Exhibit 10.2

EXECUTION

CREDIT AGREEMENT

 

dated as of

 

August 13, 2025

 

among

 

FOSSIL GROUP, INC.,

as a U.S. Borrower and the Borrower Representative,

 

FOSSIL PARTNERS, L.P.,

as a U.S. Borrower,

 

certain Subsidiaries from time to time party hereto,

as Borrowers,

 

the other Loan Parties from time to time party hereto,

 

the Lenders from time to time party hereto,

 

and

 

ACF FINCO I LP,

as Administrative Agent

 

 

SCHEDULES:

 

EXHIBITS:

 

CREDIT AGREEMENT, dated as of August 13, 2025, among FOSSIL GROUP, INC., a Delaware corporation (the “Company”), FOSSIL PARTNERS, L.P., a Texas limited partnership (“Fossil Partners”), each of the other U.S. Subsidiary Borrowers from time to time party hereto (together with the Company, the “U.S. Borrowers”) and FOSSIL CANADA INC., a corporation organized under the laws of New Brunswick (“Fossil Canada” and, together with the U.S. Borrowers and any other Subsidiary designated as a Borrower pursuant to the terms of this Agreement, the “Borrowers”, and each individually, a “Borrower”), the Guarantors from time to time party hereto, the Lenders from time to time party hereto, ACF FINCO I LP, as Administrative Agent.

 

R E C I T A L S:

 

WHEREAS, the Lenders have agreed to extend a revolving credit facility consisting of $150,000,000 in an aggregate principal amount of Commitments, on the terms and conditions set forth herein.

 

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

 

ARTICLE I

 

 

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

 

“2026 Notes” means the 7.00% Senior Notes due 2026 issued by the Company, in an original aggregate principal amount of $150,000,000, in favor of the holders thereof pursuant to the 2026 Notes Indenture.

 

“2026 Notes Documents” means, collectively, (a) the 2026 Notes Indenture, (b) the 2026 Notes, and (c) the other documents, instruments or agreement entered into in connection with any of the foregoing, in each case, as the same may be amended, modified, supplemented or replaced in accordance therewith and with this Agreement.

 

“2026 Notes Obligations” means all Indebtedness of the Company under the 2026 Notes Documents, including all “Obligations” under and as defined in the 2026 Notes Indenture.

 

“2026 Notes Indenture” means that certain Indenture, dated as of November 8, 2021, between the Company, as issuer, and the 2026 Notes Trustee, as supplemented by the First Supplemental Indenture, dated November 8, 2021, between the Company and the 2026 Notes Trustee, and as the same may be amended, restated, amended and restated, modified, supplemented or replaced on or after the Effective Date in accordance therewith and with this Agreement, including pursuant to the Second Supplemental Indenture to the 2026 Notes Indenture, to be entered into by between the Company and the 2026 Notes Trustee, substantially in the form attached as Exhibit H to the Exchange TSA.

 

“2026 Notes Trustee” means Bank of New York Mellon, N.A., in its capacity as trustee under the 2026 Notes Indentures, together with any of its successors or assigns in such capacity.

 

“2029 1L Indenture” means the indenture, the material terms of which are substantially consistent with those set forth in the term sheet attached as Exhibit E to the Exchange TSA, and which indenture is otherwise in form and substance reasonably satisfactory to the Administrative Agent and shall be entered into as of the Exchange Effective Date by and among the Company, as issuer, the other Loan Parties party thereto, as guarantors, and the Applicable Senior Notes Trustee, pursuant to which the 2029 1L Notes shall be issued, and as the same may thereafter be amended, restated, amended and restated, modified, supplemented or replaced in accordance therewith and with this Agreement.

 

“2029 1L Notes” means the 9.500% First-Out Senior Secured Notes due 2029 to be issued by the Company pursuant to the 2029 1L Indenture in connection with and following the Exchange Transaction, in accordance with the terms and conditions set forth in the Exchange TSA.

 

“2029 1L Notes Documents” means, collectively, (a) the 2029 1L Notes Indenture, (b) the 2029 1L Notes, (c) each 2029 1L Notes Security Document, (d) the Guarantees in respect of the 2029 1L Notes Obligations and (e) the other documents, instruments or agreement entered into in connection with any of the foregoing, which shall, in each case, be in form and substance reasonably satisfactory to the Administrative Agent and shall be entered into in connection with the Exchange Transaction, in accordance with the terms and conditions set forth in the Exchange TSA and the other Exchange Documents, as the same may be amended, restated, amended and restated, modified, supplemented or replaced in accordance therewith and with this Agreement.

 

“2029 1L Notes Secured Obligations” means the Indebtedness of the Company or any Restricted Subsidiary under the 2029 1L Notes Documents.

 

“2029 1L Notes Security Documents” means, collectively, any security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, control agreements, guarantees, notes and any other documents or instruments that create Liens on any assets or properties of any Loan Party to secure any 2029 1L Notes Obligations or under which rights or remedies with respect to such Liens are governed, in each case in form and substance reasonably satisfactory to the Administrative Agent, as the same may be amended, amended and restated, modified, supplemented or replaced in accordance with the Intercreditor Agreement.

 

“2029 2L Indenture” means the indenture, the material terms of which are substantially consistent with those set forth in the term sheet attached as Exhibit F to the Exchange TSA, and which indenture is otherwise in form and substance reasonably satisfactory to the Administrative Agent and shall be entered into as of the Exchange Effective Date by and among the Company, as issuer, the other Loan Parties party thereto, as guarantors, and the Applicable Senior Notes Trustee, pursuant to which the 2029 2L Notes shall be issued, and as the same may thereafter be amended, modified, supplemented or replaced in accordance therewith and with this Agreement.

 

“2029 2L Notes” means the Company’s 7.500% Second-Out Senior Secured Notes due 2029 to be issued by the Company pursuant to the 2029 2L Indenture in connection with the Exchange Transaction, in accordance with the terms and conditions set forth in the Exchange TSA and the other Exchange Documents.

 

“2029 2L Notes Documents” means, collectively, (a) the 2029 2L Notes Indenture, (b) the 2029 2L Notes, (c) each 2029 2L Notes Security Document, (d) the Guarantees in respect of the 2029 2L Notes Obligations and (e) the other documents, instruments or agreement entered into in connection with any of the foregoing, which shall, in each case, be in form and substance reasonably satisfactory to the Administrative Agent and shall be entered into in connection with the Exchange Transaction, in accordance with the terms and conditions set forth in the Exchange TSA and the other Exchange Documents, as the same may be amended, restated, amended and restated, modified, supplemented or replaced in accordance therewith and with this Agreement.

 

“2029 2L Notes Secured Obligations” means the Indebtedness of the Company or any Restricted Subsidiary under the 2029 2L Notes Documents.

 

“2029 2L Notes Security Documents” means, collectively, any security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, control agreements, guarantees, notes and any other documents or instruments that create Liens on any assets or properties of any Loan Party to secure any 2029 2L Notes Obligations or under which rights or remedies with respect to such Liens are governed, in each case in form and substance reasonably satisfactory to the Administrative Agent, as the same may be amended, restated, amended and restated, modified, supplemented or replaced in accordance with the Intercreditor Agreement.

 

“2029 Notes” means, collectively, the 2029 1L Notes and the 2029 2L Notes.

 

“2029 Notes Documents” means, collectively, the 2029 1L Notes Documents and the 2029 2L Notes Documents.

 

“2029 Notes Secured Obligations” means, collectively, the 2029 1L Notes Secured Obligations and the 2029 2L Notes Secured Obligations.

 

“ABL Priority Collateral” has the meaning set forth in the Intercreditor Agreement, it being agreed that after the Collateral Designation Date, so long as the Notes Obligations (as defined in the Intercreditor Agreement) remain outstanding and the Intercreditor Agreement is in effect, the Specified Collateral shall be deemed to constitute Notes Priority Collateral instead of ABL Priority Collateral.

 

“ABR”, when used in reference to (a) a rate of interest, refers to the Alternate Base Rate, and (b) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate.

 

“Account” means (a) “accounts” as defined in the UCC or in the PPSA, as applicable and (b) with respect to Accounts of a UK Loan Party, a “Book Debt” as that term is defined in any UK Security Agreement.

 

“Account Debtor” means any Person obligated on an Account.

 

“Acquired Entity or Business” shall mean either (x) the assets constituting a business, division, product line, manufacturing facility or distribution facility of any Person not already a Subsidiary of the Company, which assets shall, as a result of the respective acquisition, become assets of the Company or a Restricted Subsidiary of the Company (or assets of a Person who shall be merged or amalgamated with and into the Company or a Restricted Subsidiary of the Company) or (y) a majority of the Equity Interests of any such Person, which Person shall, as a result of the respective acquisition, become a Restricted Subsidiary of the Company (or shall be merged or amalgamated with and into the Company or a Restricted Subsidiary of the Company).

 

“Adjusted Term SOFR Rate” means, with respect to any Term Benchmark Borrowing denominated in Dollars, an interest rate per annum equal to (a) the Term SOFR Rate plus (b) 0.25%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.

 

“Administrative Agent” means Ares, in its capacity as administrative agent, security trustee and collateral agent for the Lenders hereunder and under the other Loan Documents, or as applicable, such affiliates of Ares as it shall from time to time designate for the purpose of performing its obligations hereunder and under the other Loan Documents in such capacities, and in each case such Person’s successors in such capacities as provided in Article VIII.

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

 

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

“Affiliate” means, with respect to a specified Person, another Person that directly or indirectly Controls or is Controlled by or is under common Control with the Person specified.

 

“Agent Fee Letter” means the Agent Fee Letter dated as of the Effective Date, by and between the Company and the Administrative Agent.

 

“Agent’s Account” means the Deposit Account of the Administrative Agent identified in writing by the Administrative Agent to the Borrower Representative and the Lenders from time to time.

 

“Agent Indemnitee” has the meaning assigned to it in Section 9.03(c).

 

“Aggregate Borrowing Base” means (i) the U.S. Borrowing Base plus (ii) the Canadian Borrowing Base plus (iii) each German Borrowing Base plus (iv) each Swiss Borrowing Base; provided that not more than 35% of the Aggregate Borrowing Base (excluding clause (d) of the U.S. Borrowing Base) shall consist of the Borrowing Bases referenced in the foregoing clauses (iii) through (iv) in the aggregate.

 

“Agreed Currencies” means Dollars.

 

“Agreement” means this Credit Agreement, as modified, amended or restated from time to time.

 

“Alternate Base Rate” means, for any day, a rate per annum equal to the Prime Rate in effect on such day.  Any change in the Alternate Base Rate due to a change in the Prime Rate shall be effective from and including the effective date of such change in the Prime Rate.  For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 3.00%, such rate shall be deemed to be 3.00% for purposes of this Agreement.

 

“Amazon” means Amazon.com, Inc.

 

“AML Legislation” has the meaning set forth in Section 9.20.

 

“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Borrowers or their respective Affiliates from time to time concerning or relating to bribery, anti-money laundering or corruption.

 

“Applicable Commitment Fee Rate” means, on any day of determination, (a) 5.00% per annum with respect to the portion (if any) of the Unused Commitments on such day that exceeds 85% of the aggregate total Commitments on such day, and (b) 0.50% per annum with respect to the remaining portion of the Unused Commitments on such day.  By way of example, if the aggregate total Commitments equal $10,000,000, and the Unused Commitments equals $9,000,000, then the Applicable Commitment Fee Rate will be 5.00% per annum with respect to $500,000 of the Unused Commitments and 0.50% per annum with respect to the remaining $8,500,000 of the Unused Commitments.

 

“Applicable Foreign Accounts Advance Rate” means, at any time of determination (a) prior to the Collateral Designation Date, 85%, or (b) following the Collateral Designation Date, 75%.

 

“Applicable Foreign Inventory Advance Rate” means, at any time of determination (a) prior to the Collateral Designation Date, (i) 90% respect to the Net Orderly Liquidation Value of Eligible Finished Goods Inventory or (ii) 80% with respect to the Cost of Eligible Finished Goods Inventory, or (b) following the Collateral Designation Date, (i) 80% respect to the Net Orderly Liquidation Value of Eligible Finished Goods Inventory or (ii) 70% with respect to the Cost of Eligible Finished Goods Inventory.

 

“Applicable Intercreditor Agreement” has the meaning set forth in Section 9.18(a).

 

“Applicable Parties” has the meaning assigned to it in Section 9.01(f).

 

“Applicable Percentage” means, for any Revolving Lender, a percentage equal to a fraction, the numerator of which is the Commitment of such Revolving Lender, and the denominator of which is the aggregate Commitments of all the Revolving Lenders (or, if the aggregate Commitments have terminated or expired, the Applicable Percentage shall be determined based upon such Revolving Lender’s share of the aggregate Revolving Exposure); provided that, for purposes of Section 2.20 when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitments shall be disregarded in the calculations set forth above.

 

“Applicable Rate” means, for any day, with respect to (a) any Adjusted Term SOFR Rate Loan, 5.00% per annum, and (b) any ABR Loan, 4.00% per annum.

 

“Applicable Share” has the meaning set forth in Section 10.10.

 

“Applicable Senior Notes Trustee” means, with respect to the 2029 1L Indenture and 2029 1L Notes Documents and the 2029 2L Indenture and the 2029 2L Notes Documents, respectively, the applicable trustee, administrative agent, collateral agent, security agent or similar agent thereunder, together with any of their respective successors or assigns in such capacities.

 

“Applicable U.S. Credit Card Accounts Advance Rate” means, at any time of determination (a) prior to the Collateral Designation Date, 100%, or (b) following the Collateral Designation Date, 90%.

 

“Applicable U.S. Accounts Advance Rate” means, at any time of determination (a) prior to the Collateral Designation Date, 90%, or (b) following the Collateral Designation Date, 80%.

 

“Applicable U.S. Inventory Advance Rate” means, at any time of determination (a) prior to the Collateral Designation Date, (i) 100% respect to the Net Orderly Liquidation Value of Eligible Finished Goods Inventory or (ii) 80% with respect to the Cost of Eligible Finished Goods Inventory, or (b) following the Collateral Designation Date, (i) 90% respect to the Net Orderly Liquidation Value of Eligible Finished Goods Inventory or (ii) 70% with respect to the Cost of Eligible Finished Goods Inventory.

 

“Approved Electronic Platform” has the meaning set forth in Section 9.01(d).

 

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Ares” means ACF FINCO I LP, in its individual capacity, and its successors.

 

“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use of an Approved Electronic Platform) approved by the Administrative Agent.

 

“Auditor’s Determination” has the meaning set forth in Section 9.24(c).

 

“Availability” means, at any time, an amount equal to (a) the Line Cap at such time minus (b) the total Credit Exposure of all Lenders at such time; provided that (i) at all times prior to the consummation of a Successful Exchange Transaction, at least 65% of Availability shall consist of U.S. Availability and Canadian Availability, and (ii) at all times following the consummation of a Successful Exchange Transaction, “Availability” shall mean the sum of U.S. Availability plus Canadian Availability.

 

“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the aggregate Commitments.

 

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

 

“Bail-In Legislation” means (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).

 

 “Banking Services” means automated clearinghouse transaction services, in-transit cash services and foreign exchange Swap Agreements, in each case provided to any Loan Party or any Restricted Subsidiary by JPMorgan Chase Bank, N.A. or any other bank acceptable to the Administrative Agent in its sole discretion.

 

“Banking Services Obligations” means any and all obligations of the Loan Parties or any Restricted Subsidiary, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), in connection with Banking Services.

 

“Banking Services Reserves” means all Reserves that the Administrative Agent from time to time establishes in its Permitted Discretion for Banking Services then provided or Banking Services Obligations then outstanding.

 

“Bankruptcy Code” means title 11 of the United States Code, as amended.

 

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency case or proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business or assets appointed for it (including any corporate law or other law permitting a Person to obtain a stay of proceedings or compromise of claims of its creditors against it), or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such case or proceeding or appointment or has had an order for relief in such case or proceeding entered in respect thereof, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States, Canada, Germany, Switzerland, England or Wales or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

 

“Basel II” shall mean the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004.

 

“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated; (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.

 

“Benchmark” means, initially, with respect to any Term Benchmark Loan in any Agreed Currency, the applicable Relevant Rate for such Agreed Currency; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the applicable Relevant Rate or the then-current Benchmark for such Agreed Currency, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (d) of Section 2.14.

 

“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower Representative as the replacement for the then-current Benchmark 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 syndicated credit facilities denominated in the applicable Agreed Currency at such time in the United States and (b) the related Benchmark Replacement Adjustment.  If the Benchmark Replacement as so determined 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” means, with respect to any replacement of the then-current Benchmark with an Unadjusted 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 Representative 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 and/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 syndicated credit facilities denominated in the applicable Agreed Currency at such time.

 

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Revolving Loan, any technical, administrative or operational changes (including changes to the definition of “Business Day”, the definition of “U.S. Government Securities Business Day”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark 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 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” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such 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 such Benchmark (or such component thereof); or

 

(2)        in the case of clause (3) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if such Benchmark (or such component thereof) continues to be provided on such date.

 

For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) above with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such 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 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 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, the Term SOFR Administrator, the central bank for the Agreed Currency applicable to such Benchmark, 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), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide 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 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 such Benchmark (or such component thereof) is no longer, or as of a specified future date will no longer be, 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 such Benchmark (or the published component used in the calculation thereof).

 

“Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than ninety (90) days after such statement or publication, the date of such statement or publication).

 

“Benchmark Unavailability Period” means, with respect to any Benchmark, 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 such 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 such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.

 

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

 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

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

 

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

 

“Blocking Regulation” has the meaning assigned to it in Section 3.07(b).

 

“Borrower” or “Borrowers” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Borrower Representative” has the meaning set forth in Section 17.01.

 

“Borrowing” means (a) Revolving Loans of the same Type and currency, made on the same date, (b) a Protective Advance or (c) an Overadvance.

 

“Borrowing Base” means, individually and collectively as the context may require, the U.S. Borrowing Base, the Canadian Borrowing Base, each Swiss Borrowing Base and each German Borrowing Base.

 

“Borrowing Base Certificate” means a certificate, signed and certified as accurate and complete by a Financial Officer of the Borrower Representative, in substantially the form of Exhibit B (with such changes thereto as may be required by the Administrative Agent in its Permitted Discretion from time to time to reflect the components of and reserves against the Borrowing Base as provided for hereunder) or another form that is acceptable to the Administrative Agent in its Permitted Discretion.

 

“Borrowing Base Reporting Date” means the last day of each Fiscal Month of the Company; provided that during any Weekly Reporting Period, the last day of each week will also be a Borrowing Base Reporting Date.

 

“Borrowing Request” means a request by the Borrower Representative for a Borrowing of Revolving Loans in accordance with Section 2.03, which shall be, in the case of any such written request, in the form of Exhibit C or any other form approved by the Administrative Agent.

 

“Business Day” means 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 to remain closed; provided that the term “Business Day” shall also exclude (a) when used in connection with any Term Benchmark Loan denominated in Dollars, any day that is not a U.S. Government Securities Business Day, (b) when used in connection with any Canadian Loan, any day which shall be in Toronto, Ontario a legal holiday or a day on which commercial banks in Toronto, Canada are authorized or required by law to remain closed, (c) when used in connection with any German Loan, any day which shall be in London or Frankfurt a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close in London or Frankfurt, as applicable, (d) used in connection with any Swiss Loan, any day on which shall be in London or Zurich a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close in London or Zurich, as applicable, and (e) any day that the Administrative Agent’s chief executive office is closed.

 

“Canada” means the country of Canada and any province or territory thereof.

 

“Canadian Availability” means, at any time, an amount equal to (a) the Canadian Line Cap at such time minus (b) the total Canadian Credit Exposure of all Lenders at such time.

 

“Canadian Blocked Person” means any Person whose property or interests in property are blocked or subject to blocking pursuant to, or as described in, any Canadian Economic Sanctions and Export Control Laws.

 

“Canadian Borrowers” means Fossil Canada and each other Canadian Subsidiary that becomes party to this Agreement as a Canadian Borrower after the Effective Date pursuant to Section 5.03(b).

 

“Canadian Borrowing Base” means, at any time (without duplication), the Dollar Equivalent amount of the sum of:

 

(a)         the lesser of (x) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Net Orderly Liquidation Value of Eligible Finished Goods Inventory of the Canadian Borrowers at such time and (y) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Cost of Eligible Finished Goods Inventory of the Canadian Borrowers; provided that In-Transit Inventory shall not comprise more than 20% of the total amount of this clause (a), plus

 

(b)         the product of (i) the Applicable Foreign Accounts Advance Rate multiplied by (ii) the Eligible Accounts of the Canadian Borrowers at such time, minus

 

(c)          without duplication, Reserves established by the Administrative Agent in its Permitted Discretion.

 

The Administrative Agent may, in its Permitted Discretion and with no less than two (2) Business Days’ prior written notice to the Borrower Representative (other than during a Dominion Period, in which case notice shall not be required), establish or adjust Reserves used in computing the Canadian Borrowing Base; provided, that (i) no such notice shall be required to reduce any Reserve or to increase any Reserve resulting solely by virtue of mathematical calculations of the amount thereof in accordance with methodology previously established by the Administrative Agent in its Permitted Discretion and (ii) regardless of whether such notice is required, such new or increased Reserve shall be deemed to be in effect immediately for purposes of determining the Revolving Exposure Limitations with respect to any requested Borrowing or other credit extension.  Subject to the immediately preceding sentence and the other provisions hereof expressly permitting the Administrative Agent to adjust the Canadian Borrowing Base, the Canadian Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to this Agreement.

 

Any changes after the Effective Date in how the applicable Loan Parties value their Inventory in accordance with their historical practices prior to the Effective Date shall be subject to the reasonable approval of the Administrative Agent.

 

“Canadian Collateral” means any and all property of any Canadian Loan Party covered or intended to be covered by the Collateral Documents and any and all other property of any Canadian Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“Canadian Credit Exposure” means, as to any Revolving Lender at any time, the Dollar Equivalent of the sum of (a) such Revolving Lender’s Canadian Revolving Exposure plus (b) such Lender’s Applicable Percentage of the aggregate amount of Canadian Overadvances and Canadian Protective Advances outstanding.

 

“Canadian Defined Benefit Plan” means a Canadian Pension Plan, which contains a “defined benefit provision”, as defined in subsection 147.1(1) of the ITA.

 

“Canadian Dollars” and “Cdn.$” means dollars in the lawful currency of Canada.

 

“Canadian Economic Sanctions and Export Control Laws” means any Canadian laws, regulations or orders governing transactions in controlled goods or technologies or dealings with countries, entities, organizations, or individuals subject to economic sanctions and similar measures.

 

“Canadian Guarantee” means Article XI of this Agreement.

 

“Canadian Guaranteed Obligations” has the meaning set forth in Section 11.01.

 

“Canadian Guarantor” means each Canadian Borrower (solely with respect to its Obligations arising pursuant to Section 11.01 hereof) and each Canadian Subsidiary that is listed on the signature pages hereto as a Canadian Guarantor or that becomes a party hereto as a Canadian Guarantor pursuant to Section 5.03, in each case, until such Subsidiary’s Canadian Guarantee is released in accordance herewith.

 

“Canadian Line Cap” means, as of any date of determination thereof by the Administrative Agent, an amount equal to the least of (i) the total Commitments then in effect, (ii) $5,000,000 and (iii) the Canadian Borrowing Base.

 

“Canadian Loan Parties” means, individually and collectively as the context may require, the Canadian Borrowers and each Canadian Guarantor.

 

“Canadian Loans” means, individually and collectively as the context may require, the Canadian Revolving Loans, the Canadian Protective Advances and the Canadian Overadvances.

 

“Canadian Obligated Party” has the meaning set forth in Section 11.02.

 

“Canadian Overadvance” has the meaning set forth in Section 2.05(c).

 

“Canadian Overadvance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding Canadian Overadvances at such time.  The Canadian Overadvance Exposure of any Lender at any time shall be its Applicable Percentage of the total Canadian Overadvance Exposure at such time.

 

“Canadian Pension Plans” means any “registered pension plan” as defined under Section 248(l) of the ITA or which is registered under Canadian federal or provincial pension legislation and which is sponsored, maintained, funded, contributed to or required to be contributed to, or administered for the Canadian employees or former Canadian employees of any Loan Party or any Subsidiary thereof, other than plans established by statute, including the Canada Pension Plan maintained by the government of Canada and the Quebec Pension Plan maintained by the Province of Quebec.

 

“Canadian Protective Advance” has the meaning set forth in Section 2.04(a).

 

“Canadian Protective Advance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding Canadian Protective Advances at such time.  The Canadian Protective Advance Exposure of any Lender at any time shall be its Applicable Percentage of the total Canadian Protective Advance Exposure at such time.

 

“Canadian Revolving Exposure” means, with respect to any Revolving Lender at any time, the outstanding principal amount of Canadian Revolving Loans of such Revolving Lender at such time.

 

“Canadian Revolving Loan” means a Revolving Loan made by the Revolving Lenders to the Canadian Borrowers.

 

“Canadian Security Agreements” means, collectively, that certain Canadian Pledge and Security Agreement, dated as of the Effective Date, among the Canadian Loan Parties and the Administrative Agent, the Quebec Security Documents, and, as the context requires, any other pledge or security agreement entered into after the Effective Date by any other Canadian Loan Party (as required by this Agreement or any other Loan Document), as the same may be amended, restated or otherwise modified from time to time.

 

“Canadian Subsidiary” means any subsidiary of the Company that has been formed or is organized under the laws of Canada or any province or territory thereof.

 

“Capital Expenditures” means, for any period, the additions to property, plant and equipment and other capital expenditures of the Company and the Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of the Company for such period prepared in accordance with GAAP; provided that the term “Capital Expenditures” shall not include (i) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (x) insurance proceeds paid on account of the loss of or damage to the assets being replaced, restored or repaired or (y) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (ii) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (iii) the purchase of plant, property or equipment or software to the extent financed with the net proceeds of any Disposition (including by way of merger or consolidation) of any asset of the Company or any Restricted Subsidiary, including any sale or issuance to a Person other than the Company or any Restricted Subsidiary of Equity Interests in any Subsidiary, but excluding sales of Inventory, Accounts or Payment Intangibles, (iv) expenditures that constitute rental expenses under operating leases of real or personal property, (v) expenditures that are accounted for as capital expenditures by the Company or any Restricted Subsidiary and that actually are paid for by a Person other than the Company or any Restricted Subsidiary and for which neither the Company nor any Restricted Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period), (vi) the book value of any asset owned by the Company or any Restricted Subsidiary prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (x) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period in which such expenditure actually is made and (y) such book value shall have been included in Capital Expenditures when such asset was originally acquired, or (vii) expenditures that constitute Permitted Acquisitions.

 

“Capital Impairment” has the meaning set forth in Section 9.24(a).

 

“Capital Lease Obligations” of any Person means the obligations of such 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 the purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Equivalents” means:

 

(a)         marketable direct obligations issued or unconditionally guaranteed by the United States Government, the Government of Canada, the UK government, the French government or the Hong Kong government or issued by an agency thereof and backed by the full faith and credit of the United States Government, the Government of Canada, the UK government, the French government or the Hong Kong government, as the case may be, in each case maturing within two years after the date of acquisition thereof;

 

(b)         marketable direct obligations issued by any state of the United States of America, or any political subdivision of any such state or any public instrumentality thereof, by the Canadian federal government, by the UK government, by the French government or by the Hong Kong government, in each case, maturing within two years after the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from such other nationally recognized rating agency acceptable to the Administrative Agent).

 

(c)        commercial paper maturing no more than nine months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then the highest rating from such other nationally recognized rating services acceptable to the Administrative Agent);

 

(d)         certificates of deposit or bankers acceptances denominated in US Dollars, Canadian Dollars, Pounds Sterling, Euro or Hong Kong Dollars and maturing within ninety (90) days after the date of acquisition thereof issued by any Lender or any other commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada, the UK, France or Hong Kong, in each case having combined capital and surplus of not less than $250,000,000 (or the foreign currency equivalent thereof);

 

(e)        repurchase agreements of the Administrative Agent, any Lender or any other commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada, the UK, France or Hong Kong, in each case having combined capital and surplus of not less than $250,000,000 (or the foreign currency equivalent thereof);

 

(f)         overnight investments with the Administrative Agent, any Lender or any other commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada, the UK, France or Hong Kong, in each case having combined capital and surplus of not less than $250,000,000 (or the foreign currency equivalent thereof);

 

(g)       other readily marketable instruments issued or sold by the Administrative Agent, any Lender or any other commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia, Canada, the UK, France or Hong Kong, in each case having combined capital and surplus of not less than $250,000,000 (or the foreign currency equivalent thereof); and

 

(h)         funds invested in brokerage accounts with nationally recognized brokerage houses or money market accounts, in each case for less than thirty (30) days.

 

“Cash Flow Forecast” means a thirteen (13) week budget prepared by the Company, in the form approved by the Administrative Agent from time to time in its reasonable discretion, and initially furnished to the Administrative Agent on or before the Effective Date, as the same shall thereafter be updated, modified and/or supplemented from time to time as provided in Section 5.29. The initial Cash Flow Forecast shall commence as of the week ended August 8, 2025. The Cash Flow Forecast shall include a weekly cash budget, including information on a line item basis as to (a) projected cash receipts, including from asset sales, (b) projected operating and non-operating disbursements (including separate line items for ordinary course operating expenses, capital expenditures and any other fees and expenses relating to the Loan Documents), (c) projected net cash flow, and (d) projected total liquidity (including Availability) and projected calculations of each Borrowing Base.

