all deliveries to be made by such party at Closing.

 

7.2.3            Actions, Suits, etc. Other than in connection with the Bankruptcy Proceeding, there shall exist no existing, pending or threatened in writing actions, suits, arbitrations, claims, attachments, proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings, against the other party that would materially and adversely affect that party’s ability to perform its obligations under this Agreement.

 

7.2.4            Title Policy. As a condition benefitting Purchaser only, the Title Company’s shall be unconditionally committed to issuing the Title Policy pursuant to Section 5.3.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

13

 

 

7.2.5            Bankruptcy Court Sale Approval. Seller and certain affiliates are currently debtors and debtors-in-possession in Chapter 11 proceedings in The United States Bankruptcy Court for the Northern District of Texas (the “Bankruptcy Court”) under the consolidated case styled In re: Tuesday Morning Corporation, et al., Case number 20-31476-HDH-11 (the “Bankruptcy Proceeding”). Seller’s and Buyer’s obligations hereunder are subject to (i) no order or determination being entered or withheld by the Bankruptcy Court that would materially impede the Closing from occurring by the Closing Date (“Court Intervention”); (ii) entry of a final, non-appealable order (a “Plan Confirmation Order”) confirming a plan of reorganization proposed by the Seller (the “Reorganization Plan”) and (iii) the effectiveness of the Reorganization Plan.

 

If any condition to a party’s obligation to proceed with the Closing hereunder (such party, the “Performing Party”) has not been satisfied as of the Closing Date (or such earlier date as is provided herein, and in the case of a Court Intervention, the date of the occurrence of Court Intervention), subject to any applicable notice and cure periods provided in Sections 10.1 and 10.2, such party may, in its sole discretion, terminate this Agreement by delivering written notice (a “Condition Failure Termination Notice”) to the other party (the “Non-Performing Party”) on or before the Closing Date (or such earlier date as is provided herein), or elect to close (or to permit any such earlier termination deadline to pass) notwithstanding the non-satisfaction of such condition, in which event the Performing Party shall be deemed to have waived any such condition (provided that neither party may waive the condition set forth in Section 7.2.5 hereof). In the event the Performing Party elects to close (or to permit any such earlier termination deadline to pass), notwithstanding the non-satisfaction of such condition, the Performing Party shall be deemed to have waived said condition, and there shall be no liability on the part of the Non-Performing Party for breaches of representations and warranties of which the Performing Party had knowledge prior to Closing. The failure of a condition precedent to Closing that has not been satisfied on or prior to Closing through no act or omission of the Non-Performing Party in violation of this Agreement shall not be a default hereunder but shall not limit the right of the Performing Party to terminate this Agreement as a result thereof. Further, should the Performing Party elect to terminate this Agreement pursuant to this paragraph, the Performing Party shall be entitled to the Earnest Money and Independent Consideration upon termination; provided, however, if the conditions set forth in Section 7.2.5 are not satisfied and the Agreement is terminated, Buyer shall be entitled to the Earnest Money and Independent Consideration.

 

Notwithstanding the foregoing, in the event that, (a) prior to the Closing, Purchaser obtains actual knowledge of information (from whatever source, including, without limitation, as a result of Purchaser’s due diligence tests, investigations and inspections of the Property, by disclosure from Seller or Seller’s agents and employees or otherwise) that renders any of Seller’s representations and warranties materially untrue or incorrect, and (b) Purchaser promptly delivers a Condition Failure Termination Notice as a result thereof, then Seller shall have seven (7) Business Days following receipt of such Condition Failure Termination Notice (“Seller’s Cure Period”) in which to take all steps necessary in Seller’s reasonable estimation to render such representations and warranties materially true and correct; provided, however, the Seller’s Cure Period shall automatically extend the Closing Date to the extent such Condition Failure Termination Notice is sent less than seven (7) Business Days prior to the scheduled Closing Date. If, prior to the expiration of Seller’s Cure Period, Seller causes such representations to be materially true and correct, then Purchaser’s Condition Failure Termination Notice shall be deemed null and void. However, if, as of the expiration of Seller’s Cure Period, Seller has not rendered such representation and warranty materially true and correct, this Agreement shall terminate as set forth above and Purchaser shall be entitled to the Earnest Money and Independent Consideration.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

14

 

 

7.3    Seller’s Deliveries in Escrow. As of or prior to the Closing Date, Seller shall deliver in escrow to Escrow Agent the following:

 

7.3.1            Deed. A special warranty deed (or, at Purchaser’s request, multiple deeds) in the form of Exhibit B hereto, executed and acknowledged by Seller, conveying to Purchaser Seller’s fee interest in the Real Property (the “Deed”);

 

7.3.2            Bill of Sale and Assignment Agreement. A Bill of Sale and Assignment Agreement in the form of Exhibit C hereto (the “Assignment”), executed by Seller vesting in Purchaser Seller’s right, title and interest in and to the property described therein free of any claims, except for the Permitted Exceptions to the extent applicable;

 

7.3.3            FIRPTA. A Foreign Investment in Real Property Tax Act affidavit in the form of Exhibit D hereto executed by Seller;

 

7.3.4            Authority. Evidence of the existence, organization and authority of Seller and of the authority of the persons executing documents on behalf of Seller reasonably satisfactory to the underwriter for the Title Policy, it being expressly agreed that Seller shall have no obligation to provide evidence of authority to Purchaser;

 

7.3.5            Leases. The Leases, executed by Tuesday Morning Partners, Ltd. and Tuesday Morning, Inc., as applicable; and

 

7.3.6            Owner’s Affidavit. An Owner’s Affidavit and a “gap” affidavit, each, executed by Seller and in form and substance reasonably acceptable to the Title Company and Seller, but sufficient to delete the standard exceptions to the Title Policy, including, without limitation, the exceptions related to the parties in possession (other than the Leases) and mechanic’s liens.

 

7.3.7            Additional Documents. Any additional documents that Escrow Agent or the Title Company may reasonably require for the proper consummation of the transactions contemplated by this Agreement (provided, however, no such additional document shall expand any obligation, covenant, representation or warranty of Seller or result in any new or additional obligation, covenant, representation or warranty of Seller under this Agreement beyond those expressly set forth in this Agreement).

 

7.4    Purchaser’s Deliveries in Escrow. As of or prior to the Closing Date, Purchaser shall deliver in escrow to Escrow Agent the following:

 

7.4.1            Bill of Sale, Assignment and Assumption. The Assignment, executed and acknowledged by Purchaser;

 

7.4.2            Leases. The Leases, each executed by Purchaser; and

 

7.4.3            Additional Documents. Any additional documents that Seller, Escrow Agent or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Agreement (provided, however, no such additional document shall expand any obligation, covenant, representation or warranty of Purchaser or result in any new or additional obligation, covenant, representation or warranty of Purchaser under this Agreement beyond those expressly set forth in this Agreement).

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

15

 

 

7.5    Closing Statements. As of or prior to the Closing Date, Seller and Purchaser shall deposit with Escrow Agent executed closing statements consistent with this Agreement in the form required by Escrow Agent.

 

7.6    Purchase Price. At or before 2:30 p.m. (local time at the Real Property) on the Closing Date, Purchaser shall deliver to Escrow Agent the Purchase Price, less the Earnest Money that is applied to the Purchase Price, plus or minus applicable prorations, in immediate, same-day U.S. federal funds wired for credit into Escrow Agent’s escrow account, which funds must be delivered in a manner to permit Escrow Agent to deliver good funds to Seller or its designee on the Closing Date (and, if requested by Seller, by wire transfer); in the event that Escrow Agent is unable to deliver good funds to Seller or its designee on the Closing Date, then the closing statements and related prorations will be revised as necessary.

 

7.7    Possession. Seller shall deliver possession of the Property to Purchaser at the Closing subject only to the Permitted Exceptions and the Leases.

 

7.8    Delivery of Books and Records. On or prior to Closing, Seller shall deliver to the offices of Purchaser’s property manager or to the Real Property to the extent in Seller’s possession or control: copies of all maintenance records; plans and specifications; licenses, permits and certificates of occupancy; provided, however, the originals of the same shall not be delivered until termination of the applicable Lease.

 

7.9    Termination or Assignment of Service Contracts. Seller shall deliver to Purchaser termination agreements or other evidence reasonably satisfactory to Purchaser that all Service Contracts that would be binding upon Purchaser or the Property have either been (a) terminated effective upon the Closing Date and at no cost to Purchaser or to the Property, or (b) assigned to Seller in its capacity as tenant of the Property or amended to clarify that Seller is no longer the owner of the Property, without any right of the applicable service provider to make a claim against Purchaser or the Property.

 

Article 8
Prorations, Deposits, Commissions

 

8.1    Prorations. At Closing, the following items shall be prorated as of the Closing Date on an accrual basis with all items of income and expense for the Property (a) accruing prior to the Closing Date being borne by Seller, and (b) accruing from and after (and including) the Closing Date being borne by Purchaser: fees and assessments; real and personal ad valorem taxes (“Taxes”); and any assessments by private covenant for the then-current calendar year of Closing. Specifically, the following shall apply to such prorations:

 

8.1.1            Taxes. If Taxes for the year of Closing are not known or cannot be reasonably estimated, Taxes shall be prorated based on Taxes for the year prior to Closing and shall be promptly reprorated upon the issuance of final bills therefor. Prior to or at Closing, Seller shall pay or have paid all Taxes that are due and payable prior to or on the Closing Date.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

16

 

 

8.1.2            Other Costs. As a result of the Leases, utilities, operating expenses, and other such amounts attributable to the Improvements shall not be prorated, and Seller shall remain liable for such amounts to the extent accruing during the term of the Leases (or prior to Closing).

 

8.2    Closing Costs. Closing costs shall be allocated between Seller and Purchaser in accordance with Section 1.2.

 

8.3    Final Adjustment After Closing. If final bills are not available or cannot be issued prior to Closing for any item being prorated under Section 8.1, then Purchaser and Seller agree to allocate such items on a fair and equitable basis as soon as such bills are available, final adjustment to be made as soon as reasonably possible after the Closing. Payments in connection with the final adjustment shall be due within thirty (30) days of written notice. All such rights and obligations shall survive the Closing.

 

8.4    Commissions. Seller shall be responsible to the Broker for a real estate sales commission at Closing (but only in the event of a Closing in strict accordance with this Agreement) pursuant to a separate written agreement (including any real estate sales commission applicable to the Leases, if any). Purchaser shall be responsible to Lee & Associates for a real estate sales commission at Closing pursuant to a separate written agreement. Under no circumstances shall Seller owe a commission or other compensation directly to any other broker, agent or person. Other than as stated above in this Section 8.4, Seller and Purchaser each represent and warrant to the other that no real estate brokerage commission is payable to any person or entity in connection with the transaction contemplated hereby or the Leases, and each agrees to and does hereby indemnify and hold the other harmless against the payment of any commission to any other person or entity claiming by, through or under Seller or Purchaser, as applicable. This indemnification shall extend to any and all claims, liabilities, costs and expenses (including reasonable attorneys’ fees and litigation costs) arising as a result of such claims and shall survive the Closing.

 

Article 9
Representations and Warranties

 

9.1    Seller’s Representations and Warranties. Seller represents and warrants to Purchaser as of the Effective Date and as of the Closing Date that:

 

9.1.1            Organization and Authority. Seller has been duly organized, is validly existing, and is in good standing in the state in which it was formed. Subject to entry of the Plan Confirmation Order and effectiveness of the Reorganization Plan, this Agreement has been, and all of the documents to be delivered by Seller at the Closing will be, authorized and executed and constitute, or will constitute, as appropriate, the valid and binding obligation of Seller, enforceable in accordance with their terms.

 

9.1.2            Conflicts and Pending Actions. To Seller’s knowledge, there is no agreement to which Seller is a party or that is binding on Seller under which Seller will be in default as a result of entering into or consummating this Agreement. To Seller’s knowledge, other than in connection with the Bankruptcy Proceeding there is no litigation, action or proceeding pending either (a) against Seller, which challenges or impairs Seller’s ability to execute or perform its obligations under this Agreement, or (b) relating to the Property by reason of Seller’s ownership or operation of the Property or any portion thereof. Except for those rights previously disclosed to Purchaser, no rights of first offer or rights of first refusal regarding the Property exist under the organizational documents of Seller or under any agreement by which Seller or the Property is or may be bound or affected.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

17

 

 

9.1.3            Condemnation. Except as may be reflected by the Property Documents or otherwise disclosed in writing to Purchaser, Seller has received no written notice from any governmental authority having jurisdiction over the Real Property that it is presently the subject of any condemnation or similar proceeding.

 

9.1.4            Prohibited Persons and Transactions. Seller represents and warrants to Purchaser that Seller is currently in compliance with and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with the regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

 

9.1.5            Compliance With Laws. Seller has not received written notice from any governmental or quasi-governmental authority of any violations of any laws affecting or applicable to any or all of the Property which remain uncured.

 

9.1.6            Employees. There is no bargaining unit or union contract relating to any employees of Seller.

 

9.1.7            Intentionally Omitted.

 

9.1.8            ERISA. Neither the execution and delivery of this Agreement nor any of the transactions contemplated thereunder involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c) of the Code.

 

9.1.9            Property Documents. To Seller’s knowledge, the Property Documents delivered to Purchaser pursuant to Section 4.1 are correct copies, in all material respects, of the Property Documents in Seller’s possession and control.

 

9.1.10          Tax Appeals. Except as disclosed in the Property Documents, Seller has not (a) submitted an application for the creation of any special taxing district affecting the Property, or annexation thereby, or inclusion therein, or (b) received written notice that any governmental or quasi-governmental agency or authority intends to impose or increase any special or other assessment against the Property, or any part thereof, including assessments attributable to revaluations of the Property. Except as disclosed in the Property Documents, there is no ongoing appeal with respect to taxes or special assessments on the Property for any year, and any consultants engaged to perform work with respect to appeals of taxes or special assessments on the Property have been paid in full.

 

9.1.11          Leases. Other than the Permitted Exceptions and the Leases, there are no leases, licenses or occupancy agreements binding upon the Property.

 

9.1.12          Hazardous Substances. Except as disclosed in the Property Documents, to Seller’s knowledge, Seller has not received any written notice from any governmental agency having jurisdiction over the Property advising Seller that the Property is in violation of any Environmental Laws.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

18

 

 

9.1.13          No Liens or Encumbrances. Seller's ownership of the Property does not include any tenants-in-common ownership, undivided interest ownership nor fractional ownership interest.

 

9.1.14          Service Contracts. To Seller’s knowledge, the Service Contracts delivered to Purchaser as a part of the Property Documents are the only Service Contracts currently affecting the Property. Seller has not received nor given any written notice of material default under any Service Contract with respect to a material default that remains uncured as of the date hereof. To Seller’s knowledge, the list of Service Contracts is attached hereto as Exhibit F, is true, correct and complete in all material respects as of the date of this Agreement.

 

9.2    Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:

 

9.2.1            Organization and Authority. Purchaser has been duly organized, is validly existing, and is in good standing in jurisdiction in which it was formed. Purchaser has the full right and authority and has obtained any and all consents required to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby. This Agreement has been, and all of the documents to be delivered by Purchaser at the Closing will be, authorized and properly executed and constitute, or will constitute, as appropriate, the valid and binding obligation of Purchaser, enforceable in accordance with their terms.

 

9.2.2            Conflicts and Pending Action. There is no agreement to which Purchaser is a party or to Purchaser’s knowledge binding on Purchaser which is in conflict with this Agreement. There is no action or proceeding pending or, to Purchaser’s knowledge, threatened against Purchaser which challenges or impairs Purchaser’s ability to execute or perform its obligations under this Agreement.

 

9.2.3            Prohibited Persons and Transactions. Purchaser represents and warrants to Seller that Purchaser is currently in compliance with and shall at all times during the term of this Agreement (including any extension thereof) remain in compliance with the regulations of OFAC (including those named on OFAC’s Specially Designated and Blocked Persons List) and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

19

 

 

9.3    Survival of Representations and Warranties. The representations and warranties set forth in this Article 9 are made as of the Effective Date and are remade as of the Closing Date and shall not be deemed to be merged into or waived by the instruments of Closing, but shall survive the Closing for a period of nine (9) months (the “Survival Period”). Terms such as “to Seller’s knowledge,” “to the best of Seller’s knowledge” or like phrases mean the actual present and conscious awareness or knowledge of Phillip D. Hixon, the Executive Vice President of Store Operations for Seller, with oversight responsibility for all material matters relating hereto (“Seller’s Representative”), without any duty of inquiry or investigation; provided that so qualifying Seller’s knowledge shall in no event give rise to any personal liability on the part of Seller’s Representative, or any officer or employee of Seller, on account of any breach of any representation or warranty made by Seller herein. Terms such as “to Purchaser’s knowledge,” “to the best of Purchaser’s knowledge” or like phrases mean the actual present and conscious awareness or knowledge of Vince Reyna (“Purchaser ‘s Representative”), without any duty of inquiry or investigation; provided that so qualifying Purchaser’s knowledge shall in no event give rise to any personal liability on the part of Purchaser’s Representative, or any officer or employee of Purchaser, on account of any breach of any representation or warranty made by Purchaser herein. Said terms do not include constructive knowledge, imputed knowledge, or knowledge Seller or Purchaser, as applicable, or such persons do not have but could have obtained through further investigation or inquiry. Purchaser shall be deemed to have knowledge of all matters contained in the Property Documents or any final third-party reports obtained by Purchaser. No broker, agent, or party other than Seller is authorized to make any representation or warranty for or on behalf of Seller. Each party shall have the right to bring an action against the other on the breach of a representation or warranty or covenant hereunder or in the documents delivered by Seller at the Closing, but only on the following conditions: (1) the party bringing the action for breach first learns of the breach after and gives written notice of such breach to the other party before the end of the Survival Period and files such action on or before the expiration of the Survival Period, and (2) neither party shall have the right to bring a cause of action for a breach of a representation or warranty or covenant unless the damage to such party on account of such breach (individually or when combined with damages from other breaches) equals or exceeds $50,000.00 (the “Floor”), in which event the excess amount of such claims above the Floor shall be actionable, subject to the limitations of Seller’s liability set forth in this Section 9.3. Neither party shall have any liability after Closing for the breach of a representation or warranty or covenant hereunder of which the other party hereto had knowledge prior to Closing. Notwithstanding any other provision of this Agreement, any agreement contemplated by this Agreement, or any rights which Purchaser might otherwise have at law, equity, or by statute, whether based on contract or some other claim, Purchaser agrees that any liability of Seller to Purchaser will be limited to an amount equal to $750,000.00 (the “Cap”). Purchaser agrees that, with respect to any alleged breach of representations and warranties contained in Article 9 of this Agreement that is not timely raised by Purchaser to Seller in a written notice prior to the expiration of the Survival Period (in accordance with the terms of this Section 10.2), the maximum liability of Seller for all such alleged breaches is limited to $100.00. Notwithstanding anything herein to the contrary, in no event shall the Floor or the Cap apply to (i) Seller’s obligations under Article 8, (ii) Seller’s obligations to turn over insurance proceeds, if any, post-Closing, pursuant to Article 6, or (iii) liability of Seller for Seller’s fraud (including fraudulent concealment) as finally determined by a court of competent jurisdiction. Any breach of a representation or warranty or covenant that is discovered prior to Closing shall be governed by Article 10.

 

Article 10
Default and Remedies

 

10.1   Seller’s Remedies. If Purchaser fails to consummate the purchase of the Property pursuant to this Agreement for any reason except failure by Seller to perform hereunder, and in each case such default is not cured by the earlier of the fifth (5th) day after written notice thereof from Seller or the Closing Date (except no notice shall be required if Purchaser fails to close on the Closing Date), then Seller shall be entitled, as its sole and exclusive remedy, to terminate this Agreement and recover the Earnest Money as liquidated damages and not as penalty, in full satisfaction of claims against Purchaser hereunder. Seller and Purchaser agree that Seller’s damages resulting from Purchaser’s default in its obligation to consummate the purchase of the Property pursuant to the terms and conditions of this Agreement are difficult, if not impossible, to determine and the Earnest Money is a fair estimate of those damages which has been agreed to in an effort to cause the amount of such damages to be certain. In all other events Seller’s remedies shall be limited to those described in Sections 4.8, 8.4, 10.3 and 10.4 hereof, and nothing contained herein shall be deemed to limit Purchaser’s indemnity or other obligations which expressly survive termination of this Agreement. Notwithstanding the foregoing, in the event Purchaser defaults in any of its post-closing obligations or any obligations that survive Closing or a termination of this Agreement, Seller shall have all of its remedies at law and in equity on account of such default. IN NO EVENT SHALL PURCHASER'S DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS, MEMBERS, OWNERS OR AFFILIATES, ANY OFFICER, DIRECTOR, MANAGER, EMPLOYEE OR AGENT OF THE FOREGOING, OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF HAVE ANY LIABILITY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY, WHETHER BASED ON CONTRACT, COMMON LAW, STATUTE, EQUITY OR OTHERWISE.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

20

 

 

10.2   Purchaser’s Remedies. If Seller fails to consummate the sale of the Property pursuant to this Agreement or otherwise defaults on its obligations hereunder at or prior to Closing for any reason except failure by Purchaser to perform hereunder and in each case such default is not cured by the earlier of the fifth (5th) day after written notice thereof from Purchaser or the Closing Date (except no notice shall be required if Seller fails to close on the Closing Date), Purchaser may elect, as its sole remedies, either to (a) terminate this Agreement by giving Seller timely written notice of such election prior to or at Closing and recover the Earnest Money and the Independent Consideration, in which event Seller shall promptly reimburse Purchaser in an amount not to exceed $100,000.00 for any and all reasonable, third party costs actually paid or incurred by Purchaser to negotiate this Agreement, conduct its due diligence investigations and otherwise pursue the transactions contemplated hereby (including, attorneys’ fees, fees of environmental and other consultants, and accountants’ fees incurred by Purchaser in connection with this Agreement and any action hereunder or the Property), after receipt of invoices for such costs (which obligation shall survive any termination of this Agreement), or (b) waive said failure or breach and proceed to Closing without any reduction in the Purchase Price.

 

10.3   Attorneys’ Fees. In the event either party hereto employs an attorney in connection with claims by one party against the other arising from the operation of this Agreement, the non-prevailing party shall pay the prevailing party all reasonable fees and expenses, including attorneys’ fees, incurred in connection with such claims.

 

10.4   Other Expenses. If this Agreement is terminated due to the default of a party, then the defaulting party shall pay any fees or charges due to Escrow Agent for holding the Earnest Money as well as any escrow cancellation fees or charges and any fees or charges due to the Title Company for preparation and/or cancellation of the Title Commitment.

 

IN NO EVENT SHALL SELLER’S OR PURCHASER’S DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS, OWNERS OR AFFILIATES, OR ANY OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF THE FOREGOING, OR ANY AFFILIATE OR CONTROLLING PERSON THEREOF HAVE ANY LIABILITY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PROPERTY, WHETHER BASED ON CONTRACT, COMMON LAW, STATUTE, EQUITY OR OTHERWISE.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

21

 

 

Article 11
Disclaimers, Release and Indemnity

 

11.1    Disclaimers By Seller. it is understood and agreed that Seller and Seller’s agents or employees have not at any time made and are not now making, and they specifically disclaim, any other warranties, representations or guaranties of any kind or character, express or implied, with respect to the Property, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT AND ANY DOCUMENT EXECUTED BY SELLER AND DELIVERED TO PURCHASER AT CLOSING, including, but not limited to, warranties, representations or guaranties as to (A) matters of title (other than Seller’s special warranty of title to be contained in the Deed), (B) environmental matters relating to the Property or any portion thereof, including, without limitation, the presence of Hazardous Materials in, on, under or in the vicinity of the Property, (C) geological conditions, including, without limitation, subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water, and geologic faults and the resulting damage of past and/or future faulting, (d) whether, and to the extent to which the Property or any portion thereof is affected by any stream (surface or underground), body of water, wetlands, flood prone area, flood plain, floodway or special flood hazard, (E) drainage, (f) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any undershoring, (g) the presence of endangered species or any environmentally sensitive or protected areas, (h) zoning or building entitlements to which the Property or any portion thereof may be subject, (i) the availability of any utilities to the Property or any portion thereof including, without limitation, water, sewage, gas and electric, (j) usages of adjoining property, (k) access to the Property or any portion thereof, (L) the value, compliance with the plans and specifications, size, location, age, use, design, quality, description, suitability, structural integrity, operation, title to, or physical or financial condition of the Property or any portion thereof, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to the Property or any part thereof, (M) the condition or use of the Property or compliance of the Property with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building, fire or zoning ordinances, codes or other similar laws, (n) the existence or non-existence of underground storage tanks, surface impoundments, or landfills, (o) any other matter affecting the stability and integrity of the Property, (p)the potential for further development of the Property, (q) the merchantability of the Property or fitness of the Property for any particular purpose, (R) the truth, accuracy or completeness of the Property Documents, (s) tax consequences, or (t) any other matter or thing with respect to the Property.

 


Purchaser’s signature and acknowledgement of the terms and provisions of this Section 11.1

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

22

 

 

11.2    Sale “As Is, Where Is.”   Purchaser acknowledges and agrees that upon Closing, Seller shall sell and convey to Purchaser and Purchaser shall accept the Property “AS IS, WHERE IS, WITH ALL FAULTS,” except to the extent expressly provided otherwise in this Agreement and any document executed by Seller and delivered to Purchaser at Closing. Further, Purchaser acknowledges and agrees that Seller shall have no obligation whatsoever to remove, repair or otherwise account for any Tangible Personal Property located on or at the Property. Except as expressly set forth in this Agreement, including, without limitation seller’s representations and warranties set forth herein, and any document executed by Seller and delivered to Purchaser at Closing, Purchaser has not relied and will not rely on, and Seller has not made and is not liable for or bound by, any OTHER express or implied warranties, guarantees, statements, representations or information pertaining to the Property or relating thereto (including specifically, without limitation, Property Documents packages distributed with respect to the Property) made or furnished by Seller, or any property manager, real estate broker, agent or third party representing or purporting to represent Seller, to whomever made or given, directly or indirectly, orally or in writing. Except with respect to any representation or warranty of seller made hereunder, Purchaser ACKNOWLEDGES that it is relying solely on its own expertise and that of Purchaser’s consultants in purchasing the Property and shall make an independent verification of the accuracy of any documents and information provided by Seller. Purchaser will conduct such inspections and investigations of the Property as Purchaser deems necessary, including, but not limited to, the physical and environmental conditions thereof, and shall rely upon same. Purchaser acknowledges that Seller has afforded Purchaser a full opportunity to conduct such investigations of the Property as Purchaser deemed necessary to satisfy itself as to the condition of the Property and the existence or non-existence or curative action to be taken with respect to any Hazardous Materials on or discharged from the Property, and will rely solely upon same and not upon any information provided by or on behalf of Seller or its agents or employees with respect thereto, other than such representations, warranties and covenants of Seller as are expressly set forth in this Agreement and any document executed by Seller and delivered to Purchaser at Closing. Except with respect to any representation or warranties of seller or any fraudulent concealment on seller’s part, Upon Closing, Purchaser shall assume the risk that adverse matters, including, but not limited to, adverse physical or construction defects or adverse environmental, health or safety conditions, may not have been revealed by Purchaser’s inspections and investigations. Purchaser waives any and all rights or remedies it may have or be entitled to, deriving from disparity in size or from any significant disparate bargaining position in relation to Seller.

