UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street NW
Washington, D.C. 29549
Form
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction
of Incorporation
(Commission
File Number)
(IRS Employer
Identification No.)
,
,
(Address of Principal Executive Offices)
(Zip Code)
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities
Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
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THE CATO CORPORATION
Item 1.01 Entry into a Material Definitive Agreement
On May 19, 2022, The Cato Corporation (the “Company”), entered into a credit agreement (the “Credit
Agreement”) among the Company, the guarantors party thereto, the banks party thereto and Wells Fargo
Bank, National Association, as Agent. The Credit Agreement provides for a five-year $35.0 million
unsecured revolving credit facility (the “Revolving Credit Facility”). The agreement also provides that the
Company may seek increases to the Revolving Credit Facility in an aggregate amount so that the
Revolving Credit Facility does not exceed $75.0 million.
Borrowings under the Revolving Credit Facility will bear interest at an annual rate of the Secured
Overnight Funding Rate (SOFR) plus 1.0% or (b) an alternate base rate (as described in the Credit
Agreement). In addition, a commitment fee accrues with respect to the unused amount of the Revolving
Credit Facility at an annual rate of 0.10%.
The Revolving Credit Facility is guaranteed by each of the Company’s wholly owned domestic
subsidiaries, other than any subsidiary that owns part of the Company’s York, South Caroling real estate
holdings, and its bank and captive insurance subsidiaries Cedar Hill National Bank and Providence
Insurance, respectively.
The Credit Agreement provides that the Company must maintain compliance with a minimum
consolidated tangible net worth and a minimum coverage ratio of EBITDAR to fixed charges, as
determined in accordance with the Credit Agreement.
The Credit Agreement also contains affirmative, negative and financial covenants customary for
financings of this type, including, among other things, limitations on certain other indebtedness, loans and
investments, liens, mergers, asset sales, transactions with affiliates and capital expenditures, as well as
customary events of default.
The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the Credit Agreement. A copy of this Credit Agreement is incorporated as exhibit 10.1
hereto.
Item 1.02 Termination of a Material Definitive Agreement
The disclosure provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into
this Item 1.02. On May 19, 2022, in connection with the closing of the Revolving Credit Facility described in Item
1.01, the Company terminated its credit agreement, dated as of August 22, 2003, between the Company and Branch
Banking and Trust Company, as administrative agent, issuing bank, and a bank.
Item 2.02. Results of Operations and Financial Condition.
On May 19, 2022, The Cato Corporation issued a press release regarding its financial results for the first
quarter ending April 30, 2022. A copy of this press release is hereby incorporated as Exhibit 99.1 hereto.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
The disclosure provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into
this Item 2.03
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Item 5.07. Submission of Matters to a Vote of Security Holders.
On May 19, 2022, the Registrant held its Annual Meeting. The following are the voting results on each matter
submitted to the Registrant’s stockholders at the Annual Meeting. The proposals below are described in detail in the
Proxy Statement.
At the Annual Meeting, the two nominees for director were elected to the Registrant’s Board of Directors (Proposal
1 below).
In addition, management’s proposal regarding the Company’s executive compensation was approved (Proposal 2
below).
In addition, management’s proposal regarding the selection of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm for the fiscal year ending January 28, 2023 was approved (Proposal 3
below).
Summary of Voting By Proposal
1. To elect Theresa J. Drew and D. Harding Stowe, each for a term expiring in 2025 and until their successors are
elected and qualified. Votes recorded, by nominee, were as follows:
Nominee
For
Abstain
Broker
Non-Votes
Theresa J. Drew
27,362,039
4,473,136
4,264,851
D. Harding Stowe
21,708,643
10,126,532
4,264,851
2. To approve, on an advisory basis, the Company’s executive compensation. The Company’s shareholders voted
to approve this proposal with 20,981,540 for and 10,786,018 votes against. There were 67,616 abstentions and
4,264,852 Broker non-votes.
3. To approve, to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered
public accounting firm for the fiscal year ending January 28, 2023. The Company’s shareholders voted to
approve this proposal with 35,942,344 for and 78,843 votes against. There were 78,839 abstentions.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 104 – Cover Page Interactive Data File (embedded within Inline XBRL document)
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
May 23, 2022
/s/ John P. D. Cato
Date
John P. D. Cato
Chairman, President and
Chief Executive Officer
May 23, 2022
/s/ Charles D. Knight
Date
Charles D. Knight
Executive Vice President
Chief Financial Officer
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Exhibit Index
Exhibit
Exhibit
No.
10.1
99.1
104 Cover page Interactive Data File (embedded within Inline
XBRL document)
104
CREDIT AGREEMENT
dated as of
May 19, 2022
among
THE CATO CORPORATION, a Delaware corporation,
The Initial Guarantors Listed Herein,
The Banks Listed Herein
and
WELLS FARGO BANK, NATIONAL ASSOCIATION ,
as Agent
CREDIT AGREEMENT
AGREEMENT dated as of May 19, 2022 among THE CATO CORPORATION, a Delaware
corporation, CADEL LLC, a Delaware limited liability company, CHW, LLC, a Delaware limited liability
company, CATO OF TEXAS L.P., a Texas limited partnership, CATOSOUTH LLC, a North Carolina limited
liability company, catocorp.com, LLC, a Delaware limited liability company, CATOWEST, LLC, a Nevada
limited liability company, CATO SOUTHWEST, INC., a Delaware corporation, CATO WO LLC, a Delaware
limited liability company, CATO OF FLORIDA L.L.C., a Florida limited liability company, CATO OF
TENNESSEE, LLC, a Tennessee limited liability company, CATO OF VIRGINIA, LLC, a Virginia limited
liability company, CATO OF NORTH CAROLINA, LLC, a North Carolina limited liability company, CATO
OF ILLINOIS, LLC, a Illinois limited liability company, CATO OF SOUTH CAROLINA, LLC, a South Carolina
limited liability company, OHIO CATO STORES, LLC, a Ohio limited liability company, CATO OF GEORGIA,
LLC, a Georgia limited liability company, the BANKS listed on the signature pages hereof and WELLS FARGO
BANK, NATIONAL ASSOCIATION , as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01
Definitions. The terms as defined in this Section 1.01 shall, for all purposes
of this Agreement and any amendment hereto (except as otherwise expressly provided or unless the context
otherwise requires), have the meanings set forth herein:
“Acquisition” means the acquisition of (i) a controlling equity interest in another Person (including
the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon
exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another
Person which constitute all or any material part of the assets of such Person or of a line or lines of business
conducted by such Person.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial
Institution.