 

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

 

“CFC Holdco” means a Domestic Subsidiary with no material assets other than equity interests of one or more Foreign Subsidiaries that are CFCs.

 

“Change in Control” means an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all securities that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than forty percent (40%) of the equity securities of the Company entitled to vote in the election of members of the board of directors (or equivalent governing body) of the Company.

 

“Change in Law” means the occurrence, after the Effective Date, of any of the following:  (a) the adoption of or taking effect of any rule, regulation, treaty or other law, (b) any change in any rule, regulation, treaty or other law or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law, but if not having the force of law, which are generally complied with) by any Governmental Authority; provided that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act or any European equivalent regulations (such as the European Market and Infrastructure Regulations and other regulations related thereto), and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities and all applicable laws implementing CRR, CRR II, CRR III, Basel II,  Basel III and Reformed Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, promulgated or issued.

 

“Charges” has the meaning set forth in Section 9.16.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral” means the Canadian Collateral, the European Collateral and the U.S. Collateral, and any and all other property of any Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure any of the Obligations.

 

“Collateral Access Agreement” means an agreement reasonably satisfactory in form and substance to the Administrative Agent executed by a lessor, bailee, warehouseman or other Person in possession of Collateral, or any lessor (and any mortgagee, if applicable) of real estate leased by any Loan Party.

 

“Collateral and Guarantee Requirement” means, at any time, the requirement that:

 

(a)        the Administrative Agent shall have received from the Company and each Subsidiary that is a Designated Subsidiary or that the Borrower Representative elects to become a Borrower pursuant to Section 5.03, either (i) (A) in the case of the Company and each such Subsidiary that is a Domestic Subsidiary, a counterpart of this Agreement, the Intercompany Subordination Agreement and the U.S. Security Agreement, duly executed and delivered on behalf of such Person, (B) in the case of the Canadian Borrowers and each such Subsidiary that is a Canadian Subsidiary, a counterpart of this Agreement, the Intercompany Subordination Agreement, and the applicable Canadian Security Agreements, duly executed and delivered on behalf of such Person, (C) [reserved], (D) in the case of each German Borrower and each such Subsidiary that is a German Subsidiary, a counterpart of this Agreement, the Intercompany Subordination Agreement and the applicable German Security Agreements and, with respect to its Concentration Accounts and/or Collection Accounts in England and Wales (if any), the applicable UK Security Agreement, duly executed and delivered on behalf of such Person, (E) [reserved], or (F) in the case of each Swiss Borrower and each such Subsidiary that is a Swiss Subsidiary, a counterpart of this Agreement, the Intercompany Subordination Agreement, the applicable Swiss Security Agreements, and the applicable German Security Agreements with respect to its Inventory located in Germany and, with respect to its Concentration Accounts and/or Collection Accounts in England and Wales (if any), the applicable UK Security Agreement, duly executed and delivered on behalf of such Person, or (G) in the case of each UK Loan Party and each such Subsidiary that is a UK Subsidiary, a counterpart of this Agreement, the Intercompany Subordination Agreement and the applicable UK Security Agreements, duly executed and delivered on behalf of such Person, or (ii) in the case of any Person that becomes a Designated Subsidiary or a Borrower after the Effective Date, (A) a Joinder Agreement (or, in the case of a Subsidiary that becomes a Borrower, any other joinder agreement to this Agreement in form and substance satisfactory to the Administrative Agent), duly executed and delivered on behalf of such Person, (B) instruments in the form or forms specified in the applicable Security Agreement under which such Person becomes a party to the applicable Security Agreement (or, if applicable, new Collateral Documents), duly executed and delivered on behalf of such Person, together with such documents and opinions with respect to such Designated Subsidiary as may reasonably be requested by the Administrative Agent and (C) all documentation and other information requested by the Administrative Agent regarding such Designated Subsidiary as may be required to comply with the applicable “know your customer” rules and regulations, including the USA Patriot Act, or (H) in the case of each Dutch Loan Party, the applicable Dutch Security Agreements;

 

(b)         subject to Section 5.18, the Administrative Agent shall have received all such Collateral Access Agreements, Control Agreements and other Collateral Documents required to be provided to it hereunder or under the applicable Security Agreement, duly executed by the parties thereto and evidence that all Credit Card Notifications required to be provided pursuant to Section 5.16 have been provided;

 

(c)        all Equity Interests of each Loan Party (other than the Company), which Equity Interests shall be held directly by another Loan Party, and all Equity Interests owned by or on behalf of any Loan Party shall have been pledged pursuant to the applicable Security Agreement or, solely with respect to the Equity Interests of any Loan Party (other than the Equity Interests of a Canadian Loan Party owned by a U.S. Loan Party), a pledge agreement governed by the laws of the jurisdiction in which such Loan Party is organized and in form and substance reasonably satisfactory to the Administrative Agent and, in the case of Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in any CFC or CFC Holdco, in each case, that is an Excluded Subsidiary, owned directly by a U.S. Loan Party, such U.S. Loan Party’s pledge of Equity Interests entitled to vote in any such CFC or CFC Holdco to secure the U.S. Obligations shall be limited to 65% of such voting Equity Interests (and 100% of non-voting Equity Interests), and the Administrative Agent shall, to the extent required by the applicable Collateral Document, have received certificates or other instruments representing all such certificated Equity Interests, together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;

 

(d)        all Indebtedness of the Company and any Subsidiary that is owing to any Loan Party and in a principal amount of $5,000,000 or more and all Indebtedness of any other Person in a principal amount of $1,000,000 or more shall be evidenced by a promissory note and shall have been pledged pursuant to the applicable Security Agreement, and the Administrative Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank; and

 

(e)         all documents and instruments, including UCC financing statement and PPSA registrations, required by the Collateral Documents or this Agreement with the priority required by the Collateral Documents shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording.

 

Notwithstanding the foregoing and the provisions of Section 5.03, any Designated Subsidiary formed or acquired after the Effective Date shall not be required to comply with the foregoing requirements prior to the time specified in Section 5.03.  The foregoing definition and the provisions of Section 5.03 shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance or, subject to the requirements of applicable law, flood insurance, legal opinions, appraisals, surveys or other deliverables with respect to, particular assets of the Loan Parties, or the provision of Guarantees by any Subsidiary, if and for so long as the Administrative Agent, in consultation with the Company, determines that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance or flood insurance, legal opinions, appraisals, surveys or other deliverables in respect of such assets, or providing such Guarantees, shall be excessive in view of the benefits to be obtained by the Lenders therefrom.  The Administrative Agent may in its reasonable discretion, grant extensions of time for the creation and perfection of security interests in (including delivery of promissory notes as required by clause (d) above) or the obtaining of title insurance or, subject to the requirements of applicable law, flood insurance, legal opinions, appraisals, surveys or other deliverables with respect to particular assets or the provision of any Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Documents, it being acknowledged and agreed that Administrative Agent shall take the cooperation of and constraints upon third party providers into consideration when making such determination.

 

“Collateral Designation” means, at any time after the consummation of a Successful Exchange Transaction and solely to the extent that the Notes Obligations (as defined in the Intercreditor Agreement) remain outstanding and the Intercreditor Agreement is in effect, the occurrence of the following:

 

(a)        the valid exercise of the Collateral Designation Option by the Controlling Notes Collateral Agent on behalf of the participating Notes Claimholders (as each such term is defined in the Intercreditor Agreement) pursuant to Section 3.8(b) of the Intercreditor Agreement; or

 

(b)         the Borrower Representative’s election, by written notice to the Administrative Agent, to designate the Specified Collateral as Notes Priority Collateral instead of ABL Priority Collateral.

 

“Collateral Designation Conditions” means:

 

(a)        with respect to a Collateral Designation described in clause (a) of the definition thereof, the requirements to effect a Collateral Designation Date by the Controlling Notes Collateral Agent (as each such term is defined in the Intercreditor Agreement) set forth in Section 3.8(b) of the Intercreditor Agreement (it is understood and agreed by each Loan Party that upon any effective consummation of a Collateral Designation by the Controlling Notes Collateral Agent (as each such term is defined in the Intercreditor Agreement), (x) all Eligible Intellectual Property shall be removed from the Borrowing Base and (y) the lower advance rates applicable following the Collateral Designation Date shall be effective, in each case, without any further action or consent of any Loan Party or any other Person); or

 

(b)         with respect to a Collateral Designation described in clause (b) of the definition thereof, each of the following requirements:  (i) the U.S. Borrowers shall repay the amount of the IP Advance then outstanding, (ii) the Borrower Representative shall deliver to the Administrative Agent an updated Borrowing Base Certificate, giving pro forma effect to such Collateral Designation (including (x) the removal of all Eligible Intellectual Property, and (y) the lower advance rates applicable following the Collateral Designation Date), demonstrating pro forma compliance with Section 6.12, and (iii) the Payment Conditions shall be satisfied with respect to such Collateral Designation and any related transactions in connection therewith.

 

“Collateral Designation Date” means, with respect to any Collateral Designation, the date that such Collateral Designation is consummated, provided that the Collateral Designation Conditions applicable thereto are satisfied on such date.

 

“Collateral Documents” means each Security Agreement, each Collateral Access Agreement, each Credit Card Notification, each Control Agreement, each IP Security Agreement and each other document or instrument guaranteeing the payment of or granting or perfecting a Lien upon, or intending to grant or perfect a Lien upon, any assets of any Loan Party as security for the Secured Obligations.

 

“Collection Account” means a segregated Concentration Account established by any Loan Party solely for the purpose of receiving the proceeds of Accounts (and which, for the avoidance of doubt, shall not be used for general payment purposes).

 

“Commercial Letter of Credit” means a letter of credit or similar instrument (including a bank guarantee) that is (a) issued to provide for the payment of the purchase price for goods or services purchased by the Company or any Subsidiary and (b) intended to be drawn when such purchase price is due and payable and not merely upon the occurrence of a default or other contingency.

 

“Commitment” means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Revolving Lender’s Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Section 2.09 and (b) assignments by or to such Revolving Lender pursuant to Section 9.04.  The amount of each Revolving Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant or other documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code) as provided in Section 9.04(b)(ii)(C) to which such Revolving Lender shall have assumed its Commitment, as applicable.  As of the Effective Date, the aggregate amount of the Commitments is $150,000,000.

 

“Commitment Reduction Fee” has the meaning assigned to it in the Fee Letter.

 

“Commodity Account” has the meaning set forth in the applicable Security Agreement.

 

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

 

“Communications” means, collectively, any written notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein that is distributed to the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to Section 9.01, including through an Approved Electronic Platform.

 

“Company” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Company Financial Advisor” means Alvarez & Marsal, as financial and restructuring advisor to the Loan Parties, or any other financial and/or restructuring advisor reasonably acceptable to the Administrative Agent.

 

“Compliance Certificate” means a Compliance Certificate in the form of Exhibit D or any other form approved by the Administrative Agent.

 

“Concentration Account” means each Deposit Account maintained with a financial institution reasonably acceptable to the Administrative Agent which is subject to a Control Agreement (or, in the case of a European Loan Party, another arrangement with similar effect (including, but not limited to, a notice and acknowledgement)) pursuant to which the Administrative Agent is given sufficient access (as reasonably determined by the Administrative Agent) to ensure that the provisions of Section 2.10(b) are capable of being complied with and to require the relevant account bank to follow the instructions of the Administrative Agent if instructions are given by it (without further consent of any Loan Party or other Person) and which is effective under applicable law to grant the Administrative Agent a perfected first priority security interest in such Deposit Account (subject to Permitted Liens); and in each case, including the Primary Concentration Accounts.

 

“Consolidated” means, when used with reference to financial statements or financial statement items of any Person, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP.

 

“Consolidated Cash Interest Expense” means, for any period, the excess of (a) the sum of (i) the cash interest expense (including (x) imputed interest expense in respect of Capital Lease Obligations and Synthetic Lease Obligations, (y) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and (z) net costs under Swap Agreements entered into to hedge interest rates to the extent such net costs are allocable to such period in accordance with GAAP) of the Company and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) any interest accrued during such period in respect of Indebtedness of the Company or any Restricted Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, plus (iii) any cash payments made during such period in respect of obligations referred to in clause (b)(iii) below that were amortized or accrued in a previous period, minus (b) the sum of (i) interest income of the Company and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization or write-off of capitalized interest or other financing costs paid in a previous period, plus (iii) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to accretion or amortization of debt discounts or accrued interest payable in kind for such period.

 

“Consolidated EBITDA” means, for any period, the sum of the following determined on a consolidated basis, without duplication, for the Company and its Restricted Subsidiaries in accordance with GAAP: (a) Consolidated Net Income for such period, plus (b) the sum of the following, without duplication, to the extent deducted in determining Consolidated Net Income for such period: (i) income and franchise tax expense during such period, (ii) interest expense (including, without limitation, interest expense attributable to Capital Leases Obligations and Synthetic Lease Obligations and all net payment obligations pursuant to interest Swap Obligations), (iii) amortization, depreciation and other non-cash charges for such period (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future), (iv) the amount of premium payments paid by the Company or its Restricted Subsidiaries, and charges in respect of unamortized fees and expenses, in each case associated with the repayment of Indebtedness, (v) expenses relating to stock-based compensation plans resulting from the application of Financial Accounting Standards Board Statement No. 123R, and (vi) one-time restructuring charges and reserves; provided that the aggregate amount added back pursuant to this clause (vi) (including in respect of the restructuring work performed by Alvarez & Marsal by their Consumer and Retail Group, but excluding one-time restructuring charges and reserves to the extent incurred on or before December 31, 2025 in connection with the consummation of the Exchange Transactions or effectiveness of this Agreement) for any period (x) ending on or prior to January 31, 2027 shall not exceed 25% of Consolidated EBITDA for such period (prior to giving effect to any add-back pursuant to this clause (vi)) and (y) ending after January 31, 2027, shall not exceed 10% of Consolidated EBITDA for such period (prior to giving effect to any add-back pursuant to this clause (vi)), minus (c) interest income for such period, minus (d) one-time income or gains for such period.

 

“Consolidated Fixed Charges” means, for any period, the sum, without duplication, of (a) Consolidated Cash Interest Expense for such period, (b) cash principal payments on Indebtedness made or required to be made during such period, (c) expense for income taxes paid or required to be paid in cash during such period and (d) Restricted Payments paid in cash during such period pursuant to clauses (a)(iii), (a)(vi) and (a)(vii) of Section 6.08.

 

“Consolidated Net Income” means, for any period, the net income (or loss) of the Company and its Restricted Subsidiaries for such period, determined on a consolidated basis, without duplication, in accordance with GAAP; provided that, in calculating Consolidated Net Income of the Company and its Restricted Subsidiaries for any period, there shall be excluded (a) the net income (or loss) of any Person (other than the Company) that is not a Restricted Subsidiary except to the extent such net income is actually paid in cash to the Company or any of its Restricted Subsidiaries by dividend or other distribution during such period, (b) the net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary of the Company or any of its Restricted Subsidiaries or is merged into or consolidated with the Company or any of its Restricted Subsidiaries or that Person’s assets are acquired by the Company or any of its Restricted Subsidiaries except to the extent included pursuant to the foregoing clause (a), and (c) the net income (if positive), of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary to the Company or any of its Restricted Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any taxes payable on such dividends or distributions.

 

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

 

“Control Agreement” means, with respect to any Deposit Account or Securities Account of a Loan Party, (a) a “springing” control agreement, executed and delivered by such Loan Party, Administrative Agent, the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account) and, to the extent permitted and agreed to by such securities intermediary or bank, the Controlling Notes Collateral Agent (as defined in the Intercreditor Agreement) or (b) for such accounts not located in the United States, an analogous document used for equivalent purposes under comparable law of such jurisdiction (including, but not limited to, a security notice), in each case, in form and substance reasonably satisfactory to the Administrative Agent; and with respect to Deposit Accounts under German law, (x) any agreement to be entered into between the respective Borrower as account holder, the Administrative Agent and the respective account bank and, to the extent permitted and agreed to by such account bank, the Controlling Notes Collateral Agent (as defined in the Intercreditor Agreement), or (y) a notice of pledge to be served on the respective account bank and the corresponding acknowledgement, granting sole disposal rights in favor of the Administrative Agent, in each case reasonably acceptable to the Administrative Agent.

 

“Corresponding Debt” has the meaning set forth in Section 8.10(b)(ii).

 

“Cost” means, with respect to any Inventory, the lower of cost or market value of such Inventory, based upon the Loan Parties’ accounting practices, known to the Administrative Agent, which practices are consistent with the methodology used in the most recent Inventory appraisal delivered in connection with this Agreement prior to the Effective Date or otherwise reasonably acceptable to the Administrative Agent.  “Cost” does not include inventory capitalization costs or other non‑purchase price charges (such as freight or duty) used in the Loan Parties’ calculation of cost of goods sold.

 

“Covered Entity” means any of the following:

 

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

 

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

 

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

 

“Credit Card Accounts Receivable” means any receivables due to any U.S. Loan Party from a credit card issuer or a credit card processor in connection with purchases of Inventory of such U.S. Loan Party on (a) credit cards issued by Visa, MasterCard, American Express, Discover, PayPal, Wells Fargo, each of their respective Affiliates, and any other credit card issuers that are reasonably acceptable to the Administrative Agent, (b) [reserved] or (c) debit cards and mall cards issued by issuers or providers that are reasonably acceptable to the Administrative Agent, in each case which have been earned by performance by such U.S. Loan Party but not yet paid to such U.S. Loan Party by such credit card issuer or credit card processor.

 

“Credit Card Agreement” means any agreement between a U.S. Loan Party, on the one hand, and a credit card issuer or a credit card processor (including any credit card processor that processes purchases of Inventory from a U.S. Loan Party through debit cards or mall cards), on the other hand.

 

“Credit Card Notifications” means each Credit Card Notification, in form and substance reasonably satisfactory to the Administrative Agent, executed by one or more U.S. Loan Parties and delivered by such U.S. Loan Parties to credit card issuers or credit card processors that are party to any Credit Card Agreement.

 

“Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s U.S. Credit Exposure plus (b) such Lender’s Canadian Credit Exposure plus (c) such Lender’s European Credit Exposure.

 

“CRR” means either CRR-EU or, as the context may require, CRR-UK.

 

“CRR-EU” means regulation 575/2013 of the European Union on prudential requirements for credit institutions and investment firms and regulation 2019/876 of the European Union amending Regulation (EU) No 575/2013 and all delegated and implementing regulations supplementing that Regulation.

 

“CRR-UK” means CRR-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.

 

“CRR II” means either CRR II-EU or, as the context may require, CRR II-UK.

 

“CRR II-EU” means regulation 2019/876 amending CRR-EU as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012 and all delegated and implementing regulations supplementing that Regulation.

 

“CRR II-UK” means CRR II-EU as amended and transposed into the laws of the United Kingdom by the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 and as amended by the Capital Requirements (Amendment) (EU Exit) Regulations 2019.

 

“CRR III” means Regulation (EU) 2024/1623 of the European Parliament and of the Council of 31 May 2024 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor.

 

“Debt Maturity Reserve” means a Reserve in an amount equal to the then outstanding principal amount of any Indebtedness referred to in clause (ii) of the proviso to the definition of “Maturity Date”, which Debt Maturity Reserve shall remain in place (but, in each case, shall be reduced to give effect to any payments, repayments or redemptions of any such Indebtedness made thereafter to the extent such payments, repayments or redemptions are permitted hereunder) until the earlier of the repayment of such Indebtedness or the extension of the scheduled maturity date of such Indebtedness to a date which is at least ninety-one (91) days after the Scheduled Maturity Date.

 

“Default” means any event or condition that constitutes an Event of Default or that upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

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

 

“Defaulting Lender” means any Lender, as determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit, Protective Advances or Overadvances within three Business Days of the date required to be funded by it hereunder, (b) notified any Borrower, the Administrative Agent, any Issuing Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit, Protective Advances or Overadvances, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three Business Days of the date when due, unless the subject of a good faith dispute, or (e)(i) become or is insolvent or has a parent company that has become or is insolvent, (ii) become the subject of a bankruptcy or insolvency case or proceeding under any Insolvency Laws or otherwise, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such case or proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency case or proceeding under any Insolvency Laws or otherwise, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such case or proceeding or appointment or (iii) has become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.

 

“Defaulting Lender Rate” means (a) for the first three (3) days from and after the date the relevant payment is due, in the case of amounts denominated in Dollars, the Alternate Base Rate, and (b) thereafter, in the case of amounts denominated in Dollars, the interest rate then applicable to ABR Loans.

 

“Deposit Account” means each checking, savings or other demand deposit account maintained by any of the Loan Parties.

 

“Designated Subsidiary” means each Subsidiary other than any Excluded Subsidiary.

 

“Dilution” means, as of any date of determination, a percentage, based upon the experience of the appropriate prior period as determined by the Administrative Agent in its Permitted Discretion, that is the greater of (x) the dilution percentage as set forth in the most recent field examination conducted by or on behalf of the Administrative Agent and (y) the result of dividing the amount of (i) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to the applicable Loan Parties’ Accounts during such period, by (ii) the applicable Loan Parties’ billings with respect to such Accounts during such period.

 

“Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the applicable advance rate against Eligible Accounts and/or Eligible Credit Card Accounts Receivable by the number of full or partial percentage points by which Dilution is in excess of (i) 2.5%, with respect to Accounts owing to U.S. Loan Parties, or (ii) 5%, with respect to all other Accounts.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Disqualified Stock” means any Equity Interests which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital (other than any payment solely in Equity Interests (other than any Equity Interest referred to in this clause (a)), in each case at any time on or prior to the date that is 91 days after the Scheduled Maturity Date, or (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) cash, (ii) debt securities or (iii) any Equity Interests referred to in (a) above, in each case at any time prior to the date that is 91 days after the Scheduled Maturity Date.  Notwithstanding the foregoing, any Equity Interests that would constitute Disqualified Stock solely because holders of the Equity Interests have the right to require the issuer of such Equity Interests to repurchase such Equity Interests upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Equity Interests provide that the issuer may not repurchase or redeem any such Equity Interests pursuant to such provisions unless such repurchase or redemption is permitted under the terms of this Agreement.

 

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

 

“Division” means 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.

 

“Division Successor” means any Person that, upon the consummation of a Division of a Dividing Person, holds all or any portion of the assets, liabilities and/or obligations previously held by such Dividing Person immediately prior to the consummation of such Division (other than any Person that is not a Restricted Subsidiary to which any such assets are so transferred pursuant to clause (a)(v)(x)(2) of Section 6.03 in a Disposition permitted by Section 6.05). A Dividing Person which retains any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon the occurrence of such Division.

 

“Document” has the meaning set forth in the U.S. Security Agreement.

 

“Dollar Equivalent” means, for any amount, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, and (b) if such amount is denominated in any other currency, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion.

 

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

 

“Domestic Subsidiary” means any Subsidiary of the Company that is organized under the laws of the United States, any state of the United States or the District of Columbia.

 

“Dominion Period” means any period (a) during which any Event of Default has occurred and is continuing or (b) during a Reduced Availability Period.

 

“Dutch Collateral” means any and all property of any Dutch Loan Party covered or intended to be covered by the Collateral Documents and any and all other property of any Dutch Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“Dutch Guarantee” means Article XII of this Agreement.

 

“Dutch Guaranteed Obligations” has the meaning set forth in Section 12.01.

 

“Dutch Guarantor” means each Dutch Subsidiary that becomes a party hereto as a Dutch Guarantor pursuant to Section 5.25 until such Subsidiary’s Dutch Guarantee is released in accordance herewith.

 

“Dutch Loan Party” means the Dutch Guarantor and any other Loan Party incorporated or organized in the Netherlands.

 

“Dutch Obligated Party” has the meaning set forth in Section 12.02.

 

“Dutch Security Agreements”: collectively (a) any deed of pledge (including any (supplemental) pledge of receivables entered into by any Dutch Loan Party in favour of the Administrative Agent for the benefit of the Secured Parties governed by the laws of the Netherlands, and (b) each other Security Document governed by Dutch law.

 

“Dutch Subsidiary” means any subsidiary of the Company that has been formed or is organized under the laws of the Netherlands.

 

“EEA Financial Institution” means (a) any institution 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 institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

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

 

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

 

“Effective Date” means August 13, 2025.

 

“Electronic Signature” means 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” means any electronic system, including e-mail, e-fax, web portal access for such 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 Accounts” means, at any time, each Account that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination:  such Account (i) has been earned by performance and represents the bona fide amounts due to a Loan Party and in each case is originated in the ordinary course of business of such Loan Party, and (ii) in each case is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (dd) below.  Without limiting the foregoing, to qualify as an Eligible Account, such Account shall indicate no Person other than a Loan Party as payee or remittance party.  Any Account included within any of the following categories shall not constitute an Eligible Account:

 

(a)         which is not subject to a perfected first priority security interest (subject to any Liens specified in clause (b)(ii)(a) or clause (b)(iii) of this definition) in favor of the Administrative Agent (for the benefit of the Lender Parties);

 

(b)       which is subject to any Lien, other than (i) Liens permitted under Section 6.02(a), (ii) a Permitted Encumbrance (a) for which appropriate Reserves (as determined by the Administrative Agent in its Permitted Discretion) have been established or (b) which does not have priority over the Lien in favor of the Administrative Agent (for the benefit of the Lender Parties), (iii) Permitted Liens in respect of Prior Claims that are unregistered and that secure amounts that are not yet due and payable and (iv) junior priority Permitted Liens that are subject to the Applicable Intercreditor Agreement;

 

(c)        (i) with respect to which the scheduled due date is more than 90 days after the date of the original invoice therefor, (ii) which is unpaid more than 90 days after the date of the original invoice therefor or more than 60 days after the original due date therefor or (iii) which has been written off the books of such Loan Party or otherwise designated as uncollectible;

 

(d)          which is owing by an Account Debtor for which more than 50% of the Accounts owing from such Account Debtor and its Affiliates are ineligible pursuant to clause (c) above;

 

(e)         which is owing by (i) an Account Debtor (other than Amazon or Zalando) to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to all Loan Parties exceeds 10% of the aggregate amount of Eligible Accounts of all Loan Parties or (ii) Amazon or Zalando to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to all Loan Parties exceeds 30% of the aggregate amount of Eligible Accounts of all Loan Parties;

 

(f)          with respect to which any covenant contained in this Agreement or in the applicable Security Agreement has been breached (unless and until such breach is cured) in any material respect or any representation or warranty contained in this Agreement or in the applicable Security Agreement is not true in any material respect;

 

(g)         which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation (the form of which is reasonably satisfactory to the Administrative Agent) which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon such Loan Party’s completion of any further performance, (v) represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis (other than return rights for defective goods or repairs available in the ordinary course of business) or (vi) relates solely to payments of interest;

 

(h)         for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by such Loan Party;

 

(i)          with respect to which any check or other instrument of payment has been returned uncollected for any reason;

 

(j)         which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of any receiver, interim receiver, custodian, trustee, monitor, administrator or liquidator or similar official for such Account Debtor of its assets, (ii) had possession of all or a material part of its property taken by any receiver, interim receiver, custodian, trustee, monitor or liquidator, (iii) filed, or had filed against it, any assignment, application, request or petition for liquidation, reorganization, arrangement, adjustment of debts, stay of proceedings, adjudication as bankrupt, winding-up, or voluntary or involuntary case or proceeding under any state, provincial or federal bankruptcy laws or any other Insolvency Laws (other than post-petition accounts payable of an Account Debtor that is a debtor-in-possession under the Bankruptcy Code and reasonably acceptable to the Administrative Agent), (iv) admitted in writing its inability to pay its debts as they become due, or (v) ceased operation of its business as a going concern;

 

(k)          which is owed by any Account Debtor which has sold all or substantially all of its assets;

 

(l)          which in the case of (i) Accounts owing to a U.S. Borrower or Canadian Borrower is owed by an Account Debtor which (A) does not maintain its chief executive office in the U.S. or Canada (or its domicile, for the purposes of the Civil Code (Quebec)) or (B) is not organized under applicable law of the U.S., any state of the U.S., the District of Columbia, or Canada or any province or territory thereof unless, in any such case, such Account is backed by a letter of credit acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, the Administrative Agent or (ii) Accounts owing to a European Borrower, which is owed by an Account Debtor which is not incorporated or established in an Eligible Debtor Jurisdiction;

 

(m)       which is owed in any currency other than (i) with respect to Accounts of the U.S. Loan Parties, Dollars or (ii) with respect to Accounts of a Foreign Borrower, Dollars, Euros or Canadian Dollars;

 

(n)          which is owed by (i) any Governmental Authority of any country other than the U.S. or Canada unless such Account is backed by a Letter of Credit acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, the Administrative Agent, or (ii) any Governmental Authority of the U.S. or Canada, or any department, agency, public corporation, or instrumentality thereof, unless the Financial Administration Act (Canada), as amended, (or the equivalent law of any province of Canada, if any, in the case of a Governmental Authority of such province) or the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), as applicable, and any other steps necessary to perfect the Lien of the Administrative Agent in such Account have been complied with to the Administrative Agent’s satisfaction;