 


Purchaser’s signature and acknowledgement of the terms and provisions of this Section 11.2

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

23

 

 

11.3    Seller Released from Liability. Purchaser acknowledges that it will and has had the opportunity to inspect the Property prior to Closing, observe its physical characteristics and existing conditions and the opportunity to conduct such investigation and study on and of the Property and adjacent areas as Purchaser deems necessary, and Purchaser hereby FOREVER RELEASES AND DISCHARGES Seller from all responsibility and liability, whether arising before or after the Effective Date, and liabilities under the Comprehensive Environmental Response, Compensation and Liability Act Of 1980 (42 U.S.C. Sections 9601 et seq.), as amended (“CERCLA”), regarding the condition, valuation, salability or utility of the Property, or its suitability for any purpose whatsoever (including, but not limited to, with respect to the presence in the soil, air, structures and surface and subsurface waters, of Hazardous Materials or other materials or substances that have been or may in the future be determined to be toxic, hazardous, undesirable or subject to regulation and that may need to be specially treated, handled and/or removed from the Property under current or future federal, state and local laws, regulations or guidelines (collectively, “Environmental Laws”), and any structural and geologic conditions, subsurface soil and water conditions and solid and hazardous waste and Hazardous Materials on, under, adjacent to or otherwise affecting the Property); provided however, that the terms of this sentence (and this paragraph) shall not apply to Seller’s duties, liabilities and obligations, solely as tenant under the Leases, accruing from and after Closing pursuant to the Leases. Purchaser further hereby WAIVES (and by Closing this transaction will be deemed to have WAIVED) any and all objections and complaints (including, but not limited to, federal, state and local statutory and common law based actions, and any private right of action under any federal, state or local laws, regulations or guidelines to which the Property is or may be subject, including, but not limited to, CERCLA) concerning the physical characteristics and any existing conditions of the Property, whether arising before or after the Effective Date; provided however, that the terms of this sentence (and this paragraph) shall not apply to Seller’s duties, liabilities and obligations, solely as tenant under the Leases, accruing from and after Closing pursuant to the Leases. Purchaser further hereby assumes the risk of changes in applicable laws and regulations relating to past, present and future environmental conditions on the Property and the risk that adverse physical characteristics and conditions, including, without limitation, the presence of Hazardous Materials or other contaminants, may not have been revealed by its investigation; provided however, that the terms of this sentence (and this paragraph) shall not apply to Seller’s duties, liabilities and obligations, solely as tenant under the Leases, accruing from and after Closing pursuant to the Leases. Notwithstanding anything in this Agreement to the contrary, (a) if Purchaser is named as a party in any litigation or investigation brought by a third party (including a governmental or quasi-governmental entity) unrelated to Purchaser and Seller is not so named, then Purchaser may, to the extent permitted by law, interplead or implead Seller in such action so long as no claim of contribution or monetary relief is made by Purchaser against Seller; provided, however, that prior to the expiration of the Survival Period, Purchaser may bring claims in accordance with Section 9.3 hereof, (b) the release described in this paragraph above applies to Purchaser and its successors and assigns only, and does not bind any third party; and (c) the terms of this paragraph shall not preclude Purchaser from raising in defense of any third party claims made against the Property or Purchaser after Closing which relate to conditions first existing, or actions taken, during the period of Seller’s ownership of the Property, the fact that Purchaser was not the owner of the Property at the time such third party claim arose so long as no claim of contribution or monetary relief is made by Purchaser against Seller; provided however, that in no event shall this sentence (or this paragraph) be construed to waive, modify or limit any of (i) Purchaser’s rights and remedies under the Leases with respect to matters arising from or after Closing, or (ii) Seller’s duties, liabilities and obligations, under the Leases to the extent accruing from and after Closing. Notwithstanding any provision contained in this section to the contrary, this Section 11.3 shall not apply to any representation or warranty of Seller made in this Agreement or any other document executed and delivered by Seller at Closing.

 


Purchaser’s signature and acknowledgement of the terms and provisions of this Section 11.3

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

24

 

 

11.4            “Hazardous Materials” Defined. For purposes hereof, “Hazardous Materials” means “Hazardous Material,” “Hazardous Substance,” “Pollutant or Contaminant,” and “Petroleum” and “Natural Gas Liquids,” as those terms are defined or used in Section 101 of CERCLA, and any other substances regulated because of their effect or potential effect on public health and the environment, including, without limitation, PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials, putrescible materials, and infectious materials.

 

11.5            Survival. The terms and conditions of this Article 11 shall expressly survive the Closing and shall not merge with the provisions of any closing documents.

 

Purchaser acknowledges and agrees that the disclaimers and other agreements set forth herein are an integral part of this Agreement and that Seller would not have agreed to sell the Property to Purchaser for the Purchase Price without the disclaimers and other agreements set forth above.

 

Article 12
Miscellaneous

 

12.1            Parties Bound; Assignment. This Agreement, and the terms, covenants, and conditions herein contained, shall inure to the benefit of and be binding upon the heirs, personal representatives, successors, and assigns of each of the parties hereto. Purchaser may assign its rights under this Agreement without the consent of Seller upon the following conditions: (a) the assignee of Purchaser must be (i) an entity controlling, controlled by, or under common control with Purchaser (a “Purchaser Control Entity”), or (ii) any entity in which one or more Purchaser Controlled Entities directly or indirectly is the general partner (or similar managing partner, member or manager) or owns more than 50% of the economic interests of such entity, (b) all of the Earnest Money must have been delivered in accordance herewith, (c) the assignee of Purchaser shall assume all obligations of Purchaser hereunder, but Purchaser shall remain primarily liable for the performance of Purchaser’s obligations, and (d) a copy of the fully executed written assignment and assumption agreement shall be delivered to Seller at Closing.

 

12.2            Headings. The article, section, subsection, paragraph and/or other headings of this Agreement are for convenience only and in no way limit or enlarge the scope or meaning of the language hereof.

 

12.3            Invalidity and Waiver. If any portion of this Agreement is held invalid or inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be deemed valid and operative, and, to the greatest extent legally possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. The failure by either party to enforce against the other any term or provision of this Agreement shall not be deemed to be a waiver of such party’s right to enforce against the other party the same or any other such term or provision in the future.

 

12.4            Governing Law; Jurisdiction; Venue. This Agreement shall, in all respects, be governed, construed, applied, and enforced in accordance with the law of the state in which the Real Property is located. EACH OF PURCHASER AND SELLER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF DALLAS, STATE OF TEXAS, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE DELIVERED BY PURCHASER AND SELLER HEREUNDER SHALL BE LITIGATED EXCLUSIVELY IN SUCH COURTS. EACH OF PURCHASER AND SELLER EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS OR ANY OTHER SIMILAR DEFENSE TO THE JURISDICTION OR VENUE OF SAID COURTS.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

25

 

 

12.5            Survival. The provisions of this Agreement that contemplate performance after the Closing and the obligations of the parties not fully performed at the Closing (other than any unfulfilled closing conditions which have been waived or deemed waived by the other party) shall survive the Closing and shall not be deemed to be merged into or waived by the instruments of Closing.

 

12.6            Entirety and Amendments. This Agreement embodies the entire agreement between the parties and supersedes all other prior agreements and understandings relating to the Property. This Agreement may be amended or supplemented only by an instrument in writing executed by the party against whom enforcement is sought. All Exhibits hereto are incorporated herein by this reference for all purposes.

 

12.7            Time. Time is of the essence in the performance of this Agreement.

 

12.8            Confidentiality; Press Releases. Purchaser shall make no public announcement or disclosure of any information related to this Agreement to outside brokers or third parties, prior to Closing, without the prior written specific consent of Seller; provided, however, that Purchaser may, subject to the provisions of Section 4.6, make disclosure of this Agreement to its Permitted Outside Parties as necessary to perform its obligations hereunder and as may be required under laws or regulations applicable to Purchaser. It is understood and agreed that money damages may not be a sufficient remedy for any breach of this Section and that the Seller shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach. Purchaser further agrees not to raise, as a defense or objection to the request or granting of such relief, that any breach of this Section is or would be compensable by an award of money damages, and Purchaser agrees to waive any requirement for the security or posting of any bond in connection with such remedy.  Such remedy shall not be deemed to be the exclusive remedy for breach of this Section but shall be in addition to all other remedies available at law or equity to Seller.  Purchaser also agrees to reimburse Seller and its representatives for all costs incurred by Seller and its representatives in connection with the enforcement of this Section (including, without limitation, legal fees in connection with any such litigation, including any appeals therefrom). The provisions of this Section shall survive Closing for a period of twelve (12) months.

 

12.9            Notices. All notices required or permitted hereunder shall be in writing and shall be served on the parties at the addresses set forth in Section 1.3. Any such notices shall, unless otherwise provided herein, be given or served (a) by depositing the same in the United States mail, postage paid, certified and addressed to the party to be notified, with return receipt requested, (b) by overnight delivery using a nationally recognized overnight courier, (c) by personal delivery, or (d) by electronic mail. Notices shall be deemed properly delivered and received: (i) the same day when personally delivered; or (ii) one day after deposit with a nationally recognized overnight courier; or (iii) the same day when sent by email. A party’s address may be changed by written notice to the other party. Copies of notices are for informational purposes only, and a failure to give or receive copies of any notice shall not be deemed a failure to give notice. Notices given by counsel to the Purchaser shall be deemed given by Purchaser and notices given by counsel to the Seller shall be deemed given by Seller.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

26

 

 

12.10            Construction. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and agree that the normal rule of construction - to the effect that any ambiguities are to be resolved against the drafting party - shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto.

 

12.11            Calculation of Time Periods; Business Day. Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a Business Day, in which event the period shall run until the end of the next day which is a Business Day. The last day of any period of time described herein shall be deemed to end at 5:00 p.m. local time at the Real Property. As used herein, the term “Business Day“ means any day that is not a Saturday, Sunday or legal holiday for national banks in the city in which the Real Property is located.

 

12.12            Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one Agreement. To facilitate execution of this Agreement, the parties may execute and exchange by email electronic counterparts (i.e., PDF counterparts) of the signature pages.

 

12.13            No Recordation. Without the prior written consent of Seller, there shall be no recordation of either this Agreement or any memorandum hereof, or any affidavit pertaining hereto, and any such recordation of this Agreement or memorandum or affidavit by Purchaser without the prior written consent of Seller shall constitute a default hereunder by Purchaser, whereupon Seller shall have the remedies set forth in Section 10.1 hereof. In addition to any such remedies, Purchaser shall be obligated to execute an instrument in recordable form releasing this Agreement or memorandum or affidavit, and Purchaser’s obligations pursuant to this Section 12.13 shall survive any termination of this Agreement as a surviving obligation.

 

12.14            Further Assurances. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by either party at Closing, each party agrees to perform, execute and deliver, but without any obligation to incur any additional liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate the transactions contemplated hereby or to further perfect the conveyance, transfer and assignment of the Property to Purchaser.

 

12.15            ERISA. Under no circumstances shall Purchaser have the right to assign this Agreement to any person or entity owned or controlled by an employee benefit plan if Seller’s sale of the Property to such person or entity would, in the reasonable opinion of Seller’s ERISA advisors or consultants, create or otherwise cause a “prohibited transaction” under ERISA. In the event Purchaser assigns this Agreement or transfers any ownership interest in Purchaser, and such assignment or transfer would make the consummation of the transaction hereunder a “prohibited transaction” under ERISA and necessitate the termination of this Agreement then, notwithstanding any contrary provision which may be contained herein, Seller shall have the right to terminate this Agreement.

 

12.16            No Third Party Beneficiary. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

27

 

 

12.17            Reporting Person. Purchaser and Seller hereby designate the Title Company as the “reporting person” pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986, as amended.

 

12.18            Texas Real Estate License Act. The Texas Real Estate License Act requires written notice to Purchaser from any licensed real estate broker or salesman who is to receive a commission that Purchaser should have an attorney of its own selection examine an abstract of title to the property being acquired or that Purchaser should be furnished with or should obtain a title insurance policy. Notice to that effect is, therefore, hereby given to Purchaser on behalf of the broker(s) identified in this Agreement, if any.

 

12.19            DTPA Waiver. IT IS THE INTENT OF SELLER AND PURCHASER THAT THE RIGHTS AND REMEDIES WITH RESPECT TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT SHALL BE GOVERNED BY LEGAL PRINCIPLES OTHER THAN THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT. ACCORDINGLY, TO THE MAXIMUM EXTENT APPLICABLE AND PERMITTED BY LAW (AND WITHOUT ADMITTING SUCH APPLICABILITY), PURCHASER HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, CHAPTER 17, SUBCHAPTER 3 (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. FOR PURPOSES OF THE WAIVERS SET FORTH IN THIS AGREEMENT, PURCHASER HEREBY WARRANTS AND REPRESENTS UNTO SELLER THAT (A) PURCHASER HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED UNDER THIS AGREEMENT, (B) PURCHASER IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH SELLER REGARDING THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT, (C) PURCHASER IS REPRESENTED BY LEGAL COUNSEL THAT IS SEPARATE AND INDEPENDENT OF SELLER AND SELLER’S LEGAL COUNSEL AND (D) PURCHASER HAS CONSULTED WITH PURCHASER’S LEGAL COUNSEL REGARDING THIS AGREEMENT PRIOR TO PURCHASER’S EXECUTION OF THIS AGREEMENT AND VOLUNTARILY CONSENTS TO THIS WAIVER.

 

[SIGNATURE PAGES AND EXHIBITS TO FOLLOW]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

28

 

 

SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
Tuesday Morning Partners, Ltd., Tuesday Morning, Inc., and Friday Morning, LLC.
AND
PBV-14303 INWOOD ROAD, LP

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year written below.

 

  SELLER:
     
  Tuesday morning partners, ltd.,
  a Texas limited partnership
     
  By: Days of the Week, Inc.,
    a Delaware corporation
    its General Partner
     
     
Date executed by Seller   By: /s/ Steven R. Becker
    Name: Steven R. Becker
December 7, 2020   Title: Chief Executive Officer

 

  FRIDAY MORNING, LLC,
  a Texas limited liability company
     
  By: Tuesday Morning, Inc.,
    its Member
     
     
Date executed by Seller   By: /s/ Steven R. Becker
    Name: Steven R. Becker
December 7, 2020   Title: Chief Executive Officer

 

  TUESDAY MORNING, INC.,
  a Texas corporation
   
   
Date executed by Seller By: /s/ Steven R. Becker
  Name: Steven R. Becker
December 7, 2020 Title: Chief Executive Officer

 

[Signatures Continue on Following Page]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

29

 

 

  PURCHASER:
     
  PBV-14303 INWOOD ROAD, LP,
  a Texas limited partnership
     
  By: PBV-14303 Inwood Road GP, LLC
  a Texas limited liability company
  its General Partner
     
     
Date executed by Purchaser By: /s/ Michael C. O’Malley
    Michael C. O’Malley, Manager
December 3, 2020    

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

30

 

 

JOINDER BY ESCROW AGENT

 

Escrow Agent has executed this Agreement in order to confirm that Escrow Agent has received and shall hold the Earnest Money required to be deposited under this Agreement and the interest earned thereto, in escrow, and shall disburse the Earnest Money, and the interest earned thereon, pursuant to the provisions of this Agreement.

 

  CHICAGO TITLE INSURANCE COMPANY
   
   
Date executed by Escrow Agent By: /s/ Pamela Medlin
  Name: Pamela Medlin
December 7, 2020 Title: Escrow Officer

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

1

 

 

LIST OF EXHIBITS

 

A - Legal Description of Land
     
B - Special Warranty Deed
     
C - Bill of Sale and Assignment Agreement
     
D - FIRPTA Certificate
     
E-1 - Distribution Center Lease
     
E-2 - Office Lease
     
F - Service Contracts

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

2

 

 

 

Exhibit A

 

LEGAL DESCRIPTION OF LAND

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-1

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-2

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-3

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-4

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-5

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-6

 

 

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

A-7

 

 

 

Exhibit B

 

SPECIAL WARRANTY DEED

 

[exhibit follows on next page]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-1

 

 

SPECIAL WARRANTY DEED

 

Prepared by:

Haynes and Boone LLP

2323 Victory Avenue, Ste. 700

Dallas, Texas 75219

Attn: Brack Bryant

 

After Recording Return to:

 

[____________________]

[____________________]

[____________________]

  NOTICE OF CONFIDENTIALITY RIGHTS: If you are a natural person, you may remove or strike any or all of the following information from any instrument that transfers an interest in real property before it is filed for record in the public records: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

 

SPECIAL WARRANTY DEED

 

THE STATE OF TEXAS §

 

§ KNOW ALL MEN BY THESE PRESENTS:

 

COUNTY OF DALLAS §

 

________________, a________________(“Grantor”), whose address is _____________________, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, has GRANTED, BARGAINED, SOLD, and CONVEYED and by these presents does GRANT, BARGAIN, SELL, and CONVEY unto ______________________, a _________________ (“Grantee”) whose address is _____________________, the tract or parcel of land in Tarrant County, Texas, described in Exhibit A, together with all improvements thereon and all rights, titles, and interests appurtenant thereto including, without limitation, Grantor’s interest, if any, in any and all adjacent streets, alleys, rights of way and any adjacent strips and gores, together with all of Grantor’s right, title and interest, if any, in and to any and all minerals and mineral rights, oil, gas, and oil and gas rights, other hydrocarbon substances and rights, development rights, air rights, water and water rights, wells, well rights and well permits, water and sewer taps (or their equivalents), and sanitary or storm sewer capacity appertaining to or otherwise benefiting or used in connection with said real property (such land and interests are hereinafter collectively referred to as the “Property”).

 

This Special Warranty Deed and the conveyance hereinabove set forth is executed by Grantor and accepted by Grantee subject to the Permitted Exceptions listed on Exhibit B attached hereto (collectively, the “Permitted Exceptions”).

 

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereunto in anywise belonging, unto Grantee, its successors and assigns forever, and Grantor does hereby bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND all and singular the title to the Property unto the said Grantee, its successors and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through, or under Grantor but not otherwise, subject to the Permitted Exceptions.

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-2

 

 

[SIGNATURE PAGE FOLLOWS]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-3

 

 

EXECUTED as of _____________________, 2020, to be effective as of ________________.

 

      ,
  a  

 

 By: 
 Name: 
 Title: 

 

THE STATE OF __________

 

COUNTY OF ____________

§
§
§

 

This instrument was acknowledged before me on ____________, 2020, by ________________, ______________ of___________, a______________, on behalf of said corporation ..

 

   
  Notary Public, State of ___________

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-4

 

 

EXHIBIT A

 

[Description of the Property]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-5

 

 

EXHIBIT B

 

[Permitted Exceptions]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

B-6

 

 

Exhibit C

 

BILL OF SALE AND ASSIGNMENT

 

[EXHIBIT FOLLOWS ON NEXT PAGE]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

C-1

 

 

BILL OF SALE AND ASSIGNMENT

 

THIS BILL OF SALE AND ASSIGNMENT (this “Bill of Sale”) is made as of the _____ day of __________________, 2020, by and between                    , a              (“Assignor”), and _________________________,a _________________________ (“Assignee”).

 

W I T N E S S E T H:

 

For good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:

 

1.            Assignor hereby sells, transfers and conveys to Assignee all of Assignor’s right, title and interest, if any, in and to the following, in each case to the extent located on that certain land and improvements commonly known as (i) 4400-4404 South Beltwood Parkway, Farmers Branch, Texas, (ii) 14621 Inwood Road, Addison, Texas, (iii) 14639 Inwood Road, Addison, Texas, (iv) 14601 Inwood Road, Addison, Texas, (v) 14303 Inwood Road, Farmers Branch, Texas, and (vi) 6250 Lyndon B. Johnson Freeway, Dallas, Texas (collectively, “Real Property”), as more particularly described in the Purchase Agreement (as hereinafter defined):

 

(a)        all tangible personal property furniture, fixtures and equipment attached to or used in connection with the ownership, maintenance, or operation of the Real Property (the “Personalty”); provided however, that the Personalty does not include the Excluded Tangible Personal Property (as defined in the Purchase Agreement);

 

(b)        the plans and specifications and other architectural and engineering drawings for the improvements located on the Real Property, if any (to the extent in Assignor’s possession and assignable without any cost to Assignor); warranties (to the extent in Assignor’s possession and assignable without any cost to Assignor); governmental permits, approvals and licenses, if any (to the extent in Assignor’s possession and assignable without any cost to Assignor); and

 

(c)        notwithstanding anything contained herein to the contrary, in no event shall any of Assignor’s trade names, marks, signage, branding, and other identifying marks related to “Tuesday Morning” or its subsidiaries or affiliates, be included within the Personalty or otherwise be deemed or construed to have been transferred by this Bill of Sale, all of which are expressly reserved to, and retained by, Assignor.

 

2.            This Bill of Sale is given pursuant to that certain Purchase and Sale Agreement (as amended, the “Purchase Agreement”) dated as of ____________________, between Assignor and Assignee, providing for, among other things, the conveyance of the Personalty.

 

3.            As set forth in Article 11 of the Purchase Agreement, which is hereby incorporated by reference as if herein set out in full and except as set forth herein, except as expressly set forth in the Purchase Agreement, the property conveyed hereunder is conveyed by Assignor and accepted by Assignee AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF WHATSOEVER NATURE, EXPRESS OR IMPLIED, IT BEING THE INTENTION OF ASSIGNOR AND ASSIGNEE EXPRESSLY TO NEGATE AND EXCLUDE ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL THEREOF, AND ALL OTHER WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE TEXAS UNIFORM COMMERCIAL CODE.

 

4.            This Bill of Sale may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

C-2

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale as of the date first above written.

 

  ASSIGNOR:

 

    ,

  a  

 

  By:  
  Name:  
  Title:  

 

  ASSIGNEE:

 

    ,

  a  

 

  By:  
  Name:  
  Title:  

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

C-3

 

 

Exhibit D

 

FIRPTA CERTIFICATE

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform _____________ (“Transferee”) that withholding of tax is not required upon the disposition of a U.S. real property interest by                  , a                  (“Transferor”), the undersigned, in his capacity as _____________ of _____________, but not individually, hereby certifies to Transferee the following on behalf of Transferor:

 

1.            Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

 

2.            Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii);

 

3.            Transferor’s U.S. employer identification number is ___________; and

 

4.            Transferor’s office address is ___________________________.

 

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

 

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

 

Dated as of __________, 2020.

 

   

  a

 

  By:
  Name:  
  Title:  

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

D-1 

 

 

EXHIBIT E-1

 

DISTRIBUTION CENTER LEASE

 

[EXHIBIT FOLLOWS ON NEXT PAGE]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

E-1-1 

 

 

EXHIBIT E-2

 

OFFICE LEASE

 

[EXHIBIT FOLLOWS ON NEXT PAGE]

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

E-2-1 

 

 

Exhibit F

 

SERVICE CONTRACTS

 

Purchase and Sale Agreement

6250 Lyndon B. Johnson Freeway, Dallas, Texas

4404 South Beltwood Parkway, Farmers Branch, Texas

14621, 14639 and 14601 Inwood Road, Addison, Texas

14303 Inwood Road, Farmers Branch, Texas

 

F-1 

 

Exhibit 3.1

 

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

TUESDAY MORNING CORPORATION

 

Tuesday Morning Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

1.          The name of the Corporation is Tuesday Morning Corporation. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State on August 26, 1991 (the “Original Certificate of Incorporation”). The Certificate of Incorporation of the Corporation was amended on March 26, 1999 and May 12, 1999 (such amendments together with the Original Certificate of Incorporation, the “Prior Certificate of Incorporation”).

 

2.          The amendments to the Prior Certificate of Incorporation herein certified have been duly adopted in accordance with Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware (the “DGCL”) and pursuant to the authority granted to the Corporation under Section 303 of the DGCL to put into effect and carry out the Revised Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et. al. (the “Plan”), filed by the Corporation and certain of its subsidiaries pursuant to chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). The Plan was confirmed by an order, entered December 23, 2020, of the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, a court having jurisdiction over the Corporation’s chapter 11 cases under the Bankruptcy Code, which order provides for the making and filing of this Amended and Restated Certificate of Incorporation.

 

3.          This Amended and Restated Certificate of Incorporation amends and restates the Prior Certificate of Incorporation of this Corporation, in accordance with the requirements of the DGCL, to read as herein set forth in full:

 

ARTICLE ONE

 

The name of the Corporation is Tuesday Morning Corporation.

 

ARTICLE TWO

 

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, Corporation Trust Center, in the City of Wilmington, County of New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company.

 

ARTICLE THREE

 

The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

 

1 

 

 

ARTICLE FOUR

 

The total number of shares of capital stock that the Corporation shall have the authority to issue is 210,000,000 shares, consisting of 200,000,000 shares of common stock, $.01 par value (the “Common Stock”), and 10,000,000 shares of preferred stock, $.01 par value (the “Preferred Stock”). Shares of Preferred Stock may be issued from time to time in one or more series, each such series to have such distinctive designation or title as may be fixed by the Board of Directors prior to the issuance of any shares thereof. Each such series shall have such designations, preferences, limitations and relative rights, including voting rights, as shall be stated in the resolution or resolutions providing for the issuance of such series of Preferred Stock, as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof (the “Preferred Designation”), in accordance with the laws of the State of Delaware. The Board of Directors, in such resolution or resolutions, may increase or decrease the number of shares within each such series; provided, however, the Board of Directors may not decrease the number of shares within a series to less than the number of shares within such series that are then issued.

 

ARTICLE FIVE

 

The Corporation is to have perpetual existence.

 

ARTICLE SIX

 

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized to make, alter or repeal the Bylaws of the Corporation without any action on the part of the stockholders. The stockholders shall also have the power to make, alter or repeal the Bylaws.

 

ARTICLE SEVEN

 

Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors of the Corporation or in the Bylaws of the Corporation. Election of directors need to be by written ballot unless the Bylaws of the Corporation so provide.

 

ARTICLE EIGHT

 

To the fullest extent permitted by the DGCL as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any amendment, repeal or modification of this ARTICLE EIGHT shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. The Corporation shall indemnify to the fullest extent permitted by law as it presently exists or may hereafter be amended, any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative, or investigative, by reason of the fact that he, his testator, or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation. Any amendment, repeal or modification of this ARTICLE EIGHT shall not adversely affect any right or protection of any person existing at the time of such repeal or modification.

 

2 

 

 

ARTICLE NINE

 

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed herein and by the laws of the State of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation.

 

ARTICLE TEN

 

In accordance with Section 203 of the General Corporation Law of the State of Delaware, the Corporation expressly elects not to be governed by Section 203 of the General Corporation Law of the State of Delaware.

 

ARTICLE ELEVEN

 

Section 11.1         Definitions. As used in this Article XI, the following capitalized terms have the following meanings when used herein with initial capital letters (and any references to any portions of Treasury Regulation §§ 1.382-2T, 1.382-3 and 1.382-4 shall include any successor provisions):

 

(a)          4.5-percent Transaction” means any Transfer described in clause (a) or (b) or (c) of Section 11.2.

 

(b)          4.5-percent Stockholder” means a Person who owns 4.5% or more of the Corporation’s then-outstanding Common Shares, whether directly or indirectly, and including shares such Person would be deemed to constructively own or which otherwise would be aggregated with shares owned by such Person pursuant to Section 382 of the Code, or any successor provision or replacement provision and the Treasury Regulations thereunder, and any other Person of group of Persons that is a “5-percent shareholder” of the Corporation within the meaning of Treasury Regulation §1.382-2T(g).

 

(c)          Agent” has the meaning set forth in Section 11.5.

 

(d)          Common Shares” means any interest in shares of common stock, par value $0.01 per share, of the Corporation that would be treated as “stock” of the Corporation pursuant to Treasury Regulation § 1.382-2T(f)(18).

 

(e)          Code” means the United States Internal Revenue Code of 1986, as amended from time to time, and the rulings issued thereunder.

 

3 

 

 

(f)          Corporation Security” or “Corporation Securities” means (i) Common Shares, (ii) shares of preferred stock issued by the Corporation (other than preferred stock described in Section 1504(a)(4) of the Code), (iii) warrants, rights, or options (including options within the meaning of Treasury Regulation §§ 1.382-2T(h)(4)(v)) and 1.382-4 to purchase Corporation Securities, and (iv) any Shares.

 

(g)         Effective Date” means the date that this Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware.

 

(h)         Excess Securities” has the meaning given such term in Section 11.4.

 

(i)          Expiration Date” means the earlier of (i) the repeal of Section 382 of the Code or any successor statute if the Board determines that this Article XI is no longer necessary for the preservation of Tax Benefits, (ii) the beginning of a taxable year of the Corporation to which the Board of Directors determines that no Tax Benefits may be carried forward or (iii) such date as the Board shall fix in accordance with Section 11.12.

 

(j)          Percentage Share Ownership” means the percentage Share Ownership interest of any Person or group (as the context may require) for purposes of Section 382 of the Code as determined in accordance with the Treasury Regulation §§ 1.382-2T(g), (h), (j) and (k) and 1.382-4 or any successor provision.

 

(k)         Person” means any individual, firm, corporation or other legal entity, including a group of persons treated as an entity pursuant to Treasury Regulation § 1.382- 3(a)(1)(i); and includes any successor (by merger or otherwise) of such entity.

 

(l)          Prohibited Distributions” means any and all dividends or other distributions paid by the Corporation with respect to any Excess Securities received by a Purported Transferee.

 

(m)        Prohibited Transfer” means any Transfer or purported Transfer of Corporation Securities to the extent that such Transfer is prohibited and/or void under this Article XI.

 

(n)         Public Group” has the meaning set forth in Treasury Regulation § 1.382-2T(f)(13).

 

(o)         Purported Transferee” has the meaning set forth in Section 11.4.

 

(p)         Shares” means any interest that would be treated as “stock” of the Corporation pursuant to Treasury Regulation §1.382-2T(f)(18).

 

(q)         Share Ownership” means any direct or indirect ownership of Shares, including any ownership by virtue of application of constructive ownership rules, with such direct, indirect, and constructive ownership determined under the provisions of Section 382 of the Code and the regulations thereunder.

 

(r)          Tax Benefits” means the net operating loss carryforwards, capital loss carryforwards, general business credit carryforwards, alternative minimum tax credit carryforwards and foreign tax credit carryforwards, as well as any loss or deduction attributable to a “net unrealized built-in loss” of the Corporation or any direct or indirect subsidiary thereof, within the meaning of Section 382 of the Code.

 

4 

 

 

(s)          Transfer” means, any direct or indirect sale, transfer, assignment, conveyance, pledge or other disposition or other action taken by a Person, other than the Corporation, that alters the Percentage Share Ownership of any Person. A Transfer also shall include the creation or grant of an option (including an option within the meaning of Treasury Regulation §§ 1.382-2T(h)(4)(v) and 1.382-4). For the avoidance of doubt, a Transfer shall not include the creation or grant of an option by the Corporation, nor shall a Transfer include the issuance of Shares by the Corporation.

 

(t)          Transferee” means any Person to whom Corporation Securities are Transferred.