“Affiliate” of any Person means (i) any other Person which directly, or indirectly through one or
more intermediaries, controls such Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or (iii) any other Person of which
such Person owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term “control” means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
“Agent” means Wells Fargo Bank, National Association, in its capacity as agent for the Banks and
the Issuing Bank hereunder, and its successors and permitted assigns in such capacity.
“Agreement’’ means this Credit Agreement, together with all amendments and supplements
hereto.
“Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended;
(b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anticorruption laws, regulations or
ordinances in any jurisdiction in which Borrower or any other Loan Party is located or doing business.
“Anti-Money Laundering Laws” means any and all laws, statutes, regulations or obligatory
government orders, decrees, ordinances or rules related to terrorism financing, money laundering, any predicate
crime to money laundering or any financial record keeping, including any applicable provision of the PATRIOT
Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C.
§§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959).
“Applicable Margin” has the meaning set forth in Section 2.06(a).
“Assignee” has the meaning set forth in Section 9.07(c).
“Assignment and Acceptance” means an Assignment and Acceptance executed in accordance with
Section 9.07(c) in the form attached hereto as Exhibit H.
“Authority” has the meaning set forth in Section 8.02.
“Available Tenor” means, as of any date of determination and with respect to any then-current
Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component
thereof) that is or may be used for determining the length of an Interest Period pursuant to this Agreement or (b)
otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof)
that is or may be used for determining any frequency of making payments of interest calculated with reference to
such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such
Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 8.03(d).
“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).
“Bank” means each bank listed on the signature pages hereof as having a Revolving Credit
Commitment and their respective successors and assigns.
“Base Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus
0.50% and (c) Daily Simple SOFR in effect on such day plus 1.00%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or
Daily Simple SOFR, as applicable (provided that clause (c) shall not be applicable during any period in which
Daily Simple SOFR is unavailable or unascertainable). Notwithstanding the foregoing, in no event shall the Base
Rate be less than 1.00%.
“Base Rate Loan” means a Revolving Credit Advance during Interest Periods when the applicable
Loan bears or is to bear interest at a rate based upon the Base Rate as provided in Section 2.06.
“Benchmark” means, initially, Daily Simple SOFR or Term SOFR, as applicable; provided that if
a Benchmark Transition Event has occurred with respect to Daily Simple SOFR or Term SOFR, as applicable, or
the applicable then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the
extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 8.03(a).
“Benchmark Replacement” means, with respect to any Benchmark Transition Event for any then-
current Benchmark, the sum of: (a) the alternate benchmark rate that has been selected by the Agent and Borrower
as the replacement for such 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 to
such then-current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related Benchmark
Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than
the Floor, such Benchmark Replacement 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 Agent and Borrower giving due consideration to (a) any selection or recommendation of a spread
adjustment, or method for calculating or determining such spread adjustment, for the replacement of such
Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b)
any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating
or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted
Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect
to any then-current Benchmark:
(A)
in the case of clause (A) or (B) of the definition of “Benchmark Transition Event,” the later
of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which
the administrator of such Benchmark (or the published component used in the calculation thereof) permanently
or indefinitely ceases to provide all Available Tenors (if applicable) of such Benchmark (or such component
thereof); or
(B)
in the case of clause (C) of the definition of “Benchmark Transition Event,” the first date
on which such Benchmark (or the published component used in the calculation thereof) has been determined and
announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to
be non-representative; provided, that such non-representativeness will be determined by reference to the most
recent statement or publication referenced in such clause (C) and even if any Available Tenor (if applicable) of
such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, if the applicable then-current Benchmark has any Available Tenors,
the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (A) or (B) with respect
to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-
current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with
respect to any then-current Benchmark:
(A)
a public statement or publication of information by or on behalf of the administrator of
such Benchmark (or the published component used in the calculation thereof) announcing that such administrator
has ceased or will cease to provide all Available Tenors (if applicable) of such Benchmark (or such component
thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no
successor administrator that will continue to provide any Available Tenor (if applicable) of such Benchmark (or
such component thereof);
(B)
a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the
Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such
Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such
Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the
administrator for such Benchmark (or such component), which states that the administrator of such Benchmark
(or such component) has ceased or will cease to provide all Available Tenors (if applicable)of such Benchmark
(or such component thereof) permanently or indefinitely; provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide any Available Tenor (if applicable)
of such Benchmark (or such component thereof); or
(C)
a public statement or publication of information by the regulatory supervisor for the
administrator of such Benchmark (or the published component used in the calculation thereof) announcing that
all Available Tenors (if applicable) of such Benchmark (or such component thereof) are not, or as of a specified
future date will not be, representative.
For the avoidance of doubt, if the applicable then-current Benchmark has any Available Tenors, a
“Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public
statement or publication of information set forth above has occurred with respect to each then-current Available
Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier
of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark Transition Event is a public
statement or publication of information of a prospective event, the 90th day prior to the expected date of such
event as of such public statement or publication of information (or if the expected date of such prospective event
is fewer than 90 days after such statement or publication, the date of such statement or publication).
“Benchmark Unavailability Period” means, with respect to any then-current Benchmark, the
period (if any) (x) beginning at the time that a Benchmark Replacement Date with respect to such Benchmark has
occurred if, at such time, no Benchmark Replacement has replaced such Benchmark for all purposes hereunder
and under any Loan Document in accordance with Section 8.03 and (y) ending at the time that a Benchmark
Replacement has replaced such Benchmark for all purposes hereunder and under any Loan Document in
accordance with Section 8.03.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as
required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 CFR § 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.”
“Borrower” means The Cato Corporation, a Delaware corporation, and its successors and
permitted assigns.