 

(o)          which is owed by any Affiliate of any Loan Party or any employee, officer, or director of any Loan Party;

 

(p)         which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any Loan Party is indebted, but only to the extent of such indebtedness, or is subject to any security, deposit, progress payment, retainage or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent thereof;

 

(q)        which is subject to any counterclaim, deduction, defense, setoff or dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute or which is subject to any netting or similar arrangements, including, with respect to German law governed Accounts, a current account arrangement (Kontokorrentabrede) with the respective Account Debtor;

 

(r)          which is evidenced by any promissory note, chattel paper or instrument;

 

(s)          which is owed by an Account Debtor (i) located in any jurisdiction which requires filing of a “Notice of Business Activities Report” or other similar report in order to permit such Loan Party to seek judicial enforcement in such jurisdiction of payment of such Account, unless (A) such Loan Party has filed such report or qualified to do business in such jurisdiction or (B) the Administrative Agent is satisfied in its Permitted Discretion in consultation with the Company that the failure to file such report and inability to seek judicial enforcement can be remedied without material delay or material cost or (ii) which is a Sanctioned Person;

 

(t)        with respect to which such Loan Party has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business, but only to the extent of any such reduction, or any Account which was partially paid and such Loan Party created a new receivable for the unpaid portion of such Account;

 

(u)        which does not comply in all material respects with the requirements of all material applicable laws and regulations, whether Federal (U.S. or Canadian), state, provincial, territorial or local, including without limitation the U.S. Federal Consumer Credit Protection Act, the U.S. Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;

 

(v)       which is for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person other than such Loan Party has or has had an ownership interest in such goods, or which indicates any party other than such Loan Party as payee or remittance party;

 

(w)         which was created on cash on delivery terms;

 

(x)         which is an Account of an Acquired Entity or Business acquired in connection with a Permitted Acquisition or similar Investment, until the completion of a field examination satisfactory to the Administrative Agent in its Permitted Discretion with respect to such Accounts;

 

(y)         which the Administrative Agent determines, in its Permitted Discretion, may not be paid by reason of the Account Debtor’s inability to pay;

 

(z)          [reserved];

 

(aa)      which, in respect of any European Borrower, is subject to any limitation on assignment or other restriction (whether arising by operation of law, by agreement or otherwise) which would, under the local governing law of the contract creating such Account, have the effect of restricting the assignment for or by way of security or the creation of security over such Account generally, in each case unless (i) the applicable account debtor has waived such restrictions, or (ii) such restriction does not affect or impair the validity of the security interest with respect to such Account or (iii) the Administrative Agent has determined that such limitation is not enforceable;

 

(bb)      as to which the contract or agreement underlying such Account is governed by (or, if no governing law is expressed therein, is deemed to be governed by) the laws of any jurisdiction other than in the case of any European Borrower, any Eligible Contract Jurisdictions (European Borrowers);

 

(cc)        with respect to which, in the case of Accounts owed by an Account Debtor which (i) does not maintain its chief executive office in the U.S. or Canada (or its domicile, for the purposes of the Civil Code (Quebec)) or (ii) is not organized under applicable law of the U.S., any state of the U.S., the District of Columbia, or Canada or any province or territory thereof, such Account does not satisfy at least one of the following conditions:  (x) the Account Debtor with respect thereto, or any parent thereof, has a credit rating of BBB- or Baa3 or higher as determined by S&P or Moody’s, as applicable, or (y) such Account is either backed by a letter of credit acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, the Administrative Agent, or is supported by credit insurance acceptable to the Administrative Agent; and

 

(dd)        which the Administrative Agent otherwise determines is unacceptable in its Permitted Discretion;

 

In the event that Accounts having an aggregate fair market value of $5,000,000 or more which were previously Eligible Accounts cease, to the actual knowledge of a Financial Officer of the Company, to be Eligible Accounts hereunder, the Borrower Representative shall promptly (and in any event within ten (10) Business Days) notify the Administrative Agent thereof and deliver an updated Borrowing Base Certificate to the Administrative Agent showing the Borrowing Base in effect after giving effect to the removal of any such Accounts from Eligible Accounts; provided, further, that the Administrative Agent may, in its Permitted Discretion, upon receipt of such notice as set forth above, adjust the applicable Borrowing Base to reflect such change in Eligible Accounts. In determining the amount of an Eligible Account of a Loan Party, the face amount of an Account may, in the Administrative Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments or finance charges (including any amount that such Loan Party may be obligated to rebate to an Account Debtor 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 Account but not yet applied by such Loan Party to reduce the amount of such Account.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person, other than, in each case, (i) a natural person or the Company, (ii) any Subsidiary, (iii) any other Affiliate of the Company or (iv) any Person (other than a regulated bank entity) that is, or whose Affiliate is, a holder of the 2026 Notes or the 2029 Notes; provided that, for purposes of determining eligibility in respect of the preceding clause (iv), the Administrative Agent and each Lender may rely conclusively (without further inquiry) on representations attesting to such condition made by the applicable assignee in the related Assignment and Assumption.

 

“Eligible Contract Jurisdictions (European Borrowers)” means each of Austria, Belgium, Germany, Luxembourg, the Netherlands, Switzerland, the United Kingdom and the United States of America, provided that the Administrative Agent may, in its Permitted Discretion, remove one or more of the countries comprising the Eligible Contract Jurisdictions (European Borrowers) and subsequently add one or more countries back as Eligible Contract Jurisdictions (European Borrowers).

 

“Eligible Credit Card Accounts Receivable” means at the time of any determination thereof, each Credit Card Accounts 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 Accounts Receivable (i) has been earned by performance and represents the bona fide amounts due to a U.S. Loan Party from a credit card issuer or credit card processor, and in each case is originated in the ordinary course of business of such U.S. Loan Party, and (ii) in each case is not ineligible for inclusion in the calculation of the Borrowing Base pursuant to any of clauses (a) through (p) below.  Without limiting the foregoing, to qualify as an Eligible Credit Card Accounts Receivable, such Credit Card Accounts Receivable shall indicate no Person other than a U.S. Loan Party as payee or remittance party.  In determining the amount to be so included, the face amount of a Credit Card Accounts Receivable may, in the Administrative Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual fees and charges due to the credit card issuer or credit card processor, discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a U.S. Loan Party may be obligated to rebate to a customer, a credit card issuer or credit card processor pursuant to the terms of any agreement or understanding) and (ii) the aggregate amount of all cash received in respect of such Credit Card Accounts Receivable but not yet applied by the U.S. Loan Parties to reduce the amount of such Credit Card Accounts Receivable.  Any Credit Card Accounts Receivable included within any of the following categories shall not constitute an Eligible Credit Card Accounts Receivable:

 

(a)         which is not earned or does not represent the bona fide amount due to a U.S. Loan Party from a credit card processor or a credit card issuer that originated in the ordinary course of business of the applicable U.S. Loan Party;

 

(b)          which is not owned by a U.S. Loan Party or to which a U.S. Loan Party does not have good or marketable title;

 

(c)          in which the payee of such Credit Card Account Receivable is a Person other than a U.S. Loan Party;

 

(d)          which does not constitute an “Account” (as defined in the UCC or the PPSA) or a Payment Intangible;

 

(e)          which has been outstanding for more than five Business Days from the date of sale;

 

(f)         with respect to which the applicable credit card issuer, credit card processor or debit card or mall card issuer or provider has (i) applied for, suffered, or consented to the appointment of any receiver, interim receiver, custodian, trustee, monitor, administrator, sequestrator or liquidator of its assets, (ii) has had possession of all or a material part of its property taken by any receiver, interim receiver, custodian, trustee, monitor, administrator, sequestrator or liquidator, (iii) filed, or had filed against it (but only so long as any such involuntary filing has not been stayed or vacated), any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state, provincial, territorial or federal bankruptcy laws, (iv) has admitted in writing its inability to pay its debts as they become due or (v) ceased operation of its business as a going concern;

 

(g)          which is not a valid, legally enforceable obligation of the applicable credit card issuer or credit card processor with respect thereto;

 

(h)         which is not subject to a perfected first priority security interest (subject to any Liens specified in clause (i)(ii)(a) or clause (i)(iii) below) in favor of the Administrative Agent (for the benefit of the Lender Parties);

 

(i)         which is subject to any Lien, other than (i) Liens permitted under Section 6.02(a), (ii) any Permitted Encumbrances (a) which are contemplated by the applicable processor agreements and for which appropriate Reserves (as determined by the Administrative Agent in its Permitted Discretion) have been established or (b) which do not have priority over the Lien in favor of the Administrative Agent (for the benefit of the Lender Parties), (iii) Permitted Liens in respect of Prior Claims that are unregistered and secure amounts that are not yet due and payable and (iv) junior priority Permitted Liens that are subject to the Applicable Intercreditor Agreement;

 

(j)          with respect to which (i) any covenant has been breached (unless and until such breach is cured) in any material respect or (ii) any representation or warranty is not true in any material respects, in each case to the extent contained in this Agreement, the applicable Security Agreement or in the credit card agreements relating to such Credit Card Account Receivable; provided that each such representation and warranty shall be true and correct in all respects to the extent already qualified by a materiality standard;

 

(k)        which is 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;

 

(l)        which the Administrative Agent in its Permitted Discretion determines may not be paid by reason of the applicable credit card processor’s, credit card issuer’s or debit card or mall card issuer’s or provider’s inability to pay;

 

(m)         which represents a deposit or partial payment in connection with the purchase of Inventory of such U.S. Loan Party;

 

(n)          which is not subject to a Credit Card Notification;

 

(o)          which is a Credit Card Accounts Receivable of an Acquired Entity or Business acquired in connection with a Permitted Acquisition or similar Investment, until the completion of a field examination satisfactory to the Administrative Agent in its Permitted Discretion with respect to such Credit Card Accounts Receivable; or

 

(p)          which the Administrative Agent otherwise determines is unacceptable in its Permitted Discretion.

 

In the event that a Financial Officer of the Company has actual knowledge that (a) any credit card issuer, credit card processor or debit card or mall card issuer or provider with respect to Eligible Credit Card Accounts Receivable ceases to comply with the requirements of clause (f) above or (b) Credit Card Accounts Receivable having an aggregate fair market value of $2,500,000 or more which were previously Eligible Credit Card Accounts Receivable otherwise cease to be Eligible Credit Card Accounts Receivable hereunder, the applicable U.S. Loan Party or the Borrower Representative shall promptly (and in any event within ten (10) Business Days) notify the Administrative Agent thereof and deliver an updated Borrowing Base Certificate to the Administrative Agent showing the Borrowing Base in effect after giving effect to the removal of any such Credit Card Accounts Receivable from Eligible Credit Card Accounts Receivable; provided, further, that the Administrative Agent may, in its Permitted Discretion, upon receipt of such notice as set forth above, adjust the applicable Borrowing Base to reflect such change in Eligible Credit Card Accounts Receivable.

 

“Eligible Debtor Jurisdiction” means each of the United States, Canada, the United Kingdom, Germany and Switzerland; provided that the Administrative Agent may, in its Permitted Discretion, remove one or more of the countries comprising the Eligible Debtor Jurisdictions and subsequently add one or more countries back as Eligible Debtor Jurisdictions.

 

“Eligible Finished Goods Inventory” means, as of the date of determination thereof, without duplication, items of Inventory of a Loan Party that are finished goods, merchantable and readily saleable in the ordinary course of the Loan Parties’ business, in each case 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 Finished Goods Inventory:

 

(a)        which is not subject to a perfected first priority Lien (subject to any Liens specified in clause (b)(ii)(a) or clause (b)(iii) of this definition) in favor of the Administrative Agent (for the benefit of the Lender Parties) which is governed by the laws of the jurisdiction in which the Inventory in question is located or, in respect of Inventory which is in-transit in accordance with clause (h) of this definition, the laws of the jurisdiction to which the Inventory is in-transit;

 

(b)       which is subject to any Lien other than (i) Liens permitted under Section 6.02(a), (ii) a Permitted Encumbrance (a) for which appropriate Reserves (as determined by the Administrative Agent in its Permitted Discretion) have been established or (b) which does not have priority over the Lien in favor of the Administrative Agent (for the benefit of the Lender Parties), (iii) Permitted Liens in respect of Prior Claims that are unregistered and secure amounts that are not yet due and payable, and (iv) junior priority Permitted Liens that are subject to the Applicable Intercreditor Agreement;

 

(c)          which is unmerchantable, defective, damaged or unfit for sale (as such terms are customarily used in the Loan Parties’ industry), or is not salable at prices approximating at least the cost of such Inventory in the ordinary course of business or is unacceptable due to age, type, category and/or quantity, in each case, consistent with the usage of such terms in the most recent inventory appraisal received by the Administrative Agent as contemplated hereby;

 

(d)         with respect to which any covenant contained in this Agreement or in the applicable Security Agreement has been breached (unless and until such breach is cured) in any material respect or any representation or warranty contained in this Agreement or the applicable Security Agreement has been breached in any material respect or is not true in any material respect or which does not conform in all material respects to all standards imposed by any applicable Governmental Authority;

 

(e)         in which any Person other than such Loan Party shall (i) have any direct or indirect ownership, interest or title to such Inventory or (ii) be indicated on any purchase order or invoice with respect to such Inventory as having or purporting to have an interest therein;

 

(f)          which consists of goods that are obsolete, slow moving, restrictive or custom items or otherwise is manufactured in accordance with customer-specific requirements, work-in-process, raw materials, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in the Loan Parties’ business, bill and hold goods, defective goods, “seconds”, or Inventory acquired on consignment;

 

(g)       which consist of goods held for sale at all retail, factory and outlet stores which are not located in the United States, Canada, Germany or England and Wales, provided that, subject to adjustment by the Administrative Agent in its Permitted Discretion, (i) to the extent located in Germany, only up to $5,000,000 of such goods located in Germany shall be Eligible Finished Goods Inventory and (ii) to the extent located in England and Wales, only up to $2,500,000 of such goods located in England and Wales shall be Eligible Finished Goods Inventory;

 

(h)        which is not located in (i) the continental United States (with respect to Inventory owned by the U.S. Loan Parties), (ii) Germany (with respect to Inventory owned by the German Borrowers or the Swiss Borrowers), (iii) [reserved], (iv) [reserved] or (v) Canada (with respect to Inventory owned by the Canadian Borrowers), or which is in-transit, unless the Administrative Agent determines in its sole discretion to permit such in-transit Inventory to be included in the Borrowing Base (“In-Transit Inventory”), provided, that, (i)(x) for so long as such Inventory is in-transit (A) it complies with the criterion at clause (a) of this definition, (B) the Administrative Agent has received evidence of satisfactory casualty insurance naming the Administrative Agent as loss payee and otherwise covering such risks as the Administrative Agent may reasonably request and (C) the Administrative Agent has implemented a Reserve for the amount of duty and shipping costs including but not limited to any costs payable to the shipper or customs broker and (y) following the commencement of a Dominion Period, the Administrative Agent shall have received (1) a true and correct copy of the bill of lading and other shipping documents for such Inventory (and, if such Inventory is in transit outside the United States, such bill of lading is negotiable), and if requested by the Administrative Agent, the Administrative Agent’s Lien shall be noted thereon, (2) confirmation that the applicable Loan Party has title to such Inventory (together with such evidence thereof as the Administrative Agent may from time to time require) and (3) if the bill of lading is (A) non-negotiable, a duly executed Collateral Access Agreement of other bailee agreement reasonably satisfactory to the Administrative Agent from the applicable customs broker, shipper or other Person acting in a similar capacity for such Inventory, or (B) negotiable, confirmation that the bill is issued in the name of such Loan Party and consigned to the order of the Administrative Agent, and a reasonably acceptable agreement has been executed with such Loan Party’s customs broker, shipper or other Person acting in a similar capacity, in which the customs broker, shipper or other Person agrees that it holds the negotiable bill as agent for the Administrative Agent and will follow instructions of the Administrative Agent with respect to the disposition thereof and of the goods, (ii) the common carrier is not an Affiliate of the applicable vendor or supplier and (iii) the customs broker or shipper is not an Affiliate of any Loan Party;

 

(i)         which is located in any location leased by the applicable Loan Party unless (i) the lessor (and any mortgagee, if applicable) has delivered to the Administrative Agent a Collateral Access Agreement or (ii) a Rent Reserve has been established by the Administrative Agent in its Permitted Discretion;

 

(j)        which is located at an owned location subject to mortgage in favor of a Person other than the Administrative Agent, unless the mortgagee is party to the Intercreditor Agreement or has delivered a Collateral Access Agreement or other mortgagee agreement in form and substance satisfactory to the Administrative Agent in its Permitted Discretion;

 

(k)       which is located in any third-party warehouse or is in the possession of a bailee (other than a third party processor) and is not evidenced by a Document, unless (i) such warehouseman or bailee has delivered to the Administrative Agent a Collateral Access Agreement and such other documentation as the Administrative Agent may require or (ii) an appropriate Reserve has been established by the Administrative Agent in its Permitted Discretion;

 

(l)          which is being processed offsite at a third-party location or outside processor, or is in-transit to or from said third party location or outside processor;

 

(m)         which is the subject of a consignment by a Loan Party as consignor;

 

(n)         which contains or bears any intellectual property rights licensed to a Loan Party unless the Administrative Agent is satisfied in its Permitted Discretion that it may sell or otherwise Dispose of such Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement;

 

(o)        which is not reflected in a current perpetual inventory report of the applicable Loan Party (unless such Inventory is reflected in a report to the Administrative Agent as “in transit” Inventory);

 

(p)          for which reclamation rights have been asserted by the seller;

 

(q)        for which such Person does not have actual and exclusive possession thereof (either directly or through a bailee or agent of such Person);

 

(r)          which is stored at locations holding less than $25,000 of the aggregate value of such Loan Party’s Inventory;

 

(s)          (i) which is subject to retention of title rights in favor of the vendor or supplier thereof or, (ii) in relation to which, under applicable governing laws, retention of title may be imposed unilaterally by the vendor or supplier thereof; provided that Inventory of a European Borrower which may be subject to any rights of retention of title shall not be excluded from Eligible Finished Goods Inventory solely pursuant to this sub-paragraph (s) in the event that (A) the Administrative Agent shall have received evidence satisfactory to it that the full purchase price of such Inventory (and/or all other Inventory supplied by a common vendor) has, or will have, been paid prior, or upon the delivery of, such Inventory to the relevant European Borrower or (B) a Letter of Credit has been issued under and in accordance with the terms of this Agreement for the purchase of such Inventory;

 

(t)         which is Inventory of an Acquired Entity or Business acquired in connection with a Permitted Acquisition or similar Investment, until the completion of an appraisal satisfactory to the Administrative Agent in its Permitted Discretion with respect to such Inventory; or

 

(u)          which the Administrative Agent otherwise determines is unacceptable in its Permitted Discretion;

 

provided, further, that in determining the value of the Eligible Finished Goods Inventory, such value shall be reduced by, without duplication, any amounts representing (i) Vendor Rebates; (ii) costs included in Inventory relating to advertising; (iii) to the extent determined by the Administrative Agent in its Permitted Discretion to be appropriate, the shrink reserve; (iv) the unreconciled discrepancy between the general inventory ledger and the perpetual inventory ledger, to the extent the general inventory ledger reflects less Inventory than the perpetual inventory ledger; and (v) a reserve for Inventory which is designated or demanded to be returned to or retained by the applicable vendor or which is recognized as damaged or off quality by the applicable Loan Party.

 

In the event that a Financial Officer of the Company has actual knowledge that Inventory having a fair market value of $5,000,000 or more which was previously Eligible Finished Goods Inventory ceases to be Eligible Finished Goods Inventory hereunder, such Loan Party or the Borrower Representative shall promptly (and in any event within ten (10) Business Days) notify the Administrative Agent thereof and deliver an updated Borrowing Base Certificate to the Administrative Agent showing the Borrowing Base in effect after giving effect to the removal of any such Inventory from Eligible Finished Goods Inventory; provided, further, that the Administrative Agent may, in its Permitted Discretion, upon receipt of such notice as set forth above, adjust the applicable Borrowing Base to reflect such change in Eligible Finished Goods Inventory.

 

“Eligible Intellectual Property” means, at any time prior to the Collateral Designation Date, as of the date of determination thereof, without duplication, Trademark Assets owned by the U.S. Loan Parties that satisfy all of the following conditions:

 

(a)        such Trademark Assets have been identified on the Perfection Certificate delivered to the Administrative Agent on the Effective Date;

 

(b)         such Trademark Assets are subject to a perfected first priority security interest (subject to any Liens specified in clause (c)(ii)(x) of this definition) in favor of the Administrative Agent (for the benefit of the Lender Parties);

 

(c)        such Trademark Assets are not subject to any Lien other than (i) Liens permitted under Section 6.02(a), (ii) a Permitted Encumbrance (x) for which appropriate Reserves (as determined by the Administrative Agent in its Permitted Discretion) have been established or (y) which does not have priority over the Lien in favor of the Administrative Agent (for the benefit of the Lender Parties) and (iii) junior priority Permitted Liens that are subject to the Applicable Intercreditor Agreement;

 

(d)          such Trademark Assets are validly registered with the U.S. Patent and Trademark Office;

 

(e)         such Trademark Assets are not subject to any claim or assertion (whether in writing, by suit or otherwise) that any U.S. Loan Party’s ownership or any Loan Party’s or any Subsidiary’s use of such Trademark Assets violates the Trademark Assets of any other Person (to the extent of any diminution in value resulting therefrom as determined by the Administrative Agent in its Permitted Discretion);

 

(f)       the Administrative Agent shall have received a completed appraisal satisfactory to the Administrative Agent in its Permitted Discretion with respect to such Trademark Assets; and

 

(g)      the Administrative Agent shall not have otherwise determined that such Trademark Assets are unacceptable in its Permitted Discretion.

 

In the event that a Financial Officer of the Company has actual knowledge that any Trademark Asset that was previously Eligible Intellectual Property ceases to be Eligible Intellectual Property hereunder, the Borrower Representative shall immediately notify the Administrative Agent thereof and deliver an updated Borrowing Base Certificate to the Administrative Agent showing the Borrowing Base in effect after giving effect to the removal of any such Trademark Asset from Eligible Intellectual Property; provided, further, that the Administrative Agent may, in its Permitted Discretion, upon receipt of such notice as set forth above, adjust the applicable Borrowing Base to reflect such change in Eligible Intellectual Property. Upon the Collateral Designation Date, all previously Eligible Intellectual Property shall automatically cease to be Eligible Intellectual Property hereunder.

 

“Environment” means ambient air, indoor air, surface water, groundwater, drinking water, land surface and subsurface strata and natural resources such as wetlands, flora and fauna.

 

“Environmental Laws” means all applicable federal, state, provincial, territorial, municipal and local laws (including common law), regulations, rules, ordinances, codes, decrees, judgments, directives, orders (including consent orders), orders-in-council, and binding agreements with any Governmental Authority in each case, relating to pollution or protection of the Environment, human health and safety (to the extent related to exposure to Hazardous Materials), or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling of, or the arrangement for such activities with respect to, Hazardous Materials.

 

“Environmental Liability” means any liability, claim, action, suit, agreement, judgment or order arising under or relating to any Environmental Law for any damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, including those arising from or relating to: (a) compliance or non-compliance with any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threat of Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest (other than, immediately after such conversion or exchange, any Indebtedness or other debt securities that are convertible or exchangeable into any such Equity Interests).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

“ERISA Affiliate” means 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 414(c) of the Code or Section 4001(a)(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) any failure by any Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived or a failure by any Loan Party or any ERISA Affiliate to make a required contribution to a Multiemployer Plan, (c) 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, (d) a determination that any Plan is in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (e) the incurrence by any Loan Party or any ERISA Affiliate of any liability under Title IV of ERISA (other than PBGC premiums due but not delinquent under Section 4007 of ERISA), (f) 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 Plans or to appoint a trustee to administer any Plan under Section 4042 of ERISA, (g) an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan; (h) the incurrence by any Loan Party or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan (including any liability under Section 4062(e) of ERISA) or Multiemployer Plan, (i) the receipt by any Loan Party or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is insolvent within the meaning of Section 4245 of ERISA, or in “endangered” or “critical” status, within the meaning of Section 305 of ERISA or Section 432 of the Code, (j) a 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, or (k) the occurrence of a non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) with respect to which any Loan Party or any ERISA Affiliate is a “disqualified person” (within the meaning of Section 4975 of the Code) or a “party in interest” (within the meaning of Section 406 of ERISA) or could otherwise reasonably be expected to be liable.

 

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

 

“European Availability Period” means, (i) with respect to German Revolving Loans, the period from and including the date that a Successful Exchange Transaction is consummated to but excluding the earlier of the Maturity Date and the date of termination of the aggregate Commitments and (ii) with respect to Swiss Revolving Loans, the period from and including the date the Administrative Agent receives the Swiss Tax Ruling to but excluding the earlier of the Maturity Date and the date of termination of the aggregate Commitments.

 

“European Borrowers” means the Swiss Borrowers and the German Borrowers.

 

“European Borrowing Base” means, at any time of calculation, an amount equal to the sum of each German Borrowing Base and each Swiss Borrowing Base.

 

“European Collateral” means the Swiss Collateral, the Dutch Collateral, the German Collateral and the UK Collateral.

 

“European Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s German Credit Exposure plus (b) such Lender’s Swiss Credit Exposure.

 

“European Line Cap” means, as of any date of determination thereof by the Administrative Agent, an amount equal to the least of (i) the total Commitments then in effect, (ii) $40,000,000 and (iii) the European Borrowing Base.

 

“European Loan Parties” means the Swiss Loan Parties, the German Loan Parties, the Dutch Loan Parties and the UK Loan Parties.

 

“European Loans” means, individually and collectively as the context may require, the European Revolving Loans, the European Protective Advances and the European Overadvances.

 

“European Overadvance” has the meaning set forth in Section 2.05(c).

 

“European Overadvance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding European Overadvances at such time.  The European Overadvance Exposure of any Lender at any time shall be its Applicable Percentage of the total European Overadvance Exposure at such time.

 

“European Protective Advance” has the meaning set forth in Section 2.04(a).

 

“European Protective Advance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding European Protective Advances at such time.  The European Protective Advance Exposure of any Lender at any time shall be its Applicable Percentage of the total European Protective Advance Exposure at such time.

 

“European Revolving Exposure” means, with respect to any Revolving Lender at any time, the outstanding principal amount of European Revolving Loans of such Revolving Lender at such time.

 

“European Revolving Loan” means the German Revolving Loans and Swiss Revolving Loans.

 

“European Security Agreements” means, collectively, the Dutch Security Agreements, the German Security Agreements and the Swiss Security Agreements and the UK Security Agreements.

 

“European Union” means the region comprised of member states of the European Union pursuant to the Treaty on the European Union.

 

“Events of Default” or “Event of Default” has the meaning set forth in Article VII.

 

“Exchange” means either (a) the acquisition by Consenting Noteholders (as defined in the Exchange TSA)  of the 2029 1L Notes and/or 2029 2L Notes in exchange for the 2026 Notes held by such Consenting Noteholders pursuant to the Exchange Transactions (as defined in the Exchange TSA) or (b) the exchange of the 2026 Notes for 2029 1L Notes and/or 2029 2L Notes as set forth in the Exchange TSA.

 

“Exchange Act” means the United States Securities Exchange Act of 1934.

 

“Exchange Effective Date” shall mean the date the Exchange Transactions are effective.

 

“Exchange Documents” each of the definitive documents and agreements related to or otherwise utilized to implement, effectuate, or govern the Exchange Transactions.   Exchange Documents not executed or in a form attached to the Exchange TSA as of the Effective Date (a) shall be consistent in all material respects with the terms and conditions set forth in the Exchange TSA, and (b) shall otherwise be in a form and substance reasonably acceptable to the Administrative Agent (including any amendment, modification, supplement, or waiver of any terms thereof).

 

“Exchange Milestones” has the meaning assigned to such term in Section 5.31.

 

“Exchange Term Sheet” means the Restructuring Term Sheet as defined in (and attached as Exhibit A to) the Exchange TSA.

 

 “Exchange Transactions” means, collectively, (a) the entry into the Exchange TSA and each of the other Exchange Documents, (b) the consummation of the Restructuring Transactions (as defined in the Exchange TSA), including the Exchange in accordance with terms and conditions of the Exchange TSA which shall result in the issuance of the 2029 1L Notes and the 2029 2L Notes, including not less than $32,500,000 in new money 2029 1L Notes, (c) the repayment of the Loans by the Net Cash Proceeds from the issuance of the 2029 IL Notes, (d) the entry into the Intercreditor Agreement and (e) the payment of fees and expenses in connection with the foregoing.

 

“Exchange Transaction Termination Event” means any of the following events: (a) the Loan Parties fail to consummate an Exchange Transaction (constituting a Successful Exchange Transaction) on or prior to the applicable Outside Date (as defined in, and determined in accordance with, the Exchange TSA), (b) the Exchange TSA is terminated for any reason whatsoever (other than upon consummation of a Successful Exchange Transaction), (c) the Loan Parties cease to pursue the Exchange Transaction in good faith or (d) Consenting Noteholders (as defined in the Exchange TSA) fail to hold at any time at least 58% of the aggregate outstanding principal amount of the 2026 Notes.