 

(u)         Treasury Regulations” means the regulations, including temporary regulations or any successor regulations promulgated under the Code, as amended from time to time.

 

Section 11.2         Transfer and Ownership Restrictions. In order to preserve the Tax Benefits, from and after the Effective Date any attempted Transfer of Corporation Securities prior to the Expiration Date and any attempted Transfer of Corporation Securities pursuant to an agreement entered into prior to the Expiration Date, shall be prohibited and void ab initio to the extent that, as a result of such Transfer (or any series of Transfers of which such Transfer is a part), (a) any Person or Persons would become a 4.5-percent Stockholder, (b) the Percentage Share Ownership in the Corporation of any 4.5-percent Stockholder would be increased, or (c) for any attempted Transfer of Corporation Securities during the five-year period beginning on the Effective Date, the Percentage Share Ownership in the Corporation of any 4.5-percent Stockholder would be decreased ; provided, however, that nothing herein contained shall preclude the settlement of any transaction in the Corporation Securities entered into through the facilities of a national securities exchange or trading on an over-the-counter market, provided further, however, that the Company Securities and parties involved in any such transaction shall remain subject to the provisions of this Article XI in respect of such transaction.

 

Section 11.3        Exceptions. Notwithstanding anything to the contrary herein:

 

(a)          Transfers to a Public Group (including a new Public Group created under Treasury Regulation § 1.382-2T(j)(3)(i)) shall be permitted other than Transfers (or any series of Transfers of which such Transfer is a part) that would have the result described in Section 11.2(c).

 

5 

 

 

(b)          The restrictions set forth in Section 11.2 shall not apply to an attempted Transfer that is a 4.5-percent Transaction if the transferor or the Transferee obtains the written approval of the Board or a duly authorized committee thereof. As a condition to granting its approval pursuant to this Section 11.3, the Board, may, in its discretion, require (at the expense of the transferor and/or Transferee) an opinion of counsel selected by the Board that the Transfer shall not result in the application of any Section 382 of the Code limitation on the use of the Tax Benefits; provided that the Board may grant such approval notwithstanding the effect of such approval on the Tax Benefits if it determines that the approval is in the best interests of the Corporation. The Board may impose any conditions that it deems reasonable and appropriate in connection with such approval, including, without limitation, restrictions on the ability of any Transferee to Transfer Shares acquired through a Transfer. Approvals of the Board hereunder may be given prospectively or retroactively. The Board, to the fullest extent permitted by law, may exercise the authority granted by this Article XI through duly authorized officers or agents of the Corporation. Nothing in this Section 11.3 shall be construed to limit or restrict the Board in the exercise of its fiduciary duties under applicable law.

 

Section 11.4          Excess Securities.

 

(a)           No employee or agent of the Corporation shall record any Prohibited Transfer, and the purported transferee of such a Prohibited Transfer (the “Purported Transferee”) shall not be recognized as a stockholder of the Corporation for any purpose whatsoever in respect of the Corporation Securities that are the subject of the Prohibited Transfer (the “Excess Securities”). Until the Excess Securities are acquired by another person in a Transfer that is not a Prohibited Transfer, the Purported Transferee shall not be entitled with respect to such Excess Securities to any rights of stockholders of the Corporation, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any, and the Excess Securities shall be deemed to remain with the transferor unless and until the Excess Securities are transferred to the Agent pursuant to Section 11.5 or until an approval is obtained under Section 11.3. After the Excess Securities have been acquired in a Transfer that is not a Prohibited Transfer, the Corporation Securities shall cease to be Excess Securities. For this purpose, any Transfer of Excess Securities not in accordance with the provisions of Section 11.4 or Section 11.5 shall also be a Prohibited Transfer.

 

(b)          The Corporation may require as a condition to the registration of the Transfer of any Corporation Securities or the payment of any distribution on any Corporation Securities that the proposed Transferee or payee furnish to the Corporation all information reasonably requested by the Corporation with respect to its direct or indirect ownership interests in such Corporation Securities. The Corporation may make such arrangements or issue such instructions to its share transfer agent as may be determined by the Board to be necessary or advisable to implement this Article XI, including, without limitation, authorizing such transfer agent to require an affidavit from a Purported Transferee regarding such Person’s actual and constructive ownership of shares and other evidence that a Transfer will not be prohibited by this Article XI as a condition to registering any transfer.

 

6 

 

 

Section 11.5         Transfer to Agent.

 

(a)          If the Board determines that a Transfer of Corporation Securities constitutes a Prohibited Transfer described in Section 11.2(a) or Section 11.2(b) then, upon written demand by the Corporation sent within thirty (30) days of the date on which the Board determines that the attempted Transfer would result in Excess Securities, the Purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee’s possession or control, together with any Prohibited Distributions, to an agent designated by the Board of Directors (the “Agent”). The Agent shall thereupon sell to a buyer or buyers, which may include the Corporation, the Excess Securities transferred to it in one or more arm’s-length transactions (on the public securities market on which such Excess Securities are traded, if possible, or otherwise privately); provided, however, that any such sale must not constitute a Prohibited Transfer and provided, further, that the Agent shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent’s discretion, such sale or sales would disrupt the market for the Corporation Securities or otherwise would adversely affect the value of the Corporation Securities. If the Purported Transferee has resold the Excess Securities before receiving the Corporation’s demand to surrender Excess Securities to the Agent, the Purported Transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Corporation grants written permission to the Purported Transferee to retain a portion of such sales proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to Section 11.6 if the Agent rather than the Purported Transferee had resold the Excess Securities.

 

(b)          If the Board determines that a Transfer of Corporation Securities constitutes a Prohibited Transfer described in Section 11.2(c), then the Corporation shall follow the procedures in Section 11.5(a) as modified by this Section 11.5(b). If the Corporation cannot determine the identity of the Purported Transferee, then upon written demand by the Corporation sent within thirty (30) days of the date on which the Board determines that the attempted Transfer would result in Excess Securities, the 4.5-percent Stockholder who was the purported transferor in the Prohibited Transfer shall acquire through the Agent (and with such 4.5% Stockholder providing the funds) sufficient Securities to cause such 4.5-percent Stockholder, following such acquisition, not to be in violation of this Article XI; provided, however, that any such acquisition must not constitute a Prohibited Transfer. Such acquisition shall be deemed to occur simultaneously with the Transfer giving rise to the application of this provision. If such 4.5% Stockholder fails to acquire such sufficient Securities within thirty (30) days from the date on which the Corporation makes a written demand pursuant to Section 11.5 (whether or not made within the time specified in Section 11.5), then the Corporation may direct the Agent to acquire such sufficient Securities (with funds provided by the Corporation) and shall record them as owned by such 4.5% Stockholder, which shall be deemed to occur simultaneously with the Transfer giving rise to the application of this provision, and such 4.5% Stockholder shall be obligated to reimburse the Corporation for the cost of such sufficient Securities.

 

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Section 11.6          Application of Proceeds and Prohibited Distributions. The Agent shall apply any proceeds of a sale by it of Excess Securities and, if the Purported Transferee has previously resold the Excess Securities, any amounts received by it from a Purported Transferee, together, in either case, with any Prohibited Distributions, as follows: (a) first, such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder; (b) second, any remaining amounts shall be paid to the Purported Transferee, up to the amount paid by the Purported Transferee for the Excess Securities (or the fair market value at the time of the Transfer, in the event the purported Transfer of the Excess Securities was, in whole or in part, a gift, inheritance or similar Transfer) which amount shall be determined at the discretion of the Board; and (c) third, any remaining amounts shall be paid to one or more organizations qualifying under Section 501(c)(3) of the Code (or any comparable successor provision) selected by the Board. The Purported Transferee of Excess Securities shall have no claim, cause of action or any other recourse whatsoever against any transferor of Excess Securities. The Purported Transferee’s sole right with respect to such shares shall be limited to the amount payable to the Purported Transferee pursuant to this Section 11.6. In no event shall the proceeds of any sale of Excess Securities pursuant to this Section 11.6 inure to the benefit of the Corporation or the Agent, except to the extent used to cover costs and expenses incurred by the Agent in performing its duties hereunder.

 

Section 11.7          Modification of Remedies for Certain Indirect Transfers. In the event of any Transfer that does not involve a transfer of securities of the Corporation within the meaning of Delaware law (“Securities,” and individually, a “Security”) but which would cause a 4.5- percent Stockholder to violate a restriction on Transfers provided for in this Article XI, the application of Section 11.5 and Section 11.6 shall be modified as described in this Section 11.7. In such case, no such 4.5-percent Stockholder shall be required to dispose of any interest that is not a Security, but such 4.5-percent Stockholder and/or any Person whose ownership of Securities is attributed to such 4.5-percent Stockholder shall be deemed to have disposed of and shall be required to dispose of sufficient Securities (which Securities shall be disposed of in the inverse order in which they were acquired) to cause such 4.5-percent Stockholder, following such disposition, not to be in violation of this Article XI. Such disposition shall be deemed to occur simultaneously with the Transfer giving rise to the application of this provision, and such number of Securities that are deemed to be disposed of shall be considered Excess Securities and shall be disposed of through the Agent as provided in Section 11.5 and Section 11.6, except that the maximum aggregate amount payable either to such 4.5-percent Stockholder, or to such other Person that was the direct holder of such Excess Securities, in connection with such sale shall be the fair market value of such Excess Securities at the time of the purported Transfer. All expenses incurred by the Agent in disposing of such Excess Securities shall be paid out of any amounts due such 4.5-percent Stockholder or such other Person. The purpose of this Section 11.7 is to extend the restrictions in Section 11.2 and Section 11.5 to situations in which there is a 4.5- percent Transaction without a direct Transfer of Securities, and this Section 11.7, along with the other provisions of this Article XI, shall be interpreted to produce the same results, with differences as the context requires, as a direct Transfer of Corporation Securities.

 

Section 11.8          Legal Proceedings; Prompt Enforcement. If the Purported Transferee fails to surrender the Excess Securities or the proceeds of a sale thereof to the Agent within thirty (30) days from the date on which the Corporation makes a written demand pursuant to Section 11.5 (whether or not made within the time specified in Section 11.5), or if the purported transferor subject to Section 11.5(b) fails to acquire the Securities or make the payment required by Section 11.5(b), then the Corporation shall promptly take all cost effective actions that it believes are appropriate to enforce the provisions hereof, including the institution of legal proceedings to compel the applicable surrender, acquisition or payment. Nothing in this Section 11.8 shall (i) be deemed inconsistent with any Transfer of the Excess Securities provided in this Article XI being void ab initio, (ii) preclude the Corporation in its discretion from immediately bringing legal proceedings without a prior demand or (iii) cause any failure of the Corporation to act within the time periods set forth in Section 11.5 to constitute a waiver or loss of any right of the Corporation under this Article XI. The Board may authorize such additional actions as it deems advisable to give effect to the provisions of this Article XI.

 

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Section 11.9          Liability. To the fullest extent permitted by law, any stockholder subject to the provisions of this Article XI who knowingly violates the provisions of this Article XI and any Persons controlling, controlled by or under common control with such stockholder shall be jointly and severally liable to the Corporation for, and shall indemnify and hold the Corporation harmless against, any and all damages suffered as a result of such violation, including but not limited to damages resulting from a reduction in, or elimination of, the Corporation’s ability to utilize its Tax Benefits, and attorneys’ and auditors’ fees incurred in connection with such violation.

 

Section 11.10        Obligation to Provide Information. As a condition to the registration of the Transfer of any Shares, any Person who is a beneficial, legal or record holder of Shares, and any proposed Transferee and any Person controlling, controlled by or under common control with the proposed Transferee, shall provide such information as the Corporation may request from time to time in order to determine compliance with this Article XI or the status of the Tax Benefits of the Corporation.

 

Section 11.11        Legends. The Board may require that any certificates issued by the Corporation evidencing ownership of Shares that are subject to the restrictions on transfer and ownership contained in this Article XI bear the following legend:

 

“THE CERTIFICATE OF INCORPORATION, AS AMENDED FROM TIME TO TIME (THE “CERTIFICATE OF INCORPORATION”), OF THE CORPORATION CONTAINS RESTRICTIONS PROHIBITING THE TRANSFER (AS DEFINED IN THE CERTIFICATE OF INCORPORATION) OF COMMON SHARES OF THE CORPORATION (INCLUDING THE CREATION OR GRANT OF CERTAIN OPTIONS, RIGHTS AND WARRANTS) WITHOUT THE PRIOR AUTHORIZATION OF THE BOARD OF DIRECTORS OF THE CORPORATION (THE “BOARD OF DIRECTORS”) IF SUCH TRANSFER AFFECTS THE PERCENTAGE OF STOCK OF THE CORPORATION (WITHIN THE MEANING OF SECTION 382 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER) THAT IS TREATED AS OWNED BY A 4.5-PERCENT STOCKHOLDER UNDER THE CODE AND SUCH REGULATIONS. IF THE TRANSFER RESTRICTIONS ARE VIOLATED, THEN THE TRANSFER WILL BE VOID AB INITIO AND THE PURPORTED TRANSFEREE OF THE SHARES WILL BE REQUIRED TO TRANSFER EXCESS SECURITIES (AS DEFINED IN THE CERTIFICATE OF INCORPORATION) TO THE CORPORATION’S AGENT OR THE PURPORTED TRANSFEROR OF THE SHARES WILL BE REQUIRED TO REACQUIRE SHARES. IN THE EVENT OF A TRANSFER WHICH DOES NOT INVOLVE SECURITIES OF THE CORPORATION WITHIN THE MEANING OF THE DELAWARE SECURITIES ACT (“SECURITIES”) BUT WHICH WOULD VIOLATE THE TRANSFER RESTRICTIONS, THE PURPORTED TRANSFEREE (OR THE RECORD OWNER) OF THE SECURITIES WILL BE REQUIRED TO TRANSFER SUFFICIENT SECURITIES PURSUANT TO THE TERMS PROVIDED FOR IN THE CERTIFICATE OF INCORPORATION TO CAUSE THE 4.5-PERCENT STOCKHOLDER TO NO LONGER BE IN VIOLATION OF THE TRANSFER RESTRICTIONS. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE HOLDER OF RECORD OF THIS CERTIFICATE A COPY OF THE CERTIFICATE OF INCORPORATION, CONTAINING THE ABOVE-REFERENCED TRANSFER RESTRICTIONS, UPON WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.

 

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The Board may also require that any certificates issued by the Corporation evidencing ownership of Shares that are subject to conditions imposed by the Board under Section 11.3 also bear a conspicuous legend referencing the applicable restrictions.

 

Section 11.12       Authority of Board of Directors.

 

(a)          The Board shall have the power to determine all matters necessary for assessing compliance with this Article XI, including, without limitation, (i) the identification of 4.5-percent Stockholders, (ii) whether a Transfer is a 4.5-percent Transaction or a Prohibited Transfer, (iii) the Percentage Share Ownership in the Corporation of any 4.5-percent Stockholder, (iv) whether an instrument constitutes a Corporation Security, (v) the amount (or fair market value) due to a Purported Transferee pursuant to Section 11.6, and (vi) any other matters that the Board determines to be relevant; and the good faith determination of the Board on such matters shall be conclusive and binding for all the purposes of this Article XI. In addition, the Board may, to the extent permitted by law, from time to time establish, modify, amend or rescind bylaws, regulations and procedures of the Corporation not inconsistent with the provisions of this Article XI for purposes of determining whether any Transfer of Corporation Securities would jeopardize the Corporation’s ability to preserve and use the Tax Benefits and for the orderly application, administration and implementation of this Article XI.

 

(b)          Nothing contained in this Article XI shall limit the authority of the Board to take such other action to the extent permitted by law as it deems necessary or advisable to protect the Corporation and its stockholders in preserving the Tax Benefits. Without limiting the generality of the foregoing, in the event of a change in law making one or more of the following actions necessary or desirable, the Board may, by adopting a written resolution, (i) accelerate or extend the Expiration Date, (ii) modify the ownership interest percentage in the Corporation or the Persons or groups covered by this Article XI, (iii) modify the definitions of any terms set forth in this Article XI or (iv) modify the terms of this Article XI as appropriate, in each case, in order to prevent an ownership change for purposes of Section 382 of the Code as a result of any changes in applicable Treasury Regulations or otherwise; provided, however, that the Board shall not cause there to be such acceleration, extension or modification unless it determines, by adopting a written resolution, that such action is reasonably necessary or advisable to preserve the Tax Benefits or that the continuation of these restrictions is no longer reasonably necessary for the preservation of the Tax Benefits. Stockholders of the Corporation shall be notified of such determination through a filing with the Securities and Exchange Commission or such other method of notice as the Secretary of the Corporation shall deem appropriate.

 

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(c)             In the case of an ambiguity in the application of any of the provisions of this Article XI, including any definition used herein, the Board shall have the power to determine the application of such provisions with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. In the event this Article XI requires an action by the Board but fails to provide specific guidance with respect to such action, the Board shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of this Article XI. All such actions, calculations, interpretations and determinations that are done or made by the Board in good faith shall be conclusive and binding on the Corporation, the Agent, and all other parties for all other purposes of this Article XI. The Board may delegate all or any portion of its duties and powers under this Article XI to a committee of the Board as it deems necessary or advisable and, to the fullest extent permitted by law, may exercise the authority granted by this Article XI through duly authorized officers or agents of the Corporation. Nothing in this Article XI shall be construed to limit or restrict the Board in the exercise of its fiduciary duties under applicable law.

 

Section 11.13          Reliance. To the fullest extent permitted by law, the Corporation and the members of the Board shall be fully protected in relying in good faith upon the information, opinions, reports or statements of the President, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Corporate Controller of the Corporation and the Corporation’s legal counsel, independent auditors, transfer agent, investment bankers or other employees and agents in making the determinations and findings contemplated by this Article XI. The members of the Board shall not be responsible for any good faith errors made in connection therewith. For purposes of determining the existence and identity of, and the amount of any Corporation Securities owned by any stockholder, the Corporation is entitled to rely on the existence and absence of filings of Schedule 13D or 13G under the 1934 Act (or similar filings), as of any date, subject to its actual knowledge of the ownership of Corporation Securities.

 

Section 11.14          Benefits of This Article XI. Nothing in this Article XI shall be construed to give to any Person other than the Corporation or the Agent any legal or equitable right, remedy or claim under this Article XI. This Article XI shall be for the sole and exclusive benefit of the Corporation and the Agent.

 

Section 11.15          Severability. The purpose of this Article XI is to facilitate the Corporation’s ability to maintain or preserve its Tax Benefits. If any provision of this Article XI or the application of any such provision to any Person or under any circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Article XI.

 

Section 11.16          Waiver. With regard to any power, remedy or right provided herein or otherwise available to the Corporation or the Agent under this Article XI, (a) no waiver will be effective unless expressly contained in a writing signed by the waiving party; and (b) no alteration, modification or impairment will be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or other indulgence.

 

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ARTICLE TWELVE

 

Notwithstanding anything herein to the contrary, the Corporation shall not be authorized to issue non-voting capital stock of any class, series or other designation to the extent prohibited by Section 1123(a)(6) of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”); provided, however, that the foregoing restriction shall (i) have no further force and effect beyond that required by Section 1123(a)(6) of the Bankruptcy Code, (ii) only have such force and effect for so long as Section 1123(a)(6) is in effect and applies to the Corporation, and (iii) be deemed void or eliminated if required under applicable law.

 

ARTICLE THIRTEEN

 

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein

 

ARTICLE FOURTEEN

 

This Amended and Restated Certificate of Incorporation shall be effective as of 7:00 a.m., Dallas, Texas time, on December 31, 2020.

 

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IN WITNESS WHEREOF, the undersigned has caused this Amended and Restated Certificate of Incorporation to be duly executed in its corporate name by its duly authorized officer.

 

Dated: December 23, 2020 TUESDAY MORNING CORPORATION
     
     
  By:   /s/ Bridgett C. Zeterberg
  Name: Bridgett C. Zeterberg
  Title: Executive Vice President Human Resources,
    General Counsel and Corporate Secretary

 

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Exhibit 3.2

 

AMENDED AND RESTATED BYLAWS

 

OF

 

TUESDAY MORNING CORPORATION

 

A Delaware corporation

 

(Effective as of December 31, 2020)

 

ARTICLE I.

 

OFFICES

 

Section 1.         Registered Office. The registered office of the corporation in the State of Delaware shall be located at 1209 Orange Street, Corporation Trust Center, Wilmington, Delaware, County of New Castle 19805. The name of the corporation’s registered agent at such address shall be The Corporation Trust Company. The registered office and/or registered agent of the corporation may be changed from time to time by action of the board of directors.

 

Section 2.         Other Offices. The corporation may also have offices at such other places, both within and without the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.

 

ARTICLE II.

 

MEETINGS OF STOCKHOLDERS

 

Section 1.         Time and Place of Annual Meeting. The annual meeting of stockholders shall be held on such date and at such location and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting or in the waiver of notice thereof, for the purpose of electing directors and the transaction of such other business as may be properly brought before the meeting. If the date fixed for the annual meeting is a legal holiday, the meeting shall be held on the next succeeding business day. The board of directors may, in its sole discretion, determine that an annual meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by the Delaware General Corporation Law.

 

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Section 2.         Business Properly Brought Before an Annual Meeting. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. This Section 2 of Article II is expressly intended to apply to any business properly brought before an annual meeting, regardless of whether such proposal is made by means of an independently financed proxy statement. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors or (c) otherwise properly brought before the meeting by a stockholder of the corporation. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before, or more than 30 days after, the anniversary date of the immediately preceding annual meeting, to be timely, notice by the stockholder must be received not later than the close of business on the tenth (10th) day following the earlier of the date on which a written statement setting forth the date of the annual meeting was mailed to stockholders or the date on which it is first disclosed to the public. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the full text of the stockholder’s proposal and any proposed amendments to any document of the corporation, (c) the name and address of the stockholder of record, as they appear on the corporation’s books, of the beneficial owners, if any, and, if such stockholder or beneficial owner is an entity, of each director, executive, managing member or control person of such entity (any such individual or control person, a “control person”) proposing such proposal, (d) the class and number of shares of the corporation which are held of record and beneficially by the stockholder and control persons, including a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, the stockholder and such beneficial owners and control persons the effect or intent of which is to mitigate loss, manage risk or benefit from share price change for, or maintain, increase or decrease the voting power of, such stockholder or such beneficial owners or control persons with respect to shares of stock of the corporation, (e) a representation that the stockholder will notify the corporation in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (f) a representation that the stockholder is entitled to vote at the meeting and intends to appear at the meeting in person or by proxy to submit the business specified in such notice, (g) a representation whether the stockholder or the beneficial owner or control person, if any, will engage in a solicitation with respect to the proposal, and, if so, the percentage of shares of the corporation’s capital stock entitled to vote on such matter that are believed or intended to be held by the stockholders to be solicited, the approximate number of stockholders to be solicited if less than all, and the name of each participant (as defined in Item 4 of Schedule 14A under the Securities Exchange Act of 1934, as amended, regardless of whether such solicitation is subject to such provision) in such solicitation, and (h) any material interest of the stockholder in such business; provided, however, that if the stockholder’s proposal is submitted in accordance with, and is permitted by, Securities and Exchange Commission (“SEC”) Rule 14a-8, then the stockholder may provide to the secretary of the corporation only the information required by such rule.  In addition, if the stockholder’s ownership of shares of the corporation, as set forth in the notice, is solely beneficial, documentary evidence of such ownership must accompany the notice. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 2 of Article II. The presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that any business which was not properly brought before the meeting is out of order and shall not be transacted at the meeting.

 

Section 3.         Special Meetings. Except as otherwise provided by law, a special meeting of the stockholders may be called only by the president, chief executive officer or the Chairman of the Board and then only as provided for in resolutions duly adopted by the board of directors or at the written request of a majority of the directors.   The resolutions or request shall state the purpose or purposes for which the meeting is to be called. The notice of every special meeting of stockholders shall state the purpose for which it is called.   At any special meeting of stockholders, only such business shall be conducted as shall be provided for in the resolutions or request calling the special meeting.   Any special meeting of stockholders may be adjourned by the presiding officer of the meeting for any reason (including, if the presiding officer determines that it would be in the best interests of the corporation to extend the period of time for the solicitation of proxies) from time to time and from place to place until the presiding officer shall determine that the business to be conducted at the meeting is completed, which determination shall be conclusive. The board of directors may, in its sole discretion, determine that a special meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by the Delaware General Corporation Law.

 

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Section 4.         Place of Meetings. The board of directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal executive office of the corporation.

 

Section 5.         Notice. Except as otherwise required by law, whenever stockholders are required or permitted to take action at a meeting, written or printed notice stating the place, date, time, and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. All such notices shall be delivered, either personally, by electronic transmission or by mail, by or at the direction of the board of directors, the president or the secretary, and if mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the corporation. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

 

Section 6.         Inspectors. The corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. In the event that no inspector so appointed or designated is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of shares of capital stock of the corporation outstanding and the voting power of each such share, (ii) determine the shares of capital stock of the corporation present or represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares of capital stock of the corporation present or represented at the meeting and such inspectors’ count of all votes and ballots. Such certification shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

 

Section 7.         Stockholders List. The officer having charge of the stock ledger of the corporation shall make, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

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Section 8.         Quorum. The holders of a majority of the outstanding shares of capital stock, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by statute or by the certificate of incorporation. If a quorum is not present, the holders of a majority of the shares present in person or represented by proxy at the meeting, and entitled to vote at the meeting, may adjourn the meeting to another time and/or place.

 

Section 9.         Adjourned Meetings. A meeting of stockholders may be adjourned by the presiding officer of the meeting for any reason (including, if the presiding officer determines that it would be in the best interest of the corporation to extend the period of time for the solicitation of proxies) from time to time and place to place until the presiding officer shall determine that the business to be conducted at the meeting is completed, which determination shall be conclusive. When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

Section 10.         Vote Required. When a quorum is present, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the question is one upon which by express provisions of an applicable law or of the certificate of incorporation, or except as otherwise provided hereunder, a different vote is required, in which case such express provision shall govern and control the decision of such question.

 

Section 11.         Voting Rights. Except as otherwise provided by the Delaware General Corporation Law or by the certificate of incorporation of the corporation or any amendments thereto and subject to Section 3 of Article VI hereof, every stockholder shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of common stock held by such stockholder.

 

Section 12.         Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. Any proxy is suspended when the person executing the proxy is present at a meeting of stockholders and elects to vote by ballot, except that when such proxy is coupled with an interest and the fact of the interest appears on the face of the proxy, the agent named in the proxy shall have all voting and other rights referred to in the proxy, notwithstanding the presence of the person executing the proxy. At each meeting of the stockholders, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the secretary or a person designated by the secretary, and no shares may be represented or voted under a proxy that has been found to be invalid or irregular.

 

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Section 13.         Action by Written Consent. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and bearing the dates of signature of the stockholders who signed the consent or consents, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the state of Delaware, or the corporation’s principal place of business, or an officer or agent of the corporation having custody of the book or books in which proceedings of meetings of the stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested provided, however, that no consent or consents delivered by certified or registered mail shall be deemed delivered until such consent or consents are actually received at the registered office. All consents properly delivered in accordance with this section shall be deemed to be recorded when so delivered. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation as required by this section, written consents signed by the holders of a sufficient number of shares to take suchcorporate action are so recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action taken pursuant to such written consent or consents of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting thereof.

 

Section 14.         Conduct of Meetings. The meetings of the stockholders shall be presided over by the chairman of the meeting, which shall be either the Chairman of the Board or the chief executive officer, or if neither the Chairman of the Board nor the chief executive officer is present, such other officer of the corporation as designated by the board of directors. The secretary of the corporation or an assistant secretary, shall act as secretary of such meetings, or if neither the secretary nor an assistant secretary is present, then a secretary shall be appointed by the chairman of the meeting. The board of directors of the corporation may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the board of directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination or a proposal for other business was not made in accordance with the procedures prescribed by the bylaws or the aforesaid rules, regulations or procedures prescribed for the meeting, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination or proposal shall be disregarded.

 

ARTICLE III.

 

DIRECTORS

 

Section 1.         General Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors.

 

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Section 2.         Number, Election and Term of Office.   The number of directors which shall initially constitute the board upon the effective date of the Revised Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et. al., Pursuant to Chapter 11 of the Bankruptcy Code shall be nine (9).   Thereafter, the number of directors shall be established from time to time by resolution of the board.  The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors.   The directors shall be elected in this manner at the annual meeting of the stockholders, except as provided in Section 5 of this Article III.   Each director elected shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

 

Section 3.         Procedure for Nomination of Directors.  Subject to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation, nominations for the election of directors at a stockholders’ meeting may be made by the board of directors or a committee appointed by the board of directors or by any stockholder entitled to vote in the election of directors generally.  However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a stockholders’ meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the secretary of the corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before, or more than 30 days after, the anniversary date of the immediately preceding annual meeting, to be timely, the stockholder’s written notice must be received not later than the close of business on the tenth (10th) day following the earlier of the date on which a written statement setting forth the date of the annual meeting was mailed to stockholders it is first disclosed to the public. Each notice of a nomination from a stockholder shall set forth (a)  as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i)  the name, age, business address and residence address of such person, (ii)  the principal occupation or employment of such person, (iii)  the class and number of shares of the corporation which are beneficially owned by such person, and (iv)  any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such persons’ written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b)  as to the stockholder giving the notice (i)  the information required to be furnished in a notice of such stockholder,  proposal under clauses (c) through (g) of Section 2 of Article II, in each case in relation to such nomination and (ii)  a description of all arrangements or understandings between the stockholder and each nominee and any other person or person (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder.   At the request of the board of directors any person nominated by the board of directors for election as a director shall furnish to the secretary of the corporation that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee.   No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 3 of Article III. This Section 3 of Article III is expressly intended to apply to any nominations for directors submitted by stockholders, regardless of whether such nomination is made by means of an independently financed proxy statement.