“Capital Expenditures” means for any period the sum of all capital expenditures incurred during
such period by Borrower and its Consolidated Subsidiaries, as determined in accordance with FASB ASC 842,
which shall include, without limitation, the purchase or lease of any assets which if purchased would constitute
fixed assets or which if leased would constitute a finance lease or Type A lease (but excluding, for the avoidance
of doubt, any operating lease or Type B lease); provided, however, that Capital Expenditures shall not include
any such expenditures (i) for replacements, repairs or acquisitions of capital assets, to the extent made with the
proceeds of insurance in connection with a casualty event, or (ii) for replacements, repairs or acquisitions of
capital assets, to the extent made with proceeds from a sale or other disposition permitted under this Agreement
(within 180 days after receipt of such proceeds).
“Capital Lease
’’
means any lease of property that would, in accordance with FASB ASC 842, be
required to be classified and accounted for as a finance lease or Type A lease (but excluding, for the avoidance
of doubt, any operating lease or Type B lease).
“Capital Lease Obligations” means, with respect to any Capital Lease, the amount of the obligation
of the lessee thereunder that would, in accordance with GAAP, appear as a liability on the balance sheet of such
lessee in respect of such Capital Lease.
“Capital Stock” shall mean all shares, options, partnership, membership and other interests or other
equivalents (howsoever designated) of or in the equity of a Person, whether voting or nonvoting, including,
without limitation, common stock, partnership interests, membership interests, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents convertible, in whole or in part, into any
one or more or all of the foregoing.
“Cash” shall mean legal currency of the United States of America.
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. §9601 et seq., as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
“CERCLIS” means the Comprehensive Environmental Response Compensation and Liability
Information System established pursuant to CERCLA.
“Closing Certificate” has the meaning set forth in Section 3.01(d).
“Closing Date” has the meaning set forth in the introductory paragraph of Section 3.01.
“Code” means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code.
Any reference to any provision of the Code shall also be deemed to be a reference to any successor provision or
provisions thereof.
“Compliance Certificate” has the meaning set forth in Section 5.01(e).
“Conforming Changes” means, with respect to either the use or administration of an initial
Benchmark or the use, administration, adoption or implementation of any Benchmark Replacement, any technical,
administrative or operational changes (including changes to the definition of “Base Rate,” the definition of
“Domestic Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of
“Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing
and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, the applicability and length of lookback periods, and other technical,
administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and
implementation of any such rate or to permit the use and administration thereof by the Agent in a manner
substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market
practice is not administratively feasible or if the Agent determines that no market practice for the administration
of any such rate exists, in such other manner of administration as the Agent decides is reasonably necessary in
connection with the administration of this Agreement and the other Loan Documents).
“Consolidated Operating Profits” means, for any period, the Operating Profits of Borrower and its
Consolidated Subsidiaries.
“Consolidated Subsidiary” means at any date any Subsidiary or other entity the accounts of which,
in accordance with GAAP, would be consolidated with those of Borrower in its consolidated and consolidating
financial statements as of such date.
“Consolidated Tangible Net Worth ’’ means Net Worth less all Intangible Assets.
“Consolidated Total Assets” means, at any time, the total assets of Borrower and its Consolidated
Subsidiaries, determined on a consolidated basis, as set forth or reflected on the most recent consolidated balance
sheet of Borrower and its Consolidated Subsidiaries, prepared in accordance with GAAP.
“Controlled Group” means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a
single employer under Section 414 of the Code.
“Costs of Acquisition” means, with respect to any Acquisition, as at the date of entering into any
agreement therefor, the sum of the following (without duplication): (i) the value of the capital stock, warrants or
options to acquire capital stock of Borrower or any Subsidiary to be transferred in connection therewith, (ii) the
amount of any cash and fair market value of other property (excluding property described in clause (i) and the
unpaid principal amount of any debt instrument) given as consideration, (iii) the amount (determined by using
the face amount or the amount payable at maturity, whichever is greater) of any Debt incurred, assumed or
acquired by Borrower or any Subsidiary in connection with such Acquisition, (iv) all additional purchase price
amounts in the form of earnouts and other contingent obligations that should be recorded on the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements that should be recorded on financial statements of Borrower
and its Subsidiaries in accordance with GAAP, and other affiliated contracts in connection with such Acquisition
and (vi) the aggregate fair market value of all other consideration given by Borrower or any Subsidiary in
connection with such Acquisition. For purposes of determining the Cost of Acquisition for any transaction, (A)
the capital stock of Borrower shall be valued (I) in the case of capital stock that is then designated as a national
market system security by the National Association of Securities Dealers, Inc. or is listed on a national securities
exchange, the average of the last reported bid and ask quotations or the last prices reported thereon, and (II) with
respect to any other shares of capital stock, as determined by the Board of Directors of Borrower and, if requested
by the Agent, determined to be a reasonable valuation by the independent public accountants referred to in Section
5.01(a), (B) the capital stock of any Subsidiary shall be valued as determined by the Board of Directors of such
Subsidiary and, if requested by the Agent, determined to be a reasonable valuation by the independent public
accountants referred to in Section 5.01(a), and (C) with respect to any Acquisition accomplished pursuant to the
exercise of options or warrants or the conversion of securities, the Cost of Acquisition shall include both the cost
of acquiring such option, warrant or convertible security as well as the cost of exercise or conversion.
“Daily Simple SOFR” means, for any day (a “Simple SOFR Rate Day”), a rate per annum equal
to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is five (5) U.S. Government
Securities Business Days prior to (i) if such Simple SOFR Rate Day is a U.S. Government Securities Business
Day, such Simple SOFR Rate Day or (ii) if such Simple SOFR Rate Day is not a U.S. Government Securities
Business Day, the U.S. Government Securities Business Day immediately preceding such Simple SOFR Rate
Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website,
and (b) the Floor. If by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately
following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been
published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily
Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in
respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on
the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized
for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive Simple SOFR Rate
Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the
effective date of such change in SOFR without notice to Borrower.
“Daily Simple SOFR Loan” means any Loan bearing interest at a rate based on Daily Simple
SOFR (other than pursuant to the Daily Simple SOFR component of the definition of “Base Rate”), as provided
in Section 2.6(a).