 

“Exchange TSA” means, collectively, that certain Transaction Support Agreement dated as of August 13, 2025, by and among the Company, certain of its affiliates, and certain holders or beneficial holders of the 2026 Notes (including, without limitation, all exhibits or schedules thereto and the Exchange Term Sheet), as in effect on the date hereof and without giving effect to any amendment, modification or waiver of any of the terms, conditions or covenants thereof that are not consented to by the Administrative Agent.

 

“Excluded Account” means all means all (i) Deposit Accounts, Securities Accounts, Futures Accounts and Commodity Accounts (a) maintained solely as payroll or other employee wage and benefit accounts (including withholding tax payments related thereto), (b) maintained solely as sales tax accounts, (c) maintained (A) solely as escrow accounts or fiduciary or trust accounts, in each case, for the benefit of third parties, other than the Company and its Subsidiaries and their respective Affiliates and accounts otherwise held exclusively for the benefit of third parties, other than the Company and its Subsidiaries and their respective Affiliates or (B) solely to hold restricted cash as supporting obligations for guarantees permitted pursuant to Section 6.01, (d) that contain solely deposits permitted by clauses (c) and (d) of the definition of “Permitted Encumbrances”, if the documents governing such deposits prohibit the granting of a lien on such deposits, (e) that are maintained solely as store accounts maintained for local deposits; provided that the entire balance (other than a nominal amount to cover fees and charges) of all such accounts is swept on the Friday of each week (or if Friday is not a Business Day, on the next succeeding Business Day) (other than during a Dominion Period, in which case the entire balance of all such accounts shall be swept on each Business Day) into one or more Deposit Accounts that are not Excluded Accounts and that are subject to a Control Agreement (it being understood that no Concentration Account or Collection Account will be an Excluded Account as a result of this clause (e)) and (f) the entire balance of which is swept on each Business Day into one or more Deposit Accounts that are not Excluded Accounts and that are subject to a Control Agreement (it being understood that no Concentration Account or Collection Account will be an Excluded Account as a result of this clause (f)), and (ii) other Deposit Accounts, Securities Accounts, Futures Accounts or Commodities Accounts, with an aggregate closing daily balance not in excess of $4,000,000 in the aggregate for all such Deposit Accounts, Securities Accounts, Futures Accounts or Commodities Accounts excluded pursuant to this clause (ii); provided that no Concentration Account, Collection Account, Deposit Account included in the Intercompany Cash Pooling Program nor the Borrowers’ Funding Account (regardless of the amount on deposit at any time in such account) shall be an Excluded Account.

 

 “Excluded Subsidiary” means (a) any Subsidiary that is not a wholly owned Subsidiary of the Company on the Effective Date or on the date such Subsidiary becomes a Subsidiary, in each case for so long as such Subsidiary remains a non-wholly owned Subsidiary, (b) any Foreign Subsidiary of the Company (subject to the immediately following sentence), (c) [reserved], (d) any CFC Holdco, (e) any Subsidiary that is prohibited or restricted by applicable law from providing a Loan Guarantee of the applicable Guaranteed Obligations or if such Loan Guarantee would require governmental (including regulatory) consent, approval, license or authorization, unless such consent, approval, license or authorization has been received, (f) any Subsidiary that is a not-for-profit organization, (g) any Unrestricted Subsidiary, (h) any Subsidiary that is an Immaterial Subsidiary (unless, solely in the case of a Subsidiary organized in the same jurisdiction as an existing Loan Party, the Company otherwise elects), and (i) any other Subsidiary with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Company), the cost or other consequences of becoming a Guarantor shall be excessive in view of the benefits to be obtained by the Lenders therefrom; provided, that, for the avoidance of doubt, all Excluded Subsidiaries as of the Effective Date are listed on Schedule 1.01.  Notwithstanding the foregoing (x) no Canadian Loan Party or Canadian Subsidiary, German Loan Party or German Subsidiary, Swiss Loan Party or Swiss Subsidiary, Dutch Loan Party or UK Loan Party or UK Subsidiary shall be excluded from being required to comply with the Collateral and Guarantee Requirement pursuant to clauses (b), (c) or (d) above, (y) no Restricted Subsidiary of the Company that Guarantees the 2026 Notes Obligations or the 2029 Notes Secured Obligations or any Material Indebtedness of any Loan Party shall be deemed to be an Excluded Subsidiary and (z) no Subsidiary of the Company that owns or licenses (other than non-exclusive licenses from the Company or another Subsidiary granted in the ordinary course of business) any Material Intellectual Property shall be deemed to be an Excluded Subsidiary.

 

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the Loan Guarantee of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any Loan 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 Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Loan Guarantee of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Loan Guarantee or security interest is or becomes illegal.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by such Recipient’s net income (however denominated), franchise Taxes, branch profits Taxes and Canadian capital Taxes, in each case, imposed by a jurisdiction as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, such jurisdiction or as a result of any other present or former connection, or permanent establishment in respect of amounts received or receivable that are effectively attributable to such permanent establishment, between such Recipient and such jurisdiction (other than connections arising from such Recipient 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 and/or sold or assigned an interest in any Loan Document), (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the applicable Commitment (or, to the extent a Lender acquires an interest in a Loan not funded pursuant to a prior Commitment, acquires such interest in such Loan) (in each case, other than pursuant to an assignment request under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case under clause (i) or (ii) to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in such Loan or Commitment, as applicable, or to such Lender immediately before it changed its lending office, (c) any Taxes attributable to a Lender’s failure to comply with Sections 2.17(e), 9.04(b)(iii), 9.04(c) or resulting from an incorrect Lender status confirmation under Section 2.17(i) or having lost the status as Swiss Qualifying Bank or not being a Swiss Qualifying Bank on the Effective Date and (d) solely with respect to any withholding or deduction required in respect of a Loan or Commitment, any U.S. federal withholding Taxes imposed under FATCA, (e) any Canadian withholding tax imposed under Part XIII of the ITA by reason of (i) a Recipient not dealing at arm’s length (for the purposes of the ITA) with a Canadian Loan Party, (ii) a Recipient being a “specified non-resident shareholder” (as defined in subsection 18(5) of the ITA) of a Canadian Loan Party or not dealing at arm’s length (for the purposes of the ITA) with a “specified shareholder” (as defined in subsection 18(5) of the ITA) of a Canadian Loan Party, as applicable, or (iii) a Recipient being an entity in respect of which a Canadian Loan Party is a “specified entity” (as defined in subsection 18.4(1) of the ITA), except, in the case of (i), (ii) or (iii), as applicable, where the non-arm’s length relationship arises, where the Recipient is a specified non-resident shareholder of a Canadian Loan Party or does not deal at arm’s length with a specified shareholder of a Canadian Loan Party, or the Recipient is an entity in respect of which a Canadian Loan Party is a specified entity, on account of the Recipient 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 and/or sold or assigned an interest in any Loan Document and (f) in the case of a Lender (other than an assignee pursuant to a request by Borrower Representative under Section 2.19), any United Kingdom withholding tax other than (x) the portion of United Kingdom withholding tax with respect to which the applicable Lender is entitled to claim a reduction under an income tax treaty and (y) United Kingdom withholding taxes on payments made by any Guarantor under any guarantee of the Obligations imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the applicable Commitment (or, to the extent a Lender acquires an interest in a Loan not funded pursuant to a prior Commitment, acquires such interest in such Loan) (in each case, other than pursuant to an assignment request under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case under clause (i) or (ii) to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in such Loan or Commitment, as applicable, or to such Lender immediately before it changed its lending office and (g) any Swiss Withholding Tax which arises as a result of revocation of the Swiss Tax Ruling by the Swiss Federal Tax Administration and (h) any German Tax which arises solely because the payment is made to a Recipient incorporated, having its place of effective management, or acting through a permanent establishment, as the case may be, located in a Non-Cooperative Jurisdiction. "Non-Cooperative Jurisdiction" means a “non-cooperative tax jurisdiction” (nicht kooperatives Steuerhoheitsgebiet) as set out in the German Act to prevent Tax Avoidance and Unfair Tax Competition (Gesetz zur Abwehr von Steuervermeidung und unfairem Steuerwettbewerb (Steueroasen-Abwehrgesetz)) and the respective legislative decree (Rechtsverordnung), referred to in section 3, paragraph 1 of that German Act, as amended from time to time..

 

“Existing Credit Agreement” means that certain Credit Agreement, dated as of September 26, 2019, by and among the Company, as the Borrower Representative, Fossil Partners, as a Borrower, the other Loan Parties (as defined therein) party thereto, the Lenders (as defined therein) party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, as amended, restated supplemented or otherwise modified prior to the Effective Date.

 

“Extenuating Circumstance” means any period during which the Administrative Agent has determined in its sole discretion (i) that due to unforeseen and/or nonrecurring circumstances, it is impractical and/or not feasible to submit or receive a Borrowing Request by email or fax or through Electronic System, and (ii) to accept a Borrowing Request telephonically.

 

“Extraordinary Receipts” means (i) tax refunds, other than tax refunds with respect to overpayments of estimated taxes, and (ii) proceeds of judgments, proceeds of settlements, or other consideration of any kind received in connection with any cause of action or claim.

 

“FAS 842” has the meaning set forth in Section 1.06(b).

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future Treasury regulations or other official administrative interpretations thereof, and any agreements entered into pursuant to current Section 1471(b) of the Code (or any amended or successor version described above) 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.

 

“FATCA Deduction” means a deduction or withholding from a payment made under a Loan Document, as required by FATCA.

 

“FATCA Exempt Party” means a party that is entitled to receive payments free from any FATCA Deduction.

 

“Federal Funds Effective Rate” means, 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 zero, such rate shall be deemed to be zero for the purposes of this Agreement.

 

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

 

“Fee Letter” means the Fee Letter dated as of the Effective Date, by and between the Company and the Administrative Agent.

 

“Financial Officer” means, with respect to any Person, the chief financial officer, chief accounting officer, principal accounting officer, treasurer, assistant treasurer or controller of such Person and, in the case of a Foreign Loan Party also means each person performing similar duties as the foregoing Persons (including any director of such Loan Party acting in such capacity).

 

“Fiscal Month” means, with respect to the Company or any of its Subsidiaries, the approximately one-month period ending around the end of each month or such other applicable period, as determined from time to time by the Company in the ordinary course of its business, as the context may require, or, if any such Subsidiary was not in existence on the first day of any such period, the period commencing on the date on which such Subsidiary is incorporated, organized, formed or otherwise created and ending on the last day of such period.

 

“Fiscal Quarter” means one of the four (4) periods falling in each Fiscal Year, each such period being thirteen (13) weeks in duration, with the first such period in any Fiscal Year beginning on the first day of such Fiscal Year and the last such period in any Fiscal Year ending on the last Saturday closest to December 31.

 

“Fiscal Year” means the fifty–two (52) or fifty-three (53) week period beginning on the date which is one day after the end of the similar preceding period and ending on the Saturday closest to December 31st.

 

“Fixed Charge Coverage Ratio” means the ratio of (a) (i) Consolidated EBITDA for such period minus (ii) Unfinanced Capital Expenditures for such period minus (iii) such portion of principal payments on Capital Lease Obligations or Synthetic Lease Obligations made by the Company and its consolidated Subsidiaries during such period as is attributable to additions to property, plant and equipment that have not otherwise been reflected on the consolidated statement of cash flows as additions to property, plant and equipment for such period to (b) Consolidated Fixed Charges for such period.

 

“Floor” means the benchmark rate floor 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 Adjusted Term SOFR Rate.  For the avoidance of doubt, the initial Floor for the Adjusted Term SOFR Rate shall be 2.00%.

 

“Foreign Borrowers” means the Borrowers other than the U.S. Borrowers.

 

“Foreign Lender” means a Lender that is not a U.S. Person.

 

“Foreign Loan Parties” means the Loan Parties other than the U.S. Loan Parties.

 

“Foreign Pension Plan” means any pension plan, pension undertaking, supplemental pension, retirement savings or other retirement income plan, obligation or arrangement of any kind (other than any state social security arrangement that is not subject to US law or any Canadian Pension Plan) and that is established, maintained or contributed to by the Company or any of its Affiliates or in respect of which the Company or any of its Affiliates has any liability, obligation or contingent liability.

 

“Foreign Pension Plan Event” means, with respect to any Foreign Pension Plan or any Canadian Pension Plan, (a) (i) except in respect of Canadian Defined Benefit Plan, the existence of unfunded liabilities in excess of the amount permitted under any applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, or (ii) in respect of a Canadian Defined Benefit Plan, the existence of any unfunded liability or any solvency deficiency, (b) the failure to make the required contributions or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice from a Governmental Authority relating to the intention to terminate any such Foreign Pension Plan or Canadian Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan or any Canadian Pension Plan, or alleging the insolvency of any such Foreign Pension Plan or Canadian Pension Plan, (d) the incurrence of any liability by any Loan Party or any Subsidiary under applicable law on account of the complete or partial termination of such Foreign Pension Plan or Canadian Pension Plan or the complete or partial withdrawal of any participating employer therein or (e) the occurrence of any transaction that is prohibited under any applicable law and that could reasonably be expected to result in the incurrence of any liability by any Loan Party or any Subsidiary, or the imposition on any Loan Party or any Subsidiary, of any fine, excise tax or penalty resulting from any noncompliance with any applicable law.

 

“Foreign Subsidiary” means any Subsidiary of the Company, other than a Domestic Subsidiary.

 

“Fossil Canada” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Fossil East” means Fossil (East) Limited, a Hong Kong corporation.

 

“Fossil Germany” means Fossil (Europe) GmbH, a limited liability company organized under the laws of Germany.

 

“Fossil Partners” has the meaning set forth in the introductory paragraph of this Agreement.

 

“Fossil Switzerland” means Fossil Group Europe GmbH, a limited liability company organized under the law of Switzerland.

 

“Funding Account(s)” means the deposit account(s) of the Borrowers to which the Administrative Agent is authorized by the Borrowers (or by the Borrower Representative on their behalf) to transfer the proceeds of any Borrowings requested or authorized pursuant to this Agreement.

 

“Futures Account(s)” means all “futures accounts” as such term is defined in the PPSA.

 

“GAAP” means generally accepted accounting principles in the United States of America, applied in accordance with the consistency requirements thereof.

 

“German Borrowers” means each German Subsidiary that becomes party to this Agreement as a German Borrower after the Effective Date pursuant to Section 5.03(b) or Section 5.25.

 

“German Borrowing Base” means, in relation to a German Borrower, at any time (without duplication), the Dollar Equivalent amount of the sum of:

 

(a)        the lesser of (x) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Net Orderly Liquidation Value of Eligible Finished Goods Inventory of that German Borrower at such time and (y) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Cost of Eligible Finished Goods Inventory of that German Borrower; provided that In-Transit Inventory shall not comprise more than 20% of the total amount of this clause (a), plus

 

(b)         the product of (i) the Applicable Foreign Accounts Advance Rate multiplied by (ii) the Eligible Accounts of that German Borrower at such time, minus

 

(c)          without duplication, Reserves established by the Administrative Agent in its Permitted Discretion.

 

The Administrative Agent may, in its Permitted Discretion and with no less than two (2) Business Days’ prior written notice to the Borrower Representative (other than during a Dominion Period, in which case notice shall not be required), establish or adjust Reserves used in computing a German Borrowing Base; provided, that (i) no such notice shall be required to reduce any Reserve or to increase any Reserve resulting solely by virtue of mathematical calculations of the amount thereof in accordance with methodology previously established by the Administrative Agent in its Permitted Discretion and (ii) regardless of whether such notice is required, such new or increased Reserve shall be deemed to be in effect immediately for purposes of determining the Revolving Exposure Limitations with respect to any requested Borrowing or other credit extension.  Subject to the immediately preceding sentence and the other provisions hereof expressly permitting the Administrative Agent to adjust any German Borrowing Base, a German Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to this Agreement.

 

Any changes after the Effective Date in how the applicable Loan Parties value their Inventory in accordance with their historical practices prior to the Effective Date shall be subject to the reasonable approval of the Administrative Agent.

 

“German Collateral” means any and all property of any German Loan Party covered or intended to be covered by the Collateral Documents and any and all other property of any German Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“German Credit Exposure” means, as to any Revolving Lender at any time, the Dollar Equivalent of the sum of (a) such Revolving Lender’s German Revolving Exposure plus (b) such Lender’s Applicable Percentage of the aggregate amount of German Overadvances and German Protective Advances outstanding.

 

“German Guarantee” means Article XIII of this Agreement.

 

“German Guaranteed Obligations” has the meaning set forth in Section 13.01.

 

“German Guarantor” means each German Borrower (solely with respect to its Obligations arising pursuant to Section 13.01 hereof) and each German Subsidiary that becomes a party hereto as a German Guarantor pursuant to Section 5.03 or Section 5.25, in each case, until such Subsidiary’s German Guarantee is released in accordance herewith.

 

“German Insolvency Event” means:  (a) a German Relevant Entity is unable or admits inability to pay its debts as they fall due or is deemed to or declared to be unable to pay its debts under applicable law, suspends or threatens to suspend making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness, including a stoppage of payment situation (Zahlungsunfähigkeit), a status of over-indebtedness (Überschuldung) in the meaning of Section 19 of the German Insolvency Code or actual insolvency proceedings; (b) a moratorium is declared in respect of any Indebtedness of a German Relevant Entity, or (c) (i) such German Relevant Entity is otherwise in a situation to file for insolvency because of any of the reasons set out in Sections 17 to 19 of the German Insolvency Code and (ii) a petition for insolvency proceedings in respect of its assets (Antrag auf Eröffnung eines Insolvenzverfahrens) has been filed based on section 17 to section 19 of the German Insolvency Code (Insolvenzordnung), or actions are taken pursuant to section 21 German Insolvency Code (Insolvenzordnung) by a competent court.

 

“German Loan Parties” means, individually and collectively as the context may require, the German Borrowers and each German Guarantor.

 

“German Obligated Party” has the meaning set forth in Section 13.02.

 

“German Overadvance” has the meaning set forth in Section 2.05(c).

 

“German Protective Advance” has the meaning set forth in Section 2.04(a).

 

“German Relevant Entity” means any German Loan Party or any Loan Party capable of becoming subject of insolvency proceedings under the German Insolvency Code (Insolvenzordnung).

 

“German Revolving Exposure” means, with respect to any Revolving Lender at any time, the outstanding principal amount of German Revolving Loans of such Revolving Lender at such time.

 

“German Revolving Loan” means a Revolving Loan made by the Revolving Lenders to the German Borrowers.

 

“German Security Agreements” means, collectively, any German law pledge or security agreement entered into after the Effective Date by any Loan Party (as required by this Agreement or any other Loan Document), as the same may be amended, restated or otherwise modified from time to time.

 

“German Subsidiary” means any subsidiary of the Company that has been formed or is organized under the laws of Germany.

 

“Germany” means the Federal Republic of Germany.

 

“Governmental Authority” means the government of the United States of America, Canada, Germany, Switzerland, the United Kingdom, the Netherlands, any other nation or any political subdivision thereof, whether provincial, territorial, state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body exercising such powers or functions, such as the European Union, the Council of Ministers of the European Union or the European Central Bank).

 

“Guarantee” of or by any Person (the “guarantor”) means 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, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) 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, (c) 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 or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount, as of any date of determination, of any Guarantee shall be the principal amount outstanding on such date of Indebtedness or other obligation guaranteed thereby (or, in the case of (i) any Guarantee the terms of which limit the monetary exposure of the guarantor or (ii) any Guarantee of an obligation that does not have a principal amount, the maximum monetary exposure as of such date of the guarantor under such Guarantee (as determined, in the case of clause (i), pursuant to such terms or, in the case of clause (ii), reasonably and in good faith by the chief financial officer of the Company)).

 

“Guaranteed Loan Party” has the meaning set forth in Section 12.09(a).

 

“Guaranteed Obligations” means, collectively, the U.S. Guaranteed Obligations, the Canadian Guaranteed Obligations, the German Guaranteed Obligations, the Swiss Guaranteed Obligations and the UK Guaranteed Obligations.

 

“Guarantors” means the U.S. Guarantors, the Canadian Guarantors, the Dutch Guarantor, the German Guarantors, the Swiss Guarantors and the UK Guarantors.

 

“Hazardous Materials” means any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any applicable Environmental Law, including, without limitation, any petroleum products or byproducts and all other hydrocarbons, coal ash, radon gas, asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, per- or polyfluoroalkyl substances, chlorofluorocarbons and all other ozone-depleting substances or toxic mold.

 

“Hong Kong” means the Hong Kong Special Economic Region of the People’s Republic of China.

 

“Hong Kong Dollars” or “HK$” means the lawful currency of Hong Kong.

 

“Immaterial Subsidiary” means, at any date of determination, any Restricted Subsidiary (other than a Loan Party) that, at the last day of the most recently ended Fiscal Month of the Company for which financial statements have theretofore been most recently delivered pursuant to Section 5.01(b)(ii), either individually or together with its Subsidiaries, accounted for less than (x) 5.0% of Total Assets at such date and (y) less than 5.0% of the consolidated revenues of the Company and its Restricted Subsidiaries for the most recent twelve Fiscal Month period ending on or prior to such date; provided that, notwithstanding the above, “Immaterial Subsidiary” shall exclude any of the Company’s Restricted Subsidiaries designated in writing to the Administrative Agent, by a responsible officer of the Company (which the Company shall be required to designate (and hereby undertakes to designate) to the extent necessary to ensure that Immaterial Subsidiaries and their respective Subsidiaries, in the aggregate, accounted for, at the last day of any Fiscal Month of the Company for which financial statements have theretofore been most recently delivered pursuant to Section 5.01(b)(ii), less than 5.0% of Total Assets at such date and less than 5.0% of consolidated revenues of the Company and its Restricted Subsidiaries for the twelve Fiscal Month period ending on such date.

 

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person (excluding trade accounts payable incurred in the ordinary course of business), (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (i) current accounts payable incurred in the ordinary course of business, (ii) deferred compensation payable to directors, officers or employees of the Company or any Restricted Subsidiary and (iii) any purchase price adjustment or earnout incurred in connection with an acquisition), (e) all Capital Lease Obligations and Synthetic Lease Obligations of such Person, (f) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (g) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (h) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed by such Person (but only to the extent of the lesser of (x) the amount of such Indebtedness and (y) the fair market value of such property, if such Indebtedness has not been assumed by such Person), and (i) all Guarantees by such Person of Indebtedness of others.  Notwithstanding the foregoing, Indebtedness shall not include trade payables (including any obligation owed by a Person arising out of arrangements whereby a third party makes payments for the account of such Person directly or indirectly to a trade creditor of such Person in respect of trade payables of such Person) and related accrued expenses, and related obligations owed to such third party purchaser, incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.  The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor by contract, as a matter of law or otherwise as a result of such Person’s ownership interest in or other relationship with such other Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes” means (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), all Other Taxes.

 

“Indemnitee” has the meaning set forth in Section 9.03(b).

 

“Information” has the meaning set forth in Section 9.12.

 

“Information Materials” means all written materials relating to the Loan Parties and the Transactions provided to the Lenders in connection with the syndication of the Commitments.

 

“Insolvency Laws” means each of the Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada), the United Kingdom’s Insolvency Act 1986, the EU Regulation 2015/848 on insolvency proceedings (recast), the United Kingdom’s Companies Act 2006, the German Insolvency Code, the Swiss Federal Debt Enforcement and Bankruptcy Act (Bundesgesetz über Schuldbetreibung und Konkurs (SchKG)) and the Dutch Bankruptcy Act (Faillissementswet), in each case as amended, and any other applicable state, provincial, territorial, foreign or federal bankruptcy laws, each as now and hereafter in effect, any successors to such statutes and any other applicable insolvency or other similar law of any jurisdiction, including any corporate law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it and including any rules and regulations pursuant thereto.

 

“Intellectual Property” has the meaning set forth in the U.S. Security Agreement.

 

“Intercompany Cash Pooling Program” means the physical cash pooling in-house banking program described to the Administrative Agent prior to the Effective Date, pursuant to which Fossil Europe BV serves as the cash pool master (or in-house bank) for the Company and its applicable Subsidiaries.

 

“Intercompany Sourcing Arrangements” has the meaning set forth in Section 5.33.

 

“Intercompany Subordination Agreement” means the Intercompany Subordination Agreement dated as of the Effective Date, by and among the Borrowers and the other Restricted Subsidiaries party thereto, in the form attached as Exhibit M, as the same may be amended in accordance with the terms hereof and thereof.

 

“Intercreditor Agreement” means any intercreditor agreement by and among the Administrative Agent and each Applicable Senior Notes Trustee, and acknowledged by the Loan Parties, substantially the form of Exhibit E (with (A) any immaterial changes (as determined in the Administrative Agent’s sole discretion) thereto as the Company and the Administrative Agent may agree in their respective reasonable discretion and/or (B) any material changes thereto as the Company and the Administrative Agent may agree in their respective reasonable discretion, which material changes are provided for review by the Lenders and shall be deemed acceptable if the Required Lenders have not objected in writing thereto within three (3) Business Days following the date on which such changes are provided for review), as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance therewith and this Agreement.

 

“Interest Payment Date” means (a) with respect to any Loan (other than a Protective Advance or an Overadvance), the first day of each calendar month and the Maturity Date, and (b) with respect to any Protective Advance or Overadvance, the day that such Loan is required to be repaid and the Maturity Date.

 

“In-Transit Inventory” has the meaning set forth in the definition of “Eligible Finished Goods Inventory”.

 

“Inventory” has the meaning set forth in each Security Agreement.

 

“Investment” means, with respect to a specified Person, any Equity Interests, evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, or any capital contribution or loans or advances (other than advances made in the ordinary course of business that would be recorded as accounts receivable on the balance sheet of the specified Person prepared in accordance with GAAP) to, Guarantees of any Indebtedness or other obligations of, or any other investment (including any investment in the form of transfer of property for consideration that is less than the fair value thereof (as determined reasonably and in good faith by the chief financial officer of the Company)) in, any other Person that are held or made by the specified Person.  The amount, as of any date of determination, of (a) any Investment in the form of a loan or an advance shall be the principal amount thereof outstanding on such date, without any adjustment for write-downs or write-offs (including as a result of forgiveness of any portion thereof) with respect to such loan or advance after the date thereof, (b) any Investment in the form of a Guarantee shall be determined in accordance with the definition of the term “Guarantee”, (c) any Investment in the form of a purchase or other acquisition for value of any Equity Interests, evidences of Indebtedness or other securities of any Person shall be the fair value (as determined reasonably and in good faith by the chief financial officer of the Company) of the consideration therefor (including any Indebtedness assumed in connection therewith), plus the fair value (as so determined) of all additions, as of such date of determination, thereto, and minus the amount, as of such date of determination, of any portion of such Investment repaid to the investor in cash as a repayment of principal or a return of capital, as the case may be, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the time of such Investment, (d) any Investment (other than any Investment referred to in clause (a), (b) or (c) above) in the form of a transfer of Equity Interests or other property by the investor to the investee, including any such transfer in the form of a capital contribution, shall be the fair value (as determined reasonably and in good faith by the chief financial officer of the Company) of such Equity Interests or other property as of the time of such transfer (less, in the case of any investment in the form of transfer of property for consideration that is less than the fair value thereof, the fair value (as so determined) of such consideration as of the time of the transfer), minus the amount, as of such date of determination, of any portion of such Investment repaid to the investor in cash as a return of capital, but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the time of such transfer, and (e) any Investment (other than any Investment referred to in clause (a), (b), (c) or (d) above) in any Person resulting from the issuance by such Person of its Equity Interests to the investor shall be the fair value (as determined reasonably and in good faith by the chief financial officer of the Company) of such Equity Interests at the time of the issuance thereof.

 

“IP Advance” means, at any time of determination, the lesser of (a) the aggregate principal amount of U.S. Revolving Loans outstanding at such time and (b) the amount of clause (d) of the U.S. Borrowing Base at such time.

 

“IP Advance Rate” means, initially, 70%; provided that, on the first calendar day of each month (commencing on December 1, 2025), the IP Advance Rate then in effect shall be permanently reduced by 117 basis points (e.g., from 70.00% to 68.83% on December 1, 2025, from 68.83% to 67.66% on January 1, 2026, and so forth).

 

“IP Cap” means, initially, $30,000,000; provided that, on the first calendar day of each month (commencing on December 1, 2025), the IP Cap then in effect shall be permanently reduced by $500,000 (e.g., from $30,000,000 to $29,500,000 on December 1, 2025, from $29,500,000 to $29,000,000 on January 1, 2026, and so forth); provided further that, with respect to (a) any Disposition of Intellectual Property (other than the Disposition of the Intellectual Property related to the Michele brand), the IP Cap then in effect shall be further permanently reduced by an amount equal to the greater of (x) the Net Orderly Liquidation Value of such Intellectual Property and (y) 50% of the amount of Net Cash Proceeds of such Disposition, and (b) the Disposition of the Intellectual Property related to the Michele brand, the IP Cap then in effect shall be further permanently reduced by an amount equal to (i) if such Disposition occurs within six (6) months after the Effective Date, the greater of (x) the Net Orderly Liquidation Value of such Intellectual Property and (y) 35% of the amount of Net Cash Proceeds of such Disposition, or (ii) if such Disposition occurs after the date that is six (6) months after the Effective Date, the greater of (x) the Net Orderly Liquidation Value of such Intellectual Property and (y) 50% of the amount of Net Cash Proceeds of such Disposition.