 

Section 4.         Removal and Resignation.   Any director or the entire board of directors may be removed at any time, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.   Whenever the holders of any class or series are entitled to elect one or more directors by the provisions of the corporation’s certificate of incorporation, the provisions of this section shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole.   Any director may resign at any time upon written notice or by electronic transmission to the board of directors, the Chairman of the Board, if any, the chief executive officer, the president or the secretary of the corporation. Unless otherwise required in such notice, a resignation shall take effect upon delivery thereof to the board of directors or the designated officer. A resignation need not be accepted for it to be effective.

 

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Section 5.         Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled only by affirmative vote of a majority of the directors then in office, though less than a quorum, or by a sole remaining director.   Each director so chosen shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as herein provided.

 

Section 6.         Annual Meetings. The annual meeting of each newly elected board of directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of stockholders.

 

Section 7.         Other Meetings and Notice. Regular meetings, other than the annual meeting, of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors.   Special meetings of the board of directors may be called by or at the request of the president or by any member of the board of directors on at least twenty-four (24) hours’ notice to each director, either personally, by telephone, by mail, by overnight delivery service, by e-mail or by facsimile.

 

Section 8.         Quorum, Required Vote and Adjournment. A majority of the total number of directors shall constitute a quorum for the transaction of business.   The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a different number is provided by law, the certificate of incorporation or these bylaws. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

Section 9.         Committees. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which to the extent provided in such resolution or these bylaws shall have and may exercise the powers of the board of directors in the management and affairs of the corporation except as otherwise limited by law or the certificate of incorporation.  The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors.   Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

 

Section 10.         Committee Rules.   Each committee of the board of directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the board of directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum.   In the event that a member and that member’s alternate, if alternates are designated by the board of directors as provided in Section 9 of this Article III, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of any such absent or disqualified member.

 

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Section 11.         Communications Equipment. Members of the board of directors or any committee thereof may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this section shall constitute presence in person at the meeting.

 

Section 12.         Waiver of Notice and Presumption of Assent. Any member of the board of directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.   Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the corporation immediately after the adjournment of the meeting.   Such right to dissent shall not apply to any member who voted in favor of such action.

 

Section 13.         Action by Written Consent.   Unless otherwise restricted by the certificate of incorporation or bylaws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing, or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board, or committee. Such filing shall be in paper form if minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 14.         Chairman of the Board.   The Chairman of the Board shall be elected annually by the board of directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as conveniently may be.   The Chairman of the Board, or when he or she is absent, the chief executive officer, shall preside at all meetings of the board of directors and shall have such other powers and duties as designated by these bylaws and as from time to time may be assigned to him or her by the board of directors.

 

Section 15.         Compensation. Unless otherwise restricted by the certificate of incorporation, the board of directors shall have the authority to fix the compensation of directors and committee members.

 

ARTICLE IV.

 

OFFICERS

 

Section 1.         Number.   The officers of the corporation shall be elected by the board of directors and shall consist of a chief executive officer, a president, one or more vice-presidents, secretary, a treasurer, and such other officers and assistant officers as may be deemed necessary or desirable by the board of directors.   Any number of offices may be held by the same person. In its discretion, the board of directors may choose not to fill any office for any period as it may deem advisable, except that the offices of president and secretary shall be filled as expeditiously as possible.

 

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Section 2.         Election and Term of Office.   The officers of the corporation shall be elected annually by the board of directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as conveniently may be.The chief executive officer and the president shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of stockholders or as soon thereafter as conveniently may be.   The board of directors may appoint other officers to serve for such terms as it deems desirable. Vacancies may be filled or new offices created and filled at any meeting of the board of directors or by the chief executive officer.  Each officer shall hold office until the first meeting of the board of directors after the annual meeting of stockholders next succeeding his or her election, and until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

 

Section 3.         Removal. Any officer or agent elected by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

 

Section 4.         Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors or the chief executive officer for the unexpired portion of the term by the board of directors or the chief executive officer then in office.

 

Section 5.         Compensation. Compensation of all officers shall be fixed by the board of directors or a committee thereof, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the corporation.

 

Section 6.         The Chief Executive Officer. The chief executive officer of the corporation shall have general charge of the business, affairs and property of the corporation, shall have control over its officers, agents and employees, shall see that all orders and resolutions of the board of directors are carried into effect, and shall have such other powers, authority and responsibilities as the board of directors may determine.  The chief executive officer may execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. The chief executive officer may appoint additional officers as provided under Section 2 of this Article IV, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or as may be provided in these bylaws. Except as otherwise provided in these bylaws, either the chief executive officer or the Chairman of the Board shall preside at all meetings of the stockholders and (should he or she be a director) of the board of directors at which he or she is present.

 

Section 7.         The President. Unless the board of directors otherwise provides and establishes a separate office of the president, the president shall be the chief executive officer of the corporation, and shall, subject to the control and discretion of the board of directors, have the general powers of the chief executive officer as provided under these bylaws. Upon establishment of a separate office of the president, the president shall, subject to the direction and control of the board of directors and the chief executive officer, participate in the supervision of the business and affairs of the corporation and he or she shall perform all duties incident to the office of president and shall have and exercise such powers, authority and responsibilities as the board of directors or chief executive officer may determine.

 

Section 8.         The Chief Financial Officer. The chief financial officer shall be the principal financial officer of the corporation, shall have charge of the corporation’s books of account and shall be responsible for the maintenance of adequate records of all assets, liabilities and financial transactions of the corporation. The chief financial officer shall prepare and render such balance sheets, income statements and other financial reports as the board of directors, the Chairman of the Board, the chief executive officer, or the president may require. He or she shall perform such other duties as may be prescribed by these bylaws or as may be assigned to him or her by the Chairman of the Board, the chief executive officer, the president or the board of directors, and, except as otherwise prescribed by the board of directors, he or she shall have such powers and duties as generally pertain to the office of the chief financial officer.

 

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Section 9.         Vice-Presidents. The vice-president, of if there shall be more than one, the vice-presidents in the order determined by the board of directors or by the president, shall, in the absence or disability of the president, act with all of the powers and be subject to all the restrictions of the president.   The vice-presidents shall also perform such other duties and have such other powers as the board of directors, the president or these bylaws may, from time to time, prescribe.

 

Section 10.         The Secretary and Assistant Secretaries. The secretary, or an assistant secretary, shall attend all meetings of the board of directors, all meetings of the committees thereof and all meetings of the stockholders and either the secretary, or an assistant secretary, shall record in the official minutes all the proceedings of the meetings in a book or books to be kept for that purpose.   Under the president’s supervision, the secretary shall give, or cause to be given, all notices required to be given by these bylaws or by law; shall have such powers and perform such duties as the board of directors, the president or these bylaws may, from time to time, prescribe; and shall have custody of the corporate seal of the corporation. The secretary, or an assistant secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, when requested to do so by the board of directors, president or secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the president, or secretary may, from time to time, prescribe.

 

Section 11.         The Treasurer and Assistant Treasurer. The treasurer shall have the custody of the corporate funds and securities; shall deposit all monies and other valuable effects in the name and to the credit of the corporation as may be ordered by the board of directors; shall cause the funds of the corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; shall have such powers and perform such duties as the board of directors, the Chairman of the Board, the chief executive officer, the president or these bylaws may, from time to time, prescribe. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer.   The assistant treasurers shall perform such other duties and have such other powers as the board of directors, the chief executive officer, the president or treasurer may, from time to time, prescribe.

 

Section 12.         Other Officers, Assistant Officers and Agents.   Officers, assistant officers and agents, if any, other than those whose duties are provided for in these bylaws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the board of directors.

 

Section 13.         Absence or Disability of Officers. In the case of the absence or disability of any officer of the corporation and of any person hereby authorized to act in such officer’s place during such officer’s absence or disability, the board of directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.

 

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ARTICLE V.

 

INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

 

Section 1.         Nature of Indemnity. Each person who was or is made a party or is threatened to be made a party to or is involved in (whether as a primary party, a witness or otherwise) any pending, threatened or completed action, suit or proceeding, whether civil, criminal, administrative, investigative, legislative or otherwise, including any action by or in the right of the Corporation (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the corporation to the fullest extent not prohibited by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment) against all judgments, fines, penalties, amounts paid or to be paid in settlement, expense, liability and loss (including attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding)), and such indemnification shall inure to the benefit of his heirs, executors and administrators; provided, however, that, except as provided in Section 2 of this Article V, the corporation, shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation. The right to indemnification conferred in this Article V shall, subject to Sections 2, 5 and 9 of this Article V, include advancement of expenses as provided in Section 5 of this Article V.  The corporation may, by action of its board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

 

Section 2.         Procedure for Indemnification of Directors and Officers.   Any indemnification of a director or officer of the corporation under Section 1 of this Article V or advancement of expenses under Section 5 of this Article V shall be made promptly, and in any event within twenty (20) days, upon the written request of the director or officer.   If a determination by the corporation that the director or officer is entitled to indemnification and advancement of expenses pursuant to this Article V is required, and the corporation fails to respond within sixty (60) days to a written request for indemnity or advancement of expenses, the corporation shall be deemed to have approved the request.   If the corporation denies a written request for indemnification or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within twenty (20) days, the right to indemnification or advancement of expenses as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction.   Such person’s costs and expenses incurred in connection with successfully establishing his right to indemnification or advancement of expenses, in whole or in part, in any such action shall also be indemnified by the corporation.   It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the corporation.   Neither the failure of the corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its board of directors, a committee of the board of directors, independent legal counsel, or the stockholders), that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

Section 3.         Article Not Exclusive. The rights to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

 

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Section 4.         Insurance. The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, whether or not the corporation would have the power to indemnify such person against such liability under this Article V.

 

Section 5.         Expenses. Expenses incurred by any person described in Section 1 of this Article V in defending a proceeding shall be paid by the corporation in advance of such proceeding’s final disposition, unless it is determined by the board of directors, a committee of the board of directors, independent legal counsel or the stockholders in the specific case that such person has not met the applicable standards of conduct set forth in the Delaware General Corporation Law, upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation or, where indemnification is granted, to the extent the expenses so advanced by the corporation, when aggregated with any indemnification amounts collected as described in Section 9 of this Article V, exceed the indemnification to which such person is entitled.  Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors, a committee of the board of directors, independent legal counsel or the stockholders deems appropriate.

 

Section 6.         Employees and Agents. Persons who are not covered by the foregoing provisions of this Article V and who are or were employees or agents of the corporation, or who are or were serving at the request of the corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the board of directors.

 

Section 7.         Contract Rights. The provisions of this Article V shall be deemed to be a contract right between the corporation and each director or officer who serves in any such capacity at any time while this Article V and the relevant provisions of the Delaware General Corporation Law or other applicable law are in effect, and any repeal or modification of this Article V or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.

 

Section 8.         Merger or Consolidation. For purposes of this Article V, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article V with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

 

Section 9.         Other Indemnification. Notwithstanding other provisions of this Article V, the corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee, fiduciary or agent of another corporation, partnership, joint venture, trust, or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust or other enterprise.

 

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ARTICLE VI.

 

CERTIFICATES OF STOCK

 

Section 1.         Form. The shares of stock of the corporation shall be represented by certificates; provided, however, that the board of directors may provide, by resolution, that some or all classes or series of its stock may be uncertificated shares. Every holder of stock of the corporation represented by certificates, and upon request, shall be entitled to have a certificate, signed by, or in the name of the corporation by the president or a vice-president and the secretary or an assistant secretary of the corporation, certifying the number of shares of a specific class or series owned by such holder in the corporation.   If any such certificate is countersigned (1)  by a transfer agent or an assistant transfer agent other than the corporation or its employee or (2)  by a registrar, other than the corporation or its employee, the signature of any such president, vice-president, secretary, or assistant secretary may be facsimiles.   In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation whether because of death, resignation or otherwise before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation.   All certificates for certificated shares shall be consecutively numbered or otherwise identified.   The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation.   Shares of stock of the corporation shall only be transferred on the books of the corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the corporation of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the corporation may reasonably require, and accompanied by all necessary stock transfer stamps.   In that event, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates, and record the transaction on its books.   The board of directors may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent or registrar, or both in connection with the transfer of any class or series of securities of the corporation.

 

Section 2.         Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates previously issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against the corporation on account of the loss, theft or destruction of any such certificate or the issuance of such new certificate.

 

Section 3.         Fixing a Record Date for Stockholder Meetings. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty (60) nor less than ten (10)  days before the date of such meeting.   If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.   A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

 

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Section 4.         Fixing a Record Date for Action by Written Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten (10)  days after the date upon which the resolution fixing the record date is adopted by the board of directors.   If no record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded.   Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.   If no record date has been fixed by the board of directors and prior action by the board of directors is required by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action.

 

Section 5.         Fixing a Record Date for Other Purposes. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action.   If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

 

Section 6.         Registered Stockholders. Prior to the surrender to the corporation of a certificate or certificates for a share or shares of certificated stock with a request to record the transfer of such share or shares, the corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner.   The corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

 

Section 7.         Subscriptions for Stock. Unless otherwise provided for in the subscription agreement, subscriptions for shares shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series. In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation.

 

ARTICLE VII.

 

GENERAL PROVISIONS

 

Section 1.         Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law.   Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation.   Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.

 

14 

 

 

Section 2.         Checks, Drafts or Orders. All checks, drafts, or other orders for the payment of money by or to the corporation and all notes and other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner, as shall be determined by resolution of the board of directors or a duly authorized committee thereof.

 

Section 3.         Contracts. The board of directors may authorize any officer or officers, or any agent or agents, of the corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

 

Section 4.         Loans. No loans shall be contracted on behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors.   Such authority may be general or confined to specific instances.

 

Section 5.         Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors.

 

Section 6.         Corporate Seal. The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

 

Section 7.         Voting Securities Owned By Corporation. Voting securities in any other corporation held by the corporation shall be voted by the chief executive officer, unless the board of directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.

 

Section 8.         Inspection of Books and Records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business.

 

Section 9.         Section Headings. Section headings in these bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

 

15 

 

 

Section 10.         Inconsistent Provisions. In the event that any provision of these bylaws is or becomes inconsistent with any provision of the certificate of incorporation, the Delaware General Corporation Law or any other applicable law, the provision of these bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

 

ARTICLE VIII.

 

FORUM FOR ADJUDICATION OF DISPUTES

 

Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

 

ARTICLE IX.

 

AMENDMENTS

 

These bylaws may be amended, altered, or repealed and new bylaws adopted at any meeting of the board of directors by a majority vote.  The fact that the power to adopt, amend, alter, or repeal the bylaws has been conferred upon the board of directors shall not divest the stockholders of the same powers.

 

16 

 

 

The undersigned, the secretary of the corporation, hereby certifies that the foregoing amended and restated bylaws were adopted by the directors of the corporation effective as of December 31, 2020.

 

  By: /s/ Bridgett C. Zeterberg
  Name: Bridgett C. Zeterberg
  Title: Executive Vice President, Human Resources,
    General Counsel and Corporate Secretary

 

17 

 

Exhibit 10.1

 

Execution Version

 

 

CREDIT AGREEMENT

 

dated as of December 31, 2020,

 

among

 

TUESDAY MORNING CORPORATION,
as Holdings,

 

TUESDAY MORNING, INC.,
as Borrower,

 

THE LENDERS PARTY HERETO,

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, Sole Lead Arranger and Sole Bookrunner

 

and

 

BANK OF AMERICA, N.A.,
and

WELLS FARGO BANK, N.A.,
as Co-Syndication Agents

 

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I Definitions 1
   
Section 1.01 Defined Terms 1
Section 1.02 Terms Generally 59
Section 1.03 Accounting Terms 59
Section 1.04 Rounding 60
Section 1.05 Timing of Payment or Performance 60
Section 1.06 Classification 60
Section 1.07 References to Laws 61
Section 1.08 Pro Forma 61
Section 1.09 Interest Rates; LIBOR Notification 61
Section 1.10 Letters of Credit 62
Section 1.11 Divisions 62
     
ARTICLE II The Credits 62
   
Section 2.01 Revolver Commitments 62
Section 2.02 Loans and Borrowings 62
Section 2.03 Requests for Borrowings and Notices 63
Section 2.04 [Reserved] 64
Section 2.05 Letters of Credit 64
Section 2.06 Funding of Borrowings 68
Section 2.07 Interest Elections 69
Section 2.08 Repayment of Loans; Termination of Revolver Commitments 70
Section 2.09 Evidence of Debt 71
Section 2.10 Application of Payment in the Dominion Account 72
Section 2.11 Prepayments of Revolver Loans 72
Section 2.12 Fees 73
Section 2.13 Interest 73
Section 2.14 Alternate Rate of Interest 74
Section 2.15 Increased Costs 77
Section 2.16 Break Funding Payments 78
Section 2.17 Taxes 79
Section 2.18 Payments Generally; Pro Rata Treatment; Sharing of Set-offs 82
Section 2.19 Mitigation Obligations; Replacement of Lenders 84
Section 2.20 Illegality 85
Section 2.21 Defaulting Lenders 86
Section 2.22 Revolver Commitment Increase 87
Section 2.23 Bank Products and Swap Agreements 89
Section 2.24 Overadvances 89
Section 2.25 Protective Advances 90

 

i

 

 

ARTICLE III Representations and Warranties 90
   
Section 3.01 Organization; Powers 90
Section 3.02 Authorization 91
Section 3.03 Enforceability 91
Section 3.04 Governmental Approvals 91
Section 3.05 Financial Statements 92
Section 3.06 No Material Adverse Effect 92
Section 3.07 Title to Properties; Possession Under Leases 92
Section 3.08 Subsidiaries 93
Section 3.09 Litigation; Compliance with Laws 93
Section 3.10 Investment Company Act 93
Section 3.11 Use of Proceeds 93
Section 3.12 Federal Reserve Regulations 93
Section 3.13 Tax Returns 94
Section 3.14 Disclosure 94
Section 3.15 Employee Benefit Plans 95
Section 3.16 Environmental Matters 95
Section 3.17 Security Documents 95
Section 3.18 Solvency 96
Section 3.19 Labor Matters 96
Section 3.20 Insurance 97
Section 3.21 USA PATRIOT Act and OFAC 97
Section 3.22 EEA Financial Institution 97
Section 3.23 Plan Assets 97
Section 3.24 Common Enterprise 98
Section 3.25 Material Agreements 98
     
ARTICLE IV Conditions Precedent 98
   
Section 4.01 Closing Date 98
Section 4.02 Conditions Precedent to All Credit Extensions 102
     
ARTICLE V Affirmative Covenants 103
   
Section 5.01 Existence; Businesses and Properties 103
Section 5.02 Insurance 103
Section 5.03 Taxes 104
Section 5.04 Financial Statements, Reports, etc. 104
Section 5.05 Notices of Material Events 107
Section 5.06 Compliance with Laws 108
Section 5.07 Maintaining Records; Access to Properties and Inspections 108
Section 5.08 Compliance with Environmental Laws 109
Section 5.09 Further Assurances; Additional Guarantors; Mortgages 110
Section 5.10 Fiscal Year; Accounting 112
Section 5.11 [RESERVED] 112
Section 5.12 Collateral Monitoring and Reporting 112

 

ii

 

 

Section 5.13 Use of Proceeds 115
     
ARTICLE VI Negative Covenants 115
   
Section 6.01 Indebtedness 115
Section 6.02 Liens 118
Section 6.03 Sale and Lease-Back Transactions 122
Section 6.04 Investments, Loans and Advances 122
Section 6.05 Mergers, Consolidations and Dispositions 124
Section 6.06 Dividends and Distributions 128
Section 6.07 Transactions with Affiliates 130
Section 6.08 Business of Holdings, the Borrower and the Subsidiaries 132
Section 6.09 Limitation on Modification of Indebtedness; Modification of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc. 132
Section 6.10 Financial Covenant 135
Section 6.11 Use of Proceeds 135
Section 6.12 Foreign Subsidiaries 135
     
ARTICLE VII Events of Default 135
   
Section 7.01 Events of Default 135
Section 7.02 Allocation 138
     
ARTICLE VIII The Agents 140
   
Section 8.01 Appointment, Authority and Duties of the Administrative Agent 140
Section 8.02 Agreements Regarding Collateral and Field Examination Reports 141
Section 8.03 Reliance By the Administrative Agent 142
Section 8.04 Action Upon Default 142
Section 8.05 Payments Received by Defaulting Lender 142
Section 8.06 Limitation on Responsibilities of the Agents 143
Section 8.07 Successor Administrative Agent and Co-Agents 143
Section 8.08 Acknowledgements of Lenders and Issuing Banks 144
Section 8.09 Remittance of Payments and Collections 145
Section 8.10 The Administrative Agent in its Individual Capacity 145
Section 8.11 Administrative Agent Titles 146
Section 8.12 Bank Product Providers 146
Section 8.13 Survival 146
Section 8.14 Withholding Tax 146
Section 8.15 Indemnification 147
Section 8.16 Certain ERISA Matters 147
Section 8.17 Flood Insurance Laws 148
     
ARTICLE IX Miscellaneous 148
   
Section 9.01 Notices 148
Section 9.02 Survival of Agreement 149

 

iii

 

 

Section 9.03 Binding Effect 150
Section 9.04 Successors and Assigns 150
Section 9.05 Expenses; Indemnity 154
Section 9.06 Right of Set-off 156
Section 9.07 Applicable Law 156
Section 9.08 Waivers; Amendment 157
Section 9.09 Interest Rate Limitation 159
Section 9.10 Entire Agreement 160
Section 9.11 WAIVER OF JURY TRIAL 160
Section 9.12 Severability 160
Section 9.13 Counterparts; Electronic Execution 161
Section 9.14 Headings 162
Section 9.15 Jurisdiction; Consent to Service of Process 162
Section 9.16 Confidentiality 163
Section 9.17 Release of Liens and Guarantees 164
Section 9.18 USA PATRIOT Act 164
Section 9.19 Marshalling 164
Section 9.20 Obligations Several; Independent Nature of Lenders’ Rights 164
Section 9.21 Acknowledgement Regarding Any Supported QFCs 165
Section 9.22 Acknowledgements 165
Section 9.23 Lender Action 166
Section 9.24 Judgment Currency 166
Section 9.25 Acknowledgement and Consent to Bail-In of Affected Financial Institutions 167
Section 9.26 Intercreditor Agreement 167

 

iv

 

 

EXHIBITS AND SCHEDULES

 

Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Solvency Certificate
Exhibit C Form of Compliance Certificate
Exhibit D-1 Form of U.S. Tax Compliance Certificate (Foreign Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit D-2 Form of U.S. Tax Compliance Certificate (Foreign Participants that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit D-3 Form of U.S. Tax Compliance Certificate (Foreign Participants that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit D-4 Form of U.S. Tax Compliance Certificate (Foreign Lenders that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit E Form of Note
Exhibit F Form of Borrowing Base Certificate
   
Schedule 1.01(a) Specified Bank Product Obligations
Schedule 1.01(b) Existing Letters of Credit
Schedule 2.01 Revolver Commitments
Schedule 2.01B Letter of Credit Sublines
Schedule 3.07(b) Licensing Agreements
Schedule 3.07(c) Real Property
Schedule 3.08(a) Subsidiaries
Schedule 3.17 Financing Statements and Other Filings
Schedule 3.20 Insurance
Schedule 3.25 Material Agreements
Schedule 5.12 Deposit Accounts, Securities Accounts and Commodities Accounts
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
Schedule 6.04 Investments
Schedule 6.07 Transactions with Affiliates

 

v

 

 

 

CREDIT AGREEMENT dated as of December 31, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), among TUESDAY MORNING, INC., a Texas corporation (the “Borrower”), each of the Subsidiary Guarantors (as hereinafter defined), TUESDAY MORNING CORPORATION, a Delaware corporation (“Parent”), TMI HOLDINGS, INC., a Delaware corporation (“Intermediate Holdings”), the LENDERS party hereto from time to time, JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”), BANK OF AMERICA, N.A. and WELLS FARGO BANK, N.A., as co-syndication agents (in such capacity, the “Syndication Agents”).

 

WHEREAS, on May 27, 2020 (the “Petition Date”), the Borrower and each of the Subsidiary Guarantors (as defined below) filed voluntary petitions with the Bankruptcy Court commencing their respective cases that are pending under Chapter 11 of the Bankruptcy Code (collectively, the “Cases”). In connection with the Cases, the Loan Parties, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto entered into that certain Senior Secured Super Priority Debtor-In-Possession Credit Agreement dated as of May 29, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “DIP ABL Credit Agreement”);

 

WHEREAS, the Loan Parties filed the Revised Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et al., Pursuant to Chapter 11 of the Bankruptcy Code dated November 18, 2020 (as amended, supplemented or otherwise modified from time to time, the “Plan of Reorganization”) with the Bankruptcy Court, which Plan of Reorganization was confirmed by the Bankruptcy Court’s order entered on December 23, 2020;

 

WHEREAS, the Borrower has requested that the Lenders and Issuing Banks extend exit financing in connection with the consummation of the Plan of Reorganization;

 

NOW THEREFORE, the Lenders and Issuing Banks are willing to extend such exit financing to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

Section 1.01     Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below:

 

ABL Priority Collateral” shall have the meaning assigned such term in the Intercreditor Agreement.

 

Account” shall have the meaning as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

 

Account Debtor” shall mean a Person who is obligated under an Account, Chattel Paper or General Intangible.

 

 

 

Acquisition” shall mean, with respect to any Person, (a) an Investment in, or a purchase of a Controlling interest in, the Equity Interests of any other Person (whether by merger or consolidation of such Person with any other Person or otherwise) or (b) a purchase or other acquisition of all or substantially all of the assets or properties of another Person or of any business unit of another Person (whether by merger or consolidation of such Person with any other Person or otherwise).

  

Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate; provided, that if the Adjusted LIBO Rate as so determined would be less than 0.50%, such rate shall be deemed to 0.50% for the purposes of this Agreement.

 

Adjusted One Month LIBOR Rate” means, for any day, an interest rate per annum equal to the sum of (i) 2.50% plus (ii) the Adjusted LIBO Rate for a one month interest period on such day (or if such day is not a Business Day, the immediately preceding Business Day); provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate at approximately 11:00 a.m. London time on such day; provided, further, that if the LIBO Screen Rate, as determined without giving effect to the first proviso set forth in the definition of the “LIBO Screen Rate,” at such time shall be less than 0.50%, such rate shall be deemed to be 0.50% for purposes of determining the “Adjusted One Month LIBOR Rate” and the “CBFR”.

 

Administrative Agent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

Administrative Questionnaire” shall mean an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

Affected Lender” shall have the meaning assigned to such term in Section 2.20.

 

Affiliate” shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, no Agent or Lender shall be deemed to be an Affiliate of the Borrower or its Subsidiaries with respect to transactions evidenced by any Loan Document.

 

Agent Indemnitees” shall mean each Agent and its officers, directors, employees, Affiliates, agents and attorneys.

 

Agent Professionals” shall mean attorneys, accountants, appraisers, auditors, environmental engineers or consultants, and other professionals and experts retained by the Administrative Agent.

 

Agents” shall mean the Administrative Agent and the Syndication Agents.

 

2

 

 

Aggregate Letter of Credit Subline” shall mean, at any time, the aggregate amount of the Letter of Credit Sublines of all Issuing Banks at such time. As of the Closing Date, the Aggregate Letter of Credit Subline is $15,000,000.

 

Aggregate Revolving Exposure” means, at any time, the aggregate Revolving Exposure of all the Lenders at such time.

 

Agreement” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

Agreement Currency” has the meaning assigned to such term in Section 9.24.

 

All Outstanding Equity Interests” shall mean, with respect to any Person, all of the outstanding Equity Interests (other than directors’ qualifying shares and similar de minimis holdings required by Applicable Law) in such Person.

 

Allowed General Unsecured Claims” shall have the meaning assigned to such term in the Plan of Reorganization.

 

Ancillary Document” has the meaning assigned to it in Section 9.13(b).

 

Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery , corruption, money laundering, any predicate crime to money laundering or any financial record keeping an reporting requirements related thereto.

 

Applicable Law” shall mean all applicable laws, rules, regulations and binding governmental requirements having the force and effect of law applicable to the Person in question or any of its property or assets, including all applicable statutory law, common law and equitable principles, and all provisions of constitutions, treaties, statutes, rules, regulations, orders and decrees of Governmental Authorities.