“Debt” means with respect to any Person, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all obligations of such Person issued or
assumed as the deferred purchase price of property or services purchased by such Person (excluding current
accounts payable incurred in the ordinary course of business and due within twelve months of the incurrence
thereof) which would appear as liabilities on the balance sheet of such Person, (d) all Debt of others that are
secured by any Lien on any asset of such Person, whether or not such Person has assumed or become liable for
the payment thereof, (e) all Capital Lease Obligations, (f) all obligations of such Person under Hedge Agreements
(valued as the termination value thereof computed in accordance with a method approved by the International
Swap Dealers Association and agreed to by such Person in the applicable Hedge Agreement, if any), (g) the
maximum amount of all letters of credit issued or bankers’ acceptances facilities created for the account of such
Person, and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (h) all unfunded
employee benefit plan obligations and liabilities, (i) all Debt of others Guaranteed by such Person; (j) the principal
portion of all obligations of such Person under 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 under GAAP; (k) deferred taxes and (1) the
indebtedness of any partnership or unincorporated joint venture in which such Person is a general partner or a
joint venturer. Notwithstanding the foregoing, the term “Debt” shall be understood to exclude any indebtedness
or obligations owed from one Loan Party to another Loan Party.
“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect.
“Default” means any condition or event which constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless cured or waived in writing, become an Event of Default.
“Default Rate” means, with respect to any Revolving Credit Advance, on any day, the sum of 2%
plus the then highest interest rate (including the Applicable Margin) which may be applicable to such Loan
hereunder (irrespective of whether any such type of Loan is actually outstanding hereunder).
“Defaulting Bank” means, any Bank that (a) has failed to (i) fund all or any portion of the Loans
required to be funded by it hereunder within two Domestic Business Days of the date such Loans were required
to be funded hereunder unless such Bank notifies the Agent and Borrower in writing that such failure is the result
of such Bank’s determination that one or more conditions precedent to funding (each of which conditions
precedent, together with any applicable default, shall be specifically identified in such writing) has not been
satisfied, or (ii) pay to the Agent, any Issuing Bank, or any other Bank any other amount required to be paid by it
hereunder (including in respect of participations in Letters of Credit) within two Domestic Business Days of the
date when due, (b) has notified Borrower, the Agent, or any Issuing Bank in writing that it does not intend to
comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing
or public statement relates to such Bank’s obligation to fund a Loan hereunder and states that such position is
based on such Bank’s determination that a condition precedent to funding (which condition precedent, together
with any applicable default, shall be specifically identified in such writing or public statement) cannot be
satisfied), (c) has failed, within three Domestic Business Days after written request by the Agent or Borrower, to
confirm in writing to the Agent and Borrower that it will comply with its prospective funding obligations
hereunder (provided that such Bank shall cease to be a Defaulting Bank pursuant to this clause (c) upon receipt
of such written confirmation by the Agent and Borrower), or (d) has, or has a direct or indirect parent company
that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver,
custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the FDIC or any other state or federal regulatory
authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Bank shall not
be a Defaulting Bank solely by virtue of the ownership or acquisition of any equity interest in that Bank 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 Bank 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 Bank (or such governmental
authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Bank. Any
determination by the Agent or Borrower that a Bank is a Defaulting Bank under any one or more of clauses (a)
through (d) above shall be conclusive and binding absent manifest error, and such Bank shall be deemed to be a
Defaulting Bank upon delivery of written notice of such determination to Borrower, each Issuing Bank and each
Bank.
“Designated Officer” means the president, treasurer or chief financial officer of a Loan Party or
any other officer of a Loan Party authorized by resolution of the board of directors of such Loan Party to engage
in the activity specified herein with respect to such officer.
“Dollars” or “$” means dollars in lawful currency of the United States of America.
“Domestic Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in North Carolina are authorized or required by law to close.
“Domestic Subsidiary” means any Subsidiary that was formed under the laws of the United States
or any state of the United States or the District of Columbia.
“EBITDAR” means for Borrower and its Subsidiaries for any period, an amount equal to the sum
of:
(a)
Net Income for such period;
plus
(a)
in each case, to the extent deducted in determining Net Income for such period, without
duplication, (i) interest expense, (ii) income Taxes, (iii) depreciation and amortization, (iv) impairment expenses,
(v) non-cash impairment charges related to one-time or non-recurring expenses at Borrower’s stores, (vi) non-
cash charges or expenses relating to stock based compensation (but excluding any non-cash charge or expense
that represents an accrual for a cash expense to be taken in a future period), plus (d) the Gross Rental Expense,
all as determined in accordance with GAAP.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any
EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity
established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition,
or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution
described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland,
Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted
with public administrative authority of any EEA Member Country (including any delegee) having responsibility
for the resolution of any credit institution or investment firm established in any EEA Member Country.
“Environmental Authority” means any federal, state, local or regional government that exercises
any form of jurisdiction or authority under any Environmental Requirement.
“Environmental Authorizations” means all licenses, permits, orders, approvals, notices,
registrations or other legal prerequisites for conducting the business of a Loan Party or any Subsidiary of a Loan
Party required by any Environmental Requirement.
“Environmental Judgments and Orders” means all judgments, decrees or orders issued by an
Environmental Authority arising from or in any way associated with any Environmental Requirements.
“Environmental Laws” means any and all federal, state, and local statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions, discharges or releases of Hazardous
Materials into the environment, including, without limitation, ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or the clean-up or other remediation thereof.
“Environmental Liabilities” means any liabilities, whether accrued, contingent or otherwise,
arising from and in any way associated with any Environmental Requirements.
“Environmental Notices” means actual notice from any Environmental Authority or by any other
person or entity, of possible or alleged noncompliance with or liability under any Environmental Requirement,
including without limitation any complaints, citations, demands or requests from any Environmental Authority
or from any other person or entity for correction of any violation of any Environmental Requirement or any
investigations concerning any violation of any Environmental Requirement.
“Environmental Proceedings” means any judicial or administrative proceedings arising from or in
any way associated with any Environmental Requirement.
“Environmental Releases” means releases as defined in CERCLA or under any applicable
Environmental Law.
“Environmental Requirements” means any legal requirement relating to any applicable
Environmental Law and applicable to a Loan Party, any Subsidiary of a Loan Party or the Properties.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor law. Any reference to any provision of ERISA shall also be deemed to be a reference to
any successor provision or provisions thereof.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the
Loan Market Association (or any successor thereto), as in effect from time to time.