 

“IP Security Agreements” has the meaning set forth in each of the U.S. Security Agreement and the Canadian Security Agreement.

 

“IRS” means the United States Internal Revenue Service.

 

“Issuing Banks” means, individually and collectively as the context may require, any bank or financial institution selected by the Administrative Agent in the Administrative Agent’s sole discretion, each in its capacity as an issuer of Letters of Credit hereunder, and its successors and assigns in such capacity as provided in Section 2.06(i).  Each Issuing Bank may, in its sole discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“ITA” means the Income Tax Act (Canada), as amended.

 

“ITA (UK)” means the Income Tax Act 2007, as amended.

 

“Joinder Agreement” means a joinder agreement substantially in the form of Exhibit H.

 

“LC Collateral Account” has the meaning set forth in Section 2.06(j).

 

“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.  The date of an LC Disbursement shall be the date of payment by the applicable Issuing Bank under a Letter of Credit or a time draft presented thereunder, as the case may be.

 

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time 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 Borrowers at such time.  The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

 

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

 

“Lender Parties” means (a) the Administrative Agent, (b) the Lenders, (c) the Issuing Banks, (d) Qualified Counterparties to whom any Banking Services Obligations constituting Secured Obligations hereunder are owing, (e) [reserved], (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the permitted successors and assigns of the foregoing.

 

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption (or an Affiliate or branch of any such Person that is acting on behalf of such Person, in which case the term “Lenders” shall include any such Affiliate or branch with respect to the Loans made by such Affiliate or branch), other than any such Person that shall have ceased to be a party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit” means any letter of credit or similar instrument (including a bank guarantee) acceptable to the Administrative Agent and the applicable Issuing Bank issued pursuant to this Agreement for the account of a U.S. Borrower or one of its Restricted Subsidiaries; provided that no Letter of Credit issued pursuant to this Agreement shall be a Commercial Letter of Credit.

 

“Letter of Credit Agreement” has the meaning assigned to it in Section 2.06(b).

 

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, charge, assignment by way of security, security interest or other encumbrance in, on or of such asset, (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 and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

“Line Cap” means, as of any date of determination thereof by the Administrative Agent, an amount equal to the lesser of (i) the total Commitments then in effect and (ii) the Aggregate Borrowing Base.

 

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

 

“Loan Documents” means this Agreement, the Collateral Documents, the Agent Fee Letter, the Fee Letter, each Compliance Certificate, the Intercreditor Agreement, any other Applicable Intercreditor Agreement, the Intercompany Subordination Agreement, the Sourcing Rights Agreement, any promissory notes issued pursuant to this Agreement, any Letter of Credit 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, assignments, contracts, notices, letter of credit agreements, letter of credit applications and any agreements between the Borrower Representative and the Issuing Bank regarding the respective rights and obligations between a Borrower and the Issuing Bank in connection with the issuance by the Issuing Bank of Letters of Credit.  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.

 

“Loan Guarantee” means the U.S. Guarantee, the Canadian Guarantee, the German Guarantee, the Swiss Guarantee, the Dutch Guarantee and the UK Guarantee.

 

“Loan Parties” means, individually and collectively as the context may require, the U.S. Loan Parties, the Canadian Loan Parties, the Dutch Loan Parties, the German Loan Parties, the Swiss Loan Parties and the UK Loan Parties.

 

“Loans” means the loans and advances made by the Lenders or the Administrative Agent pursuant to this Agreement, including Overadvances and Protective Advances.

 

“Management Notification” has the meaning set forth in Section 9.24(c).

 

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

 

“Material Adverse Effect” means a material adverse effect on (a) the results of operations, assets, business or financial condition of the Company and the Restricted Subsidiaries taken as a whole, (b) the ability of the Loan Parties to perform any of their monetary obligations under the Loan Documents to which it is a party, or (c) the rights of or benefits available to the Administrative Agent, the Issuing Banks or the Lenders under the Loan Documents.

 

“Material Contract” means (a) any agreement to which any Loan Party or any Subsidiary thereof is a party that is of the type referred to as a “material definitive agreement” in Form 8-K or required to be attached as an exhibit to a filing in accordance with Item 601 of Regulation S-K as promulgated by the SEC and (b) any cash pooling agreements to which any Loan Party or any Subsidiary thereof is a party or by which any Loan Party or any Subsidiary thereof is bound.

 

“Material Indebtedness” means Indebtedness (other than the Loans, Letters of Credit and the Loan Guarantee), or obligations in respect of one or more Swap Agreements, of any one or more of the Company and the Restricted Subsidiaries in an aggregate principal amount exceeding $15,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

 

“Material Intellectual Property” means Intellectual Property that is (i) material to the conduct of business of the Company or any of its Subsidiaries or (ii) necessary or material to permit the Administrative Agent to enforce its rights and remedies under the Loan Documents with respect to the Collateral, or the disposition of which would otherwise adversely affect the Net Orderly Liquidation Value Percentage of any Collateral.

 

“Material Subsidiary” means each Subsidiary that is not an Immaterial Subsidiary.

 

“Maturity Date” means August 13, 2030 (the “Scheduled Maturity Date”); provided that, if on the date that is the 91st day prior to the scheduled maturity date of (i) any Material Indebtedness, any such Material Indebtedness is outstanding on such date, then the Maturity Date shall be such date, or (ii) any other Indebtedness for borrowed money (other than the Loans, Letters of Credit and the Loan Guarantee) of any one or more of the Company and the Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000, any such Indebtedness is outstanding on such date, then the Administrative Agent may establish a Debt Maturity Reserve with respect to such Indebtedness.

 

“Maximum Canadian Liability” has the meaning set forth in Section 11.08.

 

“Maximum German Liability” has the meaning set forth in Section 13.08.

 

“Maximum Rate” has the meaning set forth in Section 9.16.

 

“Maximum Swiss Liability” has the meaning set forth in Section 15.08.

 

“Maximum UK Liability” has the meaning set forth in Section 16.08.

 

“Maximum U.S. Liability” has the meaning set forth in Section 10.09.

 

“Moody’s” means Moody’s Investors Service, Inc., and any successor to its rating agency business.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make contributions or has any ongoing obligation with respect to withdrawal liability (within the meaning of Title IV of ERISA).

 

“Net Cash Pooling Investment” has the meaning set forth in Section 6.04(r).

 

“Net Cash Proceeds” means (a) with respect to any Disposition by any Loan Party or any of its Restricted Subsidiaries of assets, the amount of cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of such Loan Party or its Restricted Subsidiaries in connection therewith after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by such Loan Party or such Restricted Subsidiary to any unaffiliated third party in connection with such Disposition, (ii) Taxes paid or payable to any taxing authorities by such Loan Party or such Restricted Subsidiary or any of their Affiliates in connection with such Disposition, and (iii) all amounts that are set aside as a reserve (A) for adjustments in respect of the purchase price of such assets, (B) for any liabilities associated with such sale or casualty, to the extent such reserve is required by GAAP, and (C) for the payment of unassumed liabilities relating to the assets Disposed of at the time of, or within thirty (30) days after, the date of such Disposition, to the extent that in each case the funds described above in this clause (iii) are (x) deposited into escrow with a third party escrow agent or set aside in a separate Deposit Account that is subject to a Control Agreement in favor of the Administrative Agent (except as otherwise agreed by the Administrative Agent in its sole discretion) and (y) paid to the Administrative Agent as a prepayment of the applicable Obligations in accordance with Section 2.11(c) at such time when such amounts are no longer required to be set aside as such a reserve; and (b) with respect to the issuance or incurrence of any Indebtedness by any Loan Party or any of its Restricted Subsidiaries, or the issuance by the Company of any Equity Interests, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Loan Party or such Restricted Subsidiary or the Company in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable fees, commissions, and expenses related thereto and required to be paid by such Loan Party or such Restricted Subsidiary or the Company to any unaffiliated third party in connection with such issuance or incurrence and (ii) Taxes paid or payable to any taxing authorities by such Loan Party or such Restricted Subsidiary or any of their Affiliates in connection with such issuance or incurrence.

 

“Net Orderly Liquidation Value” shall mean, with respect to Inventory or Trademark Assets of any Person, the amount equal to the blended recovery (by category) on the aggregate amount of the Eligible Finished Goods Inventory or Eligible Intellectual Property, as applicable, at such time on a “net orderly liquidation value” basis (as determined in a manner acceptable to the Administrative Agent in its Permitted Discretion by an appraiser reasonably acceptable to the Administrative Agent) as set forth in the most recent Inventory appraisal or Intellectual Property appraisal, as applicable, received by the Administrative Agent in accordance with Section 5.12, net of operating expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets.

 

“Non-Consenting Lender” has the meaning set forth in Section 9.02(e).

 

“Non-Paying Canadian Loan Party” has the meaning set forth in Section 11.09.

 

“Non-Paying German Loan Party” has the meaning set forth in Section 13.09.

 

“Non-Paying Swiss Loan Party” has the meaning set forth in Section 15.09.

 

“Non-Paying UK Loan Party” has the meaning set forth in Section 16.09.

 

“Non-Paying U.S. Loan Party” has the meaning set forth in Section 10.10.

 

“Notes Priority Collateral” has the meaning set forth in the Intercreditor Agreement, it being agreed that after the Collateral Designation Date, so long as the Notes Obligations (as defined in the Intercreditor Agreement) remain outstanding and the Intercreditor Agreement is in effect, the Specified Collateral shall be deemed to constitute Notes Priority Collateral instead of ABL Priority Collateral.

 

“NYFRB” means the Federal Reserve Bank of New York.

 

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

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans to the Borrowers, all LC Exposure in respect of Letters of Credit issued for the account of a Borrower or any Restricted Subsidiary, all accrued and unpaid fees and all expenses, reimbursements (including pursuant to Section 2.06(e)), indemnities and other obligations of the Loan Parties to the Lenders or to any Lender, the Administrative Agent, any Issuing Bank or any indemnified party arising under the Loan Documents (including interest, costs, fees, expenses and other amounts accruing during the pendency of any case or proceeding under any Insolvency Laws, regardless of whether allowed or allowable in such case or proceeding).

 

“Original Currency” has the meaning set forth in Section 9.22.

 

“Original Indebtedness” has the meaning set forth in the definition of “Refinancing Indebtedness”.

 

“Other Secured Debt” means Indebtedness that is secured by a Lien permitted by Section 6.02(i)(i) or Section 6.02(k); provided that such Liens comply with the requirements set forth in the provisos to such Sections.

 

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, excluding any such Taxes imposed with respect to an assignment by a Lender (other than an assignment made pursuant to Section 2.19) if such Tax is imposed as a result of a present or former connection between the assignor or assignee and the jurisdiction imposing such Tax (other than connections arising from such assignor or assignee 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, and/or sold or assigned an interest in any Loan Document).

 

“Overadvance” means a U.S. Overadvance, a Canadian Overadvance or a European Overadvance.

 

“Overadvance Exposure” means, at any time, the sum of the Canadian Overadvance Exposure, the European Overadvance Exposure and the U.S. Overadvance Exposure.

 

“Parallel Debt” has the meaning assigned to such term in Section 8.11.

 

“Parent” has the meaning assigned to it in the definition of “Subsidiary”.

 

“Participant Register” has the meaning set forth in Section 9.04(c)(ii).

 

“Participants” has the meaning set forth in Section 9.04(c)(i).

 

“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

 

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (Signed into law October 26, 2001)).

 

“Paying Canadian Loan Party” has the meaning set forth in Section 11.09.

 

“Paying German Loan Party” has the meaning set forth in Section 13.09.

 

“Paying Swiss Loan Party” has the meaning set forth in Section 15.09.

 

“Paying UK Loan Party” has the meaning set forth in Section 16.09.

 

“Paying U.S. Loan Party” has the meaning set forth in Section 10.10.

 

“Payment” has the meaning set forth in Section 8.05(d)(i).

 

“Payment Conditions” means, at the time of determination with respect to a specified transaction or payment, that:

 

(a) no Default or Event of Default then exists or would arise as a result of the entering into of such transaction or the making of such payment;

 

(b) a Successful Exchange Transaction shall have occurred and, except when determining Payment Conditions with respect to a Collateral Designation, 180 days shall have elapsed since the date of such Successful Exchange Transaction; and

 

(c) on a Pro Forma Basis after giving effect to such transaction or payment and any incurrence or repayment of Indebtedness in connection therewith, (i)(A) when determining Payment Conditions with respect to any payment in respect of the 2026 Notes, Availability on a Pro Forma Basis on such date, on each day during the immediately preceding thirty (30) day period, and as projected by the Borrower Representative in good faith for the subsequent six months is equal to or greater than the greater of (x) $25,000,000 and (y) 25% of the Line Cap, or (B) when determining Payment Conditions with respect to any other transaction or payment, Availability on a Pro Forma Basis on such date, on each day during the immediately preceding thirty (30) day period, and as projected by the Borrower Representative in good faith for the subsequent twelve months is equal to or greater than the greater of (x) $37,500,000 and (y) 35% of the Line Cap, (ii) the Fixed Charge Coverage Ratio for the most recently ended twelve Fiscal Month period for which financial statements have been delivered to the Administrative Agent pursuant to Section 5.01(b)(ii) is at least (A) when determining Payment Conditions with respect to any payment in respect of the 2026 Notes, 0.95 to 1.00, or (B) when determining Payment Conditions with respect to any other transaction or payment, 1.50 to 1.00, and (iii) the sum of (A) all Permitted Acquisitions made under Section 6.04(h), (B) the outstanding amount of all Investments in Unrestricted Subsidiaries pursuant to Section 5.17, (C) the outstanding amount of all Investments made under Section 6.04(f), (D) the amount of all Restricted Payments made under Section 6.08(a)(vii), and (E) the amount of all payments of or in respect of Indebtedness under Section 6.08(b)(vii), shall not exceed $30,000,000;

 

provided that, in each case, the Company shall have delivered to the Administrative Agent a certificate of a Financial Officer certifying the satisfaction of the foregoing conditions and setting forth a reasonably detailed calculation of such Availability and the Fixed Charge Coverage Ratio.

 

“Payment Intangibles” has the meaning set forth in the U.S. Security Agreement.

 

“Payment Notice” has the meaning set forth in Section 8.05(d)(ii).

 

“Payment Recipient” has the meaning set forth in Section 8.05(d)(i).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

 

“Perfection Certificate” means a certificate in the form of Exhibit K or any other form approved by the Administrative Agent.

 

“Permitted Acquisition” means the purchase or other acquisition by the Company or any Restricted Subsidiary of Equity Interests in, or all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of), any Person if (a) in the case of any purchase or other acquisition of Equity Interests in a Person, such Person will be, upon the consummation of such acquisition, a Restricted Subsidiary, in each case including as a result of a merger, amalgamation or consolidation between any Subsidiary and such Person, or (b) in the case of any purchase or other acquisition of other assets, such assets will be owned by the Company or a Restricted Subsidiary; provided that (i) no Event of Default exists at the date the agreement relating to such Permitted Acquisition is entered into, (ii) the Payment Conditions are satisfied and (iii) the Company shall promptly deliver information relating to such Permitted Acquisition as the Administrative Agent may reasonably request.

 

“Permitted Debt” means Indebtedness of the U.S. Loan Parties (including any Guarantee thereof by a U.S. Loan Party) so long as (i) no portion of the principal of such Indebtedness has a scheduled maturity prior to the date that is 91 days after the Maturity Date at the time of issuance (determined as of the date of incurrence thereof or, in the case of any such Indebtedness outstanding on the Effective Date, the Effective Date), (ii) no Subsidiary of the Company that is not a U.S. Loan Party is an obligor in respect of such Indebtedness, and (iii) that to the extent secured, the Liens securing such Indebtedness must be secured on U.S. Collateral only and shall rank junior to the Liens securing the Secured Obligations in accordance with (and such Liens shall be subject to) an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent.

 

“Permitted Discretion” means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

 

“Permitted Encumbrances” means:

 

(a)         Liens imposed by law for Taxes that are not yet delinquent or (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) the Company or such Restricted Subsidiary has set aside on its books reserves with respect thereto to the extent required by GAAP and (iii) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation;

 

(b)       carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law (other than any Lien imposed pursuant to Section 430(k) of the Code or Section 303(k) of ERISA or a violation of Section 436 of the Code), arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.06;

 

(c)       pledges and deposits made (i) in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations and (ii) in respect of letters of credit, bank guarantees or similar instruments issued for the account of the Company or any Subsidiary in the ordinary course of business supporting obligations of the type set forth in clause (i) above;

 

(d)          pledges and deposits made to secure the performance of bids, trade contracts (other than Indebtedness for borrowed money), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

(e)          judgment liens in respect of judgments that do not constitute an Event of Default under clause (l) of Article VII;

 

(f)          easements, zoning restrictions, rights-of-way, site plan agreements, development agreements, operating agreements, cross-easement agreements, reciprocal easement agreements and similar encumbrances and exceptions to title on real property that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Company or any Subsidiary or the ordinary operation of such real property;

 

(g)         customary rights of setoff upon deposits of cash in favor of banks and other depository institutions and Liens of a collecting bank arising under the UCC or PPSA in respect of payment items in the course of collection;

 

(h)       Liens arising from precautionary UCC or PPSA financing statement filings (or similar filings under applicable law) regarding operating leases or consignments;

 

(i)        Liens representing any interest or title of a licensor, lessor or sublicensor or sublessor, or a licensee, lessee or sublicensee or sublessee, in the property subject to any lease (other than Capital Lease Obligations), license or sublicense or concession agreement permitted by this Agreement;

 

(j)          Liens arising in the ordinary course of business in favor of custom and forwarding agents and similar Persons in respect of imported goods and merchandise in the custody of such Persons;

 

(k)         Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(l)          the reservations, limitations, provisos and conditions, if any, expressed in any original grant from the Crown in right of Canada or any province thereof of any real property or any interest therein or in any comparable grant in jurisdictions other than Canada, provided they do not materially detract from the value of such property or impair the use thereof in the ordinary conduct of business;

 

(m)        Liens or rights of setoff against credit balances of the Company or any Subsidiary with credit card issuers, credit card processors or merchant service providers for mobile or digitized payment methods to secure obligations of the Company or such Subsidiary, as the case may be, to any such credit card issuer, credit card processor, or merchant service provider incurred in the ordinary course of business as a result of fees, charges, expenses and chargebacks;

 

(n)         (i) contractual or statutory Liens of landlords to the extent relating to the property and assets relating to any lease agreements with such landlord, and (ii) contractual Liens of suppliers (including sellers of goods) or customers granted in the ordinary course of business to the extent limited to the property or assets relating to such contract;

 

(o)         any interest or title of an owner of equipment or inventory on loan or consignment, or in connection with any conditional sale, title retention or similar arrangement for the sale of goods to any Borrower or any other Loan Party, in each case in the ordinary course of business of the Company and its Subsidiaries, and Liens arising from precautionary UCC financing statement filings related thereto;

 

(p)        Liens arising from the deposit of funds or evidences of Indebtedness in trust for the purpose of defeasing or discharging Indebtedness issued pursuant to an indenture, but only if such defeasing or discharging of Indebtedness is not prohibited under this Agreement; provided that such Lien covers proceeds in an aggregate amount necessary solely to defease or discharge the principal, interest, premium, if any, and, if required by the terms of the relevant indenture, fees, costs and expenses due in connection with the defeasance of such Indebtedness;

 

(q)         real property title defects or irregularities which are of a minor nature and which do not materially detract from the value of the real property or impair the use thereof in the ordinary conduct of business;

 

(r)          other Liens that are contractual rights of setoff; and

 

(s)        bankers’ liens upon deposits of funds in favor of banks or other depository institutions (including any right of pledge or right of set-off arising under the general banking conditions of any bank in relation to Deposit Accounts maintained in the Netherlands), solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;

 

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness, other than Liens referred to in clause (c) above securing letters of credit, bank guarantees or similar instruments.

 

“Permitted Liens” has the meaning set forth in Section 6.02.

 

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

 

“Plan” means any “employee pension benefit plan”, as defined in Section 3(2) of ERISA (other than a Multiemployer Plan), that is 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 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

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

 

“Pounds Sterling” or “£” means the lawful currency of the United Kingdom.

 

“PPSA” means the Personal Property Security Act (Ontario), including the regulations thereto, provided that if perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder or under any other Loan Document on the Collateral is governed by the personal property security legislation or other applicable legislation with respect to personal property security in effect in a jurisdiction in Canada other than the Province of Ontario, “PPSA” means the Personal Property Security Act or such other applicable legislation (including the Civil Code (Quebec)) in effect from time to time in such other jurisdiction in Canada for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

 

“Primary Concentration Accounts” means a Deposit Account maintained in each of the United States and Canada subject to a Control Agreement.

 

“Primary Obligor” has the meaning set forth in the definition of “Guarantee”.

 

“Prime Rate” means 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.

 

“Prior Claims” means (a) all liabilities and obligations of any Canadian Loan Party secured by any Liens, choate or inchoate, which rank or are capable of ranking in priority to the Liens granted to the Administrative Agent to secure the Secured Obligations, including in the Permitted Discretion of the Administrative Agent, claims for utilities, taxes (including sales taxes, value added taxes, amounts deducted or withheld or not paid and remitted when due under the ITA, excise taxes, goods and services taxes (“GST”) and harmonized sales taxes (“HST”) payable pursuant to Part IX of the Excise Tax Act (Canada) or similar taxes under provincial or territorial law), the claims of a labourer or worker (whether full-time or part-time) who is owed wages (including any amounts protected by the Wage Earner Protection Program Act (Canada) or secured by Section 81.3 or 81.4 of the BIA), amounts due and not paid for inventory subject to rights of suppliers under Section 81.1 of the BIA or other applicable law (generally known as the “30-day goods rule”), vacation pay, severance pay, employee source deductions, workers’ compensation obligations or pension fund obligations (including claims in respect of, and all amounts currently or past due and not contributed, remitted or paid to, or pursuant to, the Canada Pension Plan, any Canadian Pension Plan or any Canadian Pension Laws and any amounts representing any unfunded liability, solvency deficiency or wind-up deficiency whether or not due with respect to any Canadian Pension Plan, including “normal cost”, “special payments” and any other payments in respect of any funding deficiency or shortfall); and (b) with respect to any German Borrower, any reserve for amounts secured by any liens or other security interests whatsoever, choate or inchoate, which rank or are capable of ranking in priority to the liens granted to the Administrative Agent to secure or for other claims and/or deductions for the Secured Obligations, including without limitation, in the reasonable credit judgment of the Administrative Agent, any such amounts due and not paid for wages, or vacation pay, severance pay, employee deductions, income tax, insolvency costs, amounts due and not paid under any legislation relating to workers’ compensation or to employment insurance amounts currently or past due and not paid for realty, municipal or similar taxes (to the extent impacting personal or movable property), sales tax and pension obligations.

 

“Priority Payables Reserve” means reserves for Prior Claims or other amounts which rank or are capable of ranking in priority to the Liens granted to the Administrative Agent to secure the Secured Obligations, including without limitation, in the Permitted Discretion of the Administrative Agent, any such amounts due and not paid for wages, vacation pay, severance pay, employee deductions, income tax, amounts due and not paid under any legislation relating to workers’ compensation or to employment insurance, amounts currently or past due and not paid for Taxes and pension obligations.

 

“Pro Forma Basis” means, with respect to any computation hereunder required to be made on a pro forma basis giving effect to any proposed Investment or other acquisition (including any Permitted Acquisition), any Disposition, any Restricted Payment or any payment of or in respect of any Indebtedness (collectively, “Pro Forma Events”), computation thereof after giving pro forma effect to adjustments in connection with such Pro Forma Event that are in accordance with Regulation S-X under the Securities Act (other than cost savings and synergies that are only permitted under Regulation S-X as “Management’s Adjustments” by virtue of the amendments adopted on May 21, 2020 by the SEC), using, for purposes of making such computation, the consolidated financial statements of the Company and the Restricted Subsidiaries (and, to the extent applicable, the historical financial statements of any entities or assets so acquired or to be acquired, or so Disposed or to be Disposed), which shall be reformulated as if such Pro Forma Event (and, in the case of any pro forma computations made hereunder to determine whether such Pro Forma Event is permitted to be consummated hereunder, to any other Pro Forma Event consummated since the first day of the period covered by any component of such pro forma computation and on or prior to the date of such computation), and any Indebtedness or other liabilities incurred in connection with any such Pro Forma Event, had been consummated and incurred at the beginning of such period.  If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Swap Agreement applicable to such Indebtedness if such Swap Agreement has a remaining term in excess of 12 months).

 

“Pro Forma Events” has the meaning set forth in the definition of “Pro Forma Basis”.

 

“Protective Advance” means a U.S. Protective Advance, a Canadian Protective Advance or a European Protective Advance.

 

“Protective Advance Exposure” means, at any time, the sum of the Canadian Protective Advance Exposure, the U.S. Protective Advance Exposure or the European Protective Advance Exposure.

 

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

 

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

 

“Qualified Counterparties” means JPMorgan Chase Bank, N.A. or any other Person acceptable to the Administrative Agent in its sole discretion.

 

“Quebec Security Documents” means each deed of hypothec executed among any Canadian Loan Party and the Administrative Agent from time to time under the laws of the Province of Quebec.

 

“Recipient” means 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 any Loan Party hereunder or under any other Loan Document.

 

“Reduced Availability Period” means any period (a) commencing at any time when Availability shall be less than the greater of (i) 12.5% of the Line Cap and (ii) $15,000,000 for three consecutive Business Days and (b) ending when Availability shall have been greater than the greater of (i) 12.5% of the Line Cap then in effect and (ii) $15,000,000 for a period of 30 consecutive days.

 

“Refinancing” means the repayment in full of all principal, premium, if any, interest, fees and other amounts due or outstanding under the Existing Credit Agreement, the termination of the commitments thereunder, the cancellation or cash collateralization of the letters of credit outstanding thereunder and the discharge and release of the guarantees and liens existing in connection therewith.

 

“Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of such Original Indebtedness except by an amount no greater than accrued and unpaid interest with respect to such Original Indebtedness; (b) the stated final maturity of such Refinancing Indebtedness shall not be earlier than that of such Original Indebtedness; (c) such Refinancing Indebtedness shall not constitute an obligation (including pursuant to a Guarantee) of any Subsidiary that shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become pursuant to the terms of the Original Indebtedness) an obligor in respect of such Original Indebtedness and shall constitute an obligation of such Subsidiary only to the extent of their obligations in respect of such Original Indebtedness; and (d) such Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof).

 

“Reformed Basel III” means the agreements contained in “Basel III: Finalising post-crisis reforms” published by the Basel Committee on Banking Supervision in December 2017, as amended, supplemented or restated.

 

“Register” has the meaning set forth in Section 9.04(b)(v).

 

“Regulation” has the meaning set forth in Section 3.23(a).

 

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the directors, officers, partners, members, trustees, employees, agents, administrators, managers, representatives and advisors of such Person and of such Person’s Affiliates.

 

“Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment.

 

“Relevant Governmental Body” means with respect to a Benchmark Replacement in respect of Loans denominated in Dollars, the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

 

“Relevant Rate” means with respect to any Term Benchmark Borrowing denominated in Dollars, the Adjusted Term SOFR Rate.

 

“Rent Reserve” means, with respect to any leased store, warehouse distribution center, regional distribution center or depot where any Inventory subject to Liens arising by operation of law is located, a reserve equal to (a) in respect of any store, warehouse distribution center, regional distribution center or depot not located in Germany, three months’ rent at such store, warehouse distribution center, regional distribution center or depot, and (b) in the case of any store, warehouse distribution center, regional distribution center or depot located in Germany, rent for periods subsequent to the current and the following year of the lease less any existing security for such rent at such store, warehouse distribution center, regional distribution center or depot.

 

“Report” means reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the Loan Parties’ assets from information furnished by or on behalf of the Loan Parties, 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.

 

“Required Lenders” means, at any time, Lenders having Credit Exposure and unused Commitments representing more than 50% of the sum of the total Credit Exposure and unused Commitments at such time; provided that, if there are two or more Lenders (other than Defaulting Lenders) which are not Affiliates of, or Approved Funds with respect to, each other, then at least two (2) such Lenders (other than Defaulting Lenders) which are not Affiliates of, or Approved Funds with respect to, each other shall be required to constitute Required Lenders.

 

“Requirement of Law” means, with respect to any Person, collectively, the common law and all federal, state, provincial, local, foreign, multinational or international laws, statutes, codes, treaties, rules and regulations, binding guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the binding determinations of, any Governmental Authority, in each case that are applicable to and binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

“Reserves” means, without duplication of any other Reserves or items that are otherwise addressed through eligibility criteria, any and all reserves which the Administrative Agent deems necessary, in its Permitted Discretion, to maintain (including, without limitation, reserves for accrued and unpaid interest on the Secured Obligations, Rent Reserves, Banking Services Reserves, reserves for Swap Obligations, reserves for loyalty programs, reserves for gift card liabilities, reserves for consignee’s, warehousemen’s, mortgagee’s and bailee’s charges, Dilution Reserves, Debt Maturity Reserves, reserves for layaway deposits, reserves for Inventory shrinkage, reserves for customs charges and shipping charges and other foreign landing costs related to any Inventory in transit, reserves for fees payable to an insolvency administrator pursuant to section 171 of the German Insolvency Code (or relevant successor provisions), reserves for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party, reserves for uninsured, underinsured, unindemnified or underindemnified liabilities or potential liabilities with respect to any litigation, reserves for taxes, fees, assessments, and other governmental charges and Priority Payables Reserves, and reserves for extended or extendible retention of title over Accounts) with respect to the Collateral or any Loan Party.