 

Applicable Margin” shall mean, for any day, with respect to any Loan, the applicable rate per annum set forth below under the caption “Revolver CBFR Applicable Margin” or “Revolver Eurodollar Applicable Margin”, as the case may be, based upon the Average Quarterly Availability during the most recently ended fiscal quarter of the Borrower; provided that the “Applicable Margin” shall be the applicable rates per annum set forth below in Category III during the period from the Closing Date to, and including, the last day of the fiscal quarter of the Borrower ending on or about December 31, 2021:

 

Category Excess Availability

Revolver Eurodollar

Applicable Margin

Revolver CBFR
Applicable Margin
I

 

≥ $50,000,000

 

2.25% 1.25%
II

 

< $50,000,000 but

≥ $30,000,000

 

2.50% 1.50%
III

 

< $30,000,000

 

2.75% 1.75%

 

3

 

 

For purposes of the foregoing, each change in the Applicable Margin resulting from a change in Average Quarterly Availability shall be effective during the period commencing on and including the first day of each fiscal quarter of the Borrower and ending on the last day of such fiscal quarter, it being understood and agreed that, for purposes of determining the Applicable Margin on the first day of any fiscal quarter of the Borrower, the Average Quarterly Availability during the most recently ended fiscal quarter of the Borrower shall be used. Notwithstanding the foregoing, the Average Quarterly Availability shall be deemed to be in Category III at the option of the Administrative Agent or at the request of the Required Lenders if the Borrower fails to deliver any Borrowing Base Certificate or related information required to be delivered by it pursuant to Section 5.12, during the period from the expiration of the time for delivery thereof until five days after each such Borrowing Base Certificate and related information is so delivered.

 

If at any time the Administrative Agent determines that any Borrowing Base Certificate or related information based on which Availability and/or such Average Quarterly Availability and the corresponding Applicable Margin was determined, as applicable, was incorrect (whether based on a restatement, fraud or otherwise) (“Inaccurate Information”), the Borrower shall be required to retroactively pay any additional amount (an “Additional Amount”) that the Borrower would have been required to pay if such Borrowing Base Certificate or related information based upon which Availability and/or such Average Quarterly Availability was determined had been accurate at the time it was delivered. Upon the making of such retroactive payment of such Additional Amount by the Borrower, no Event of Default under Section 7.01(c) shall be deemed to exist solely as a result of the Borrower’s failure to have paid such Additional Amount when such Additional Amount would have been payable had there been no Inaccurate Information.

 

Appraised Value Percentage” means the appraised orderly liquidation value, net of costs and expenses to be incurred in connection with any such liquidation, which value is expressed as a percentage of Cost of the Eligible Inventory as set forth in the Loan Parties’ inventory stock ledgers, which value shall be determined from time to time by the most recent appraisal undertaken by an independent appraiser engaged by the Administrative Agent.

 

Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent and the Borrower (if the Borrower’s consent is required by this Agreement), in the form of Exhibit A or such other form as shall be approved by the Administrative Agent.

 

Availability” shall mean as of any applicable date, (a) the amount by which the Line Cap at such time exceeds the Aggregate Revolving Exposure on such date, minus (b) the Availability Block; provided that, solely for purposes of (x) the definition of “Cash Dominion Trigger Period”, (y) the definition of “Liquidity Event” and (z) Section 5.07(b), “Availability” shall be determined without regard to the Availability Block.

 

Availability Block” shall mean (a) during the period from and after the Closing Date to, but excluding, the first anniversary of the Closing Date, an amount equal the greater of (i) $10,000,000 and (ii) ten percent (10%) of the Line Cap, and (b) from and after the first anniversary of the Closing Date, $0.

 

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Availability Reserve” shall mean the sum (without duplication of any other reserves or items that are otherwise addressed or excluded through eligibility criteria (including collection rates or collection percentages)) of (a) the Inventory Reserves; (b) the Rent and Charges Reserve; (c) the Bank Product Reserve; (d) the Swap Obligations Reserve, and (e) such additional reserves not otherwise addressed in clauses (a) through (d) above, in such amounts and with respect to such matters, as the Administrative Agent in its Permitted Discretion may elect to establish or modify from time to time.

 

Notwithstanding anything to the contrary in this Agreement, (i) so long as no Event of Default exists, such Availability Reserve shall not be established or changed except upon not less than three (3) days’ (or such shorter period as may be agreed by the Borrower) prior written notice to the Borrower, which notice shall include a reasonably detailed description of such applicable Availability Reserve being established or changed (during which period (a) the Administrative Agent shall, if requested, discuss any such Availability Reserve or change with the Borrower, (b) the Borrower may take such action as may be required so that the event, condition or matter that is the basis for such Availability Reserve or change thereto no longer exists or exists in a manner that would result in the establishment of a lower Availability Reserve or result in a lesser change thereto, in a manner and to the extent reasonably satisfactory to the Administrative Agent and (c) the Borrower shall not be permitted to request any Credit Extension if Availability (determined as if such new or changed reserve were in effect as of the time of such Credit Extension) after giving effect to such Credit Extension would be less than $0), and (ii) the amount of any Availability Reserve established by the Administrative Agent, and any change in the amount of any Availability Reserve, shall have a reasonable relationship to the event, condition or other matter that is the basis for such Availability Reserve or such change. Notwithstanding clause (i) of the preceding sentence, changes to the Availability Reserve solely for purposes of correcting mathematical or clerical errors (and such other changes as are otherwise agreed by the Borrower) shall not be subject to such notice period, it being understood that no Default or Event of Default shall be deemed to result solely therefrom, if applicable, for a period of three (3) days.

 

Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement 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 clause (g) of Section 2.14.

 

Average Quarterly Availability” means, for any fiscal quarter of the Borrower, an amount equal to the average daily Availability during such fiscal quarter, as determined by the Administrative Agent’s system of records; provided, that in order to determine Availability on any day for purposes of this definition, the Borrower’s Borrowing Base for such day shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 5.12 as of such day.

 

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

 

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Bail-In Legislation” shall mean, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

 

Bank Product” shall mean any of the following products, services or facilities extended to the Borrower or any Subsidiary by a Lender or any of its Affiliates: (a) Cash Management Services; (b) commercial credit card and merchant card services; (c) the WF Factoring Arrangement, (d) supply chain finance services including, without limitation, trade payable services and supplier accounts receivable purchases, (e) commercial equipment financing and leasing, (f) foreign exchange facilities, and (g) other banking products or services as may be requested by the Borrower or any Subsidiary, other than loans or letters of credit.

 

Bank Product Obligations” shall mean Indebtedness and other obligations (including Cash Management Obligations) of a Loan Party relating to Bank Products.

 

Bank Product Reserve” shall mean the aggregate amount of reserves established by the Administrative Agent from time to time in its Permitted Discretion in respect of Secured Bank Product Obligations, provided that (a) in no event shall amounts owing in respect of the WF Factoring Arrangement be included in the Bank Product Reserve or Availability Reserve, (b) no amounts owing in respect of the Specified Bank Products shall be included in the Bank Product Reserve or Availability Reserve except to the extent such amounts exceed $1 million in the aggregate, and in such case only to the extent of such excess and (c) no amounts owing in respect of Cash Management Obligations owed to Wells Fargo Bank, N.A. or one or more of its Affiliates shall be included in the Bank Product Reserve or Availability Reserve except to the extent such amounts exceed $2 million in the aggregate, and in such case only to the extent of such excess.

 

Bankruptcy Code” shall mean Title 11 of the United States Code or any similar federal or state law for the relief of debtors, as now and hereafter in effect, or any successor statute.

 

Bankruptcy Court” shall mean the United States Bankruptcy Court for the Northern District of Texas, Dallas Division or any other court having jurisdiction over the Cases from time to time and any Federal appellate court thereof.

 

Benchmark” shall mean, initially, LIBO Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBO Rate or the then-current Benchmark, then “Benchmark” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (c) or clause (d) of Section 2.14.

 

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Benchmark Replacement” shall mean, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

 

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;

 

(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

 

(3) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor 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 credit facilities at such time and (b) the related Benchmark Replacement Adjustment;

 

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Loan Document, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (1) of this definition (subject to the first proviso above).

 


If the Benchmark Replacement as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.

 

Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:

 

(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:

 

(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;

 

(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and

 

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(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” 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 the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) 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 on the applicable Benchmark Replacement Date or (ii) 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 credit facilities;

 

provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.

 

Benchmark Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).

 

Benchmark Replacement Date” shall mean the earliest to occur of the following events with respect to the then-current Benchmark:

 

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) 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);

 

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein;

 

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(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the Lenders and the Borrower pursuant to Section 2.14(d); or

 

(4) in the case of an Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (Local Time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Required Lenders.

 

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) 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” shall mean the occurrence of one or more of the following events with respect to the then-current Benchmark:

 

(1) 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);

 

(2) 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 Federal Reserve Board, the NYFRB, 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

 

(3) 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 no longer representative.

 

For the avoidance of doubt, 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).

 

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Benchmark Unavailability Period” shall mean the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition 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 Section 2.14 and (y) 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 Section 2.14.

 

Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

 

Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

 

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

 

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

 

Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America, or any successor thereto.

 

Borrower” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

Borrowing” shall mean a group of Revolver Loans of a single Type and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

 

Borrowing Base” shall mean at any time of calculation, the sum of the following as set forth (other than with respect to clause (e)) in the most recently delivered Borrowing Base Certificate:

 

(a)           the product of (i) the face amount of Eligible Credit Card Receivables multiplied by (ii) ninety percent (90%); plus

 

(b)           the product of (i) the Cost of Eligible Inventory, multiplied by (ii) (A) during the period from January 1 through September 30 of each year, ninety percent (90%) and (B) during the period from October 1 through December 31 of each year, ninety-two and a half percent (92.5%), multiplied by (iii) the Appraised Value Percentage of such Inventory; plus

 

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(c)           with respect to any Eligible Letter of Credit, the product of (i) the Cost of the Inventory supported by such Eligible Letter of Credit, multiplied by (ii) (A) during the period from January 1 through September 30 of each year, ninety percent (90%) and (B) during the period from October 1 through December 31 of each year, ninety-two and a half percent (92.5%), multiplied by (iii) the Appraised Value Percentage of such Inventory; minus

 

(d)           the Availability Reserve.

 

Borrowing Base Certificate” shall mean a certificate in the form of Exhibit F, by which the Borrower certifies calculation of the Borrowing Base in accordance with Section 5.12.

 

Borrowing Base Collateral” shall mean Collateral consisting of Credit Card Receivables, Eligible Letters of Credit and Inventory.

 

Borrowing Request” shall mean a request by the Borrower in accordance with the terms of Section 2.03.

 

Budget” shall have the meaning assigned to such term in Section 5.04(f).

 

Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law or other governmental action to remain closed; provided that when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in deposits in Dollars in the London interbank market.

 

Capital Expenditures” shall mean, in respect of any period, the aggregate of all expenditures incurred by the Borrower and the Subsidiaries during such period that, in accordance with GAAP, are required to be classified as capital expenditures, including Capital Lease Obligations incurred, provided, however, that Capital Expenditures for the Borrower and the Subsidiaries shall not include:

 

(a)           expenditures of proceeds of insurance settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or condemned assets, equipment or other property to the extent such expenditures are made to replace or repair such lost, destroyed, damaged or condemned assets, equipment or other property or otherwise to acquire, maintain, develop, construct, improve, upgrade or repair assets or properties useful in the business of the Borrower and the Subsidiaries within twelve (12) months of receipt of such proceeds,

 

(b)           expenditures that are accounted for as capital expenditures of such Person and that actually have been paid for by a third party (other than the Borrower or any Subsidiary thereof) and for which neither the Borrower nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other Person (whether before, during or after such period, other than the payment of rent),

 

(c)           the purchase price of equipment or property purchased during such period to the extent the consideration therefor consists of any combination of (x) used or surplus equipment or property traded in at the time of such purchase and (y) the proceeds of a reasonably concurrent sale of used or surplus equipment or property, in each case, in the ordinary course of business,

 

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(d)           expenditures that are accounted for as capital expenditures in connection with transactions constituting Permitted Business Acquisitions, or

 

(e)           the interest component of any Capital Lease Obligation.

 

Capital Lease Obligations” shall mean the obligations of any Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP and, for purposes hereof, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

Cases” shall have the meaning assigned such terms in the recitals to this Agreement.

 

Cash Collateral” shall mean cash and any interest or other income earned thereon, or deposit account balances, and, with respect to LC Obligations only, any other credit support satisfactory to the applicable Issuing Bank, in each case that are delivered to the Administrative Agent to Cash Collateralize any Obligation.

 

Cash Collateralize” shall mean the pledge and deposit with or the delivery of Cash Collateral to the Administrative Agent, as security for the payment of any Obligation, in an amount equal to the percentage of such outstanding Obligations as is required by the context herein. “Cash Collateralization” has a correlative meaning.

 

Cash Dominion Trigger Period” shall mean the period (a) commencing on the date that (i) Availability shall be less than the greater of (A) $20.0 million and (B) 20% of the Line Cap, in either case for two (2) consecutive Business Days, (ii) Availability shall be less than $15.0 million, or (iii) an Event of Default shall have occurred, and (b) continuing until, during each of the preceding sixty (60) consecutive days, (x) Availability shall have been greater than the greater of (A) $20.0 million and (B) 20% of the Line Cap and (y) no Event of Default shall have existed. For all purposes hereunder, a “Cash Dominion Trigger Period” shall be deemed to exist at all times during the Initial Cash Dominion Trigger Period.

 

Cash Management Obligations” shall mean obligations owed by the Borrower or any Subsidiary in respect of any overdraft and related liabilities arising from treasury and treasury management services, Cash Management Services, credit cards, “p-cards” or any automated clearing house transfer of funds.

 

Cash Management Services” any services provided from time to time by any Lender or any of its Affiliates (or any Person who at the time such arrangement was entered into was a Lender or an Affiliate thereof) to the Borrower or any Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts or similar cash management arrangements, including automated clearinghouse, e-Payables, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

 

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Casualty Event” shall mean any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Borrower or any of its Subsidiaries.

 

CBFR” shall mean the Prime Rate; provided that the CBFR shall never be less than the Adjusted One Month LIBOR Rate on such day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in the CBFR due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be effective from and including the effective date of such change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

 

CBFR Borrowing” shall mean a Borrowing comprised of CBFR Loans.

 

CBFR Loan” shall mean any Revolver Loan bearing interest at a rate determined by reference to the CBFR in accordance with the provisions of Article II.

 

Change in Control” shall mean:

 

(a)           except as otherwise permitted by Section 6.05(b), the acquisition of record ownership or direct beneficial ownership (i.e., excluding indirect beneficial ownership through intermediate entities by any Person which is the subject of clause (c) below) by any Person other than Parent (or another Parent Entity that has become a Loan Party) of any Equity Interests in Intermediate Holdings, such that after giving effect thereto Parent (or another Parent Entity that has become a Loan Party) shall cease to beneficially own and control 100% of the Equity Interests of Intermediate Holdings, or

 

(b)           the acquisition of record ownership or direct beneficial ownership (i.e., excluding indirect beneficial ownership through intermediate entities by any Person which is the subject of clause (c) below) by any Person other than Intermediate Holdings (or another Parent Entity that is or has become a Loan Party) of any Equity Interests in the Borrower, such that after giving effect thereto Intermediate Holdings (or another Parent Entity that is or has become a Loan Party) shall cease to beneficially own and control 100% of the Equity Interests of the Borrower,

 

(c)           the acquisition of beneficial ownership, directly or indirectly, by any Person or group (within the meaning of the Exchange Act and the rules of the SEC thereunder as in effect on the date hereof), other than Osmium/Tensile and any employee benefit plan and/or Person acting as a trustee, agent or other fiduciary or administrator in respect thereof, of Equity Interests in Parent representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in Parent; or

 

(d)           a “Change in Control” (or comparable event) as defined in the Term Loan Agreement.

 

Change in Law” shall mean (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender (or, for purposes of Section 2.15(b), by any Lending Office of such Lender or by such Lender’s holding company, if any) with any written request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.

 

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Charges” shall have the meaning assigned to such term in Section 9.09.

 

Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

Claims” shall mean all claims, liabilities, obligations, losses, damages, penalties, judgments, proceedings, interests, costs and expenses of any kind (including remedial response costs, reasonable attorneys’ fees) at any time (including after Payment in Full of the Obligations, resignation or replacement of the Administrative Agent or replacement of any Lender) incurred by any Indemnitee or asserted against any Indemnitee by any Loan Party or other Person, in any way relating to (a) any Loans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto, (b) any action taken or omitted to be taken by an Indemnitee in connection with any Loan Documents, (c) the existence or perfection of any Liens, or realization upon any Collateral, (d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failure by any Loan Party to perform or observe any terms of any Loan Document, in each case including all costs and expenses relating to any investigation, litigation, arbitration or other proceeding (including an Insolvency Proceeding or appellate proceedings), whether or not the applicable Indemnitee is a party thereto.

 

Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolver Loans, Overadvance Loans or Protective Advances.

 

Closing Date” shall mean December 31, 2020.

 

Closing Fee” shall have the meaning assigned to such term in Section 2.12(d).

 

Code” shall mean the Internal Revenue Code of 1986, as amended.

 

Collateral” shall mean any and all assets subject or purported to be subject to a Lien pursuant to any Security Document, including all ABL Priority Collateral and Term Loan Priority Collateral.

 

Collateral Agreement” shall mean the Guarantee and Collateral Agreement dated as of the Closing Date, among Holdings, the Borrower, each Subsidiary Guarantor and the Administrative Agent.

 

Collateral Deposit Account” shall have the meaning assigned to it in Section 5.12(d)(iv).

 

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Commitment Letter” shall mean that certain Commitment Letter dated November 2, 2020 by and among the Borrower, J.P. Morgan, Wells Fargo Bank, N.A. and Bank of America, N.A.

 

Commitment Revolver Termination Date” shall mean the earliest to occur of (a) the Revolver Termination Date; (b) the date on which the Borrower terminates the Revolver Commitments pursuant to Section 2.08; or (c) the date on which the Revolver Commitments are terminated pursuant to Section 7.01.

 

Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), and any successor statute.

 

Confirmation Order” shall mean the Order confirming the Revised Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et al., pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 1913] entered by the Bankruptcy Court on December 23, 2020.

 

Consolidated Cash Balance” shall mean, at any time of determination, the aggregate amount of unrestricted cash and cash equivalents of the Loan Parties and their Subsidiaries, it being understood that Credit Card Receivables and any amounts on deposit in the General Unsecured Cash Fund Deposit Account for the benefit of the holders of Allowed General Unsecured Claims, in each case, shall be excluded from the calculation of Consolidated Cash Balance.

 

Consolidated Cash Balance Report” shall mean a report in form and substance reasonably satisfactory to the Administrative Agent prepared by the Borrower setting forth with reasonable supporting detail the Consolidated Cash Balance as of the applicable date.

 

Consolidated Fixed Charge Coverage Ratio” shall mean the ratio, determined on a consolidated basis for the Borrower and its Subsidiaries for the most recent four fiscal quarters period, of (a) EBITDAR for such period minus (i) Capital Expenditures (except those financed with Indebtedness for borrowed money other than the Revolver Loans) paid in cash for such period and (ii) the aggregate amount of federal, state, local and foreign income taxes paid or payable currently in cash for such period to (b) Consolidated Fixed Charges paid or payable currently in cash for such period.

 

Consolidated Fixed Charges” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, the sum (without duplication) of (a) Interest Expense (but excluding, in any event (w) Transactions Costs and annual administrative or other agency fees, (x) fees and expenses associated with Dispositions, Investments and any issuances of Equity Interests or Indebtedness (in each case (A) not prohibited under this Agreement and (B) whether or not consummated) and (y) amortization of deferred financing costs) paid or payable in cash for such period less any interest income for such period received or (without duplication) to be received currently in cash, (b) regularly scheduled principal payments on funded Indebtedness paid or payable currently in cash for such period (other than payments made among the Loan Parties (other than Holdings)), (c) all cash dividends or other distributions paid by the Borrower or any Subsidiary during such period to any Person other than the Borrower or a Subsidiary Guarantor (excluding items eliminated in consolidation) on any series of preferred stock or any Refunding Capital Stock of the Borrower or a Subsidiary during such period, (d) all cash dividends or other distributions paid by the Borrower or any Subsidiary paid to any Person other than the Borrower or any Subsidiary (excluding items eliminated in consolidation) on any series of Equity Interests of the Borrower or a Subsidiary that is not Qualified Capital Stock during such period, (e) Restricted Payments made under clauses (b), (d) and (h) of Section 6.06 made in cash during any fiscal period (other than Tax Distributions) and (f) Rent Expense for such period.

 

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Consolidated Net Income” shall mean, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis; provided, however, that, without duplication,

 

(a)           any net after-tax (A) extraordinary, (B) nonrecurring or (C) unusual gains or losses or income or expenses (less all fees and expenses relating thereto) including, without limitation, any severance expenses, and fees, expenses or charges related to any offering of Equity Interests of any Parent Entity or the Borrower, any Investment or Indebtedness permitted to be incurred hereunder or refinancings thereof (in each case, whether or not successful), including any such fees, expenses or charges related to the Transactions (including any Transaction Costs), in each case, shall be excluded,

 

(b)           any net after-tax income or loss from discontinued operations and any net after-tax gain or loss on disposal of discontinued operations shall be excluded,

 

(c)           any net after-tax gain or loss (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the board of directors (or equivalent governing body) of the Borrower) shall be excluded,

 

(d)           any net after-tax income or loss (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness shall be excluded,

 

(e)           the Net Income for such period of any Person that is not a subsidiary of such Person, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments (including any ordinary course dividend, distribution or other payment) paid in cash (or to the extent converted into cash) to the referent Person or a subsidiary thereof in respect of such period,

 

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

 

(g)           any increase in amortization or depreciation or any non-cash charges resulting from any amortization, write-up, write-down or write-off of assets with respect to assets revalued upon the application of purchase accounting (including tangible and intangible assets, goodwill, deferred financing costs and inventory (including any adjustment reflected in the “cost of goods sold” or similar line item of the financial statements)) in connection with the Transactions, Permitted Business Acquisitions or any merger, consolidation or similar transaction not prohibited hereunder.

 

Contractual Obligation” shall mean, as applied to any Person, any provision of any security issued by that Person or of any indenture, mortgage, deed of trust, contract, written undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

 

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Control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.

 

Control Agreement” shall mean an agreement that grants the Administrative Agent “control” within the meaning of Section 9-104 or Section 9-106 (as applicable) of the UCC in effect in the applicable jurisdiction of the applicable Deposit Account, commodity account or securities account, in form and substance reasonably satisfactory to the Administrative Agent.

 

Corresponding Tenor” with respect to any Available Tenor shall mean, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

 

Cost” shall mean the lower of cost or market value of Inventory, determined in accordance with the accounting policies used in the preparation of the Borrower’s audited financial statements (pursuant to which the retail method of accounting is utilized for substantially all merchandise Inventories), which policies are in effect on the Closing Date. “Cost” does not include inventory capitalization costs or other non-purchase price charges (such as freight) used in the Borrower’s calculation of cost of goods sold.

 

Covered Entity” shall mean any of the following:

 

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

 

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

 

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

 

Covered Party” shall have the meaning assigned to it in Section 9.21.

 

Credit Card Receivables” shall mean each “Account” (as defined in the UCC) and “payment intangible” (as defined in the UCC) together with all income, payments and proceeds thereof, owed by a major credit or debit card issuer (including Visa, Mastercard, Discover and American Express and such other issuers approved by the Administrative Agent) to the Borrower or a Subsidiary Guarantor resulting from charges by a customer of the Borrower or a Subsidiary Guarantor on credit or debit cards issued by such issuer in connection with the sale of goods by the Borrower or a Subsidiary Guarantor, or services performed by the Borrower or a Subsidiary Guarantor, in each case in the ordinary course of its business.

 

Credit Extension” shall mean any Borrowing and any issuance, amendment, extension or renewal of a Letter of Credit.

 

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Customs Broker Agreement” shall mean an agreement, in form and substance reasonably satisfactory to the Administrative Agent, among the Borrower, a customs broker or other carrier, and the Administrative Agent, in which the customs broker or other carrier acknowledges that it has control over and holds the documents evidencing ownership of the subject Inventory for the benefit of the Administrative Agent and agrees, upon notice from the Administrative Agent, to hold and dispose of the subject Inventory solely as directed by the Administrative Agent.

 

Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.

 

Default” shall mean any event or condition that upon notice, lapse of time or both would constitute an Event of Default.

 

Default Rate” shall have the meaning assigned to such term in Section 2.13(d).

 

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

 

Defaulting Lender” shall mean any Lender that (a) has failed to perform any funding obligations (including its obligation to fund any portion of participations in Letters of Credit) hereunder, and such failure is not cured within two (2) Business Days of the date of the funding obligation; (b) has notified the Administrative Agent or the Borrower that such Lender does not intend to comply with its funding obligations hereunder or generally under other agreements to which it commits to extend credit or has made a public statement to that effect; (c) has failed, within three (3) Business Days following written request by the Administrative Agent or the Borrower, to confirm in a manner reasonably satisfactory to the Administrative Agent and the Borrower that such Lender will comply with its funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt by the Administrative Agent of such confirmation); (d) has, or has a direct or indirect parent company that has, become the subject of an Insolvency Proceeding or taken any action in furtherance thereof, including, in the case of any Lender, the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such capacity; provided, however, that a Lender shall not be a Defaulting Lender solely by virtue of a Governmental Authority’s ownership of any equity interest in such Lender or parent company so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of the courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender or (e) it or its Lender Parent has become the subject of a Bail-in Action.

 

Deposit Account” shall have the meaning assigned thereto in Article 9 of the UCC.

 

DIP ABL Credit Agreement” shall have the meaning assigned such terms in the recitals to this Agreement.

 

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DIP RE Credit Agreement” shall mean that certain Senior Secured Super Priority Debtor-In-Possession Delayed Draw Term Loan Agreement dated as of July 10, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the Closing Date), among the Borrower, Holdings, the other guarantors party thereto, the lenders party thereto, and Franchise Group, Inc., as administrative agent.

 

Disposition” shall mean any sale, transfer, lease or other disposition (whether effected pursuant to a Division or otherwise) of assets. “Dispose” shall have a meaning correlative thereto.

 

Dividing Person” has the meaning assigned to it in the definition of “Division”.

 

Division” shall mean the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.

 

Dollars” or “$” shall mean lawful money of the United States of America.

 

Dominion Account” shall mean the Borrower’s special concentration Deposit Account (account no.: xxxxxx7366 and any successor account) held at J.P. Morgan, over which the Administrative Agent has exclusive control for withdrawal purposes pursuant to the terms and provisions of this Agreement and the other Loan Documents.

 

Early Opt-in Election” shall mean, if the then-current Benchmark is the LIBO Rate, the occurrence of:

 

(1)a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding U.S. dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and

 

(2)the joint election by the Administrative Agent and the Borrower to trigger a fallback from LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders.

 

EBITDA” shall mean, with respect to the Borrower and the Subsidiaries on a consolidated basis for any period, the Consolidated Net Income of the Borrower and the Subsidiaries for such period plus the sum of (a) (in each case without duplication and to the extent the respective amounts described in subclauses (i) through (xv) of this clause (a) reduced such Consolidated Net Income for the respective period for which EBITDA is being determined):

 

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(i)            provision for Taxes based on income, profits or capital of the Borrower and the Subsidiaries for such period, including, without limitation, state, foreign, franchise and similar taxes, and Tax Distributions made by the Borrower during such period,

 

(ii)           Interest Expense of the Borrower and the Subsidiaries for such period,

 

(iii)          depreciation and amortization expenses of the Borrower and the Subsidiaries for such period,

 

(iv)          without duplication of amounts added back pursuant to clause (xv) below, business optimization expenses and restructuring charges and reserves (which, for the avoidance of doubt, shall include retention, severance, systems establishment costs, excess pension charges, contract termination costs (including future lease commitments) and costs to consolidate facilities and relocate employees); provided that with respect to each business optimization expense or restructuring charge or reserve, the Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Officer of the Borrower specifying and quantifying such expense, charge or reserve and stating that such expense, charge or reserve is a business optimization expense or restructuring charge or reserve, as the case may be,

 

(v)           without duplication of amounts added back pursuant to clause (iv) above, with respect to each new store opened by the Borrower or any of its Subsidiaries, all net store operating losses relating thereto for a period of twelve (12) months following the opening of such new store,

 

(vi)          Transaction Costs and fees, costs and expenses incurred directly in connection with any transaction, including any Investment, equity issuance, debt issuance, refinancing or Disposition (in each case, (A) not prohibited under this Agreement and (B) whether or not consummated) during such period; provided that the aggregate amount added to EBITDA for any period pursuant to this clause (vi) shall not exceed $5.0 million,

 

(vii)         any other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation),

 

(viii)        [reserved];

 

(ix)          to the extent reimbursable by third parties pursuant to indemnification provisions, other transaction fees, costs and expenses, provided that the Borrower in good faith expects to receive reimbursement for such fees, costs and expenses within the next four (4) fiscal quarters,

 

(x)           [reserved],

 

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(xi)          to the extent covered by insurance under which the insurer has been properly notified and has not denied or contested coverage, expenses with respect to liability events or casualty events,

 

(xii)         any unrealized losses in the fair market value of any Swap Agreements,

 

(xiii)        (A) any charges or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement, pension plan, any stock subscription or shareholder agreement or any distributor equity plan or agreement and (B) any charges, costs, expenses, accruals or reserves in connection with the rollover, acceleration or payout of equity interests held by management, in each case under this clause (B), to the extent such charges, costs, expenses, accruals or reserves are funded with the net cash proceeds of any equity issuance,

 

(xiv)        any net unrealized losses resulting from currency translation losses related to currency remeasurements of Indebtedness (including any net loss resulting from Swap Agreements for currency exchange risk) and any unrealized foreign currency translation losses,

 

(xv)         restructuring costs and any consulting or professional fees incurred in connection with the Cases on or prior to the first anniversary of the Closing Date in an aggregate amount not to exceed $10.0 million, and

 

(xvi)        the proceeds of business interruption insurance, in an amount not to exceed the earnings for the applicable period that such proceeds are intended to replace; provided that the Borrower in good faith expects to receive such business interruption proceeds within the next four (4) fiscal quarters,

 

minus (b) (without duplication and to the extent the amounts described in this clause (b) increased such Consolidated Net Income for the respective period for which EBITDA is being determined) (i) income tax credits and Restricted Payments pursuant to Section 6.06(a)(i), (ii) all non-cash gains increasing Consolidated Net Income of the Borrower and the Subsidiaries for such period (but excluding any such gains (x) in respect of which cash or other assets were received in a prior period or will be received in a future period or (y) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period), (iii) any unrealized gains in the fair market value of any Swap Agreements and (iv) any net unrealized gains resulting from currency translation gains related to currency remeasurements of Indebtedness (including any net gain resulting from Swap Agreements for currency exchange risk) and any unrealized foreign currency translation gains, minus (c) (without duplication) (i) the amount added back to EBITDA pursuant to clause (a)(ix) above to the extent such transaction fees, costs and expenses were not reimbursed within the time period required by such clause (which amount shall be deducted in the next succeeding fiscal quarter following expiration of the applicable time period) and (ii) the amount added back to EBITDA pursuant to clause (a)(xv) to the extent such business interruption proceeds were not received within the time period required by such clause (which amount shall be deducted in the next succeeding fiscal quarter following expiration of the applicable time period).