“Event of Default” has the meaning set forth in Section 6.01.
“FDIC” means the Federal Deposit Insurance Corporation.
“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to
the next higher 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if
the day for which such rate is to be determined is not a Domestic Business Day, the Federal Funds Rate for such
day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wells Fargo on such day on such transactions as determined
by the Agent.
“Financials” or “Financial Statements” means the consolidated balance sheet and statements of
income and cash flow to be delivered to the Banks by the Loan Parties pursuant to Section 5.01 hereof.
“Fiscal Quarter” means any fiscal quarter of Borrower.
“Fiscal Year ” means any fiscal year of Borrower.
“Fixed Charges” for any period means the sum of (i) Cash interest expense for such period, (ii)
Gross Rental Expense for such period and (iii) current maturities of long term Debt of Borrower and its
Consolidated Subsidiaries for such period, all as determined in accordance with GAAP.
“Floor” means a rate of interest equal to 0%.
“Fort Mill Land” means the real property owned by Borrower or any Domestic Subsidiary of
Borrower located in York County, South Carolina, consisting of approximately 381 gross acres of land as of the
Closing Date.
“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“GAAP” means generally accepted accounting principles applied on a basis consistent with those
which, in accordance with Section 1.02, are to be used in making the calculations for purposes of determining
compliance with the terms of this Agreement.
“Gross Rental Expense” means for any period the rental expense under non-cancelable operating
leases (including without limitation any contingent rent and monthly percentage rent payable with respect
thereto), amortization of deferred rent and payments under equipment leases, in each case for such period of
Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP.
“Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly
or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to secure, purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising
by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services,
to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the
term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The
term “Guarantee” used as a verb has a corresponding meaning.
“Guaranteed Obligations” means any and all liabilities, indebtedness and obligations of any and
every kind and nature, heretofore, now or hereafter owing, arising, due or payable from Borrower to the Banks,
the Issuing Bank, the Agent, or any of them, arising under or evidenced by this Agreement, the Notes, the Letter
of Credit Agreements or any other Loan Document.
“Guarantors” means collectively: (a) the Initial Guarantors; and (b) all Wholly Owned Domestic
Subsidiaries acquired, formed or otherwise in existence after the Closing Date, as required by Section 5.26 (other
than any Wholly Owned Domestic Subsidiaries existing as of the Closing Date and that are not Initial Guarantors).
“Hazardous Materials” includes, without limitation, (a) solid or hazardous waste, as defined in the
Resource Conservation and Recovery Act of 1980, 42 U.S.C. §6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b) any “hazardous substance”, “pollutant” or
“contaminant”, as defined in CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or any
other petroleum product or by-product, including crude oil or any fraction thereof, (d) toxic substances, as defined
in the Toxic Substances Control Act of 1976, or in any applicable state or local law or regulation and (e)
insecticides, fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide Act of
1975, or in any applicable state or local law or regulation, as each such Act, statute or regulation may be amended
from time to time.
“Hedge Agreement” means any interest rate or foreign currency hedging agreement entered into
by one or more of the Loan Parties providing for a swap, cap, floor or collar agreement or similar hedging or
arrangement providing for the transfer or mitigation of interest rate or foreign currency risk, either generally or
under specific contingencies.
“Immaterial Subsidiaries” means any Subsidiary that would not constitute a “significant
subsidiary” of Borrower as defined in Rule 1.02 of Regulation S-X promulgated by the SEC.
“Initial Guarantors” means collectively (i) Cato West, LLC, a Nevada limited liability company;
(ii) Cato Southwest, Inc., a Delaware corporation; (iii) CatoSouth LLC, a North Carolina limited liability
company; (iv) CHW, LLC, a Delaware limited liability company; (v) catocorp.com, LLC, a Delaware limited
liability company; (vi) CaDel LLC, a Delaware limited liability company; (vii) Cato of Texas L.P., a Texas limited
partnership; (viii) Cato WO LLC, a Delaware limited liability company; (ix) Cato of Florida L.L.C., a Florida
limited liability company; (x) Cato of Tennessee, LLC, a Tennessee limited liability company; (xi) Cato of
Virginia, LLC, a Virginia limited liability company; (xii) Cato of North Carolina, LLC, a North Carolina limited
liability company; (xiii) Cato of Illinois, LLC, a Illinois limited liability company; (xiv) Cato of South Carolina,
LLC, a South Carolina limited liability company; (xv) Ohio Cato Stores, LLC, a Ohio limited liability company;
and (xvi) Cato of Georgia, LLC, a Georgia limited liability company.
“Intangible Assets’’ means all intangible assets of Borrower and its Subsidiaries, on a consolidated
basis, including, without limitation, covenants not to compete, and any other asset that would be treated as an
intangible under GAAP.
“Interest Payment Date” means the first day of each month.
“Interest Period” means as to any Term SOFR Loan, the period commencing on the date such
Term SOFR Loan is disbursed or converted to or continued as a Term SOFR Loan and ending on the numerically
corresponding day in the first, second, third or sixth month thereafter, as Borrower may elect in the applicable
Notice of Borrowing and subject to availability; provided that:
(A)
the Interest Period shall commence on the date of advance of or conversion to any Term
SOFR Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall
commence on the date on which the immediately preceding Interest Period expires;
(B)
if any Interest Period would otherwise expire on a day that is not a Domestic Business Day,
such Interest Period shall expire on the next succeeding Domestic Business Day; provided that if any Interest
Period would otherwise expire on a day that is not a Domestic Business Day but is a day of the month after which
no further Domestic Business Day occurs in such month, such Interest Period shall expire on the immediately
preceding Domestic Business Day;
(C)
(1) no Interest Period may be selected which begins before the Termination Date and would
otherwise end after the Termination Date; provided that in any event an Interest Period may be less than the period
selected in and only in the calendar month in which the Notes originate or mature;
(2) for any Base Rate Loan, a calendar month; provided that the last Interest Period under
this Agreement shall end on the Termination Date.
(D)
there shall be no more than eight (8) Interest Periods in effect at any time;
(E)
no tenor that has been removed from this definition pursuant to Section 8.03(d) shall be
available for specification in any Notice of Borrowing.