 

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

 

“Responsible Officer” means, with respect to any Person, its chief financial officer, chief executive officer, president, executive vice president, chief accounting officer or any vice president, managing director (which shall include any Geschäftsführer), director, company secretary, treasurer, assistant treasurer, controller or other officer of such Person having substantially the same authority and responsibility and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent; provided that, with respect to compliance with financial covenants, “Responsible Officer” shall mean a Financial Officer.

 

“Restricted Obligations” has the meaning set forth in Section 15.11(a)(i).

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Company or any Restricted Subsidiary, or any payment or distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, exchange, conversion, cancellation or termination of any Equity Interests in the Company or any Restricted Subsidiary.

 

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

 

“Retained Regulation” means the Regulation as it applies under English law, taking into account: (i) its having become part of English domestic law on and after 11:00 p.m. (UK time) on 31 December 2020 (“IP completion day”) pursuant to the European Union (Withdrawal) Act 2018 (“EUWA”); and (ii) any modifications to it that have taken effect on or after IP completion day pursuant to the EUWA or otherwise under English law (but not, for the avoidance of doubt, any modifications to it that have taken effect on or after IP completion day under European Union law).

 

“Revolving Borrowing” means a Borrowing of Revolving Loans.

 

“Revolving Exposure” means the U.S. Revolving Exposure, the Canadian Revolving Exposure and the European Revolving Exposure.

 

“Revolving Exposure Limitations” has the meaning set forth in Section 2.01.

 

“Revolving Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption (or an Affiliate or branch of any such Person that is acting on behalf of such Person, in which case the term “Revolving Lenders” shall include any such Affiliate or branch with respect to the Revolving Loans made by such Affiliate or branch), other than any such Person that shall have ceased to be a party hereto pursuant to an Assignment and Assumption.

 

“Revolving Loan” means a Loan made pursuant to Sections 2.01 and 2.02(a).

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., and any successor to its rating agency business.

 

“Sale/Leaseback Transaction” means an arrangement relating to property owned by the Company or any Restricted Subsidiary whereby the Company or such Restricted Subsidiary sells or transfers such property to any Person and the Company or any Restricted Subsidiary leases such property, or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, from such Person or its Affiliates.

 

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, the Crimea Region of Ukraine, Cuba, Iran, North Korea and Syria).

 

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, His Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) a Canadian Blocked Person, (c) any Person operating, organized or resident in a Sanctioned Country or (d) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a), (b) or (c) or (e) any Person otherwise the subject of any Sanctions.

 

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time (a) by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) by the United Nations Security Council, the European Union, any European Union member state or His Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, or (c) by the government of Canada pursuant to Canadian Economic Sanctions and Export Control Laws.

 

“Scheduled Maturity Date” has the meaning provided in the definition of “Maturity Date”.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Second Currency” has the meaning set forth in Section 9.22.

 

“Secured Banking Services Amount” has the meaning set forth in the definition of Secured Banking Services Obligations.

 

“Secured Banking Services Obligations” means Banking Services Obligations, for which (i) the applicable Loan Party agrees to provide security pursuant to the documentation governing such Banking Services and (ii) the Administrative Agent shall have received from the applicable provider of such Banking Services (A) a written notice to the Administrative Agent of (x) the existence of such Banking Services Obligations, (y) the maximum dollar amount of obligations arising thereunder (the “Secured Banking Services Amount”), and (z) the methodology to be used by such parties in determining the Secured Banking Services Amount owing from time to time, and (B) a report, at such times as may be requested by the Administrative Agent, setting forth the then outstanding Secured Banking Services Amount with respect to such Banking Services of such Person; provided that, Banking Services Obligations shall be Secured Banking Services Obligations solely to the extent that (1) there is sufficient Collateral following satisfaction of all of the other Obligations and (2) the aggregate amount of all such Banking Services Obligations does not exceed $2,000,000.

 

“Secured Obligations” means all Obligations, including any Parallel Debt, together with all Secured Banking Services Obligations of the Borrowers or any Restricted Subsidiary of the Company; provided that Excluded Swap Obligations with respect to any Loan Party shall not be Secured Obligations of such Loan Party.

 

“Securities Account” means all “securities accounts” as such term is defined in the UCC or the PPSA, as applicable.

 

“Securities Act” means the United States Securities Act of 1933.

 

“Security Agreement” means, individually and collectively as the context may require, the U.S. Security Agreement, the Canadian Security Agreements and the European Security Agreements.

 

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

 

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

 

“SOFR Administrator’s Website” means the NYFRB’s Website or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

 

“Sourcing Rights Agreement” means that certain Sourcing Rights Agreement, dated as of the Effective Date, by and among certain of the Loan Parties, Fossil East and the Administrative Agent.

 

“Specified Collateral” means that portion of the Collateral consisting of Intellectual Property Collateral (as defined in the Intercreditor Agreement).

 

“Specified Indebtedness” means the 2029 Notes Obligations, Subordinated Indebtedness, unsecured Indebtedness and Indebtedness secured on a junior basis to the Liens securing the Secured Obligations.

 

“Specified UK SchemeCo” means Fossil (UK) Global Services Ltd.

 

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person the payment of which is subordinated in right of payment to the payment of the Secured Obligations.

 

“subsidiary” means, with respect to any Person (the “parent”) at any date, (a) any Person 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 and (b) any other Person (i) of which Equity Interests representing more than 50% of the equity value 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, or (ii) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any direct or indirect subsidiary of the Company.

 

“Successful Exchange Transaction” means the consummation of the Exchange Transaction, which Exchange Transaction results in the aggregate outstanding principal amount of the 2026 Notes being reduced to $15,000,000 (or such higher amount acceptable to the Required Lenders in their sole discretion) or less.

 

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one 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 and any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or any Subsidiary shall be a Swap Agreement.

 

“Swap Obligations” of a Person means any and all obligations of such Person, 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, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

 

“Swiss Borrowers” means each Swiss Subsidiary that becomes party to this Agreement as a Swiss Borrower after the Effective Date pursuant to Section 5.03(b) or Section 5.25.

 

“Swiss Borrowing Base” means, in relation to a Swiss Borrower, at any time (without duplication), the Dollar Equivalent amount of the sum of:

 

(a)        the lesser of (x) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Net Orderly Liquidation Value of Eligible Finished Goods Inventory of that Swiss Borrower at such time and (y) the product of (i) the Applicable Foreign Inventory Advance Rate multiplied by (ii) the Cost of Eligible Finished Goods Inventory of that Swiss Borrower; provided that In-Transit Inventory shall not comprise more than 20% of the total amount of this clause (a), plus

 

(b)         the product of (i) the Applicable Foreign Accounts Advance Rate multiplied by (ii) the Eligible Accounts of that Swiss Borrower at such time, minus

 

(c)          without duplication, Reserves established by the Administrative Agent in its Permitted Discretion.

 

The Administrative Agent may, in its Permitted Discretion and with no less than two (2) Business Days’ prior written notice to the Borrower Representative (other than during a Dominion Period, in which case notice shall not be required), establish or adjust Reserves used in computing a Swiss Borrowing Base; provided, that (i) no such notice shall be required to reduce any Reserve or to increase any Reserve resulting solely by virtue of mathematical calculations of the amount thereof in accordance with methodology previously established by the Administrative Agent in its Permitted Discretion and (ii) regardless of whether such notice is required, such new or increased Reserve shall be deemed to be in effect immediately for purposes of determining the Revolving Exposure Limitations with respect to any requested Borrowing or other credit extension.  Subject to the immediately preceding sentence and the other provisions hereof expressly permitting the Administrative Agent to adjust any Swiss Borrowing Base, a Swiss Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to this Agreement.

 

Any changes after the Effective Date in how the applicable Loan Parties value their Inventory in accordance with their historical practices prior to the Effective Date shall be subject to the reasonable approval of the Administrative Agent.

 

“Swiss Collateral” means any and all property of any Swiss Loan Party covered or intended to be covered by the Collateral Documents and any and all other property of any Swiss Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“Swiss Credit Exposure” means, as to any Revolving Lender at any time, the Dollar Equivalent of the sum of (a) such Revolving Lender’s Swiss Revolving Exposure plus (b) such Lender’s Applicable Percentage of the aggregate amount of Swiss Overadvances and Swiss Protective Advances outstanding.

 

“Swiss Federal Tax Administration” means the tax authorities referred to in article 34 of the Swiss Withholding Tax Act for purposes of any tax imposed pursuant to the Swiss Federal Withholding Tax Act.

 

“Swiss Guarantee” means Article XV of this Agreement.

 

“Swiss Guaranteed Obligations” has the meaning set forth in Section 15.01.

 

“Swiss Guarantor” means each Swiss Borrower (solely with respect to its Obligations arising pursuant to Section 15.01 hereof) and each Swiss Subsidiary that becomes a party hereto as a Swiss Guarantor pursuant to Section 5.03 or Section 5.25, in each case, until such Swiss Borrower’s  or such Swiss Subsidiary’s Swiss Guarantee is released in accordance herewith.

 

“Swiss Guarantor Obligations” has the meaning set forth in Section 15.11(a).

 

“Swiss Guidelines” means, together, guideline S-02.123 in relation to interbank loans of 22 September 1986 (Merkblatt “Verrechnungssteuer auf Zinsen von Bankguthaben, deren Gläubiger Banken sind (Interbankguthaben)” vom 22. September 1986), circular letter No. 47 in relation to bonds of 25 July 2019 (1-047-V-2019) (Kreisschreiben Nr. 47 “Obligationen” vom 25. Juli 2019), guideline S-02.130.1 in relation to money market instruments and book claims of April 1999 (Merkblatt vom April 1999 betreffend Geldmarktpapiere und Buchforderungen inländischer Schuldner), circular letter No. 46 of 24 July 2019 (1-046-VS-2019) in relation to syndicated credit facilities (Kreisschreiben Nr. 46 “Steuerliche Behandlung von Konsortialdarlehen, Schuldscheindarlehen, Wechseln und Unterbeteiligungen” vom 24. Juli 2019), circular letter No. 34 of 26 July 2011 (1-034-V-2011) in relation to deposits (Kreisschreiben Nr. 34 “Kundenguthaben” vom 26. Juli 2011), the circular letter No. 15 of 3 October 2017 (1-015-DVS-2017) in relation to bonds and derivative financial instruments as subject matter of taxation of Swiss federal income tax, Swiss withholding tax and Swiss stamp taxes (Kreisschreiben Nr. 15 “Obligationen und derivative Finanzinstrumente als Gegenstand der direkten Bundessteuer, der Verrechnungssteuer und der Stempelabgaben” vom 3. Oktober 2017) and practice note 010-DVS-2019 of 5 February 2019 published by the Swiss Federal Tax Administration regarding Swiss Withholding Tax in the Group (Mitteilung 010-DVS-2019-d vom 5. Februar 2019 – Verrechnungssteuer: Guthaben im Konzern), in each case as issued, amended or replaced from time to time, by the Swiss Federal Tax Administration or as substituted or superseded and overruled by any law, statute, ordinance, court decision, regulation or the like as in force from time to time.

 

“Swiss Insolvency Event” means (a) a Swiss Loan Party is unable or admits inability to pay its debts as they fall due, suspends or threatens to suspend making payments on any of its debts, or by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness, (b) a Swiss Loan Party is over-indebted within the meaning of article 725b Swiss Federal Code of Obligations (Schweizerisches Obligationenrecht) of 30 March 1911, as amended from time to time (“CO”) unless (i) any such shortfall is covered by a subordination (Rangrücktritt) or (ii) there is a reasonable prospect that the over-indebtedness can be remedied within a reasonable period, but no later than 90 days after submission of the audited interim accounts, and that the claims of the creditors are not additionally jeopardized, each within the meaning of article 725b CO, (c) a moratorium is declared in respect of any indebtedness of any Swiss Loan Party, or (d) in relation to a Swiss Loan Party, any corporate action, legal proceedings or other procedure or step is taken in relation (i) to the opening of bankruptcy proceedings, the suspension of payments in case of actual or anticipated financial difficulties, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise), (ii) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer, (iii) the enforcement of any security over any assets of any Swiss Loan Party.

 

“Swiss Loan Parties” means, individually and collectively as the context may require, the Swiss Borrowers and each Swiss Guarantor.

 

“Swiss Non-Bank Rules” means the Swiss Ten Non-Bank Rule and the Swiss Twenty Non-Bank Rule.

 

“Swiss Non-Qualifying Bank” means a person or entity other than a Swiss Qualifying Bank.

 

“Swiss Obligated Party” has the meaning set forth in Section 15.02.

 

“Swiss Overadvance” has the meaning set forth in Section 2.05(c).

 

“Swiss Protective Advance” has the meaning set forth in Section 2.04(a).

 

“Swiss Qualifying Bank” means a person or entity that (a) effectively conducts banking activities with its own infrastructure and staff as its principal purpose and (b) has a banking license in full force and effect issued in accordance with the banking laws in force in its jurisdiction of incorporation, or if acting through a branch, issued in accordance with the banking laws in the jurisdiction of such branch, all in accordance with the Swiss Guidelines.

 

“Swiss Revolving Exposure” means, with respect to any Revolving Lender at any time, the outstanding principal amount of Swiss Revolving Loans of such Revolving Lender at such time.

 

“Swiss Revolving Loan” means a Revolving Loan made by the Revolving Lenders to the Swiss Borrowers.

 

“Swiss Security Agreements” means, collectively,  any Swiss law pledge or security agreement entered into after the Effective Date by any Loan Party (as required by this Agreement or any other Loan Document), as the same may be amended, restated or otherwise modified from time to time.

 

“Swiss Subsidiary” means any subsidiary of the Company that has been formed or is organized under the laws of Switzerland and/or having its registered office in Switzerland and/or otherwise qualifying as a Swiss resident pursuant to article 9 of the Swiss Withholding Tax Act.

 

“Swiss Tax Ruling” means a written confirmation or countersigned tax ruling application from the Swiss Federal Tax Administration, in form and substance satisfactory to the Administrative Agent and Borrower Representative, confirming that each Lender counts as one (1) Swiss Non-Qualifying Bank only for purposes of the Swiss Non-Bank Rules.

 

“Swiss Ten Non-Bank Rule” means the rule that the aggregate number of creditors of a Swiss Borrower under this Agreement that are Non-Qualifying Banks must not at any time exceed ten (10), all in accordance with the meaning of the Swiss Guidelines or legislation or explanatory notes addressing the same issues that are in force at such time.

 

“Swiss Twenty Non-Bank Rule” means the rule that the aggregate number of creditors, other than Qualifying Banks, of a Swiss Borrower under all its outstanding debts relevant for classification as debenture (Kassenobligation) must not at any time exceed twenty (20), all in accordance with the meaning of the Swiss Guidelines or legislation or explanatory notes addressing the same issues that are in force at such time.

 

“Swiss Withholding Tax” means taxes imposed under the Swiss Withholding Tax Act.

 

“Swiss Withholding Tax Act” means the Swiss Federal Act on the Withholding Tax of 13 October 1965 (Bundesgesetz über die Verrechnungssteuer), together with the related ordinances, regulations and guidelines, all as amended and applicable from time to time.

 

“Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing product where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP.

 

“Synthetic Lease Obligations” means, as to any Person, an amount equal to the sum, without duplication, of (a) the obligations of such person to pay rent or other amounts under any Synthetic Lease which are attributable to principal and (b) the amount of any purchase price payment under any Synthetic Lease assuming the lessee exercises the option to purchase the leased property at the end of the lease term.  For purposes of Section 6.02, a Synthetic Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.

 

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.

 

“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.

 

“Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

 

“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing denominated in Dollars, the Term SOFR Reference Rate. The Term SOFR Rate may not be the lowest or best rate at which the Administrative Agent calculates interest or extends credit. The Term SOFR Rate (1) for the calendar month in which the Effective Date occurs shall be equal to the Term SOFR Reference Rate in effect as of the close of business on the last Business Day of the calendar month immediately preceding the Effective Date, and (2) for each calendar month thereafter, shall be adjusted (if necessary) on the first day of such calendar month and shall be equal to the Term SOFR Reference Rate in effect as of the close of business on the last Business Day of the immediately preceding calendar month.

 

“Term SOFR Reference Rate” means, with respect to any Term Benchmark Borrowing denominated in Dollars, a rate equal to SOFR for a term of ninety (90) days and administered by the Term SOFR Administrator as published on commercially available sources providing such quotations as may be designated by the Administrative Agent from time to time.

 

“Total Assets” means, at any date of determination, the consolidated total assets of the Company as of the last day of the most recent Fiscal Month of the Company for which financial statements have been delivered pursuant to Section 5.01(b)(ii) as adjusted to (i) exclude amounts attributed to Unrestricted Subsidiaries and (ii) give effect to any Pro Forma Event occurring since such date.

 

“Total Indebtedness” means, as of any date, the sum, without duplication, of (a) the aggregate principal amount of Indebtedness of the Company and the Restricted Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP (but without giving effect to any election to value any Indebtedness at “fair value”, as described in Section 1.06(a), or any other accounting principle that results in the amount of any such Indebtedness (other than zero coupon Indebtedness) as reflected on such balance sheet to be below the stated principal amount of such Indebtedness), (b) the aggregate amount of Capital Lease Obligations and Synthetic Lease Obligations of the Company and the Restricted Subsidiaries outstanding as of such date, determined on a consolidated basis, and (c) the aggregate obligations of the Company and the Restricted Subsidiaries as an account party in respect of drawn letters of credit or letters of guaranty, other than contingent obligations in respect of any letter of credit or letter of guaranty to the extent such letter of credit or letter of guaranty does not support Indebtedness.

 

“Total Leverage Ratio” means, on any date, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of twelve consecutive Fiscal Months of the Company most recently ended on or prior to such date.

 

“Trademarks” has the meaning set forth in the U.S. Security Agreement.

 

“Trademark Assets” means all Trademarks and, with respect to each Trademark, all technology (patented and unpatented) owned by a Loan Party that exists in support of such Trademark.

 

“Transactions” means the (a) execution, delivery and performance by the Loan Parties of this Agreement, the borrowing of the Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, (b) the creation and perfection of the security interests provided for in the Collateral Documents, (c) the Refinancing, and (d) the payment of all fees, commissions, costs and expenses in connection with the foregoing.

 

“Treaty on the European Union” means the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (signed February 7, 1992), as amended from time to time.

 

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate or the Alternate Base Rate.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the perfection of security interests created by the Collateral Documents.

 

“UK Collateral” means any and all property of any UK Loan Party covered or intended to be covered by the Collateral Documents and any and all other property of any UK Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“UK Financial Institutions” means 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 Guarantee” means Article XVI of this Agreement.

 

“UK Guaranteed Obligations” has the meaning set forth in Section 16.01.

 

“UK Guarantor” means each UK Subsidiary that is listed on the signature pages hereto as a UK Guarantor or that becomes a party hereto as a UK Guarantor pursuant to Section 5.03, in each case, until such Subsidiary’s UK Guarantee is released in accordance herewith.

 

“UK Loan Parties” means, individually and collectively as the context may require, each UK Guarantor.

 

“UK Obligated Party” has the meaning set forth in Section 16.02.

 

“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

“UK Security Agreements” means, collectively, (a) that certain English law all asset security agreement, dated as of the Effective Date, among the UK Loan Parties and the Administrative Agent and (b) any other English law pledge or security agreement (including any supplemental agreement or accession agreement in respect of a UK Security Agreement) entered into after the Effective Date by any other Loan Party (as required by this Agreement or any other Loan Document), as the same may be amended, restated or otherwise modified from time to time.

 

“UK Subsidiary” means any subsidiary of the Company incorporated in England and Wales.

 

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

 

“Unfinanced Capital Expenditures” means Capital Expenditures (a) not financed with the proceeds of any incurrence of long-term Indebtedness (other than the incurrence of any Loans, Capital Lease Obligations or Synthetic Lease Obligations) or the proceeds of any sale or issuance of Equity Interests or equity contributions, and (b) that are not reimbursed by a third person (excluding any Loan Party or any of its Affiliates) in the period such expenditures are made pursuant to a written agreement. For the avoidance of doubt, Unfinanced Capital Expenditures shall include Capital Expenditures financed with the proceeds of any Loans, Capital Lease Obligations or Synthetic Lease Obligations.

 

“United States” or “U.S.” means the United States of America.

 

“Unliquidated Obligations” means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Secured Obligation that is:  (a) an obligation to reimburse a bank for drawings not yet made under a letter of credit issued by it; (b) any other obligation (including any guarantee) that is contingent in nature at such time; or (c) an obligation to provide collateral to secure any of the foregoing types of obligations.

 

“Unrestricted Subsidiary” means (a) at any time prior to the occurrence of a Successful Exchange Transaction, the Specified UK SchemeCo (and no other Subsidiary), so long as the Specified UK SchemeCo has no assets or Subsidiaries, and (b) any Subsidiary of the Company designated by the board of directors of the Company as an Unrestricted Subsidiary pursuant to Section 5.17 following the occurrence of a Successful Exchange Transaction, and any Subsidiary of an Unrestricted Subsidiary.

 

“Unused Commitments” has the meaning assigned to it in Section 2.12(a).

 

“Updated Borrowing Base Condition” has the meaning assigned to it in Section 5.01(m).

 

“U.S. Availability” means, at any time, an amount equal to (a) the U.S. Line Cap at such time minus (b) the total U.S. Credit Exposure of all Lenders at such time.

 

“U.S. Borrowers” means, individually and collectively as the context may require, the Company and each U.S. Subsidiary Borrower.

 

“U.S. Borrowing Base” means, at any time (without duplication), the Dollar Equivalent amount of the sum of:

 

(a)          the lesser of (x) the product of (i) the Applicable U.S. Inventory Advance Rate multiplied by (ii) the Net Orderly Liquidation Value of Eligible Finished Goods Inventory of the U.S. Loan Parties at such time and (y) the product of (i) the Applicable U.S. Inventory Advance Rate multiplied by (ii) the Cost of Eligible Finished Goods Inventory of the U.S. Loan Parties; provided that In-Transit Inventory shall not comprise more than 20% of the total amount of this clause (a), plus

 

(b)        the product of (i) the Applicable U.S. Accounts Advance Rate multiplied by (ii) the Eligible Accounts of the U.S. Loan Parties at such time, plus

 

(c)          the product of (i) the Applicable U.S. Accounts Advance Rate multiplied by (ii) the Eligible Credit Card Accounts Receivable of the U.S. Loan Parties at such time, plus

 

(d)       at any time (1) prior to the Collateral Designation Date, the lesser of (x) the product of (i) the IP Advance Rate then in effect multiplied by (ii) the Net Orderly Liquidation Value of Eligible Intellectual Property of the U.S. Loan Parties at such time and (y) the IP Cap then in effect, or (2) after the Collateral Designation Date, $0, minus

 

(e)          at all times prior to the occurrence of a Successful Exchange Transaction, an amount equal to $15,000,000, minus

 

(f)          without duplication, Reserves established by the Administrative Agent in its Permitted Discretion.

 

The Administrative Agent may, in its Permitted Discretion and with no less than two (2) Business Days’ prior written notice to the Borrower Representative (other than during a Dominion Period, in which case notice shall not be required), establish or adjust Reserves used in computing the U.S. Borrowing Base; provided, that (i) no such notice shall be required to reduce any Reserve or to increase any Reserve resulting solely by virtue of mathematical calculations of the amount thereof in accordance with methodology previously established by the Administrative Agent in its Permitted Discretion and (ii) regardless of whether such notice is required, such new or increased Reserve shall be deemed to be in effect immediately for purposes of determining the Revolving Exposure Limitations with respect to any requested Borrowing or other credit extension.  Subject to the immediately preceding sentence and the other provisions hereof expressly permitting the Administrative Agent to adjust the U.S. Borrowing Base, the U.S. Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to this Agreement.

 

Any changes after the Effective Date in how the applicable Loan Parties value their Inventory in accordance with their historical practices prior to the Effective Date shall be subject to the reasonable approval of the Administrative Agent.

 

“U.S. Collateral” means any and all property owned, leased or operated by a Person covered or intended to be covered by the Collateral Documents and any and all other property of any U.S. Loan Party, now existing or hereafter acquired, that may at any time be or become, or is intended to be or become, subject to a security interest or Lien in favor of the Administrative Agent to secure the Secured Obligations.

 

“U.S. Credit Exposure” means, as to any Revolving Lender at any time, the sum of (a) such Lender’s U.S. Revolving Exposure plus (b) such Lender’s Applicable Percentage of the aggregate amount of U.S. Overadvances and U.S. Protective Advances outstanding.

 

“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

 

“U.S. Guarantee” means Article X of this Agreement.

 

“U.S. Guaranteed Obligations” has the meaning set forth in Section 10.01.

 

“U.S. Guarantor” means each U.S. Borrower (solely with respect to its Obligations arising pursuant to Section 10.01 hereof) and each Domestic Subsidiary that is listed on the signature pages hereto as a U.S. Guarantor or that becomes a party hereto as a U.S. Guarantor pursuant to Section 5.03, in each case, until such Subsidiary’s U.S. Guarantee is released in accordance herewith.

 

“U.S. Line Cap” means, as of any date of determination thereof by the Administrative Agent, an amount equal to the lesser of (i) the total Commitments then in effect and (ii) the U.S. Borrowing Base.

 

“U.S. Loan Parties” means, individually and collectively as the context may require, the U.S. Borrowers and each U.S. Guarantor.

 

“U.S. Obligated Party” has the meaning set forth in Section 10.02.

 

“U.S. Overadvance” has the meaning set forth in Section 2.05(c).

 

“U.S. Overadvance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding U.S. Overadvances at such time.  The U.S. Overadvance Exposure of any Lender at any time shall be its Applicable Percentage of the total U.S. Overadvance Exposure at such time.

 

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

 

“U.S. Protective Advance” has the meaning set forth in Section 2.04(a).

 

“U.S. Protective Advance Exposure” means, at any time, the sum of the aggregate principal amount of all outstanding U.S. Protective Advances at such time.  The U.S. Protective Advance Exposure of any Lender at any time shall be its Applicable Percentage of the total U.S. Protective Advance Exposure at such time.

 

“U.S. Revolving Exposure” means, with respect to any Revolving Lender at any time, the sum of (a) the outstanding principal amount of U.S. Revolving Loans of such Revolving Lender at such time, plus (b) an amount equal to such Revolving Lender’s LC Exposure at such time.

 

“U.S. Revolving Loan” means a Revolving Loan made to the U.S. Borrowers by the Revolving Lenders.

 

“U.S. Security Agreement” means that certain Pledge and Security Agreement, dated as of the Effective Date, between the U.S. Loan Parties and the Administrative Agent, and, as the context requires, any other pledge or security agreement entered into after the Effective Date by any other U.S. Loan Party (as required by this Agreement or any other Loan Document), or any other Person, as the same may be amended, restated or otherwise modified from time to time.

 

“U.S. Subsidiary Borrowers” means each Subsidiary of the Company that is listed on the signature pages hereto as a U.S. Subsidiary Borrower and each other U.S. Subsidiary that becomes party to this Agreement as a U.S. Subsidiary Borrower after the Effective Date pursuant to Section 5.03(b).

 

“U.S. Tax Compliance Certificate” has the meaning set forth in Section 2.17(e)(ii)(B)(3).

 

“VAT” means:

 

(a)          any value added tax imposed by the United Kingdom’s Value Added Tax Act 1994;

 

(b)        any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112);

 

(c)          any other tax of a similar nature, whether imposed in the United Kingdom or a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraphs (a) or (b) above, or imposed elsewhere; and

 

(d)          any tax imposed in compliance with the Swiss Federal Act on Value Added Tax of 12 June 2009 as amended from time to time.

 

“Vendor Rebates” means credits earned from vendors for volume purchases that reduce net inventory costs for the Loan Parties.

 

“Weekly Reporting Period” means any period (a) during which any Event of Default has occurred and is continuing or (b)(i) commencing at any time when Availability shall be less than the greater of (x) 20% of the Line Cap then in effect and (y) $25,000,000 for three consecutive Business Days and (ii) ending when Availability shall have been greater than the greater of (x) 20% of the Line Cap then in effect and (y) $25,000,000 for a period of 30 consecutive days.

 

“wholly-owned”, when used in reference to a subsidiary of any Person, means that all the Equity Interests in such subsidiary (other than directors’ qualifying shares and other nominal amounts of Equity Interests that are required to be held by other Persons under applicable law) are owned, beneficially and of record, by such Person, another wholly-owned subsidiary of such Person or any combination thereof.

 

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

 

“Write-Down and Conversion Powers” means, (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.

 

“Zalando” means Zalando SE.

 

SECTION 1.02        Classification of Loans and Borrowings. For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., a “Term Benchmark Loan” or a “Term Benchmark Borrowing”) or by Type and Borrower (e.g., a “Term Benchmark U.S. Revolving Loan”).