 

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Notwithstanding anything to the contrary herein, the aggregate amount added back to EBITDA pursuant to clauses (a)(iv) and (a)(v) of the definition thereof and in respect of any pro forma adjustments made pursuant to the definition of “Pro Forma Basis” with respect to any applicable four (4) fiscal quarter period shall not exceed 20% of the EBITDA of the Borrower and the Subsidiaries for such four (4) fiscal quarter period (calculated prior to giving effect to any add back pursuant to clauses (a)(iv) and (a)(v) of the definition of “EBITDA” or any pro forma adjustments pursuant to the definition of “Pro Forma Basis”). This paragraph shall not apply with respect to clause (a)(v) above for purposes of calculating the Consolidated Fixed Charge Coverage Ratio.

 

EBITDAR” shall mean, for any period, (a) EBITDA for such period plus (b) to the extent deducted in determining EBITDA for such period, Rent Expense.

 

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

 

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

 

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

 

Electronic Signature” shall mean an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

 

Electronic System” shall mean any electronic system, including e-mail, e-fax, web portal access for the Borrower and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.

 

Eligible Assignee” shall mean (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans.

 

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Eligible Credit Card Receivables” shall mean, at the time of any determination thereof, each Credit Card Receivable that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination: such Credit Card Receivable (i) has been earned by performance and represents the bona fide amounts due to a Loan Party from a credit card payment processor and/or credit card issuer, and in each case originated in the ordinary course of business of such Loan Party, (ii) unless owed by Visa, Mastercard, American Express Company or Discover, is acceptable to the Administrative Agent in its Permitted Discretion and (iii) in each case, is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (k) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, a Credit Card Receivable shall indicate no Person other than a Loan Party as payee or remittance party. 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 or otherwise excluded below, (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 Loan Party may be obligated to rebate to a customer, a credit card payment processor, or credit card issuer 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. Any Credit Card Receivables meeting the foregoing criteria shall be deemed Eligible Credit Card Receivables but only as long as such Credit Card Receivable is not included within any of the following categories, in which case such Credit Card Receivable shall not constitute an Eligible Credit Card Receivable:

 

(a)           Credit Card Receivables which do not constitute an Account or “payment intangible” (as defined in the UCC);

 

(b)           Credit Card Receivables that have been outstanding for more than five (5) Business Days from the date of sale;

 

(c)           Credit Card Receivables with respect to which a Loan Party does not have good, valid and marketable title, free and clear of any Lien (other than Liens permitted by Section 6.02(b)(iii); provided that any such Liens shall be subject to the Intercreditor Agreement and junior to the Liens granted to the Administrative Agent on such Credit Card Receivables);

 

(d)           Credit Card Receivables that are not subject to a first priority security interest in favor of the Administrative Agent (it being the intent that chargebacks in the ordinary course by such processors shall not be deemed violative of this clause);

 

(e)           Credit Card Receivables which 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);

 

(f)            Credit Card Receivables as to which the processor has the right under certain circumstances to require a Loan Party to repurchase the Credit Card Receivables from such credit card processor;

 

(g)           Credit Card Receivables due from an issuer or payment processor of the applicable credit card which is the subject of any proceeding under the Bankruptcy Code;

 

(h)           Credit Card Receivables which are not a valid, legally enforceable obligation of the applicable issuer with respect thereto;

 

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(i)            Credit Card Receivables which do not conform to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Receivables;

 

(j)            Credit Card Receivables which are evidenced by “chattel paper” or an “instrument” of any kind unless such “chattel paper” or “instrument” is in the possession of the Administrative Agent, and to the extent necessary or appropriate, endorsed to the Administrative Agent; or

 

(k)           Credit Card Receivables which the Administrative Agent determines in its Permitted Discretion to be uncertain of collection.

 

Eligible In-Transit Inventory” shall mean, as of any date of determination thereof, Inventory:

 

(a)           for which full payment has been delivered to the seller of such Inventory and evidence of such payment has been received by the Administrative Agent;

 

(b)           which has been shipped from (i) a foreign location for receipt by the Borrower or a Subsidiary Guarantor within thirty (30) days of the date of shipment or (ii) a domestic location for receipt by the Borrower or a Subsidiary Guarantor within fifteen (15) days of the date of shipment, but, in either case, which has not yet been delivered to the Borrower or a Subsidiary Guarantor;

 

(c)           for which (i) the purchase order is in the name of the Borrower or a Subsidiary Guarantor and title has passed to the Borrower or a Subsidiary Guarantor or (ii) the document of title reflects the Borrower or a Subsidiary Guarantor as consignee or, if requested by the Administrative Agent after the occurrence and during the continuance of a Default or an Event of Default, names the Administrative Agent as consignee;

 

(d)           in the case of any Inventory described in clause (b)(i) above, as to which the Administrative Agent has received a Customs Broker Agreement;

 

(e)           which is insured in compliance with Section 5.02 hereof; and

 

(f)            which does not qualify as Eligible Inventory solely because it (i) is not located in the United States of America (excluding territories or possessions of the United States) or (ii) is located at a location that is not owned or leased by the Borrower or a Subsidiary Guarantor, but which otherwise constitutes Eligible Inventory.

 

Eligible Inventory” shall mean, as of the date of determination thereof, without duplication, (i) Eligible In-Transit Inventory, and (ii) all items of Inventory of the Borrower or a Subsidiary Guarantor that are finished goods, merchantable and readily saleable to the public in the ordinary course deemed by the Administrative Agent in its Permitted Discretion to be eligible for inclusion in the calculation of the Borrowing Base, in each case that, except as otherwise agreed by the Administrative Agent, complies with each of the representations and warranties respecting Inventory made by the Borrower or a Subsidiary Guarantor in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the criteria set forth below. The following items of Inventory shall not be included in Eligible Inventory:

 

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(a)            Inventory that is not solely owned by the Borrower or a Subsidiary Guarantor or the Borrower or a Subsidiary Guarantor does not have good and valid title thereto;

 

(b)            Inventory that is leased by, or is on consignment to, the Borrower or a Subsidiary Guarantor, or that is consigned by the Borrower or a Subsidiary Guarantor to a Person which is not a Loan Party;

 

(c)            Inventory (other than Eligible In-Transit Inventory) that is not located in the United States of America (excluding territories or possessions of the United States);

 

(d)            Inventory (other than Eligible In-Transit Inventory) that (i) is not located at a location that is owned or leased by the Borrower or a Subsidiary Guarantor or a “pool point” in the Loan Parties’ distribution network or (ii) is located at a distribution center or warehouse leased by the Borrower or a Subsidiary Guarantor with Inventory having a value in excess of $1,000,000 at any such location, except in the case of this clause (ii) to the extent that the Borrower or a Subsidiary Guarantor has furnished the Administrative Agent with (A) any UCC financing statements or other documents that the Administrative Agent may determine to be necessary to perfect its security interest in such Inventory at such location and (B) (x) a Lien Waiver executed by the Person owning any such location on terms reasonably acceptable to the Administrative Agent or (C) if such location is in a landlord lien-priming state, a Rent and Charges Reserve has been imposed;

 

(e)            Inventory that is comprised of goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete or slow moving, or custom items, work-in-process, raw materials, or that constitute spare parts, promotional, marketing, packaging and shipping materials or supplies used or consumed in the Borrower’s or a Subsidiary Guarantor’s business, (iv) are seasonal in nature and which have been packed away for sale in a subsequent season, (v) are not in compliance in all material respects with all standards imposed by any Governmental Authority having regulatory authority over such Inventory, its use or sale, or (vi) are bill and hold goods;

 

(f)             Inventory that is not subject to a perfected first priority security interest in favor of the Administrative Agent (other than landlords’ Liens permitted pursuant to clause (e) of Section 6.02 as to which either a Lien Waiver has been delivered or a Rent and Charges Reserve has been imposed);

 

(g)            Inventory that consists of samples, labels, bags, packaging, and other similar non-merchandise categories;

 

(h)            Inventory that is not insured in compliance with the provisions of Section 5.02 hereof;

 

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(i)             Inventory that has been sold but not yet delivered or as to which the Borrower or a Subsidiary Guarantor has accepted a deposit;

 

(j)             Inventory that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third party from which the Borrower or any of its Subsidiaries has received notice of a dispute in respect of any such agreement unless the Administrative Agent is reasonably satisfied that it may sell or otherwise Dispose of such Inventory without (i) infringing the rights of such third party, (ii) violating any contract with such third party or (iii) incurring any liability with respect to the payment of royalties other than royalties incurred in connection with the sale of such Inventory pursuant to the current licensing agreement relating thereto; or

 

(k)            Inventory acquired in a Permitted Business Acquisition, unless and until the Administrative Agent has completed or received an appraisal of such Inventory from appraisers satisfactory to the Administrative Agent, establishes an Inventory advance rate and Inventory Reserves (if applicable) therefor, and otherwise agrees that such Inventory shall be deemed Eligible Inventory, all of the results of the foregoing to be reasonably satisfactory to the Agents.

 

Eligible Letter of Credit” shall mean, as of any date of determination thereof, a Letter of Credit which supports the purchase of Inventory, (i) which Inventory does not constitute Eligible In-Transit Inventory and for which no documents of title have then been issued, (ii) which Inventory, when completed, otherwise would constitute Eligible Inventory, (iii) which Letter of Credit has an expiry within thirty (30) days of the date of initial issuance of such Letter of Credit, and (iv) which Letter of Credit provides that it may be drawn only after the Inventory is completed and after documents of title have been issued for such Inventory reflecting the Borrower, a Subsidiary Guarantor or the Administrative Agent as consignee of such Inventory.

 

Enforcement Action” shall mean any action to enforce any Obligations or Loan Documents or to exercise any rights or remedies relating to any Collateral (whether by judicial action, self-help, notification of Account Debtors, exercise of setoff or recoupment, exercise of any right to vote or act in a Loan Party’s Insolvency Proceeding, or otherwise), in each case solely to the extent permitted by the Loan Documents.

 

environment” shall mean ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, the workplace or as otherwise defined in any Environmental Law.

 

Environmental Laws” shall mean all laws (including common law), rules, regulations, codes, ordinances, orders, decrees or judgments, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or actual or alleged exposure to, any Hazardous Materials or to occupational health and safety (to the extent relating to the environment or Hazardous Materials).

 

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Equity Interests” of any Person shall mean any and all shares, interests, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, any limited or general partnership interest and any limited liability company membership interest and any and all warrants, rights or options to purchase or other rights to acquire any of the foregoing, but excluding for the avoidance of doubt any Indebtedness convertible into or exchangeable for any of the foregoing (until so converted or exchanged).

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor statute and the rules and regulations promulgated thereunder.

 

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

 

ERISA Event” shall mean (a) any Reportable Event; (b) the existence with respect to any Loan Party, any ERISA Affiliate or any Plan of a non-exempt Prohibited Transaction; (c) the failure by any Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA), applicable to such Plan, whether or not waived; (d) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (f) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, Insolvent, in Reorganization, or terminated (within the meaning of Section 4041A of ERISA); or (g) the failure by any Loan Party or any ERISA Affiliate to pay when due (after expiration of any applicable grace period) any installment payment with respect to Withdrawal Liability under Section 4201 of ERISA.

 

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

 

Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

 

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

 

Event of Default” shall have the meaning assigned to such term in Section 7.01.

 

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time and any successor statute.

 

Excluded Assets” shall have the meaning assigned to such term in Section 5.09(h).

 

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Excluded Deposit Accounts” shall mean (a) Deposit Accounts used specifically, solely and exclusively for Tax and Trust Funds, (b) any Term Loan Priority Collateral Account, (c) Deposit Accounts that do not have a daily balance at any time in excess of $250,000; provided that the aggregate amount of funds in all Deposit Accounts excluded under this clause (c) shall not exceed $1,000,000, and (d) the General Unsecured Cash Fund Deposit Account.

 

Excluded Subsidiary” shall mean (a) any Subsidiary that is prohibited by law, regulation or Contractual Obligation in existence on the Closing Date and not entered into in contemplation of this Agreement from providing a Guarantee of the Obligations or that would require a governmental (including regulatory) consent, approval, license or authorization in order to provide such Guarantee, (b) any Subsidiary for which a Guarantee of the Obligations by such Subsidiary would result in material adverse tax consequences as reasonably determined by the Borrower in consultation with the Administrative Agent, (c) Tuesday Morning Cares, a Texas not-for profit entity, and (d) any Subsidiary to the extent that the burden or cost of obtaining a Guarantee of the Obligations from such Subsidiary outweighs the benefit afforded thereby, as reasonably determined by the Administrative Agent and the Borrower; provided that, in no event shall any Subsidiary that guarantees the Term Loan Obligations or any other Material Indebtedness constitute an “Excluded Subsidiary”.

 

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

 

Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income taxes imposed on (or measured by) its net income (or franchise taxes imposed in lieu of net income taxes) by any jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located or any other jurisdiction as a result of such recipient engaging in a trade or business in such jurisdiction for tax purposes (other than engaging in a trade or business as a result of having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document), (b) any branch profits tax or any similar tax that is imposed by any jurisdiction described in clause (a) above, (c) in the case of a Lender making a Revolver Loan to the Borrower, any U.S. federal withholding tax that (x) is in effect under Applicable Law and would apply to amounts payable hereunder to such Lender at the time such Lender becomes a party to such Revolver Loan to the Borrower (or designates a new Lending Office) except to the extent that such Person (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from a Loan Party with respect to any U.S. federal withholding tax pursuant to Section 2.17(a) or Section 2.17(c) or (y) is attributable to such Lender’s failure to comply with Section 2.17(e) with respect to such Revolver Loan unless such failure to comply with Section 2.17(e) is a result of a change in law after the date such Lender becomes a party to such Revolver Loan to the Borrower (or designates a new Lending Office), (d) any interest, additions to taxes or penalties with respect to the foregoing and (e) any withholding taxes imposed pursuant to FATCA.

 

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Existing Debt” shall mean the Indebtedness outstanding under the Prepetition Credit Agreement, the DIP ABL Credit Agreement and the DIP RE Credit Agreement.

 

Existing Letters of Credit” shall mean the letters of credit issued (or deemed issued) under the DIP ABL Credit Agreement (including any banker’s acceptances or other payment obligations arising therefrom) and outstanding as of the Closing Date and set forth on Schedule 1.01(b).

 

Fairness Opinion” shall have the meaning assigned to such term in Section 6.07(b)(x).

 

FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

 

FCCR Test Amount” shall have the meaning assigned to such term in Section 6.10.

 

Federal Funds Effective Rate” shall mean, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 1.50%, such rate shall be deemed to be 1.50% for the purposes of this Agreement.

 

Fee Letter” shall mean that certain Fee Letter dated November 2, 2020 by and among the Borrower and the Administrative Agent.

 

Financial Officer” of any Person shall mean the Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such Person.

 

FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended.

 

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Flood Documentation” shall mean, with respect to each Mortgaged Property located in the United States or any territory thereof, (i) a completed “life-of-loan” Federal Emergency Management Agency standard flood hazard determination (together with a notice about Special Flood Hazard Area status and flood disaster assistance duly executed by the applicable Loan Party relating thereto), (ii) a copy of, or a certificate as to coverage under, and a declaration page relating to, the insurance policies required by Section 5.02(b) hereof and the applicable provisions of the Security Documents, each of which shall (A) be endorsed or otherwise amended to include a “standard” or “New York” lender’s loss payable or mortgagee endorsement (as applicable), (B) name the Administrative Agent, on behalf of the Secured Parties, as additional insured and loss payee/mortgagee, (C) identify the address of each property located in a Special Flood Hazard Area, the applicable flood zone designation and the flood insurance coverage and deductible relating thereto and (D) be otherwise in form and substance reasonably satisfactory to the Administrative Agent and each Regulated Lender Entity and sufficient to comply with Flood Insurance Laws, and (iii) any other documents reasonably requested by any Regulated Lender Entity to the extent such documents are required for compliance by such Regulated Lender Entity with applicable Flood Insurance Laws.

 

Flood Insurance Laws” shall mean, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto and related legislation, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

 

Floor” shall mean the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate.

 

Foreign Benefit Arrangement” shall mean any employee benefit arrangement mandated by non-U.S. law that is maintained or contributed to by any Loan Party or any ERISA Affiliate.

 

Foreign Lender” shall mean any Lender that is not a U.S. Person.

 

Foreign Plan” shall mean each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to U.S. law and is maintained or contributed to by any Loan Party or any ERISA Affiliate.

 

Foreign Plan Event” shall mean, with respect to any Foreign Benefit Arrangement or Foreign Plan, (a) the failure to make or, if applicable, accrue in accordance with normal accounting practices, any employer or employee contributions required by Applicable Law or by the terms of such Foreign Benefit Arrangement or Foreign Plan; (b) the failure to register or loss of good standing with applicable regulatory authorities of any such Foreign Benefit Arrangement or Foreign Plan required to be registered; or (c) the failure of any Foreign Benefit Arrangement or Foreign Plan to comply with any material provisions of Applicable Law and regulations or with the material terms of such Foreign Benefit Arrangement or Foreign Plan.

 

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

 

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Fronting Exposure” shall mean a Defaulting Lender’s Pro Rata share of LC Obligations, except to the extent allocated to other Lenders or Cash Collateralized under Section 2.21.

 

GAAP” shall mean generally accepted accounting principles in effect from time to time in the United States.

 

General Intangible” shall mean any “general intangible” as such term is defined in the UCC.

 

General Unsecured Cash Fund” shall have the meaning assigned to such term in the Plan of Reorganization.

 

General Unsecured Cash Fund Deposit Account” shall mean the Deposit Account of the Borrower maintained with Signature Bank in which the General Unsecured Cash Fund is deposited and maintained.

 

General Unsecured Cash Fund Escrow Agreement” shall mean that certain Escrow Deposit Agreement, dated on or about the Closing Date, between Parent, Bankruptcy Management Solutions, Inc., and Signature Bank, in its capacity as escrow agent.

 

Governmental Authority” shall mean any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.

 

Guarantee” of or by any Person (the “guarantor”) shall mean (a) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or (v) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation, or (b) any Lien on any assets of the guarantor securing any Indebtedness of any other Person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided, however, that the term “Guarantee” shall not include (x) endorsements for collection or deposit, in either case in the ordinary course of business or (y) customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or disposition of assets permitted under this Agreement. The amount of any Guarantee for purposes of clause (b) shall be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.

 

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guarantor” shall have the meaning assigned to such term in the definition of the term “Guarantee.”

 

Guarantors” shall mean, collectively, Parent, Intermediate Holdings, the Subsidiary Guarantors and any other Loan Party (including the Borrower with respect to any Secured Obligations of another Loan Party).

 

Hazardous Materials” shall mean all pollutants, contaminants, wastes, chemicals, materials, substances and constituents of any nature which are subject to regulation by any Governmental Authority or which would reasonably be likely to give rise to liability under any Environmental Law, including, without limitation, explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas.

 

Holdings” shall mean a collective reference to Parent and Intermediate Holdings, or, if Intermediate Holdings ceases to exist, shall mean Parent.

 

IBA” shall have the meaning assigned to such term in Section 1.09.

 

Impacted Interest Period” shall have the meaning assigned to such term in the definition of “LIBO Rate”.

 

Increase Date” shall have the meaning assigned to such term in Section 2.22(b).

 

Increase Loan Lender” shall have the meaning assigned to such term in Section 2.22(b).

 

Indebtedness” of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments to the extent the same would appear as a liability on a balance sheet prepared in accordance with GAAP, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services (other than current intercompany liabilities (but not any refinancings, extensions, renewals or replacements thereof) incurred in the ordinary course of business and maturing within three hundred sixty-five (365) days after the incurrence thereof), to the extent that the same would be required to be shown as a long term liability on a balance sheet prepared in accordance with GAAP, (e) all Guarantees by such Person of Indebtedness of others, (f) all Capital Lease Obligations of such Person, (g) all payments that such Person would have to make in the event of an early termination, on the date Indebtedness of such Person is being determined, in respect of outstanding Swap Agreements net of payments such Person would receive in the event of early termination on such date of determination, (h) the principal component of all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and (i) the principal component of all obligations of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness expressly limits the liability of such Person in respect thereof. The Indebtedness of the Borrower and the Subsidiaries shall exclude (i) accrued expenses and accounts and trade payables, (ii) liabilities under vendor agreements to the extent such indebtedness may be satisfied through non-cash means such as purchase volume earnings credits and (iii) reserves for deferred income taxes. For the avoidance of doubt, “Indebtedness” shall not include any amounts due or payable for the benefit of the holders of Allowed General Unsecured Claims in accordance with the Plan of Reorganization.

 

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Indemnified Taxes” shall mean all Taxes other than Excluded Taxes and Other Taxes.

 

Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

 

Initial Cash Dominion Trigger Period” shall mean the period commencing on the Closing Date and ending on the Spring-Out Date.

 

Insolvency Proceeding” shall mean any case or proceeding commenced by or against a Person under any state, federal, provincial, territorial or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the Bankruptcy Code, or any other insolvency, bankruptcy, debtor relief or debt adjustment law; (b) the appointment of a receiver, interim receiver, monitor, trustee, liquidator, administrator, conservator, custodian or other similar Person for such Person or any part of its Property, including, in the case of any Lender, the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such capacity; or (c) an assignment for the benefit of creditors.

 

Insolvent” with respect to any Multiemployer Plan, shall mean the condition that such plan is insolvent within the meaning of Section 4245 of ERISA.

 

Intercreditor Agreement” shall mean that certain Intercreditor and Subordination Agreement dated the Closing Date by and among the Borrower, the Administrative Agent and the Term Loan Agent.

 

Interest Election Request” shall mean a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.07.

 

Interest Expense” shall mean, with respect to any Person for any period, the sum without duplication of (a) gross interest expense of such Person for such period on a consolidated basis, including (i) the amortization of debt discounts, (ii) the amortization of all fees (including fees with respect to Swap Agreements) payable in connection with the incurrence of Indebtedness to the extent included in interest expense and (iii) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense and (b) capitalized interest of such Person. For purposes of the foregoing, gross interest expense shall be determined after giving effect to any net payments made or received and costs incurred by the Borrower and the Subsidiaries with respect to Swap Agreements (provided that payments and costs upon the settlement or termination of a Swap Agreement will not be included in Interest Expense). For the avoidance of doubt, “Interest Expense” shall not include any amounts paid or repaid for the benefit of the holders of Allowed General Unsecured Claims or otherwise funded from the General Unsecured Cash Fund, in each case in accordance with the Plan of Reorganization.

 

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Interest Payment Date” shall mean, (a) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Revolver Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three (3) months’ duration, each day that would have been an Interest Payment Date had successive Interest Periods of three (3) months’ duration been applicable to such Borrowing and, in addition, the date of any refinancing or conversion of such Borrowing with or to a Borrowing of a different Type, (b) with respect to any CBFR Loan, the first calendar day following the end of each fiscal quarter, and (c) the Revolver Termination Date.

 

Interest Period” shall mean, as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, or the date any Eurodollar Borrowing is converted to a CBFR Borrowing in accordance with Section 2.07 or repaid or prepaid in accordance with Section 2.08 or Section 2.10; provided, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.

 

Intermediate Holdings” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

Interpolated Rate” shall mean, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between (a) the LIBO Screen Rate for the longest period for which the LIBO Screen Rate is available that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time; provided, that, if any Interpolated Rate shall be less than 0.50%, such rate shall be deemed to be 0.50% for purposes of this Agreement.

 

Inventory” has the meaning given that term in the UCC, and shall also include, without limitation, all: (a) goods which (i) are leased by a Person as lessor, (ii) are held by a Person for sale or lease or to be furnished under a contract of service, (iii) are furnished by a Person under a contract of service, or (iv) consist of raw materials, work in process, or materials used or consumed in a business; (b) goods of said description in transit; (c) goods of said description which are returned, repossessed or rejected; and (d) packaging, advertising, and shipping materials related to any of the foregoing.

 

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Inventory Reserves” shall mean, without duplication of any factors considered in the Appraised Value Percentage of Inventory and without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, such reserves as may be established from time to time by the Administrative Agent in the Administrative Agent’s Permitted Discretion with respect to the determination of the saleability, at retail, of the Eligible Inventory or which reflect such other factors as may affect the market value of the Eligible Inventory. Without limiting the generality of the foregoing, Inventory Reserves may, in the Administrative Agent’s Permitted Discretion, include (but are not limited to) reserves based on: (a) obsolescence; (b) seasonality; (c) Shrink; (d) imbalance; (e) change in Inventory character; (f) change in Inventory composition; (g) change in Inventory mix; (h) mark-downs (both permanent and point of sale); (i) retail mark-ons and markups inconsistent with prior period practice and performance, industry standards, current business plans or advertising calendar and planned advertising events; and (j) out-of-date and/or expired Inventory.

 

Investment” shall have the meaning assigned to such term in Section 6.04.

 

IRS” shall mean the United States Internal Revenue Service.

 

ISDA Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.

 

Issuing Bank” shall mean each of J.P. Morgan or any Affiliate of J.P. Morgan, Bank of America, N.A. or any Affiliate thereof, Wells Fargo Bank, N.A. or any Affiliate thereof and any other Lender reasonably acceptable to the Borrower and the Administrative Agent (such consent not to be unreasonably withheld or delayed by either party) who agrees to issue Letters of Credit, or any replacement issuer appointed pursuant to Section 2.19. References herein to the term “Issuing Bank” in singular form shall be deemed to refer to Issuing Banks in plural form, as the context shall require.

 

Issuing Bank Fee” shall have the meaning assigned to such term in Section 2.12(c).

 

Joint Venture” shall mean a joint venture or similar arrangement, whether in corporate, partnership or other legal form which is not a Subsidiary but in which the Borrower or any Subsidiary owns or controls any Equity Interests; provided, in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.

 

J.P. Morgan” shall mean JPMorgan Chase Bank, N.A. and its affiliates.

 

Judgment Currency” has the meaning assigned to such term in Section 9.24.

 

Junior Lien” shall mean a Lien that is subordinated to the Liens securing the Obligations on terms satisfactory to the Administrative Agent.

 

LC Application” shall mean an application by the Borrower to an Issuing Bank for issuance of a Letter of Credit, in form reasonably satisfactory to the applicable Issuing Bank.

 

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LC Conditions” shall mean the following conditions necessary for issuance of a Letter of Credit: (a) after giving effect to such issuance, the total LC Obligations do not exceed the Aggregate Letter of Credit Subline (and the aggregate amount of LC Obligations of the applicable Issuing Bank shall not exceed the Letter of Credit Subline of such Issuing Bank, unless the applicable Issuing Bank otherwise agrees); (b) each Letter of Credit shall expire not later than the earlier of (i) 365 days from issuance (or such longer period as may be agreed between the applicable Issuing Bank and the Borrower) and (ii) the fifth Business Day prior to the Revolver Termination Date; provided that any Letter of Credit may provide for an automatic renewal thereof for additional periods of up to 365 days (which in no event shall extend beyond the date referred to in clause (b)(ii), except to the extent Cash Collateralized at 105% of the Stated Amount thereof or backstopped pursuant to arrangements reasonably acceptable to the relevant Issuing Bank); (c) the Letter of Credit and payments thereunder are denominated in Dollars; and (d) the form of the proposed Letter of Credit is satisfactory to the Administrative Agent and the applicable Issuing Bank in their reasonable discretion.