“Investment” means any investment in any Person, whether by means of purchase or acquisition
of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person,
making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or
otherwise.
“Investment Policy’’ means the Investment Policy attached hereto as Schedule 1.01 - Investment
Policy.
“Issuing Bank’’ means Wells Fargo, and any successor in such capacity.
“John Cato’’ means John P. Derham Cato and any of his children and trusts for their benefit.
“Lending Office’’ means, as to each Bank, its office located at its address set forth on the signature
pages hereof (or identified on the signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to Borrower and the Agent.
“Letter of Credit’’ means the letters of credit issued by the Issuing Bank pursuant to Section 2.03(a)
and “Letter of Credit’’ means any one of such Letters of Credit, as any of such letters of credit may be extended,
renewed, replaced or amended from time to time.
“Letter of Credit Advance’’ means an advance made by the Issuing Bank pursuant to Section
2.03(c).
“Letter of Credit Agreement’’ means any agreement entered into by Borrower and the Issuing
Bank pursuant to which a Letter of Credit is issued, as amended, modified or restated from time to time.
“Letter of Credit Commitment’’ means, with respect to each Bank, (i) the amount designated as
the Letter of Credit Commitment set forth opposite the name of such Bank on the signature pages hereof, or (ii)
as to any Bank which enters into an Assignment and Acceptance (whether as transferor Bank or as Assignee
thereunder), the amount of such Bank’s Letter of Credit Commitment after giving effect to such Assignment and
Acceptance, in each case as such amount may be reduced from time to time pursuant to Sections 2.08 and 2.09.
“Lien” means, with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien,
pledge, charge, security interest, security title, preferential arrangement which has the practical effect of
constituting a security interest or encumbrance, servitude or encumbrance of any kind in respect of such asset to
secure or assure payment of a Debt or a Guarantee, whether by consensual agreement or by operation of statute
or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of
this Agreement, Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
“Loan” means a Base Rate Loan, Daily Simple SOFR Loan, Term SOFR Loan, or Revolving
Credit Advance and “Loans’’ means Base Rate Loans, Daily Simple SOFR Loans, Term SOFR Loans, Revolving
Credit Advances (which terms are not necessarily exclusive of the other said terms, e.g., a Term SOFR Loan may
also be a Revolving Credit Advance) or any or all of them, as the context shall require.
“Loan Documents’’ means this Agreement, the Notes, the Letter of Credit Agreements, the Letters
of Credit, any other document evidencing, relating to or securing the Revolving Credit Advances, or the Letters
of Credit, and any other document or instrument delivered from time to time in connection with this Agreement,
the Notes, the Letter of Credit Agreements, the Letters of Credit, or Revolving Credit Advances, as such
documents and instruments may be amended or supplemented from time to time.
“Loan Parties’’ means collectively Borrower and each Guarantor that is now or hereafter a party
to any of the Loan Documents.
“Margin Stock” means “margin stock” as defined in Regulations T, U or X of the FRB, as in effect
from time to time, together with all official rulings and interpretations issued thereunder.
“Material Adverse Effect” means a material adverse change in or a material adverse effect on (a)
the condition (financial or otherwise), operations, business or properties of Borrower or any of its Consolidated
Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or the Banks under the Loan Documents,
or the ability of the Loan Parties to perform their obligations under the Loan Documents, or (c) the legality,
validity or enforceability of any Loan Document.
“Minimum EBITDAR Coverage Ratio” means, as of the end of any Fiscal Quarter, the ratio of (i)
EBITDAR for the four-Fiscal Quarter period then ended minus Taxes paid in Cash for such four-Fiscal Quarter
period to (ii) the Fixed Charges for such four-Fiscal Quarter period.
“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.
“Net Income” means the consolidated net income of Borrower and its Subsidiaries determined in
accordance with GAAP.
“Net Worth” means at any time the combined stockholders’ equity of Borrower and its
Subsidiaries on a consolidated basis at such time determined in accordance with GAAP.
“Notes’’ means each of the Revolving Credit Notes, or any or all of them, as the context shall
require.
‘‘Notice of Borrowing’’ has the meaning set forth in Section 2.02.
“Obligations’’ means and include the Revolving Credit Advances, Letter of Credit Advances and
all other loans, advances, indebtedness, liabilities, obligations, covenants and duties (including post-petition
interest on the foregoing, to the extent lawful) owing, arising, due or payable jointly or severally, from any Loan
Party to Agent, the Issuing Bank or any Bank of any kind or nature, present or future, howsoever evidenced,
created, incurred, acquired or owing, whether arising under this Agreement, the Notes, the Letter of Credit
Agreements, the other Loan Documents or otherwise with respect to the Revolving Credit Advances, Letter of
Credit Advances, Letters of Credit, or the other Loan Documents, whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation, all interest, charges, expenses,
fees, attorneys’ fees and any other sums chargeable to any Loan Party by Agent, the Issuing Bank or any Bank
under this Agreement, the Notes, the Letter of Credit Agreements or any of the other Loan Documents.
“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Officer’s Certificate” has the meaning set forth in Section 3.01(e).
“Operating Profits” means, as applied to any Person for any period, the operating income of such
Person for such period, as determined in accordance with GAAP.
“Participant” has the meaning set forth in Section 9.07(b).
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub, L. 107-56, signed into law October 26, 2001.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.
“Permitted Lien” means the Liens permitted under Section 5.11.
“Person” means an individual, a corporation, a limited liability company, a partnership (including
without limitation, a joint venture), an unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an agency or instrumentality thereof.
“Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA
maintained by any member of the Controlled Group.
“Preferred Stock” means Capital Stock of any of Loan Parties that gives the holder thereof a
preference over the holders of such Loan Party’s common stock with respect to the payment of dividends or
liquidation proceeds, or otherwise designated by such Loan Party as “preferred stock.
’’
“Previous Loan Agreement” means the Loan Agreement, by and between the Loan Parties and the
lenders named therein, dated as of August 22, 2003, as amended.
“Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to
time by the Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business
on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced
publicly by the Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate
charged to its customers or other banks.
“Principal Payment Date” means the first day of each month.
“Prohibited Transaction’’ shall have the meaning given such term under ERISA.