 

SECTION 1.03      Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all real and personal, tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders, writs and decrees, of all Governmental Authorities.  Except as otherwise provided herein and unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document (including this Agreement and the other Loan Documents) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), and all references to any statute shall be construed as referring to all rules, regulations, rulings and official interpretations promulgated or issued thereunder, (c) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof’ and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.  References to the Administrative Agent shall be taken to refer also, where the context requires, to the Administrative Agent acting in its capacity as security trustee in connection with the UK Security Agreements.

 

SECTION 1.04        German Terms. In this Agreement, where it relates to the German Borrowers, a reference to: (a) gross negligence includes grobe Fahrlässigkeit; (b) negligence includes Fahrlässigkeit; (c) a security interest includes any mortgage (Grundschuld, Hypothek), pledge (Pfandrecht), retention of title arrangement (Eigentumsvorbehalt), right of retention (Zurückbehaltungsrecht), right to reclaim goods (Herausgabeansprüche), and, in general, any right in rem created for the purpose of granting security; (d) a winding-up, administration or dissolution (and any of those terms) includes a German entity being declared bankrupt (insolvent) or dissolved (ausfgelöst); (e) any step or procedure taken in connection with insolvency proceedings includes a German entity having applied for bankruptcy (Insolvenzantrag) or the opening of bankruptcy proceedings (Insolvenzeröffnung); and (f) an administrator includes an insolvency administrator (Insolvenzverwalter) and insolvency trustee (Sachwalter).

 

SECTION 1.05        Quebec Interpretation. For purposes of any Collateral located in the Province of Quebec or charged by any hypothec and for all other purposes pursuant to which the interpretation or construction of this Agreement or any other Loan Document may be subject to the laws of the Province of Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec, (a) “personal property” includes “movable property”, (b) “real property” includes “immovable property”, (c) “tangible property” includes “corporeal property”, (d) “intangible property” includes “incorporeal property”, (e) “security interest”, “mortgage”, and “lien” include a “hypothec”, “prior claim”, and a “resolutory clause”, (f) all references to filing, registering, or recording under the UCC or the PPSA include publication under the Civil Code of Quebec, (g) all references to “perfection” of or “perfected” Liens include a reference to “opposable” or “set up” Liens as against third parties, (h) any “right of offset”, “right of setoff”, or similar expression includes a “right of compensation”, (i) “goods” includes “corporeal movable property” other than chattel paper, documents of title, instruments, money, and securities, (j) an “agent” includes a “mandatary”, (k) “construction liens” include “legal hypothecs in favour of persons having taken part in the construction or renovation of an immovable”, (l) “joint and several” includes solidary and “jointly and severally” includes “solidarily”, (m) “gross negligence or willful misconduct” will be deemed to be “intentional or gross fault”, (n) “beneficial ownership” includes “ownership on behalf of another as mandatary”, (o) “easement” includes “servitude”, (p) “priority” includes “prior claim” or rank, as applicable, (q) “survey” includes “certificate of location and plan”, (r) “fee simple title” or “fee owned” include “absolute ownership” and “ownership” (including ownership under a right of superficies), (s) “ground lease” includes an “emphyteusis” or a “lease with a right of superficies”, as applicable, (t) “account” and “accounts receivable” include “claims” and “monetary claims”, (u) “guarantee” and “guarantor” include “suretyship” and “surety”, respectively, (v) “foreclosure” includes “the exercise of a hypothecary right of taking in payment”, (w) “leasehold interest” includes “rights resulting from a lease”, (x) “lease” includes a “leasing contract (crédit-bail)”, and (y) “deposit account” includes a “financial account” as defined in Article 2713.6 of the Civil Code of Quebec.  The parties hereto confirm that it is their wish that this Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only (except if another language is required under any applicable law) and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up in the English language only.  Each party hereto hereby confirms that it was represented by legal counsel and has had the opportunity to negotiate the terms of this Agreement and any other Loan Documents, including the essential stipulations thereof, with the assistance of its legal counsel.  Les parties aux présentes confirment que c’est leur volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise seulement et que tous les documents, y compris tous avis, envisagés par cette convention et les autres documents peuvent être rédigés en langue anglaise seulement (sauf si une autre langue est requise en vertu d’une loi applicable). Chaque partie aux présentes confirme qu’elle a été représentée par des conseillers juridiques et a eu l’opportunité de négocier les termes de cette convention et des autres documents de crédit, y compris leurs stipulations essentielles, avec l’aide de ses conseillers juridiques.

 

SECTION 1.06        Accounting Terms; GAAP.

 

(a)        Except as otherwise expressly provided herein, all terms of an accounting or financial nature used herein shall be construed in accordance with GAAP, as in effect from time to time; provided that (a) if the Borrower Representative notifies the Administrative Agent that the Borrowers request an amendment to any provision hereof to eliminate the effect of any change occurring after the Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower Representative 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 that the Borrower Representative, on the one hand, and the Administrative Agent and Lenders, on the other hand, agree to negotiate in good faith with respect to any proposed amendment to eliminate or adjust for the effect of any such change in GAAP at no cost to the Loan Parties other than the reimbursement of the Administrative Agent’s costs and expenses; and (b) notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Financial Accounting Standards Board 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.

 

(b)       Notwithstanding anything to the contrary contained in Section 1.04(a) or in the definition of “Capital Lease Obligations”, any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.

 

SECTION 1.07        Currency Matters.

 

(a)          Without limiting the other terms of this Agreement, the calculations and determinations under this Agreement of any amount in any currency other than Dollars shall be deemed to refer to the Dollar Equivalent thereof, as the case may be, and all certificates delivered under this Agreement shall express such calculations or determinations in Dollars or the Dollar Equivalent thereof, as the case may be.  The permissibility of actions taken under Article VI on any date based on the requisite currency translation calculated as of such date shall not be affected by subsequent fluctuations in exchange rates.

 

(b)        Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognized by the central bank of any country as the lawful currency of that country, then:

 

(i)         any reference in the Loan Documents to, and any obligations arising under the Loan Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Administrative Agent; and

 

(ii)          any translation from one currency or currency unit to another shall be at the official rate of exchange recognized by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Administrative Agent.

 

(c)         If a change in any currency of a country occurs, this Agreement will, to the extent the Administrative Agent reasonably determines necessary, be amended to comply with any generally accepted conventions and market practice in the relevant interbank market and otherwise to reflect the change in currency.

 

SECTION 1.08       Classification of Actions. For purposes of determining compliance at any time with the covenants set forth in Article VI (or, in each case, any defined terms used therein), in the event that the subject transaction meets the criteria of more than one (or each portion of the subject transaction meets the criteria of one or more) of the categories of transactions permitted pursuant to the Sections (or related defined terms) in Article VI, the Borrowers may, in its sole discretion, and except as otherwise expressly provided in this Agreement, classify the applicable transaction (or any portion thereof) under such Section (or defined term); it being understood that (i) except as otherwise expressly provided in this Agreement, the Borrowers may divide and include such transaction under one or more of the clauses of such Section (or any relevant portion thereof or of the applicable related defined term) that permit such transaction and (ii) the Borrowers may not subsequently reclassify any transaction (or portion thereof) under a different clause of such Section.

 

SECTION 1.09        Interest Rates; Benchmark Notifications. The interest rate on a Loan denominated in Dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform.  Upon the occurrence of a Benchmark Transition Event, Section 2.14(d) provides a mechanism for determining an alternative rate of interest.  The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, 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 existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability.  The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrowers.  The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to any Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

 

SECTION 1.10        Dutch Terms

 

(a)          Without prejudice to the generality of any provision of this Agreement, in this Agreement or any other Loan Document, where it relates to a Dutch Loan Party, a reference to:

 

(b)        “constitutional documents” includes an up-to-date certified excerpt (uittreksel) from the trade register (handelsregister) of the Dutch Chamber of Commerce (Kamer van Koophandel), a certified copy of the deed of incorporation (oprichtingsakte), an up-to-date and certified copy of the articles of association (statuten) and a copy of any (board or other) regulations ((bestuurs-)reglement);

 

(c)          “administrator” includes a bewindvoerder;

 

(d)          “attachment” includes any beslag;

 

(e)          “dissolution” includes ontbinding;

 

(f)          “encumbrance” includes any bezwaring;

 

(g)          “lien” includes retentierecht;

 

(h)          “mortgage” includes hypotheekrecht;

 

(i)          “necessary corporate or other organizational action” includes obtaining a unconditional positive advice from any competent works council (ondernemingsraad);

 

(j)          “admitting in writing its inability to pay its debts as they become due” includes a director (bestuurder) making a filing under section 36 of the Dutch Tax Collection Act (Invorderingswet 1990);

 

(k)          “pledge” includes pandrecht;

 

(l)          “title retention” includes eigendomsvoorbehoud;

 

(m)          “setoff” includes verrekening; and

 

(n)          “trustee” includes a curator.

 

ARTICLE II

 

 

SECTION 2.01     Commitments. Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make U.S. Revolving Loans to the U.S. Borrowers from time to time during the Availability Period, each Revolving Lender severally agrees to make Canadian Revolving Loans to the Canadian Borrowers from time to time during the Availability Period, and each Revolving Lender severally agrees to make European Revolving Loans to the European Borrowers from time to time during the European Availability Period, in each case, in an aggregate principal amount that will not result in:

 

(i)          the U.S. Revolving Exposure of any Revolving Lender exceeding such U.S. Revolving Lender’s Commitment;

 

(ii)         the U.S. Revolving Exposure exceeding the U.S. Line Cap then in effect;

 

(iii)        the Canadian Revolving Exposure exceeding the Canadian Line Cap then in effect;

 

(iv)       the German Revolving Exposure to a German Borrower exceeding the German Borrowing Base of that German Borrower then in effect;

 

(v)          the Swiss Revolving Exposure to a Swiss Borrower exceeding the Swiss Borrowing Base of that Swiss Borrower then in effect;

 

(vi)         the European Revolving Exposure exceeding the European Line Cap; or

 

(vii)        the aggregate Revolving Exposure exceeding the Line Cap;

 

subject to the Administrative Agent’s authority, in its sole discretion, to make Protective Advances pursuant to the terms of Section 2.04.  The limitations on Borrowings referred to in clauses (i) through (vii) are referred to collectively as the “Revolving Exposure Limitations”.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

 

SECTION 2.02        Loans and Borrowings.

 

(a)       Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type and Borrower made by the Lenders ratably in accordance with their respective Commitments.  Any Protective Advance and any Overadvance shall be made in accordance with the procedures set forth in Section 2.04 or 2.05, as applicable.

 

(b)       All Borrowings shall be denominated in Dollars.  Subject to Section 2.14, each Borrowing (other than Protective Advances and Overadvances) denominated in Dollars shall be comprised entirely of Adjusted Term SOFR Rate Loans.  Each Overadvance shall be an ABR Loan.  Each Lender at its option may make any Term Benchmark Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement.

 

(c)         At the time that each Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of the Dollar Equivalent of $1,000,000 and not less than the Dollar Equivalent of $2,000,000.

 

SECTION 2.03       Requests for Revolving Borrowings. To request a Borrowing of Revolving Loans, the Borrower Representative shall notify the Administrative Agent of such request either in writing (delivered by hand or through Electronic System if arrangements for doing so have been approved by the Administrative Agent) in a form approved by the Administrative Agent and signed by the Borrower Representative (or if an Extenuating Circumstance shall exist, by telephone) 11:00 a.m., New York City time, two Business Days before the date of the proposed Borrowing.  Each such Borrowing Request shall be irrevocable and each such telephonic Borrowing Request, if permitted, shall be confirmed immediately upon the cessation of the Extenuating Circumstance by hand delivery, facsimile 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 Representative.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.01:

 

(i)          whether such Loans are being made to the U.S. Borrowers, the Canadian Borrowers, the German Borrowers or the Swiss Borrowers (and specifying such applicable Borrower(s));

 

(ii)        the aggregate amount of the requested Borrowing and the manner in which the proceeds of such Borrowing are to be disbursed (which shall be consistent with Section 2.07 and subject to Section 2.02(d)); and

 

(iii)        the date of such Borrowing, which shall be a Business Day.

 

If no election as to the currency of any Borrowing is specified, then such Borrowing shall be denominated in Dollars.  Promptly (and in any event within one (1) Business Day) 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 Revolving Loan to be made as part of the requested Borrowing.

 

SECTION 2.04        Protective Advances.

 

(a)         Subject to the limitations set forth below, the Administrative Agent is authorized by the Borrowers and the Lenders, from time to time in the Administrative Agent’s sole discretion (but shall have absolutely no obligation), to make (i) Loans to the U.S. Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “U.S. Protective Advance”), (ii) Loans to the Canadian Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “Canadian Protective Advance”), (iii)  Loans to the German Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “German Protective Advance”), (iv) Loans to the Swiss Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “Swiss Protective Advance”, and, together with the German Protective Advance, the “European Protective Advance”), which the Administrative Agent, in its Permitted Discretion, deems necessary or appropriate (A) to preserve or protect the Collateral, or any portion thereof, (B) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (C) to pay any other amount chargeable to or required to be paid by the applicable Borrower(s) pursuant to the terms of this Agreement, including payments of reimbursable expenses (including costs, fees, and expenses as described in Section 9.03) and other sums payable under the Loan Documents; provided that (i) the aggregate principal amount of outstanding U.S. Protective Advances, when aggregated with the aggregate principal amount of outstanding U.S. Overadvances, shall not at any time exceed 15% of the total U.S. Borrowing Base then in effect, (ii) the aggregate Dollar Equivalent of outstanding Canadian Protective Advances, when aggregated with the aggregate principal amount of outstanding Canadian Overadvances, shall not at any time exceed 10% of the total Canadian Borrowing Base then in effect, (iii) the aggregate Dollar Equivalent of outstanding German Protective Advances, when aggregated with the aggregate principal amount of outstanding German Overadvances, shall not at any time exceed 10% of the total of the German Borrowing Base then in effect, (iv) the aggregate Dollar Equivalent of outstanding Swiss Protective Advances, when aggregated with the aggregate principal amount of outstanding Swiss Overadvances, shall not at any time exceed 10% of the total of the Swiss Borrowing Base then in effect, and (v) the aggregate Credit Exposure shall not exceed the aggregate Commitments.  Protective Advances may be made even if the conditions precedent set forth in Section 4.02 have not been satisfied.  All Protective Advances shall be ABR Borrowings.  The Administrative Agent’s authorization to make Protective Advances may be revoked at any time by the Required Lenders.  Any such revocation must be in writing and shall become effective prospectively upon the Administrative Agent’s receipt thereof.  At any time that the making of such U.S. Revolving Loan would not violate the Revolving Exposure Limitations and the conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may request the Revolving Lenders to make a U.S. Revolving Loan in Dollars to repay any U.S. Protective Advance.  At any other time the Administrative Agent may require the Revolving Lenders to fund in Dollars their risk participations described in Section 2.04(b) in any U.S. Protective Advance.  At any time that the making of such Canadian Revolving Loan would not violate the Revolving Exposure Limitations and the conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may request the Revolving Lenders to make a Canadian Revolving Loan in Dollars to repay any Canadian Protective Advance.  At any other time the Administrative Agent may require the Revolving Lenders to fund in Dollars their risk participations described in Section 2.04(b) in any Canadian Protective Advance.  At any time that the making of such German Revolving Loan would not violate the Revolving Exposure Limitations and the conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may request the Revolving Lenders to make a German Revolving Loan in Dollars to repay any German Protective Advance.  At any other time the Administrative Agent may require the Revolving Lenders to fund in Dollars their risk participations described in Section 2.04(b) in any German Protective Advance.  At any time that the making of such Swiss Revolving Loan would not violate the Revolving Exposure Limitations and the conditions precedent set forth in Section 4.02 have been satisfied, the Administrative Agent may request the Revolving Lenders to make a Swiss Revolving Loan in Dollars to repay any Swiss Protective Advance.  At any other time the Administrative Agent may require the Revolving Lenders to fund in Dollars their risk participations described in Section 2.04(b) in any Swiss Protective Advance.

 

(b)        The Administrative Agent may by notice given not later than 12:00 p.m., New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of any Protective Advance outstanding.  Each such notice shall specify the aggregate principal amount of the Protective Advance in which the Lenders will be required to participate, the currency thereof and each Lender’s Applicable Percentage of such Protective Advance.  Each Lender hereby absolutely and unconditionally agrees to pay, upon receipt of notice as provided above, to the Administrative Agent such Lender’s Applicable Percentage of each such Protective Advance.  Each Lender acknowledges and agrees that its obligation to acquire participations in Protective Advances pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including nonsatisfaction of any of the conditions precedent set forth in Section 4.02, the occurrence and continuance of a Default or any reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.07 with respect to Revolving Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders pursuant to this paragraph).  From and after the date, if any, on which any Lender has paid in full for its participation in any Protective Advance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender its Applicable Percentage of all payments of principal and interest and all proceeds of Collateral received by the Administrative Agent in respect of such Protective Advance; provided that any such payment or proceeds so distributed shall be repaid to the Administrative Agent if and to the extent such payment or proceeds is required to be refunded to the applicable Borrower(s) for any reason.  The purchase of participations in any Protective Advance pursuant to this paragraph shall not constitute a Loan and shall not relieve the Borrowers of their respective obligations to repay such Protective Advance.

 

SECTION 2.05        Overadvances.

 

(a)          [Reserved]

 

(b)          [Reserved]

 

(c)        Any provision of this Agreement to the contrary notwithstanding, at the request of the Borrower Representative, the Administrative Agent may in its sole discretion (but shall have absolutely no obligation) make (i) Loans to the U.S. Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “U.S. Overadvance”), (ii) Loans to the Canadian Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “Canadian Overadvance”), (iii) [reserved], (iv) Loans to the German Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “German Overadvance”), (v) [reserved], (vi) Loans to the Swiss Borrowers in Dollars on behalf of the Revolving Lenders (each such Loan, a “Swiss Overadvance”, and, together with the German Overadvance, the “European Overadvance”); provided that (1) the aggregate principal amount of outstanding U.S. Overadvances, when aggregated with the aggregate principal amount of outstanding U.S. Protective Advances, shall not at any time exceed 15% of the total U.S. Borrowing Base then in effect, (2) the aggregate Dollar Equivalent of outstanding Canadian Overadvances, when aggregated with the aggregate principal amount of outstanding Canadian Protective Advances, shall not at any time exceed 10% of the total Canadian Borrowing Base then in effect, (3) [reserved], (4) the aggregate Dollar Equivalent of outstanding German Overadvances, when aggregated with the aggregate principal amount of outstanding German Protective Advances, shall not at any time exceed 10% of the total of the German Borrowing Bases then in effect, (5) [reserved], (6) the aggregate Dollar Equivalent of outstanding Swiss Overadvances, when aggregated with the aggregate principal amount of outstanding Swiss Protective Advances, shall not at any time exceed 10% of the total of the Swiss Borrowing Base then in effect, (7) [reserved] and (8) the aggregate Credit Exposure shall not exceed the aggregate Commitments. Overadvances may be made even if the conditions precedent set forth in Section 4.02 have not been satisfied.  (A) All U.S. Overadvances, German Overadvances and Swiss Overadvances shall be ABR Borrowings and (B) all Canadian Overadvances shall be ABR Borrowings.  The applicable Borrowers shall be required to repay each Overadvance no later than the 30th day after the date of the making thereof.  The Administrative Agent’s authorization to make Overadvances may be revoked at any time by the Required Lenders.  Any such revocation must be in writing and shall become effective prospectively upon the Administrative Agent’s receipt thereof.

 

(d)         Upon the making of an Overadvance by the Administrative Agent, each applicable Revolving Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Administrative Agent, without recourse or warranty, an undivided interest and participation in such Overadvance in proportion to its Applicable Percentage of the aggregate Commitments.  The Administrative Agent may, at any time, require the applicable Revolving Lenders to fund their participations. From and after the date, if any, on which any Revolving Lender is required to fund its participation in any Overadvance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender, such Lender’s Applicable Percentage of all payments of principal and interest and all proceeds of Collateral received by the Administrative Agent in respect of such Loan.

 

SECTION 2.06        Letters of Credit.

 

(a)        General.  Subject to the terms and conditions set forth herein, the Borrower Representative may request the issuance of Letters of Credit denominated in Dollars for the account of a U.S. Borrower, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Availability Period, and the Administrative Agent agrees to cause to have such Letter of Credit issued by the applicable Issuing Bank.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.  For the avoidance of doubt, subject to Section 2.06(n), any Letter of Credit hereunder for the account of a U.S. Borrower may be for the benefit of a Restricted Subsidiary of such Borrower whether or not a Borrower. Notwithstanding anything herein to the contrary, no Issuing Bank shall have an obligation hereunder to issue, and shall not issue, any Letter of Credit (i) the proceeds of which would be made available to any Person (A) to fund any activity or business of or with any Sanctioned Person, or in any country or territory that, at the time of such funding, is the subject of any Sanctions or (B) in any manner that would result in a violation of any applicable Sanctions by any party to this Agreement, (ii) if 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 Effective Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such Issuing Bank in good faith deems material to it, or (iii) if the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally; 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 not to be in effect on the Effective Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented; provided, further, that there shall not be more than a total of five (5) Letters of Credit issued and outstanding at any time.  The Borrower Representative shall be responsible for preparing or approving the final text of each Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by the Borrower Representative.  The U.S. Borrowers are solely responsible for the suitability of each Letter of Credit.

 

(b)        Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit (other than an automatic renewal permitted pursuant to paragraph (c) of this Section), the Borrower Representative shall deliver by hand or electronic transmission (or transmit through Electronic System, if arrangements for doing so have been approved by the Administrative Agent) to the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit (together with a copy of the agreed form Letter of Credit), or identifying the Letter of Credit to be amended, renewed or extended, specifying the Borrower(s) or Restricted Subsidiary for whose account such Letter of Credit is to be issued, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the currency in which such Letter of Credit will be denominated (which shall be Dollars), the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  By submitting a request to the Administrative Agent for the issuance of a Letter of Credit, the Borrower Representative shall be deemed to have requested that the applicable Issuing Bank issue the requested Letter of Credit.  The Administrative Agent's records of the content of any such request will be conclusive. In addition, as a condition to any such Letter of Credit issuance, the Borrower Representative shall have entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of credit application in each case, as required by the applicable Issuing Bank and using such bank’s standard form (each, a “Letter of Credit Agreement”).  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the total LC Exposure shall not exceed $5,000,000 and (ii) the Revolving Exposure Limitations shall be complied with.

 

(c)         Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Scheduled Maturity Date.  Any Letter of Credit may provide by its terms that it may be automatically extended for additional successive one year periods on terms reasonably acceptable to the applicable Issuing Bank.  Any Letter of Credit providing for automatic extension shall be extended upon the then current expiration date without any further action by any Person unless the applicable Issuing Bank shall have given notice to the applicable beneficiary (with a copy to the applicable Borrower) of the election by such Issuing Bank not to extend such Letter of Credit, such notice to be given not fewer than 30 days prior to the then current expiration date of such Letter of Credit; provided that no Letter of Credit may be extended automatically or otherwise beyond the date that is five Business Days prior to the Scheduled Maturity Date.

 

(d)         Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Revolving Lenders, such Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay, in Dollars, to the Administrative Agent, for the account of the applicable Issuing Bank, such Revolving Lender’s Applicable Percentage of the Dollar Equivalent of each LC Disbursement made by such Issuing Bank and not reimbursed by the U.S. Borrowers on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the U.S. Borrowers for any reason.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, reduction or termination of the Commitments or any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP 98 or any successor publication of the International Chamber of Commerce) permits a drawing to be made under such Letter of Credit after the expiration thereof or of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

 

(e)         Reimbursement.  If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the U.S. Borrowers shall, following notice of such LC Disbursement to the Borrower Representative, reimburse such LC Disbursement by paying to the Administrative Agent, in the currency of the Letter of Credit to which such LC Disbursement relates, an amount equal to such LC Disbursement not later than 2:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Borrower Representative shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower Representative prior to such time on such date, then not later than 2:00 p.m., New York City time, on (i) the Business Day that the Borrower Representative receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the Business Day that the Borrower Representative receives such notice, if such notice is not received prior to such time on the day of receipt; provided that the U.S. Borrowers may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with a Borrowing in an equivalent amount and, to the extent so financed, the U.S. Borrowers’ obligation to make such payment shall be discharged and replaced by the resulting Borrowing.  If the U.S. Borrowers fail to make such payment when due, the Administrative Agent shall notify each applicable Revolving Lender of the Dollar Equivalent of the applicable LC Disbursement, the payment then due from the applicable U.S. Borrower in respect thereof and such Revolving Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice, each applicable Revolving Lender shall pay to the Administrative Agent in Dollars its Applicable Percentage of the payment then due from the applicable U.S. Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to such Issuing Bank the amounts so received by it from the applicable Revolving Lenders.  Promptly following receipt by the Administrative Agent of any payment from the U.S. Borrowers pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that any Revolving Lender has made payments pursuant to this paragraph to reimburse such Issuing Bank, then to each such Revolving Lender and such Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve the applicable U.S. Borrower of its obligation to reimburse such LC Disbursement.

 

(f)        Obligations Absolute.  The U.S. Borrowers’ obligations to reimburse LC Disbursements as provided in paragraph (e) of this Section are absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not substantially comply with the terms of such Letter of Credit, (iv) any force majeure or other event that under any rule of law or uniform practices to which any Letter of Credit is subject (including Section 3.14 of ISP 98 or any successor publication of the International Chamber of Commerce) permits a drawing to be made under such Letter of Credit after the stated expiration date thereof or of the Commitments or (v) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrowers’ obligations hereunder.  No Lender Party, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any other act, failure to act or other event or circumstance; provided that the foregoing shall not be construed to excuse any Issuing Bank from liability to the applicable Borrower(s) to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by such Borrower(s) that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of bad faith, gross negligence or willful misconduct on the part of an Issuing Bank (with such absence to be presumed unless otherwise determined by a court of competent jurisdiction in a final and nonappealable judgment), such Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

 

(g)         Disbursement Procedures.  Each Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  Each Issuing Bank shall promptly notify the Administrative Agent and the Borrower Representative by telephone (confirmed by fax or through Electronic Systems) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation to reimburse such Issuing Bank and the applicable Revolving Lenders with respect to any such LC Disbursement; provided, further, that until the Administrative Agent advises any such Issuing Bank that the provisions of Section 4.02 are not satisfied, such Issuing Bank shall be required to so notify the Administrative Agent in writing only once each week of the Letters of Credit issued by such Issuing Bank during the immediately preceding week as well as the daily amounts outstanding for the prior week, such notice to be furnished on such day of the week as Administrative Agent and such Issuing Bank may agree.

 

(h)      Interim Interest.  If any Issuing Bank shall make any LC Disbursement, then, unless the U.S. Borrowers shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, in the currency of the Letter of Credit to which such LC Disbursement relates, for each day from and including the date such LC Disbursement is made to but excluding the date that the U.S. Borrowers reimburse such LC Disbursement in full, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the U.S. Borrowers fail to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(h) shall apply.  Interest accrued pursuant to this paragraph shall be paid to the Administrative Agent for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Revolving Lender to the extent of such payment, and shall be payable on demand or, if no demand has been made, on the date on which the applicable Borrower(s) reimburse the applicable LC Disbursement in full.

 

(i)          Replacement and Resignation of the Issuing Banks.

 

(i)          Any Issuing Bank may be replaced at any time by written agreement among the Borrower Representative, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank.  At the time any such replacement shall become effective, the U.S. Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

 

(ii)         Subject to the appointment and acceptance of a successor Issuing Bank, an Issuing Bank may resign as an Issuing Bank at any time upon thirty days’ prior written notice to the Administrative Agent, the Borrower Representative and the Lenders, in which case, such resigning Issuing Bank shall be replaced in accordance with clause (i) of Section 2.06(i) above.

 

(j)          Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrower Representative receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, (i) the U.S. Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the applicable Revolving Lenders (the “LC Collateral Account”), an amount in cash in the currencies in which such LC Exposure is denominated equal to 105% of the LC Exposure in respect of Letters of Credit issued for the account of the U.S. Borrowers and their Restricted Subsidiaries as of such date plus accrued and unpaid interest thereon; provided that the obligations to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company or other applicable Borrower described in clause (h), (i) or (j) of Article VII.  Such deposits shall be held by the Administrative Agent as collateral for the payment and performance of the U.S. Obligations arising from LC Exposure in respect of Letters of Credit issued for the account of the U.S. Borrowers and their Restricted Subsidiaries as further set forth in the applicable Collateral Documents.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC Collateral Account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the U.S. Borrowers’ risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in the LC Collateral Account.  Moneys in the LC Collateral Account shall, notwithstanding anything to the contrary herein or in the Collateral Documents, be applied by the Administrative Agent to reimburse the applicable Issuing Banks for LC Disbursements for which they have not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the U.S. Borrowers for the LC Exposure in respect of Letters of Credit issued at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Required Lenders), be applied to satisfy the Secured Obligations (but subject to, in the case of any such application at a time when any Lender is a Defaulting Lender (but only if, after giving effect thereto, the remaining cash collateral shall be less than the aggregate LC Exposure of all the Defaulting Lenders that has not been reallocated to non-Defaulting Lenders pursuant to Section 2.20), the consent of each Issuing Bank).  If any Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to such Borrower within three Business Days after all Events of Default have been cured or waived.

 

(k)          [Reserved].