 

LC Disbursement” shall mean any payment made by an Issuing Bank pursuant to a Letter of Credit.

 

LC Documents” shall mean all documents, instruments and agreements (including LC Requests and LC Applications) delivered by the Borrower or any other Person to an Issuing Bank or the Administrative Agent in connection with any Letter of Credit.

 

LC Exposure” shall mean, with respect to any Lender at any time, such Lender’s Pro Rata share of the aggregate LC Obligations at such time.

 

LC Obligations” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus (b) the aggregate amount of all LC Disbursements relating to Letters of Credit that have not yet been reimbursed by or on behalf of the Borrower.

 

LC Request” shall mean a request for issuance of a Letter of Credit, to be provided by the Borrower to an Issuing Bank, in form satisfactory to the applicable Issuing Bank.

 

Lead Arranger” shall mean J.P. Morgan.

 

Lender” shall mean each financial institution listed on Schedule 2.01 (other than any such Person that has ceased to be a party hereto pursuant to an Assignment and Acceptance in accordance with Section 9.04), as well as any Person that becomes a “Lender” hereunder in accordance with Section 9.04.

 

Lender Parent” shall mean, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

 

Lender Party” shall mean the Administrative Agent, each Issuing Bank, or any other Lender.

 

Lending Office” shall mean, as to any Lender, the applicable branch, office or Affiliate of such Lender designated by such Lender to make Loans.

 

Letter of Credit” shall mean each letter of credit issued by an Issuing Bank pursuant to this Agreement and shall include each Existing Letter of Credit, and the term “Letter of Credit” shall mean any one of them or each of them singularly, as the context may require.

 

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Letter of Credit Increase Event” shall mean, at any time after the Closing Date, the occurrence of each of the following events: (i) the Borrower delivers a written notice to the Administrative Agent requesting an increase of the Aggregate Letter of Credit Subline, (ii) one or more Lenders then party to this Agreement (including any existing Issuing Bank) agree to issue Letters of Credit in an aggregate principal amount equal to such requested increased amount (for the avoidance of doubt, no Issuing Bank is under any obligation to increase its Letter of Credit Subline) and (iii) Schedule 2.01B to this Agreement is amended to reflect the Letter of Credit Subline of each Issuing Bank after giving effect to the Letter of Credit Increase Event; it being understood that such amendment to Schedule 2.01B shall only require the consent of the Borrower, the Administrative Agent and each Issuing Bank agreeing to increase its Letter of Credit Subline or otherwise changing its Letter of Credit Subline, in each case, as of the date of the Letter of Credit Increase Event. It is understood and agreed that the Aggregate Letter of Credit Subline may not exceed $50.0 million at any time.

 

Letter of Credit Subline” shall mean, for any Issuing Bank, the amount set forth opposite such Issuing Bank’s name on Schedule 2.01B as such schedule may be modified from time to time after the Closing Date in accordance with the terms hereof; provided that, as to any Issuing Bank, the Letter of Credit Subline of such Issuing Bank shall not exceed the amount set forth opposite such Issuing Bank’s name on Schedule 2.01B as in effect on the Closing Date, unless the applicable Issuing Bank otherwise agrees. For the avoidance of doubt, the Letter of Credit Sublines are part of, and not in addition to, the Revolver Commitments.

 

Liabilities” shall mean any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.

 

LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any applicable Interest Period or for any CBFR Borrowing, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that, if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”), then the LIBO Rate shall be the Interpolated Rate, subject to Section 2.14 in the event that the Administrative Agent shall conclude that it shall not be possible to determine such Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error). Notwithstanding the above, to the extent that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection with an CBFR Borrowing, such rate shall be determined as modified by the definition of Adjusted One Month LIBOR Rate.

 

LIBO Screen Rate” shall mean, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period or for any CBFR Borrowing, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for Dollars) for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBO Screen Rate as so determined would be less than 0.50%, such rate shall be deemed to 0.50% for the purposes of this Agreement; provided further, that the foregoing shall not be applicable to determine the “Adjusted One Month LIBOR Rate” and the “CBFR”.

 

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Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, encumbrance, charge or security interest in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

 

Lien Waiver” shall mean an agreement, in form reasonably satisfactory to the Administrative Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit the Administrative Agent to enter upon the premises and remove the Collateral or to use the premises to store the Collateral as permitted hereunder; and (b) for any Collateral held by a warehouseman, processor, shipper, customs broker (including pursuant to a Customs Broker Agreement) or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any Documents (as defined in the Collateral Agreement) in its possession relating to the Collateral as agent for the Administrative Agent, and agrees to deliver the Collateral to the Administrative Agent upon request, in accordance with such agreement.

 

Line Cap” shall mean, at any time of determination, an amount equal the lesser of (a) the aggregate amount of all Revolver Commitments and (b) the then applicable Borrowing Base.

 

Liquidity Event” shall mean the occurrence of a date when (a) Availability on such date shall have been less than the greater of (i) 17.5% of the Line Cap and (ii) $20.0 million, in either case for five consecutive Business Days, until such date as (b) Availability on such date shall have been at least equal to the greater of (i) 17.5% of the Line Cap and (ii) $20.0 million for 30 consecutive calendar days.

 

LLC” shall mean any Person that is a limited liability company under the laws of its jurisdiction of formation.

 

Loan” shall mean any Revolver Loan, Protective Advance or Overadvance Loan.

 

Loan Documents” shall mean, collectively, this Agreement, any promissory notes issued pursuant to this Agreement, the Security Documents, each compliance certificate, the Intercreditor Agreement, any subordination agreement, and all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Administrative Agent or any Lender and including all other pledges, powers of attorney, consents, notices, LC Documents and any agreements between the Borrower and any Issuing Bank regarding such Issuing Bank’s Letter of Credit Subline or the respective rights and obligations between the Borrower and any Issuing Bank in connection with the issuance by such Issuing Bank of Letters of Credit, and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

 

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Loan Parties” shall mean Holdings, the Borrower, the Subsidiary Guarantors and any Parent Entity, in lieu of Holdings, that has executed and delivered an assumption agreement in substantially the form of Exhibit D to the Collateral Agreement and become a “Guarantor” and “Grantor” thereunder.

 

Local Time” shall mean Dallas time.

 

Margin Stock” shall mean margin stock within the meaning of Regulations T, U and X, as applicable.

 

Material Adverse Effect” shall mean a material adverse change in, or material adverse effect on (a) the business, assets, financial condition or results of operations, in each case of Holdings, the Borrower and the Subsidiaries, taken as a whole, (b) the validity or enforceability of the Loan Documents, (c) the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents, (d) the Collateral, or the Administrative Agent’s Liens (on behalf of itself and other Secured Parties) on the Collateral or the priority of such Liens, or (e) the rights and remedies (taken as a whole) of the Administrative Agent, the Issuing Banks and the Lenders under the Loan Documents.

 

Material Agreement” shall mean, (a) the General Unsecured Cash Fund Escrow Agreement and (b) any other contract or agreement pursuant to which Holdings or its Subsidiaries is a party that if breached could reasonably be expected to cause a Material Adverse Effect.

 

Material Indebtedness” shall mean, collectively, (i) the Term Loan Obligations and (ii) any Indebtedness (other than the Loans and Letters of Credit), of any one or more of Holdings and its Subsidiaries in an aggregate principal amount exceeding $5.0 million.

 

Material Intellectual Property” means any intellectual property that, individually or collectively, (a) is (i) necessary to the business of the Borrower and its Subsidiaries as currently conducted or (ii) is otherwise material to the business or operations of the Borrower and its Subsidiaries, taken as a whole, or (b) has a fair market value (as reasonably determined by the Borrower in good faith) in excess of $1.0 million.

 

Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

 

Moody’s” shall mean Moody’s Investors Service, Inc.

 

Mortgage” shall mean any mortgage, deed of trust or other agreement in form and substance reasonably satisfactory to the Administrative Agent, which conveys or evidences a Lien in favor of the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, on the applicable Real Property, including any amendment, restatement, modification or supplement thereto.

 

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Mortgageable Real Property” shall mean (a) any fee owned real property and related fixtures that is adjacent to, contiguous with or necessary or related to or used in connection with any real property then subject to a Mortgage in favor of the Administrative Agent, or (b) any other fee owned real property and related fixtures that either (i) has a fair market value in an amount equal to or greater than $1.0 million (or if an Event of Default has occurred and is continuing, then regardless of the fair market value of such real property and related fixtures) or (ii) is subject to a Lien in favor of the Term Loan Agent to secure the Term Loan Obligations. For the avoidance of doubt, no real property that is subject to the Sale Leaseback shall be “Mortgageable Real Property.”

 

Mortgaged Properties” shall mean the fee owned real properties of the Loan Parties encumbered by a Mortgage pursuant to Section 5.09, if any.

 

Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, or has within any of the preceding six (6) plan years made or accrued an obligation to make contributions.

 

Net Income” shall mean, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) other than as otherwise set forth in the definition of “Pro Forma Basis,” the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or requirement of law applicable to such Subsidiary.

 

Non-Consenting Lender” shall have the meaning assigned to such term in Section 2.19(c).

 

Note” shall have the meaning assigned to such term in Section 2.09(d).

 

Noticed Bank Product” shall mean Bank Product Obligations arising under a Bank Product, in respect of which the notice delivered to the Administrative Agent pursuant to Section 2.23 by the applicable Secured Bank Product Provider and the Borrower (as required under the definition of “Secured Bank Product Provider”) confirms that such Bank Product Obligations shall be deemed a “Noticed Bank Product” hereunder for all purposes, including the application of Availability Reserve and Section 7.02, so long as no Overadvance would result from establishment of a Bank Product Reserve with respect to such Bank Product Obligations; provided that, if the amount of Secured Bank Product Obligations arising under such Bank Product is increased in accordance with the definition of “Secured Bank Product Obligations”, then such Secured Bank Product Obligations shall only constitute a Noticed Bank Product to the extent that a Bank Product Reserve can be established with respect to such Bank Product Obligations without resulting in an Overadvance. For the avoidance of doubt, (a) so long as J.P. Morgan or one of its Affiliates is the Administrative Agent, neither J.P. Morgan nor any of its Affiliates providing Bank Products for any Loan Party or any Subsidiary of a Loan Party shall be required to provide any notice in respect of such Bank Products and (b) all Bank Product Obligations set forth in Schedule 1.01(a) as of the date hereof shall constitute Noticed Bank Products.

 

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Noticed Swap Agreement” shall mean Swap Agreement Obligations arising under a Swap Agreement, in respect of which the notice delivered to the Administrative Agent pursuant to Section 2.23 by the applicable Secured Swap Provider and the Borrower (as required under the definition of “Secured Swap Provider”) confirms that such Swap Agreement shall be deemed a “Noticed Swap Agreement” hereunder for all purposes, including the application of Availability Reserve and Section 7.02, so long as no Overadvance would result from establishment of a Swap Obligations Reserve with respect to such Swap Agreement Obligations; provided that, if the amount of Secured Swap Obligations arising under such Swap Agreement is increased in accordance with the definition of “Secured Swap Obligations” then such Secured Swap Obligations shall only constitute a Noticed Swap Agreement to the extent that a Swap Obligations Reserve can be established with respect to such Swap Agreement Obligations without resulting in an Overadvance. For the avoidance of doubt, so long as J.P. Morgan or one of its Affiliates is the Administrative Agent, neither J.P. Morgan nor any of its Affiliates having Swap Agreements with any Loan Party or any Subsidiary of a Loan Party shall be required to provide any notice in respect of such Swap Agreements.

 

NYFRB” shall mean the Federal Reserve Bank of New York.

 

NYFRB Rate” shall mean, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” shall mean the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than 1.50%, such rate shall be deemed to be 1.50% for purposes of this Agreement.

 

NYFRB’s Website” shall mean the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

 

Obligations” shall mean for purposes of the Loan Documents, all obligations of every nature of each Loan Party from time to time owed to the Agents (including former Agents) or the Lenders, under any Loan Document, whether for principal, interest (including interest, fees and other amounts which, but for the filing of a petition in bankruptcy with respect to such Loan Party, would have accrued on any such Obligation, whether or not a claim is allowed against such Loan Party for such interest, fees and other amounts in the related bankruptcy proceeding), LC Obligations, fees, expenses, indemnification or otherwise. For the avoidance of doubt, Revolver Loans made pursuant to any Revolver Commitment Increases incurred under Section 2.22 shall constitute Obligations.

 

OFAC” shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.

 

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Operating Account” shall mean the Borrower’s main operating Deposit Account (account no.: xxxxxx7526) held at Wells Fargo Bank, N.A. or any successor Deposit Account approved by the Administrative Agent.

 

Osmium/Tensile” means Osmium Partners, LLC, Tensile Capital Management, LLC and their respective Affiliates.

 

Other Liabilities” shall mean any obligation on account of (a) any Cash Management Services furnished to any of the Loan Parties or any of their Subsidiaries and/or (b) any transaction which arises out of any Bank Product or any Swap Agreement entered into with any Loan Party, as each may be amended from time to time.

 

Other Taxes” shall mean any and all present or future stamp, court, intangible, recording, filing, documentary, excise, property or similar Taxes arising from any payment made hereunder or from the execution, delivery, performance or enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, the Loan Documents, and any and all interest and penalties related thereto.

 

Overadvance” shall have the meaning assigned to such term in Section 2.24.

 

Overadvance Loan” shall mean a CBFR Loan made when an Overadvance exists or is caused by the funding thereof.

 

Overnight Bank Funding Rate” shall mean, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

 

Paid in Full” or “Payment in Full” means, (a) the payment in full in cash of all outstanding Loans and LC Disbursements, together with accrued and unpaid interest thereon, (b) the termination, expiration, or cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to the Administrative Agent of a cash deposit, or at the discretion of the Administrative Agent a backup standby letter of credit satisfactory to the Administrative Agent and the Issuing Banks, in an amount equal to 105% of the outstanding LC Obligations as of the date of such payment), (c) the payment in full in cash of all accrued and unpaid fees, (d) the payment in full in cash of all reimbursable expenses and other Secured Obligations (other than obligations for taxes, indemnification, charges and other inchoate or contingent or reimbursable liabilities for which no claim or demand for payment has been made or, in the case of indemnification, no notice has been given (or, in each case, reasonably satisfactory arrangements have otherwise been made) and other obligations expressly stated to survive such payment and termination of this Agreement), together with accrued and unpaid interest thereon, (e) the termination of all Revolver Commitments, and (f) the termination of the Secured Swap Obligations and the Secured Bank Product Obligations or entering into other arrangements satisfactory to the Secured Parties counterparties thereto.

 

Parent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

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Parent Entity” shall mean any of (i) Holdings and (ii) any other Person of which Holdings is a Subsidiary.

 

Participant” shall have the meaning assigned to such term in Section 9.04(g).

 

Participant Register” shall have the meaning assigned to such term in Section 9.04(g).

 

Payment Conditions” shall mean as to any relevant action contemplated in this Agreement, (i) no Event of Default has then occurred and is continuing or would result from any action, (ii) Availability on a Pro Forma Basis immediately after giving effect to such action would be greater than the greater of (A) $25.0 million and (B) 25% of the Line Cap at all times over the sixty (60) consecutive days prior to consummation of such action, and also on a Pro Forma Basis for such action, and (iii) delivery to Administrative Agent at least three (3) Business Days and not more than five (5) Business Days (or such shorter or longer period of time, as applicable, as may be agreed by the Administrative Agent in its sole discretion) prior to the date of the proposed action of a certificate of the Borrower signed by a Financial Officer of the Borrower giving notice of the intent to consummate such action and certifying compliance with the foregoing conditions (including calculations of Availability).

 

PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

 

Perfection Certificate” shall mean a certificate in form reasonably satisfactory to the Administrative Agent that provides information with respect to the Loan Parties and the Property of each Loan Party.

 

Permitted Business Acquisition” shall mean any acquisition by the Borrower or any other Loan Party of all or substantially all of the assets of, or All Outstanding Equity Interests in, a Person or division or line of business of a Person, provided that: (i) on the date of execution of the purchase agreement in respect of such acquisition, no Event of Default shall have occurred and be continuing or would result therefrom; (ii) if the aggregate total consideration to be paid by the Borrower or any Subsidiary exceeds $2.5 million, the Borrower shall have delivered to the Administrative Agent at least five (5) days prior to such acquisition a certificate of a Responsible Officer of the Borrower to such effect, together with all financial information for such Subsidiary or assets that is reasonably requested by the Administrative Agent and available to the Borrower; (iii) if (with respect to any acquisition of a Person or any Equity Interests in a Person) the acquired Person shall not become a Subsidiary Guarantor or (with respect to any acquisition of assets) the assets shall be acquired by a Subsidiary that is not a Subsidiary Guarantor, the aggregate amount of cash or property paid by the Loan Parties in connection with such acquisition shall not exceed amounts permitted by Sections 6.04(q) or (r); and (iv) the Payment Conditions shall be satisfied on a Pro Forma Basis for such Permitted Business Acquisition.

 

Permitted Discretion” shall mean a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset based lender) business judgment and as it relates to the imposition of exclusionary criteria shall require that the effect of any adjustment or imposition of exclusionary criteria be a reasonable quantification (as reasonably determined by the Administrative Agent) of any impact on the incremental net realizable value of the assets included in the Borrowing Base attributable to such contributing factors.

 

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Permitted Investments” shall mean:

 

(a)            direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, in each case with maturities not exceeding two (2) years;

 

(b)            time deposit accounts, certificates of deposit and money market deposits maturing within one hundred eighty (180) days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits in excess of $250.0 million and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher by at least one (1) nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act));

 

(c)            repurchase obligations with a term of not more than one hundred eighty (180) days for underlying securities of the types described in clause (a) above entered into with a bank meeting the qualifications described in clause (b) above;

 

(d)            commercial paper, maturing not more than one (1) year after the date of acquisition, issued by a corporation organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of P-2 (or higher) according to Moody’s, or A-1 (or higher) according to S&P;

 

(e)            securities with maturities of two (2) years or less from the date of acquisition issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least A by S&P or A by Moody’s;

 

(f)            shares of mutual funds whose investment guidelines restrict 95% of such funds’ investments to those satisfying the provisions of clauses (a) through (e) above; and

 

(g)            money market funds that (i) comply with the criteria set forth in Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least $5.0 billion.

 

Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium thereon, any committed or undrawn amounts and underwriting discounts, fees, commissions and expenses, associated with such Permitted Refinancing Indebtedness), except as otherwise permitted under Section 6.01, (b) other than with respect to Indebtedness permitted pursuant to Section 6.01(h) and Section 6.01(i), such Permitted Refinancing Indebtedness has a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being Refinanced, (c) if the Indebtedness being Refinanced is (i) by its terms subordinated in right of payment to the Obligations under this Agreement or (ii) unsecured Indebtedness, such Permitted Refinancing Indebtedness shall (A) (x) be subordinated in right of payment to such Obligations on terms not materially less favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, taken as a whole, or (y) remain unsecured, respectively, and (B) have a final maturity date equal to or later than one hundred eighty (180) days after the Revolver Termination Date, (d) no Permitted Refinancing Indebtedness shall have obligors or contingent obligors that were not obligors or contingent obligors (or that would not have been required to become obligors or contingent obligors) in respect of the Indebtedness being Refinanced except to the extent otherwise permitted under Section 6.01 or Section 6.04, and (e) if the Indebtedness being Refinanced is (or would have been required to be) secured with any ABL Priority Collateral, such Permitted Refinancing Indebtedness shall (x) be secured by a Junior Lien with respect to the ABL Priority Collateral pursuant to an intercreditor arrangement reasonably satisfactory to the Administrative Agent and (y) have a final maturity date equal to or later than one hundred eighty (180) days (or ninety (90) days in the case of Indebtedness permitted pursuant to Section 6.01(j)) after the Revolver Termination Date.

 

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Person” shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company, individual or family trust, or other organization (whether or not a legal entity), or any government or any agency or political subdivision thereof.

 

Petition Date” shall have the meaning assigned such terms in the recitals to this Agreement.

 

Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Plan Asset Regulations” shall mean 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.

 

Plan of Reorganization” shall have the meaning assigned to such term in the recitals to this Agreement.

 

Prepetition Credit Agreement” shall mean that Credit Agreement, dated as of August 18, 2015, as amended, among the Borrower, the guarantors thereunder, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and parties party thereto from time to time.

 

primary obligor” shall have the meaning assigned to such term in the definition of “Guarantee.”

 

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Prime Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

 

Pro Forma Basis” shall mean, as to any calculation of the Consolidated Fixed Charge Coverage Ratio for any events as described below that occur subsequent to the commencement of any period of four (4) consecutive quarters (the “Reference Period”) for which the financial effect of such events is being calculated, and giving effect to the events for which such calculation is being made, such calculation as will give pro forma effect to such events as if such events occurred on the first day of the Reference Period (it being understood and agreed that (x) unless otherwise specified, such Reference Period shall be deemed to be the four (4) consecutive fiscal quarters ending on the last day of the most recently ended fiscal quarter of the Borrower and its Subsidiaries for which financial statements are available and such pro forma adjustments shall be excluded to the extent already accounted for in the calculation of EBITDA for such period and (y) if any Person that became a Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any Subsidiary shall have experienced any event requiring adjustments pursuant to this definition, then such calculation shall give pro forma effect thereto for such period as if such event occurred at the beginning of such period): (i) in making any determination of EBITDA, pro forma effect shall be given to any asset disposition of a Subsidiary, line of business, to any asset acquisition, any discontinued operation or any operational change, in each case that occurred during the Reference Period (or, in the case of determinations made with respect to any action the taking of which hereunder is subject to compliance on a Pro Forma Basis or otherwise with the Consolidated Fixed Charge Coverage Ratio (any such action, a “Restricted Action”) occurring during the Reference Period or thereafter and through and including the date of such determination) and (ii) in making any determination on a Pro Forma Basis, (x) all Indebtedness (including Indebtedness incurred or assumed and for which the financial effect is being calculated, whether incurred under this Agreement or otherwise, but excluding normal fluctuations in revolving Indebtedness incurred for working capital purposes) incurred or permanently repaid, returned, redeemed or extinguished during the Reference Period (or, in the case of determinations made with respect to any Restricted Action, occurring during the Reference Period or thereafter and through and including the date of such determination) shall be deemed to have been incurred or repaid, returned, redeemed or extinguished at the beginning of such period (it being understood that for purposes of any calculation of the Consolidated Fixed Charge Coverage Ratio, the use of proceeds of any such Indebtedness shall be taken into account in such calculation) and (y) Interest Expense of such Person attributable to (A) interest on any Indebtedness, for which pro forma effect is being given as provided in the preceding clause (x), bearing floating interest rates shall be computed on a pro forma basis utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination as if such rate had been actually in effect during the period for which pro forma effect is being given taking into account any interest hedging arrangements applicable to such Indebtedness, (B) any Capital Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a Responsible Officer of the Borrower to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP and (C) interest on any Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be determined to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as the Borrower or Subsidiary may designate.

 

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Pro forma calculations made pursuant to the definition of the term “Pro Forma Basis” shall be determined in good faith by a Responsible Officer of the Borrower and, for any fiscal period ending on or prior to the first anniversary of any such asset acquisition, asset disposition, discontinued operation or operational change, may include adjustments to reflect operating expense reductions and other operating improvements or synergies reasonably expected to result from such asset acquisition, asset disposition, discontinued operation, operational change, and for purposes of determining compliance with the Consolidated Fixed Charge Coverage Ratio such adjustments may reflect additional operating expense reductions and other additional operating improvements and synergies that would be includable in pro forma financial statements prepared in accordance with Regulation S-X and such other adjustments not includable in Regulation S-X under the Securities Act for which substantially all of the steps necessary for the realization thereof have been taken and are reasonably anticipated by the Borrower to be realized in the next twelve (12)-month period following the consummation thereof and, are estimated on a good faith basis by the Borrower; provided, however that the aggregate amount of any such adjustments shall not exceed (together with the aggregate add back to EBITDA pursuant to clauses (a)(iv) and (a)(v) of the definition thereof with respect to the applicable four (4) fiscal quarter period) 20% of the EBITDA of the Borrower and the Subsidiaries for any four (4) fiscal quarter period (prior to giving effect to any add back pursuant to clauses (a)(iv) and (a)(v) of the definition of “EBITDA” or any pro forma adjustments pursuant to this definition). The Borrower shall deliver to the Administrative Agent a certificate of a Responsible Officer of the Borrower setting forth such demonstrable or additional operating expense reductions and other operating improvements or synergies and information and calculations supporting them in reasonable detail.

 

Pro Rata” shall mean with respect to any Lender, a percentage (rounded to the ninth decimal place) determined (a) while Revolver Commitments are outstanding, by dividing the amount of such Lender’s Revolver Commitment by the aggregate amount of all Revolver Commitments; and (b) at any other time, by dividing the amount of such Lender’s Loans and LC Obligations by the aggregate amount of all outstanding Loans and LC Obligations.

 

Prohibited Transaction” shall have the meaning assigned to such term in Section 406 of ERISA and/or Section 4975(c) of the Code.

 

Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible (including cash, securities, accounts, contract rights and Equity Interests or other ownership interests of any Person), whether now in existence or owned or hereafter acquired.

 

Protective Advances” shall have the meaning assigned to such term in Section 2.25.

 

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

 

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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 assigned to it in Section 9.21.

 

Qualified Capital Stock” shall mean any Equity Interest of any Person that does not by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (a) provide for scheduled payments of dividends in cash (other than at the option of the issuer) prior to the date that is, at the time of issuance of such Equity Interest, ninety-one (91) days after the Revolver Termination Date, (b) become mandatorily redeemable at the option of the holder thereof (other than for Qualified Capital Stock or pursuant to customary provisions relating to redemption upon a change of control or sale of assets) pursuant to a sinking fund obligation or otherwise prior to the date that is, at the time of issuance of such Equity Interest, ninety-one (91) days after the Revolver Termination Date or (c) become convertible or exchangeable at the option of the holder thereof for Indebtedness or Equity Interests that are not Qualified Capital Stock; provided further, that if any such Equity Interest is issued pursuant to a plan for the benefit of the employees, directors, officers, managers or consultants of Holdings (or any Parent Entity thereof), the Borrower or its Subsidiaries or by any such plan to such Persons, such Equity Interest shall not be regarded as an Equity Interest not constituting Qualified Capital Stock solely because it may be required to be repurchased by Holdings (any Parent Entity), the Borrower or its Subsidiaries in order to satisfy applicable regulatory obligations.

 

Real Property” shall have the meaning assigned to such term in Section 3.07(c).

 

Real Property Documents” shall mean, with respect to any real property, (a) a FIRREA compliant appraisal of such real property from appraisers engaged by the Administrative Agent, (b) Flood Documentation reasonably satisfactory to the Administrative Agent and each Regulated Lender Entity, (c) survey documentation reasonably satisfactory to the Administrative Agent, (d) a Title Insurance Policy, (e) opinions addressed to the Administrative Agent and the Lenders of (i) local counsel in each jurisdiction where the Mortgaged Property is located with respect to the enforceability of the Mortgages and other matters customarily included in such local law opinions and (ii) counsel for the Borrower regarding due authorization, execution and delivery of the Mortgages, in each case, in form and substance reasonably satisfactory to the Administrative Agent, (f) such other requirements or documents as may be reasonably requested by the Administrative Agent and Required Lenders and (g) any other documentation or confirmation required to be delivered or made pursuant to Section 5.09(f) and Section 5.09(g).

 

Reference Period” shall have the meaning assigned to such term in the definition of “Pro Forma Basis.”

 

Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days preceding the date of such setting, and (2) if such Benchmark is not LIBO Rate, the time determined by the Administrative Agent in its reasonable discretion.

 

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Refinance” shall have the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” “Refinancing” and “Refinanced” shall have meanings correlative thereto.

 

Refunding Capital Stock” shall have the meaning assigned to such term in Section 6.06(i).

 

Register” shall have the meaning assigned to such term in Section 9.04(e).

 

Regulated Lender Entity” shall have the meaning assigned to such term in Section 5.09(f).

 

Regulation D” shall mean Regulation D of the Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

 

Regulation T” shall mean Regulation T of the Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

 

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

 

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

 

Reimbursement Date” shall have the meaning assigned to such term in Section 2.05(b)(i).

 

Related Fund” shall mean, with respect to any Lender, any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities and is administered, advised or managed by (i) such Lender, (ii) an Affiliate of such Lender or (iii) an entity or an Affiliate of an entity that administers, advises or manages such Lender.

 

Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates; provided that, with respect to any Issuing Bank, “Related Parties” shall include its branches and its correspondent and advising banks.

 

Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment. “Released” shall have a meaning correlative thereto.

 

Relevant Governmental Body” shall mean the Federal Reserve Board or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board or the NYFRB or any successor thereto.