“Properties’’ means all real property owned, leased or otherwise used or occupied by a Loan Party
or any Subsidiary of a Loan Party, wherever located, now or in the future.
“Pro Rata Share” of any amount means, with respect to any Bank at any time, the product of such
amount times a fraction the numerator of which is the amount of such Bank ’s Revolving Credit Commitment at
such time and the denominator of which is the aggregate amount of the Revolving Credit Commitments of all of
the Banks at such time.
“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.
“Quarterly Payment Date” means March 31, June 30, September 30 and December 31 of each
year.
“Redeemable Preferred Stock” of any Person means any preferred stock issued by such Person
which is at any time prior to the Termination Date either (i) mandatorily redeemable (by sinking fund or similar
payments or otherwise) or (ii) redeemable at the option of the holder thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such
Person and of such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve
Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the
Federal Reserve Bank of New York or any successor thereto.
“Reportable Event” shall have the meaning given such term in ERISA.
“Required Banks” means (A) at any time there are only two (or fewer) Banks party to this
Agreement: (1) Banks having at least 66 2/3% of the aggregate amount of the Revolving Credit Commitments;
or (2) if the Revolving Credit Commitments are no longer in effect, Banks holding at least 66 2/3% of the
aggregate outstanding principal amount of the Notes, Letter of Credit Advances and Undrawn Amounts; and (B)
at any time there are more than two Banks party to this Agreement: (1) Banks having at least 51% of the aggregate
amount of the Revolving Credit Commitments or, (2) if the Revolving Credit Commitments are no longer in
effect, Banks holding at least 51% of the aggregate outstanding principal amount of the Notes, Letter of Credit
Advances and Undrawn Amounts.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial
Institution, a UK Resolution Authority.
“Restricted Payment” means (i) any dividend or other distribution on any shares of Borrower’s
capital stock (except dividends payable solely in shares of its capital stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares of Borrower’s capital stock (except shares
acquired upon the conversion thereof into other shares of its capital stock) or (b) any option, warrant or other right
to acquire shares of Borrower’s capital stock.
“Revolving Credit Advance” shall mean an advance made to Borrower under this Agreement
pursuant to Section 2.01. A Revolving Credit Advance is: (i) a “Base Rate Advance” if such Revolving Credit
Advance is a Base Rate Loan; (ii) a “Daily Simple SOFR Advance” if such Revolving Credit Advance is a Daily
Simple SOFR Loan; or (iii) a “Term SOFR Advance” if such Revolving Credit Advance is a Term SOFR Loan.
“Revolving Credit Borrowing” means a borrowing hereunder consisting of Revolving Credit
Advances made to Borrower at the same time by the Banks pursuant to Section 2.01. A Revolving Credit
Borrowing is: (i) a “Base Rate Borrowing” if such Revolving Credit Advances are Base Rate Loans, (ii) a “Daily
Simple SOFR Borrowing” if such Revolving Credit Advances are Daily Simple SOFR Loans; or (iii) a “Term
SOFR Borrowing” if such Revolving Credit Advances are Term SOFR Loans.
A
“Daily Simple SOFR
Borrowing” and a “Term SOFR Borrowing” may collectively be referred to as a “SOFR Loan Borrowing”.
“Revolving Credit Commitment” means, with respect to each Bank, (i) the amount set forth
opposite the name of such Bank on the signature pages hereof and denominated as the Revolving Credit
Commitment, or (ii) as to any Bank which enters into an Assignment and Acceptance (whether as transferor Bank
or as Assignee thereunder), the amount of such Bank’s Revolving Credit Commitment after giving effect to such
Assignment and Acceptance, in each case as such amount may be reduced from time to time pursuant to Sections
2.08 and 2.09.
“Revolving Credit Notes” means the promissory notes of Borrower, substantially in the form of
Exhibit A hereto, evidencing the obligation of Borrower to repay the Revolving Credit Advances, together with
all amendments, consolidations, modifications, renewals and supplements thereto and “Revolving Credit Note”
means any one of such Revolving Credit Notes.
“Sanctioned Country” means, at any time, a country, region or territory which is itself (or whose
government is) the subject or target of any Sanctions (including, as of the Closing Date, Cuba, Iran, North Korea,
Syria, Venezuela and Crimea).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of
designated Persons maintained by OFAC (including OFAC’s Specially Designated Nationals and Blocked
Persons List and OFAC’s Consolidated Non-SDN List), the U.S. Department of State, the United Nations Security
Council, the European Union, any European member state, Her Majesty’s Treasury, or other relevant sanctions
authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or
controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, any such Person or Persons
described in clauses (a) and (b), including a Person that is deemed by OFAC to be a Sanctions target based on the
ownership of such legal entity by Sanctioned Person(s) or (d) any Person otherwise a target of Sanctions, including
vessels and aircraft, that are designated under any Sanctions program.
“Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary
sanctions, trade embargoes and restrictions and anti-terrorism laws, including but not limited to those imposed,
administered or enforced from time to time by the U.S. government (including those administered by OFAC or
the U.S. Department of State), the United Nations Security Council, the European Union, any European member
state, Her Majesty’s Treasury, or other relevant sanctions authority in any jurisdiction in which (a) Borrower or
any of its Subsidiaries or Affiliates is located or conducts business, (b) in which any of the proceeds of the
extensions of credit will be used, or (c) from which repayment of the extensions of credit will be derived.
“SEC” means the U.S. Securities and Exchange Commission.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR
Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor
administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York,
currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate
identified as such by the SOFR Administrator from time to time.
“SOFR Loan” means any Daily Simple SOFR Loan or Term SOFR Loan.
“Subordinated Debentures” means any Debt of any Loan Party which expressly contains in the
instruments evidencing such Debt, or in the indenture or other similar instrument pursuant to which such Debt is
issued, subordination provisions, satisfactory to the Agent, and substantially to the effect that the holder agrees
that the Debt evidenced by such instrument, and any renewals or extensions thereof, shall at all times and in all
respects be subordinate and junior in right of payment to the Obligations hereunder.
“Subsidiary” means any corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by Borrower or one
or
more of its Subsidiaries.
“Taxes” has the meaning set forth in Section 2.12(c).