 

(l)        Issuing Bank Reports to the Administrative Agent.  Unless otherwise agreed by the Administrative Agent, each Issuing Bank shall, in addition to its notification obligations set forth elsewhere in this Section, report in writing to the Administrative Agent (i) periodic activity (for such period or recurrent periods as shall be requested by the Administrative Agent) in respect of Letters of Credit issued by such Issuing Bank, including all issuances, extensions (other than any extension of a Letter of Credit providing for automatic extension), amendments and renewals, all expirations and cancelations and all disbursements and reimbursements, (ii) reasonably prior to the time that such Issuing Bank issues, amends, renews or extends any Letter of Credit (other than any extension of a Letter of Credit providing for automatic extension), the date of such issuance, amendment, renewal or extension, and the stated amount and currency of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed), (iii) on each Business Day on which such Issuing Bank makes any LC Disbursement, the date and amount and currency of such LC Disbursement, (iv) on any Business Day on which the applicable Borrower(s) fail to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of such failure and the amount cue and (v) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such Issuing Bank.

 

(m)       LC Exposure Determination.  For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at the time of determination.

 

(n)         Letters of Credit Issued for Restricted Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of a Restricted Subsidiary, the U.S. Borrowers  shall be obligated to reimburse the applicable Issuing Bank hereunder for any and all drawings under such Letter of Credit.  Each U.S. Borrower hereby acknowledges that the issuance of Letters of Credit requested by such U.S. Borrower for the account of Restricted Subsidiaries of such U.S. Borrower inures to the benefit of such U.S. Borrower, and that such U.S. Borrower’s business derives substantial benefits from the businesses of such Restricted Subsidiaries.

 

SECTION 2.07        Funding of Borrowings.

 

(a)       Each Lender shall make each Revolving Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, in each case, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Revolving Lenders.  Subject to Section 2.02(d), the Administrative Agent will make such Loans available to the applicable Borrower(s) by promptly crediting the amounts so received, in like funds, to the Funding Account(s); provided that Revolving Loans made to finance the reimbursement of (i) an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank and (ii) a Protective Advance or Overadvance shall be retained by the Administrative Agent.

 

(b)         Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Revolving Borrowing that such Lender will not make available to the Administrative Agent such Lender’s Applicable Percentage of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance on such assumption, make available to the applicable Borrower(s) a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower(s) severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower(s) to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of (x) the Defaulting Lender Rate and (y) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrowers, (w) in the case of Loans denominated in Dollars, the interest rate applicable to Adjusted Term SOFR Rate Loans, and (x) [reserved].  If the applicable Borrower(s) and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the applicable Borrower(s) the amount of such interest paid by the Borrowers for such period.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Revolving Loan included in such Borrowing.  Any payment by any Borrower(s) pursuant to this paragraph (b) shall be without prejudice to any claim such Borrower(s) may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

SECTION 2.08        [Reserved].

 

SECTION 2.09        Termination and Reduction of Commitments; Increase in Commitments.

 

(a)         Unless previously terminated, the Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Maturity Date, or any earlier date on which the Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.

 

(b)        The Borrower Representative may at any time terminate the Commitments upon (i) the payment in full of all outstanding Loans, together with accrued and unpaid interest thereon and on any LC Disbursements, (ii) the 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 reasonably satisfactory to the Administrative Agent) equal to 105% of the portion of the LC Exposure attributable to all Letters of Credit, as determined by the applicable Issuing Banks), (iii) the payment in full of all accrued and unpaid fees (including any Commitment Reduction Fee) and (iv) the payment in full of all reimbursable expenses and all other Obligations outstanding at such time.

 

(c)          The Borrower Representative may from time to time reduce the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000, (ii) the Borrower Representative shall not reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the Borrowers would not be in compliance with the Revolving Exposure Limitations, and (iii) concurrently with the effectiveness of such reduction, the Borrower Representative shall pay any Commitment Reduction Fee that is due and payable in connection therewith.

 

(d)         The Borrower Representative shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) or (c) of this Section at least ten Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Revolving Lenders of the contents thereof.  Each notice delivered by the Borrower Representative pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower Representative may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Representative (by notice to the Administrative Agent on or prior to specified effective date) if such condition is not satisfied.  Any termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

 

SECTION 2.10        Repayment of Loans; Evidence of Debt.

 

(a)       The Borrowers hereby, jointly and severally, unconditionally promise to pay to (i) the Administrative Agent, for the account of each Revolving Lender, the principal amount of all outstanding Revolving Loans, and (ii) the Administrative Agent the then unpaid amount of each Protective Advance and Overadvance, in each case, on the earliest of (A) the Maturity Date, (B) in the case of any Overadvance, the earlier of the 30th day after the date of the making thereof and the date of demand by the Administrative Agent and (C) in the case of any Protective Advance, demand by the Administrative Agent.

 

(b)         On each Business Day during any Dominion Period, the Administrative Agent may (and at the direction of the Required Lenders shall) apply all funds credited to a Concentration Account or Collection Account on such Business Day or the immediately preceding Business Day (at the discretion of the Administrative Agent, whether or not immediately available) to the Obligations, which funds shall be applied first, to prepay any Protective Advances and Overadvances, second, to prepay the Revolving Loans, third, to cash collateralize outstanding LC Exposure, and fourth, as the Borrower Representative may direct.  Further, all amounts received in a Concentration Account or Collection Account shall be applied pursuant to this paragraph (b) first against Protective Advances, Overadvances and Revolving Loans denominated in like currency to the currency of the moneys in such Concentration Account or Collection Account. In the event and to the extent that any Protective Advances, Overadvances or Revolving Loans remain unpaid (the “Payment and Collateralization Requirements”) following such application as a result of a mismatch between the currencies of the amounts in the Concentration Accounts or Collection Accounts and the currencies in which the outstanding Payment and Collateralization Requirements are denominated, the relevant Borrower shall be deemed to have requested the Administrative Agent to convert any excess funds remaining in the Concentration Accounts or Collection Accounts to the currency or currencies of the outstanding Payment and Collateralization Requirements and apply such converted amounts to such outstanding Payment and Collateralization Requirements.

 

(c)       Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the applicable Borrower(s) to such Lender resulting from each Loan made by such Lender to such Borrower(s), including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

 

(d)        The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder to the applicable Borrower(s) and the Type thereof, (ii) the amount of any principal or interest due and payable or to become due and payable from the applicable Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

(e)         The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to pay any amounts due hereunder in accordance with the terms of this Agreement.

 

(f)         Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the applicable Borrowers shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.

 

SECTION 2.11        Prepayment of Loans.

 

(a)         Voluntary Prepayments.  The Borrowers shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (h) of this Section.

 

(b)      Revolving Exposure Limitations.  Except to the extent such excess arises from Protective Advances permitted under Section 2.04 or Overadvances permitted under Section 2.05, in the event and on each occasion that the Borrowers are not in compliance with the Revolving Exposure Limitations, the Canadian Borrowers, the European Borrowers and the U.S. Borrowers shall severally prepay the Revolving Loans (or, if no such Borrowings are outstanding, deposit cash collateral in the LC Collateral Account in accordance with Section 2.06(j)) of such Borrower(s) in an aggregate amount that, after giving effect to such prepayments or cash collateralizations the Borrowers shall be in compliance with the Revolving Exposure Limitations.

 

(c)          Dispositions.

 

(i)          Promptly (but in any event, within one (1) Business Day) following the date of receipt (or, if a Dominion Period has occurred and is continuing, concurrently with receipt) by any Loan Party of the Net Cash Proceeds of any voluntary or involuntary Disposition by any Loan Party of any Accounts included in any Borrowing Base, such Loan Party shall prepay the Revolving Loans in an amount equal to 100% of such Net Cash Proceeds in excess of (x) $1,000,000 for any such Disposition individually or (y) $2,500,000 in the aggregate for all such Dispositions during any Fiscal Year; and

 

(ii)          Promptly (but in any event, within one (1) Business Day) following the date of receipt (or, if a Dominion Period has occurred and is continuing, concurrently with receipt) by any Loan Party of the Net Cash Proceeds of any voluntary or involuntary Disposition by any Loan Party of any assets constituting Collateral (other than (x) Accounts included in the Borrowing Base and (y) Notes Priority Collateral so long as the Notes Obligations (as defined in the Intercreditor Agreement) remain outstanding and the Intercreditor Agreement is in effect) (including casualty losses or condemnations but excluding Dispositions permitted under Sections 6.05(a), (b), (c), (e), (k) and (l)), such Loan Party shall prepay the Revolving Loans in an amount equal to 100% of such Net Cash Proceeds (including condemnation awards and payments in lieu thereof) in excess of (x) $1,000,000 for any such Disposition individually or (y) $2,500,000 in the aggregate for all such Dispositions during any Fiscal Year; provided that, so long as (A) no Default or Event of Default shall have occurred and be continuing or would result therefrom, (B) the Borrower Representative shall have given the Administrative Agent prior written notice of such Loan Party’s intention to apply such monies to the costs of replacement of the properties or assets that are the subject of such Disposition or the cost of purchase or construction of other assets useful in the business of such Loan Party, and (C) such Loan Party completes such replacement, purchase, or construction within 180 days after the initial receipt of such Net Cash Proceeds, then such Loan Party shall have the option to apply such Net Cash Proceeds to the costs of replacement of the assets that are the subject of such Disposition or the costs of purchase or construction of other assets useful in the business of such Loan Party unless and to the extent that such applicable period shall have expired without such replacement, purchase, or construction being made or completed, in which case, any amounts remaining shall be paid to the Administrative Agent and applied in accordance with this paragraph (c)(ii).

 

(iii)        Nothing contained in this paragraph (c) shall permit any Loan Party to Dispose of any assets other than in accordance with Section 6.05.

 

(d)         Extraordinary Receipts.  Promptly (but in any event, within one (1) Business Day) following the date of receipt (or, if a Dominion Period has occurred and is continuing, concurrently with receipt) by any Loan Party or any of its Restricted Subsidiaries of any Extraordinary Receipts, such Loan Party shall, to the extent permitted under paragraph (g) of this Section, prepay the Revolving Loans, in an amount equal to 100% of such Extraordinary Receipts in excess of (x) $1,000,000 individually or (y) $2,500,000 in the aggregate during any Fiscal Year, net of any reasonable expenses or costs (including, for the avoidance of doubt, Taxes) incurred in collecting and paying over such Extraordinary Receipts.

 

(e)        Indebtedness.  Concurrently with the incurrence or issuance by any Loan Party or any of its Restricted Subsidiaries of any Indebtedness (other than Indebtedness permitted under Section 6.01), such Loan Party shall prepay the Revolving Loans (or, if no such Borrowings are outstanding, deposit cash collateral in the LC Collateral Account in accordance with Section 2.06(j)) in an amount equal to 100% of the Net Cash Proceeds received by such Person in connection with such incurrence or issuance.  The provisions of this paragraph (e) shall not be deemed to be implied consent to any such incurrence or issuance otherwise prohibited by the terms of this Agreement.

 

(f)        Equity.  Promptly (but in any event, within one (1) Business Day) following the date of the issuance by (or, if a Dominion Period has occurred and is continuing, concurrently with such issuance) the Company of any Equity Interests (other than the issuance of Equity Interests of the Company to directors, contractors, officers and employees (or similar persons) of the Company and its Subsidiaries pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements), the Company shall prepay the Revolving Loans in an amount equal to 50% of the Net Cash Proceeds received by Company in connection with such issuance.  The provisions of this paragraph (f) shall not be deemed to be implied consent to any such issuance otherwise prohibited by the terms of this Agreement.

 

(g)         Collateral and Proceeds Limitations.

 

(i)          [Reserved].

 

(ii)       Notwithstanding any other provision of this Section 2.11, with respect to any amount of Extraordinary Receipts received by a Foreign Subsidiary (other than a Loan Party), in the event the Borrower Representative and the Administrative Agent determine in good faith that the upstreaming of cash equal to such amount by such Foreign Subsidiary (i) would violate any local Law (e.g., financial assistance, thin capitalization, corporate benefit, restrictions on upstreaming of cash intra-group or the fiduciary and statutory duties of the directors of such Subsidiary) or any term of any organizational document applicable to such Foreign Subsidiary, or (ii) would cause any material adverse tax consequence to the applicable Borrower, its parent entities or its Subsidiaries, taking into account any foreign tax credit or benefit actually available in connection with such upstreaming of cash in the year of such upstreaming of cash (which basis for and calculations of such material adverse tax consequences shall be set forth in reasonable detail in a written notice of the Borrower Representative delivered to the Administrative Agent), then, so long as no Event of Default has occurred and is continuing, such amount shall be excluded from such prepayment requirement in respect of the applicable Obligations until the Borrower Representative determines in good faith that such Foreign Subsidiary may repatriate such amounts without such material adverse consequences (at which time such amount shall be subject to such prepayment requirement); provided, that if and to the extent any such upstreaming ceases to be prohibited or delayed by applicable local law at any time during the one (1) year period immediately following the date on which the applicable mandatory prepayment was required to be made, the applicable Loan Parties shall reasonably promptly upstream, or cause to be upstreamed, an amount equal to such portion of the excluded prepayment amount attributable thereto (net of any costs related to such upstreaming or incremental Taxes payable as a result thereof), and the applicable Loan Parties shall reasonably promptly pay such portion of such prepayment amount to the Lenders.

 

(h)       Prepayment Notice.  The Borrower Representative shall notify the Administrative Agent, by telephone (confirmed by hand delivery or through Electronic System, if arrangements for doing so have been approved by the Administrative Agent) of any prepayment hereunder not later than 12:00 p.m., New York City time, three Business Days before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09.  Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Revolving Borrowing shall be applied ratably to the Revolving Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.

 

SECTION 2.12        Fees.

 

(a)        The Borrower Representative agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee in Dollars, which shall accrue at the Applicable Commitment Fee Rate on the daily amount by which the aggregate total Commitments exceed the aggregate Revolving Loans and LC Exposure (such excess amount, the “Unused Commitments”) during the period from and including the Effective Date to but excluding the date on which the Commitments terminate.  Commitment fees accrued through and including the last day of each calendar month shall be payable in arrears on the first day of the following calendar month, commencing on the first such date to occur after the Effective Date, and on the date on which the Commitments terminate.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.

 

(b)        The Borrower Representative agrees to pay to the Administrative Agent for the account of each Revolving Lender a letter of credit fee in Dollars with respect to its participations in Letters of Credit, which, subject to Section 2.13(h), shall accrue at the same Applicable Rate used to determine the interest rate applicable to Term Benchmark Loans (as in effect from time to time) on the average daily Dollar Equivalent of such Revolving Lender’s applicable LC Exposure in respect of such Letters of Credit (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Revolving Lender’s Commitment terminates and the date on which such Revolving Lender ceases to have any LC Exposure in respect of such Borrower(s)’ Letters of Credit.  In addition, the Borrower Representative agrees to pay to each Issuing Bank a fronting fee in Dollars, which shall accrue at a rate per annum equal to 0.50% of the average daily Dollar Equivalent of the LC Exposure attributable to Letters of Credit issued for the account of the U.S. Borrowers and their Restricted Subsidiaries by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure in respect of Letters of Credit issued for the account of the U.S. Borrowers and their Restricted Subsidiaries, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any such Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of each calendar month shall be payable on the first day of the following calendar month, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Banks pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed.

 

(c)          The Borrower Representative agrees to pay to the Administrative Agent, for the account of the applicable Lender Parties, fees in the amounts and payable at the times separately agreed upon in the Agent Fee Letter or the Fee Letter or as otherwise agreed between the Borrower Representative and the Administrative Agent.

 

(d)         All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the applicable Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances (absent manifest error in the amount paid).

 

SECTION 2.13        Interest.

 

(a)          Dollar Denominated Revolving Loans.

 

(i)          The Loans comprising each ABR Borrowing (excluding U.S. Protective Advances and U.S. Overadvances) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(ii)        The Loans comprising each Term Benchmark Borrowing denominated in Dollars shall bear interest at the Adjusted Term SOFR Rate plus the Applicable Rate.

 

(b)          [Reserved].

 

(c)          [Reserved].

 

(d)          [Reserved].

 

(e)          [Reserved].

 

(f)          Each Protective Advance and Overadvance shall bear interest at the Alternate Base Rate plus the Applicable Rate for ABR Revolving Loans plus 2% per annum.

 

(g)          [Reserved].

 

(h)         Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default (automatically upon the occurrence of an Event of Default under clause (h), (i) or (j) of Article VII, or at the election of the Administrative Agent or the Required Lenders during the continuance of any other Event of Default, which election may be effective retroactively to the date such Event of Default first occurred), (i) the outstanding principal amount of the Loans shall bear interest at 2% per annum plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section, (ii) letter of credit participation fees shall accrue at 2% per annum plus the rate otherwise applicable to Letters of Credit as provided in Section 2.12(b), (iii) the Applicable Commitment Fee Rate under clause (a) of the definition thereof shall be 2% per annum plus the rate otherwise applicable thereunder (provided that the Applicable Commitment Fee Rate under clause (b) of the definition thereof shall remain unchanged), and (iv) all other outstanding Obligations shall bear interest at 2% per annum plus the rate applicable to ABR Revolving Loans hereunder.

 

(i)       Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that interest accrued pursuant to paragraph (h) of this Section shall be payable on demand.

 

(j)          All interest hereunder shall be computed on the basis of a year of 365/366 days, except that interest computed by reference to the Term SOFR Rate (other than ABR Loans determined by reference to the Term SOFR Rate) and all fees shall be computed on the basis of a year of 360 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted Term SOFR Rate or Term SOFR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

(k)         Interest Act (Canada).  For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest or fees to which the rates of interest or fees provided in this Agreement and the other Loan Documents (and stated herein or therein, as applicable, to be computed on the basis of 360 days or any other period of time less than a calendar year) are equivalent are the rates so determined multiplied by the actual number of days in the applicable calendar year and divided by 360 or such other period of time, respectively.

 

(l)          Limitation on Interest.  If any provision of this Agreement or of any of the other Loan Documents would obligate any Canadian Loan Party to make any payment of interest or other amount payable to the Lenders in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by the Lenders of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)) then, notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Lenders of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows:  (1) firstly, by reducing the amount or rate of interest required to be paid to the Lenders under this Section 2.13, and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the Lenders which would constitute “interest” for purposes of Section 347 of the Criminal Code (Canada).  Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if the Lenders shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada), the Canadian Loan Parties shall be entitled, by notice in writing to the Administrative Agent, to obtain reimbursement from the Lenders in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by the Lenders to the Borrowers.  Any amount or rate of interest referred to in this Section 2.13(l) shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that the applicable Loan remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be prorated over that period of time and otherwise be prorated over the period from the Effective Date to the Maturity Date and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Administrative Agent shall be conclusive for the purposes of such determination.

 

(m)        [Reserved].

 

(n)        Swiss Minimum Interest Rate.  The interest rates provided for the Swiss Borrower (and any Swiss Subsidiary) are minimum interest rates.  The parties hereto have assumed, on the date of this Agreement, that Swiss Withholding Tax is not and will not become payable by the Swiss Borrower (and any Swiss Subsidiary) on interest payments under this Agreement or any other Loan Document.  The Swiss Borrower (and any Swiss Subsidiary) acknowledges and agrees that the interest rates set out in this Agreement are minimum interest rates which shall be adjusted in accordance with subsection (o) below if Swiss Withholding Tax becomes payable at any time on interest payments by the Swiss Borrower (and any Swiss Subsidiary) under this Agreement or any other Loan Document.

 

(o)         Swiss Withholding Tax. If Swiss Withholding Tax applies on interest payments by the Swiss Borrower (and any Swiss Subsidiary) under this Agreement or any other Loan Document, the gross-up and indemnity provisions of Section 2.17(a) and Section 2.17(d) shall not apply, but instead the following shall apply, provided that the relevant Swiss Withholding Tax is not an Excluded Tax:

 

(i)         The Swiss Borrower (and any Swiss Subsidiary) shall pay such additional amounts as shall be necessary in order for the net amounts received by the Lenders after withholding of Swiss Withholding Tax to be equal to the respective amounts of interest which would otherwise have been receivable in respect of this Agreement in the absence of the withholding of Swiss Withholding Tax;

 

(ii)       Swiss Withholding Tax shall be calculated, deducted and paid by the Swiss Borrower (and any Swiss Subsidiary) to the Swiss Federal Tax Administration on the amount of interest so recalculated at a rate of currently thirty five percent (35%) (or such other rate as applicable from time to time), unless a tax ruling obtained from the Swiss Federal Tax Administration confirms that such rate is, pursuant to any double-taxation treaty, a specified lesser rate in relation to interest payments under this Agreement in which case such lesser rate shall be applied; and

 

(iii)       To the extent that interest payable under a Loan Document becomes subject to Swiss Withholding Tax, the Loan Parties and the Lenders shall promptly co-operate in completing any procedural formalities (including submitting forms and documents required by the appropriate tax authority) to the extent possible and necessary (a) to make interest payments without them being subject to Swiss Withholding Tax, or (b) to being subject to Swiss Withholding Tax at a rate reduced under applicable double taxation treaties, or (c) for the Lenders to obtain a full or partial refund of Swiss Withholding Tax under applicable double taxation treaties. For the avoidance of doubt, a Lender who is treated as not being a Swiss Qualifying Bank pursuant to Section 2.17(i) shall not be under any obligation to change its status into a Swiss Qualifying Bank.

 

SECTION 2.14        Alternate Rate of Interest; Illegality.

 

(a)        Subject to the other clauses of this Section 2.14, if, at any applicable time, (i) the Administrative Agent determines in good faith (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate, as applicable, pursuant to the definitions thereof, (ii) the basis for determining the Adjusted Term SOFR Rate or the Term SOFR Rate, as applicable, ceases to be reported by the sources designated by the Administrative Agent from time to time and the Administrative Agent shall have reasonably determined that, by reason of circumstances affecting the relevant market, other adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate, as applicable, or (iii) the Required Lenders determine that for any reason in connection with any request for a Loan that the Adjusted Term SOFR Rate or the Term SOFR Rate, as applicable, does not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans, and the Required Lenders have provided notice of such determination to the Administrative Agent, then the Administrative Agent shall forthwith give notice thereof to the Borrower Representative and each Lender.  Upon notice thereof (x) subject to Section 2.13(h), the interest rate applicable to the Revolving Loans and other Obligations denominated in Dollars shall be the Alternate Base Rate plus the Applicable Rate determined and effective immediately, and (y) subject to Section 2.14(d), such substituted rate shall thereafter be determined by the Administrative Agent in accordance with the terms hereof.

 

(b)        Each of the Term SOFR Rate may be adjusted by the Administrative Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes which shall be governed by Section 2.17), in each case, due to changes in applicable law, including any Changes in Law and changes in the reserve requirements imposed by the Board of Governors (including pursuant to regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D)), which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the Term SOFR Rate.  In any such event, the affected Lender shall give Borrowers and Administrative Agent notice of such a determination and adjustment and Administrative Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (i) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such Term SOFR Rate, and the method for determining the amount of such adjustment, or (ii) repay the Loans of such Lender with respect to which such adjustment is made.

 

(c)          If there has been at any time an interest rate substituted for the Term SOFR Rate in accordance with this Section 2.14 and if in the reasonable opinion of the Administrative Agent, the circumstances causing such substitution have ceased, then the Administrative Agent shall promptly notify the Borrower Representative in writing of such cessation, and thereafter the Term SOFR Rate shall be determined as originally defined hereby.

 

(d)         Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event, the Administrative Agent and the Borrower Representative may amend this Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the Administrative Agent has posted such proposed amendment to all affected Lenders and the Borrower Representative so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 2.14(b) will occur prior to the applicable Benchmark Transition Start Date.

 

(e)       Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.

 

(f)         The Administrative Agent will promptly notify the Borrower Representative and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, and (iv) the commencement or conclusion of any Benchmark Unavailability Period.  Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.

 

(g)     Upon the Borrower Representative’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower Representative may revoke any request for a Term Benchmark Borrowing, and, failing that, either (x) the Borrower Representative will be deemed to have converted any request for (1) a Term Benchmark Borrowing denominated in Dollars into a request for a Borrowing of or conversion to an ABR Borrowing or (y) any Term Benchmark Borrowing denominated in an Agreed Currency shall be ineffective.

 

(h)       If any Lender determines that any Requirement of Law has made it unlawful, or if any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain, fund or continue any Term Benchmark Borrowing, then, on notice thereof by such Lender to the Borrowers through the Administrative Agent, any obligations of such Lender to make, maintain, fund or continue Term Benchmark Loans will be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrowers will upon demand from such Lender (with a copy to the Administrative Agent), either prepay all applicable Term Benchmark Borrowings of such Lender or be deemed to have converted all Term Benchmark Borrowings of such Lender to ABR Borrowings (in the case of Adjusted Term SOFR Rate Borrowings), respectively, on the date specified in such Lender’s notice.  Upon any such conversion or prepayment, the Borrowers will also pay accrued interest on the amount so converted or prepaid.

 

SECTION 2.15        Increased Costs.

 

(a)          If any Change in Law shall:

 

(i)          impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any such reserve requirement reflected in the applicable Term Benchmark) or any Issuing Bank; or

 

(ii)         impose on any Lender or any Issuing Bank or the London, Canadian or other applicable offshore interbank market for the applicable Agreed Currency any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein,

 

(iii)       subject any Recipient to any Taxes (other than any (A) Indemnified Taxes or (B) Excluded Taxes) on or with respect to its loans, loan principal, letters of credit, commitments or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

 

and the result of any of the foregoing shall be to increase the cost to such Lender or other Recipient of making or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender or other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, from time to time upon request of such Lender or other Recipient, the applicable Borrower(s) will pay to such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs or expenses incurred or reduction suffered.

 

(b)         If any Lender or any Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has had or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Loans held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy or liquidity), then, from time to time upon request of such Lender or such Issuing Bank, the applicable Borrower(s) will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered.

 

(c)         A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section delivered to the Borrower Representative shall be conclusive absent manifest error.  The applicable Borrower(s) shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)         Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such Issuing Bank’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or expenses incurred or reductions suffered more than 270 days prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Borrower Representative of the Change in Law giving rise to such increased costs or expenses or reductions and of such Lender’s or such Issuing Bank’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or expenses or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

 

(e)         Notwithstanding the above, a Lender will not be entitled to demand compensation for any increased cost or reduction set forth in this Section 2.15 at any time if it is not the general practice and policy of such Lender to demand such compensation from similarly situated borrowers in similar circumstances under agreements containing provisions permitting such compensation to be claimed at such time.

 

SECTION 2.16      Compensation for Losses. With respect to any Loans, in the event of the failure to borrow or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(h) and is revoked in accordance therewith), then the Borrowers shall compensate each Lender for the loss, cost and expense (excluding any loss of margin) attributable to such event, including any loss or expense arising from the liquidation or reemployment of funds (but not loss of profits) obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  A certificate of any Lender delivered to the Borrower Representative and setting forth and explaining in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.16 shall be conclusive absent manifest error.  The applicable Borrower(s) shall pay such Lender the amount shown as due on any such certificate within 30 days after receipt thereof.

 

SECTION 2.17        Taxes.

 

(a)        Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by any applicable withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Lender (or, in the case of payments made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

	FOSSIL GROUP, INC.
	as a U.S. Borrower
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Chief Financial Officer
	FOSSIL PARTNERS, L.P.
	as a U.S. Borrower
	By: FOSSIL GROUP, INC., its General Partner
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Chief Financial Officer
	FOSSIL CANADA, INC.
	as a Canadian Borrower
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Treasurer
	FOSSIL GLOBAL HOLDINGS, INC.
	as a U.S. Guarantor
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   President

	FOSSIL INTERMEDIATE, INC.
	as a U.S. Guarantor
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Treasurer
	FOSSIL STORES I, INC.
	as a U.S. Guarantor
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Treasurer
	FOSSIL TRUST, acting pursuant to the agreement and contract of trust of fossil trust dated, august 31, 1994
	as a U.S. Guarantor
	By:	/s/ Randy Greben
	Name: Randy Greben
	Title:   Treasurer

	FOSSIL U.K. LIMITED
	By:	/s/ Sharon L. Dean
	Name: Sharon L. Dean
	Title:   Managing Director
	By:	/s/ Patrick L. Turner
	Name: Patrick L. Turner
	Title:   Managing Director
	FOSSIL (UK) HOLDINGS LIMITED
	By:	/s/ Sharon L. Dean
	Name: Sharon L. Dean
	Title:   Managing Director
	By:	/s/ Patrick L. Turner
	Name: Patrick L. Turner
	Title:   Managing Director

	ACF FINCO I LP,
	as Administrative Agent
	By:	/s/ Ryan T. Mass
	Name: Ryan T. Mass
	Title:   Authorized Signatory

	GRC SPV INVESTMENTS, LLC,
	as a Lender
	By:	/s/ Kathleen M. Anda
	Name: Kathleen M. Anda
	Title:   Chief Risk Officer

	ARES STRATEGIC INCOME FUND,
	as a Lender
	By:	/s/ Jason Park
	Name: Jason Park
	Title:   Authorized Signatory

	ARES CAPITAL CORPORATION,
	as a Lender
	By:	/s/ Jason Park
	Name: Jason Park
	Title:   Authorized Signatory

	CION ARES DIVERSIFIED CREDIT FUND,
	as a Lender
	By:	/s/ Jason Park
	Name: Jason Park
	Title:   Authorized Signatory