 

Rent and Charges Reserve” shall mean the aggregate of (a) all past due rent and other amounts due and owing by a Loan Party to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Eligible Inventory and could legally assert a Lien on any Inventory; and (b) a reserve at least equal to two months’ rent and other periodic charges that would reasonably be expected to be payable to any such Person, unless it has executed a Lien Waiver, in each case, excluding any amounts being disputed in good faith; provided, that clause (b) shall only apply to locations in jurisdictions that are landlord lien priming jurisdictions.

 

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Rent Expense” shall mean, for any period, the consolidated rent expense of the Borrower and its Subsidiaries, as determined in accordance with GAAP.

 

Reorganization” shall mean, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

Report” shall mean reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the assets of the Loan Parties from information furnished by or on behalf of the Borrower, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.

 

Reportable Event” shall mean any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code), other than those events as to which the thirty (30)-day notice period referred to in Section 4043(c) of ERISA has been waived.

 

Required Lenders” shall mean, at any time, the Lenders holding more than 50% of the aggregate amount of Revolver Commitments and Aggregate Revolving Exposure outstanding at any time; provided, however the Revolver Commitments and Revolving Exposure of any Defaulting Lender shall be excluded from such calculation; provided further, that if the number of Lenders, excluding Defaulting Lenders, is greater than one (1) Lender (including any Lender’s Affiliates as one (1) Person for this purpose), Required Lenders must include at least two (2) unaffiliated Lenders.

 

Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

 

Responsible Officer” of any Person shall mean any executive officer or Financial Officer of such Person and any other officer or similar official thereof responsible for the administration of the obligations of such Person in respect of this Agreement.

 

Restricted Action” shall have the meaning assigned to such term in the definition of “Pro Forma Basis.”

 

Restricted Debt Payment” shall have the meaning assigned to such term in Section 6.09(b).

 

Restricted Payment” shall have the meaning assigned to such term in Section 6.06.

 

Reuters” shall mean, as applicable, Thomson Reuters Corp, Refinitiv, or any successor thereto.

 

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Revolver Commitment” shall mean for any Lender, its obligation to make Revolver Loans and to participate in LC Obligations, Overadvance Loans and Protective Advances up to the maximum principal amount shown on Schedule 2.01, as hereafter modified pursuant to an Assignment and Acceptance to which it is a party. “Revolver Commitments” shall mean the aggregate amount of such commitments of all Lenders.

 

Revolver Commitment Increase” shall have the meaning assigned to such term in Section 2.22(a).

 

Revolver Commitment Increase Notice” shall have the meaning assigned to such term in Section 2.22(b).

 

Revolver Loans” shall mean a loan made pursuant to Section 2.01.

 

Revolver Termination Date” shall mean December 31, 2023.

 

Revolving Exposure” means, with respect to any Lender at any time, the sum of (a) the outstanding principal amount of such Lender’s Revolver Loans and its LC Exposure at such time, plus (b) an amount equal to its Pro Rata share of the aggregate principal amount of Protective Advances outstanding at such time, plus (c) an amount equal to its Pro Rata share of the aggregate principal amount of Overadvances outstanding at such time.

 

Revolving Facility Percentage” shall mean, with respect to any Lender, the percentage of the total Revolver Commitments represented by such Lender’s Revolver Commitment. If the Revolver Commitments have terminated or expired, the Revolving Facility Percentages shall be determined based upon the Revolver Commitments most recently in effect, giving effect to any assignments pursuant to Section 9.04.

 

Rights Offerings” shall have the meaning assigned to such term in the Plan of Reorganization.

 

S&P” shall mean Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business.

 

Sale and Lease-Back Transaction” shall have the meaning assigned to such term in Section 6.03.

 

Sale Leaseback” shall have the meaning assigned to such term in the Plan of Reorganization.

 

Sanctioned Country” shall mean, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, and Syria).

 

Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the or by the United Nations Security Council, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person directly or indirectly owned or controlled (individually or in the aggregate) by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject, or target, of any Sanctions.

 

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Sanctions” shall mean individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by:  (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (e) any other Governmental Authority with jurisdiction over any Loan Party or any of their respective Subsidiaries or Affiliates.

 

SEC” shall mean the Securities and Exchange Commission or any successor thereto.

 

Secured Bank Product Obligations” shall mean Bank Product Obligations, including, without limitation, the Bank Product Obligations set forth in Schedule 1.01(a) as of the date hereof, owing to a Secured Bank Product Provider, up to the maximum amount (in the case of any Secured Bank Product Provider other than J.P. Morgan and its Affiliates so long as J.P. Morgan is the Administrative Agent) reasonably specified by such provider in writing to the Administrative Agent, which amount may be established or increased (by further written notice to the Administrative Agent from time to time in accordance with Section 2.23) as long as no Default or Event of Default exists.

 

Secured Bank Product Provider” shall mean (a) J.P. Morgan or any of its Affiliates; and (b) any other Lender or Affiliate of a Lender that is providing and any Person that was a Lender or an Affiliate or a Lender at the time it provided a Bank Product (provided such provider delivers written notice to the Administrative Agent in accordance with Section 2.23 and otherwise in form and substance reasonably satisfactory to the Administrative Agent, which has been countersigned by the Borrower to designate such Bank Product as a Secured Bank Product Obligation, (i) describing the Bank Product and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 8.12).

 

Secured Obligations” shall mean the Obligations, the Secured Swap Obligations and the Secured Bank Product Obligations.

 

Secured Parties” shall mean (a) the Administrative Agent, (b) the Lenders, (c) each Issuing Bank, (d) each Secured Bank Product Provider, to the extent the Bank Product Obligations in respect thereof constitute Secured Obligations, (e) each Secured Swap Provider, to the extent the Swap Agreement Obligations in respect thereof constitute Secured Obligations and (f) the successors and assigns of each of the foregoing.

 

Secured Swap Obligations” shall mean Swap Agreement Obligations owing to a Secured Swap Provider, up to the maximum amount (in the case of any Secured Swap Provider other than J.P. Morgan and its Affiliates so long as J.P. Morgan is the Administrative Agent) reasonably specified by such provider in writing to the Administrative Agent, which amount may be established or increased (by further written notice to the Administrative Agent from time to time in accordance with Section 2.23) as long as no Default or Event of Default exists.

 

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Secured Swap Provider” shall mean (a) J.P. Morgan or any of its Affiliates; and (b) any other Lender or Affiliate of a Lender that is providing and any Person that was a Lender or an Affiliate or a Lender at the time it provided a Swap Agreement to a Loan Party (provided such provider delivers written notice to the Administrative Agent in accordance with Section 2.23 and otherwise in form and substance reasonably satisfactory to the Administrative Agent, which has been countersigned by the Borrower to designate such Swap Agreement as a Secured Swap Obligation, (i) describing the Swap Agreement and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 8.12).

 

Securities Act” shall mean the Securities Act of 1933.

 

Security Documents” shall mean the Mortgages, the Collateral Agreement and any other agreements, instruments and documents executed in connection with this Agreement that are intended to create, perfect or evidence Liens to secure the Secured Obligations, including, without limitation, all other security agreements, pledge agreements, mortgages, deeds of trust, and Control Agreements now or hereafter executed by any Loan Party and delivered to the Administrative Agent.

 

Shrink” shall mean Inventory which has been lost, misplaced, stolen, or is otherwise unaccounted for.

 

SOFR” shall mean, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day.

 

SOFR Administrator” shall mean the NYFRB (or a successor administrator of the secured overnight financing rate).

 

SOFR Administrator’s Website” shall mean the NYFRB’s Website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

Specified Bank Products” shall mean the Bank Products set forth on Part I of Schedule 1.01(a) as of the date hereof.

 

Specified Event of Default” shall mean any Event of Default arising under Section 7.01(a) (solely relating to a material misrepresentation contained in any Borrowing Base Certificate), (b), (c), (d) (solely relating to a failure to comply with Section 5.12(c) or (d) or 6.10), (h), (i), (e)(i), (e)(ii) (solely relating to a failure to comply with Section 5.04(a) or (b)) or (m).

 

Spring-Out Date” shall mean the first date following the first anniversary of the Closing Date on which Availability was at all times over the sixty (60) consecutive days prior to such date in excess of the greater of (a) $25.0 million and (b) 25% of the Line Cap.

 

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Stated Amount” shall mean at any time the maximum amount for which a Letter of Credit may be honored as provided in Section 1.10.

 

Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D). Such reserve percentage shall include those imposed pursuant to Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

 

Subordinated Indebtedness” shall mean any unsecured Indebtedness of the Borrower or any Subsidiary that is expressly subordinated in right of payment to the Obligations on terms reasonably satisfactory to the Administrative Agent.

 

Subordinated Intercompany Debt” shall have the meaning assigned to such term in Section 6.01(d).

 

Subsidiary” shall mean any direct or indirect subsidiary of the Borrower or a Loan Party, as applicable.

 

subsidiary” shall mean, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, by the parent and/or one or more subsidiaries of the parent.

 

Subsidiary Guarantor” shall mean each Loan Party other than Holdings and the Borrower.

 

Supermajority Lenders” shall mean the Lenders holding more than 66⅔% of the aggregate amount of Revolver Commitments and the Aggregate Revolving Exposure outstanding at any time; provided, however that (i) the Revolver Commitments and Revolving Exposure of any Defaulting Lender shall be excluded from such calculation and (ii) if the number of Lenders, excluding Defaulting Lenders, is greater than or equal to three (3) Lenders (including any Lender’s Affiliates as one (1) Person for this purpose), Supermajority Lenders must include at least three (3) unaffiliated Lenders.

 

Supported QFC” has the meaning assigned to it in Section 9.21.

 

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Swap Agreement” shall mean any agreement, contract, or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act and any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one (1) or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions, provided that no phantom stock or other employee benefit plan providing for payments only on account of services provided by current or former directors, officers, employees, members of management or consultants of Holdings, the Borrower or any of their Subsidiaries shall be a Swap Agreement.

 

Swap Agreement Obligations” means any and all obligations of the Loan Parties and their Subsidiaries, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction permitted hereunder with a Lender or an Affiliate of a Lender.

 

Swap Obligation” shall mean, with respect to any Person, 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 or any rules or regulations promulgated thereunder.

 

Swap Obligations Reserve” shall mean the aggregate amount of reserves established by the Administrative Agent from time to time in its Permitted Discretion in respect of Secured Swap Obligations, which shall in any event include the maximum amount of all Noticed Swap Agreements in respect of Swap Agreement Obligations.

 

Syndication Agents” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

Tax and Trust Funds” means cash, cash equivalents or other assets comprised solely of (a) funds used for payroll and payroll taxes and other employee benefit payments to or for the benefit of such Loan Party’s employees in the current period (which may be monthly or quarterly, as applicable), (b) all taxes required to be collected, remitted or withheld in the current period (which may be monthly or quarterly, as applicable) (including, without limitation, federal and state withholding taxes (including the employer’s share thereof)) and (c) any other funds which any Loan Party holds in trust or as an escrow or fiduciary for another person (which is not an Affiliate of a Loan Party) in the ordinary course of business and in connection with a transaction or arrangement not prohibited under this Agreement.

 

Tax Distributions” shall have the meaning assigned to such term in Section 6.06(d).

 

Taxes” shall mean any and all present or future taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges), assessments, fees or withholdings imposed by any Governmental Authority and any and all interest and penalties related thereto.

 

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Term Loan Agent” shall mean Alter Domus (US) LLC, in its capacity as “Administrative Agent” under the Term Loan Agreement and the other Term Loan Documents, together with its successors and permitted assigns.

 

Term Loan Agreement” shall mean that certain Credit Agreement dated as of the Closing Date, by and among the Borrower, the Guarantors, the lenders party thereto and the Collateral Agent, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time to the extent permitted under the Intercreditor Agreement.

 

Term Loan Documents” shall mean the “Loan Documents” as defined in the Term Loan Agreement.

 

Term Loan Lenders” shall mean the “Lenders” under and as defined in the Term Loan Agreement.

 

Term Loan Obligations” shall mean all obligations of the Loan Parties, which are incurred or owing under the Term Loan Documents, including all obligations in respect of the payment of principal, interest, fees, prepayment premiums and indemnification obligations, and obligations in respect of any refinancing of such Indebtedness permitted under this Agreement and under the Intercreditor Agreement; provided that such Indebtedness is subject to the Intercreditor Agreement.

 

Term Loan Priority Collateral” shall have the meaning assigned such term in the Intercreditor Agreement.

 

Term Loan Priority Collateral Account” shall mean a Deposit Account subject to the sole dominion and control of the Term Loan Agent which holds solely identifiable proceeds of Term Loan Priority Collateral pending reinvestment or the application thereof to the Term Loan Obligations in accordance with the Term Loan Documents and the Intercreditor Agreement.

 

Term Loan Secured Parties” shall mean the Term Loan Agent and the Term Loan Lenders.

 

Term Loans” shall mean those Term Loans borrowed by the Borrower pursuant to the Term Loan Agreement in the original aggregate principal amount of $25.0 million.

 

Term SOFR” shall mean, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

 

Term SOFR Notice” shall mean a notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term SOFR Transition Event.

 

Term SOFR Transition Event” shall mean the determination by the Administrative Agent that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a Benchmark Transition Event or an Early Opt-in Election, as applicable, has previously occurred resulting in a Benchmark Replacement in accordance with Section 2.14 that is not Term SOFR.

 

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Title Insurance Policy” shall mean a mortgagee’s loan policy, in form and substance reasonably satisfactory to the Administrative Agent, together with all endorsements reasonably requested by the Administrative Agent, issued by or on behalf of a title insurance company reasonably satisfactory to the Administrative Agent, insuring the Lien created by a Mortgage in an amount and on terms reasonably satisfactory to the Administrative Agent, delivered to the Administrative Agent.

 

Transaction Costs” shall mean fees and expenses payable or otherwise borne by Holdings, any other Parent Entity, the Borrower and its Subsidiaries in connection with the Transactions occurring on or about the Closing Date.

 

Transactions” shall mean, collectively, the transactions to occur pursuant to the Loan Documents, including (a) the execution and delivery of the Loan Documents and the initial borrowings hereunder, (b) the execution and delivery of the Term Loan Documents and the initial borrowings thereunder and (c) the repayment of the Existing Debt.

 

Type,” when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term “Rate” shall include the Adjusted LIBO Rate and the CBFR.

 

UK Financial Institutions” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

 

UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York or in any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

 

Uniform Customs” shall have the meaning assigned to such term in Section 9.07.

 

Unused Line Fee” shall have the meaning assigned to such term in Section 2.12(b).

 

Unused Line Fee Rate” shall mean 0.50% per annum, calculated based upon the actual number of days elapsed over a 360-day.

 

U.S. Person” shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

 

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U.S. Special Resolution Regimes” shall have the meaning assigned to such term in Section 9.21.

 

U.S. Tax Compliance Certificate” shall have the meaning assigned to such term in Section 2.17(e)(i)(B)(3).

 

USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Adequate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107 56 (signed into law October 26, 2001)).

 

Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the product obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including a payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth that will elapse between such date and the making of such payment); by (b) the outstanding principal amount of such Indebtedness.

 

WF Concentration Account” shall mean the Borrower’s Main Concentration Account No.: xxxxxx5063 held at Wells Fargo Bank, National Association or any successor Deposit Account approved by the Administrative Agent.

 

WF Factored Receivables” shall mean any Accounts originally owed or owing by a Loan Party to another Person which have been purchased by or factored with Wells Fargo Bank, National Association or any of its Affiliates pursuant to a factoring arrangement or otherwise with the Person that sold the goods or rendered the services to the Loan Party which gave rise to such Account.

 

WF Factoring Arrangement” shall mean the services and products provided to Borrower by Wells Fargo Bank, National Association (“WF”) and one or more of its Affiliates, with respect to or in connection with WF Factored Receivables, in the maximum amount set forth in the applicable notice delivered to the Administrative Agent pursuant to Section 2.23 by WF, as the Secured Bank Product Provider, and Borrower.

 

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

 

Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

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Section 1.02     Terms Generally.

 

(a)      The definitions set forth or referred to in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof. 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.” All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, the Loan Documents in which the reference appears unless the context shall otherwise require.

 

(b)      Except as otherwise expressly provided herein, any reference in this Agreement to any Loan Document or other document, agreement or instrument (including any by-laws, limited partnership agreement, limited liability company agreement, articles of incorporation, certificate of limited partnership or certificate of formation, as the case may be) shall mean such Loan Document, agreement or instrument as amended, restated, amended and restated, supplemented, otherwise modified, replaced, renewed, extended or refinanced from time to time and any reference in this Agreement to any Person shall include a reference to such Person’s permitted assigns and successors-in-interest.

 

Section 1.03     Accounting Terms.

 

(a)      Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith; provided further that if an amendment is requested by the Borrower or the Required Lenders, then the Borrower and the Administrative Agent shall negotiate in good faith to enter into an amendment of such affected provisions (without the payment of any amendment or similar fees to the Lenders) to preserve the original intent thereof in light of such change in GAAP or the application thereof subject to the approval of the Required Lenders (not to be unreasonably withheld, conditioned or delayed); provided further that all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value,” as defined therein and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

 

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(b)     Notwithstanding anything to the contrary contained in paragraph (a) above or the definition of Capital Lease Obligations, in the event of an accounting change requiring all leases to be capitalized, only those leases (assuming for purposes hereof that they were in existence on the date hereof) that would constitute Capital Lease Obligations on the date hereof shall be considered Capital Lease Obligations and all calculations and deliverables under this Agreement or any other Loan Document shall be made in accordance therewith (provided that all financial statements delivered to the Administrative Agent in accordance with the terms of this Agreement after the date of such accounting change shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to such accounting change). Notwithstanding anything to the contrary, for all purposes under this Agreement (other than for purposes of Sections 5.04(a), (b) or (c)) and the other Loan Documents, including negative covenants, financial covenants and component definitions, GAAP will be deemed to treat operating leases and Capital Lease Obligations in a manner consistent with their treatment under GAAP as in effect on December 31, 2018, notwithstanding any modifications or interpretive changes thereto that may occur thereafter.

 

Section 1.04     Rounding. Except as otherwise expressly provided herein, any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one (1) place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding up if there is no nearest number).

 

Section 1.05     Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day (other than as described in the definition of CBFR, NYFRB Rate or Interest Period), the date of such payment or performance shall extend to the immediately succeeding Business Day and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

Section 1.06     Classification; Payment Conditions.

 

(a)     For purposes of determining compliance at any time with Sections 6.01, 6.02, 6.04, 6.05, 6.06, 6.07 and 6.09, in the event that any Lien, Investment, Indebtedness, Disposition, Restricted Payment, affiliate transaction, contractual restriction or prepayment of Indebtedness meets the criteria of more than one (1) of the categories of transactions or items permitted pursuant to any clause of such Sections 6.01, 6.02, 6.04, 6.05, 6.06, 6.07 and 6.09, the Borrower, in its sole discretion, may classify or reclassify such transaction or item (or portion thereof) and will only be required to include the amount and type of such transaction (or portion thereof) in any one (1) category; provided that such transaction or item (or any portion thereof) may not be reclassified into Section 6.01(g), 6.04(r), 6.05(h), 6.06(h), 6.09(b) or 6.09(d).

 

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(b)     Not less than three (3) Business Days prior and not more than five (5) Business Days prior to the consummation of any Permitted Business Acquisition, Investment pursuant to Section 6.04(r), Disposition pursuant to Section 6.05(h), Restricted Payment pursuant to Section 6.06(h) or Restricted Debt Payment pursuant to Section 6.09(b) or Section 6.09(d), the Borrower shall deliver a certificate of a Responsible Officer of the Borrower certifying that as of the date of the applicable Permitted Business Acquisition, Investment, Disposition, Restricted Payment or Restricted Debt Payment, as applicable, the Payment Conditions will be satisfied on a pro forma basis after giving effect to such transaction together with reasonably detailed calculations of Availability.

 

Section 1.07     References to Laws. Unless otherwise expressly provided herein, references to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

 

Section 1.08     Pro Forma. Notwithstanding anything to the contrary contained herein, financial ratios and tests (including the Consolidated Fixed Charge Coverage Ratio) pursuant to this Agreement shall be calculated in the manner prescribed by the definition of “Pro Forma Basis.”

 

Section 1.09     Interest Rates; LIBOR Notification. The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. Upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, Sections 2.14(c) and (d)  provide the mechanism for determining an alternative rate of interest. The Administrative Agent will promptly notify the Borrower, pursuant to Section 2.14(f) of any change to the reference rate upon which the interest rate on Eurodollar Loans is based. However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the London interbank offered rate or other rates in the definition of “LIBO Rate” or with respect to any alternative or successor rate thereto, or replacement rate thereof (including, without limitation, (a) any such alternative, successor or replacement rate implemented pursuant to Section 2.14(c) or (d), whether upon the occurrence of a Benchmark Transition Event, a Term SOFR Transition Event or an Early Opt-in Election, and (b) the implementation of any Benchmark Replacement Conforming Changes pursuant to Section 2.14(e)), including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

 

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Section 1.10     Letters of Credit. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the amount of such Letter of Credit available to be drawn at such time; provided that with respect to any Letter of Credit that, by its terms or the terms of any letter of credit agreement related thereto, provides for one or more automatic increases in the available amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum amount is available to be drawn at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Article 29(a) of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600 (or such later version thereof as may be in effect at the applicable time) or Rule 3.13 or Rule 3.14 of the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time) or similar terms of the Letter of Credit itself, or if compliant documents have been presented but not yet honored, such Letter of Credit shall be deemed to be “outstanding” and “undrawn” in the amount so remaining available to be paid, and the obligations of the Borrower and each Lender shall remain in full force and effect until the Issuing Banks and the Lenders shall have no further obligations to make any payments or disbursements under any circumstances with respect to any Letter of Credit.

 

Section 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 and acquired on the first date of its existence by the holders of its Equity Interests at such time.

 

ARTICLE II

 

The Credits

 

Section 2.01     Revolver Commitments. Each Lender agrees, severally on a Pro Rata basis up to its Revolver Commitment, on the terms set forth herein, to make Revolver Loans to the Borrower from time to time from and after the Closing Date through the Commitment Revolver Termination Date. The Revolver Loans may be repaid and reborrowed as provided herein. In no event shall the Lenders have any obligation to honor a request for a Revolver Loan if the Aggregate Revolving Exposure outstanding at such time (including the requested Revolver Loan) would exceed the Line Cap.

 

Section 2.02     Loans and Borrowings.

 

(a)     All Loans shall be made by the Lenders ratably in accordance with their respective Revolver Commitments. The failure of any Lender to make any Revolver Loan required to be made by it shall not relieve any other Lender of its obligations hereunder.

 

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(b)     Subject to Section 2.14, each Borrowing shall be (i) comprised entirely of CBFR Loans or Eurodollar Loans as the Borrower may request in accordance herewith and (ii) (x) in the case of Eurodollar Loans, in a minimum amount of $1,000,000, or an increment of $100,000 in excess thereof or (y) in the case of CBFR Loans, no minimum amount or predetermined increment shall apply. Each Lender at its option may make any CBFR Loan or Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Revolver Loan; provided that, any exercise of such option shall not affect the obligation of the Borrower to repay such Revolver Loan in accordance with the terms of this Agreement and such Lender shall not be entitled to any amounts payable under Section 2.15 or 2.17 solely in respect of increased costs resulting from such exercise and existing at the time of such exercise.

 

(c)     Borrowings of more than one Type may be outstanding at the same time; provided that, without the consent of the Administrative Agent, there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.

 

(d)     Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolver Termination Date.

 

Section 2.03     Requests for Borrowings and Notices.

 

(a)     To request a Borrowing of Revolver Loans, the Borrower shall notify the Administrative Agent of such request either by telephone, in writing (delivered by hand or fax) by delivering a Borrowing Request signed by the Borrower or through Electronic System if arrangements for doing so have been approved by the Administrative Agent (a) in the case of a Eurodollar Borrowing, not later than 12:00 p.m., Local Time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of a CBFR Borrowing, not later than 12:00 p.m., Local Time, on the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and each such telephonic Borrowing Request shall be confirmed promptly by hand delivery, fax or a communication through Electronic System to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such written or telephonic Borrowing Request shall specify the following information in compliance with Section 2.02:

 

  (i)             the aggregate amount of the requested Borrowing;

 

  (ii)            the date of such Borrowing, which shall be a Business Day;

 

  (iii)           whether such Borrowing is to be a CBFR Borrowing or a Eurodollar Borrowing;

 

  (iv)           in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

 

  (v)            the location and number of the Borrower’s account to which funds are to be disbursed.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a CBFR Borrowing. If no Interest Period is specified with respect to a requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected a Eurodollar Borrowing with an Interest Period of one (1) month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Revolver Loan to be made as part of the requested Borrowing.

 

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Section 2.04     [Reserved].

 

Section 2.05     Letters of Credit.

 

(a)      Issuance of Letters of Credit. At any time on or after the Closing Date the Borrower may request any Issuing Bank, which request shall be irrevocable unless otherwise agreed by such Issuing Bank, to issue Letters of Credit denominated in Dollars as the applicant thereof for the support of it or its Subsidiaries’ obligations from time to time until 30 days prior to the Revolver Termination Date (or until the Commitment Revolver Termination Date, if earlier), on the terms and subject to the conditions set forth herein, including the following:

 

(i)            The Borrower acknowledges that any Issuing Bank’s issuance of any Letter of Credit is conditioned upon such Issuing Bank’s receipt of a LC Application with respect to the requested Letter of Credit, as well as such other instruments and agreements as such Issuing Bank may customarily require for issuance of a letter of credit of similar type and amount. No Issuing Bank shall have any obligation to issue any Letter of Credit unless (i) such Issuing Bank receives a LC Request and LC Application at least 3 Business Days (or shorter period of time as may be agreed by the Administrative Agent and the applicable Issuing Bank in their reasonable discretion) prior to the requested date of issuance; and (ii) each LC Condition is satisfied. If, in sufficient time to act, the applicable Issuing Bank receives written notice from Required Lenders that a LC Condition has not been satisfied, such Issuing Bank shall not issue the requested Letter of Credit. Prior to receipt of any such notice, the applicable Issuing Bank shall not be deemed to have knowledge of any failure of the LC Conditions to be satisfied. In the event that a reallocation of the Fronting Exposure with respect to LC Obligations of a Defaulting Lender pursuant to Section 2.21(a) does not fully cover the Fronting Exposure with respect to LC Obligations of such Defaulting Lender and such Defaulting Lender has not Cash Collateralized its obligations or otherwise made arrangements reasonably satisfactory to the applicable Issuing Bank, the applicable Issuing Bank may require the Borrower to Cash Collateralize such remaining Fronting Exposure in respect of each outstanding Letter of Credit and will have no obligation to issue new Letters of Credit, or to extend, renew or amend existing Letters of Credit to the extent the Fronting Exposure with respect to LC Obligations would exceed the commitments of the non-Defaulting Lenders, unless such remaining Fronting Exposure with respect to LC Obligations is Cash Collateralized. In addition, an Issuing Bank shall not be under any obligation to issue any Letter of Credit if:

 

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(A)      any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or any requirement of law relating to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it, or

 

(B)      the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally.

 

(ii)           Letters of Credit may be requested by the Borrower to support obligations incurred in the ordinary course of business, to backstop or replace Existing Letters of Credit through the issuance of new Letters of Credit for the account of the issuers of such Existing Letters of Credit (including, by “grandfathering” such Existing Letters of Credit in this Agreement which shall, for the avoidance of doubt, be deemed issued pursuant to this Agreement), for any purpose permitted under this Agreement and the other Loan Documents or as otherwise approved by the Administrative Agent. The amendment, renewal or extension of any Letter of Credit shall be treated as the issuance of a new Letter of Credit, except that delivery of a new LC Application may be required or waived at the discretion of the applicable Issuing Bank.

 

(iii)          The Borrower assumes all risks of, and none of the Administrative Agent, any Issuing Bank or any Lender shall have any liability for, the acts, omissions or misuses of any Letter of Credit by the beneficiary. In connection with issuance of any Letter of Credit, none of the Administrative Agent, any Issuing Bank or any Lender shall be responsible for the existence, character, quality, quantity, condition, packing, value or delivery of any goods purported to be represented by any LC Documents; any differences or variation in the character, quality, quantity, condition, packing, value or delivery of any goods from that expressed in any LC Documents; the form, validity, sufficiency, accuracy, genuineness or legal effect of any LC Documents or of any endorsements thereon; the time, place, manner or order in which shipment of goods is made; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter of Credit or LC Documents; any deviation from instructions, delay, default or fraud by any shipper or other Person in connection with any goods, shipment or delivery; any breach of contract between a shipper or vendor and the Borrower; errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone or otherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of any Letter of Credit or the proceeds thereof; or any consequences arising from causes beyond the control of the Issuing Banks, the Administrative Agent or any Lender, including any act or omission of a Governmental Authority. The Issuing Banks shall be fully subrogated to the rights and remedies of each beneficiary whose claims against the Borrower is discharged with proceeds of any Letter of Credit.

 

(iv)          In connection with its administration of and enforcement of rights or remedies under any Letters of Credit or LC Documents, each Issuing Bank shall be entitled to act, and shall be fully protected in acting, upon any certification, documentation or communication in whatever form believed by such Issuing Bank, in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person. Each Issuing Bank may consult with and employ legal counsel, accountants and other experts to advise it concerning its obligations, rights and remedies, and shall be entitled to act upon, and shall be fully protected in