“Term SOFR” means, for any calculation, the Term SOFR Reference Rate for a tenor comparable
to the applicable Interest Period on the day (such day, the “Term SOFR Determination Day”) that is two (2) U.S.
Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by
the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (Eastern time) on any Term SOFR
Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term
SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not
occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR
Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR
Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding
U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days
prior to such Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above
(including pursuant to the proviso under clause (a) or clause (b) above) shall ever be less than the Floor, then
Term SOFR shall be deemed to be the Floor.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or
a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).
“Term SOFR Loan” means any Loan bearing interest at a rate based on Term SOFR, as provided
in Section 2.06(a).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” means May 18, 2027.
“Third Parties” means all lessees, sublessees, licensees and other users of the Properties, excluding
those users of the Properties in the ordinary course of Borrower’s business and on a temporary basis.
“Total Unused Revolving Credit Commitments” means at any date, an amount equal to: (A) the
aggregate amount of the Revolving Credit Commitments of all of the Banks at such time, less (B) the sum of: (i)
the aggregate outstanding principal amount of the Revolving Credit Advances of all of the Banks at such time;
(ii) the aggregate outstanding principal amount of all Letter of Credit Advances; and (iii) the aggregate Undrawn
Amounts.
“Transferee” has the meaning set forth in Section 9.07(d).
“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 Financial Institution” 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.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding
the Benchmark Replacement Adjustment.
“Undrawn Amount” means, with respect to any Letter of Credit, at any time, the maximum amount
available to be drawn under such Letter of Credit at such time and “Undrawn Amounts” means, at any time, the
sum of all Undrawn Amounts at such time.
“United States” means the United States of America.
“Unused Revolving Credit Commitment” means at any date, with respect to any Bank, an amount
equal to its Revolving Credit Commitment less the sum of: (i) aggregate outstanding principal amount of its
Revolving Credit Advances; (ii) such Bank’s Pro Rata Share of the aggregate outstanding principal amount of all
Letter of Credit Advances; and (iii) such Bank’s Pro Rata Share of the Undrawn Amounts.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday
or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income
departments of its members be closed for the entire day for purposes of trading in United States government
securities.
“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.
“Wholly Owned Domesti c Subsidiary” means any Domestic Subsidiary that is a Wholly Owned
Subsidiary.
“Wholly Owned Subsidiary” (i) any corporation 100% of whose Equity Interest is at the time
owned by Borrower and/or one or more Wholly Owned Subsidiaries and (ii) any partnership, limited liability
company, association, joint venture or other entity in which Borrower and/or one or more Wholly Owned
Subsidiaries has a 100% equity interest at such time.
“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.
SECTION 1.02
Accounting Terms and Determinations. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided that, if after the date hereof there occurs any change in GAAP or in the
application thereof on the operation of any provision hereof and Borrower notifies the Agent that Borrower
requests an amendment to any provision hereof to eliminate the effect of such change in GAAP or in the
application thereof (or if the Agent notifies Borrower that the Required Banks 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. 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 Borrower or any of its Subsidiaries 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.
SECTION 1.03
Use of Defined Terms . All terms defined in this Agreement shall have the
same meanings when used in any of the other Loan Documents, unless otherwise defined therein or unless the
context shall otherwise require.
SECTION 1.04
Terminology. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural
and the plural shall include the singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.
SECTION 1.05
References. Unless otherwise indicated, references in this Agreement to
“Articles”, “Exhibits’’ . “Schedules’’, and “Sections’’ are references to articles, exhibits, schedules and sections
hereof.
SECTION 1.06
Divisions. For all purposes under the Loan Documents, in connection with
any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s
laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability
of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent
Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized
on the first date of its existence by the holders of its equity interests at such time.
SECTION 1.07
Rates. The Agent does not warrant or accept any responsibility for, and
shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation
of or any other matter related to Daily Simple SOFR, SOFR, the Term SOFR Reference Rate
or Term SOFR, or
any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative,
successor or replacement rate thereto (including any Benchmark Replacement), including whether the
composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark
Replacement), as it may or may not be adjusted pursuant to Section 8.03, will be similar to, or produce the same
value or economic equivalence of, or have the same volume or liquidity as, Daily Simple SOFR, SOFR, the Term
SOFR Reference Rate, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b)
the effect, implementation or composition of any Conforming Changes. The Agent and its Affiliates or other
related entities may engage in transactions that affect the calculation of Daily Simple SOFR, SOFR, the Term
SOFR Reference Rate
,
Replacement) or any relevant adjustments thereto and such transactions may be adverse to Borrower. The Agent
may select information sources or services in its reasonable discretion to ascertain Daily Simple SOFR, SOFR,
the Term SOFR Reference Rate
or Term SOFR, or any other Benchmark, any component definition thereof or
rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no
liability to Borrower, any Bank 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 1.08
Pro Forma Adjustments for Acquisitions. To the extent Borrower or any
Subsidiary makes any Acquisition permitted pursuant to Section 5.04 during the period of four-Fiscal Quarter
period of Borrower and its Subsidiaries then most recently ended, the Minimum EBITDAR Coverage Ratio and
Consolidated Tangible Net Worth shall be calculated after giving pro forma effect thereto (including pro forma
adjustments arising out of events which are directly attributable to such Acquisition, are factually supportable and
are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of
Regulation S-X of the Securities Act of 1933, as amended, as interpreted by the SEC, and as certified by a
Designated Officer), as if such Acquisition (and any related incurrence, repayment or assumption of Indebtedness)
had occurred in the first day of such four-Fiscal Quarter period.
SECTION 1.09
Timing of Payment or Performance. Except as otherwise provided herein,
when the payment of any obligation or the performance of any covenant, duty, or obligation is stated to be due or
performance required on (or before) a day which is not a Business Day, the date of such payment or performance
shall extend to the immediately succeeding Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.
ARTICLE II
THE CREDITS
SECTION 2.01
Commitments to Make Revolving Credit Advances. Each Bank severally
agrees, on the terms and conditions set forth herein, to make Revolving Credit Advances to Borrower from time
to time before the Termination Date; provided that, immediately after each such Revolving Credit Advance is
made, the aggregate outstanding principal amount of Revolving Credit Advances by such Bank together with
such Bank’s Pro Rata Share of the aggregate outstanding principal amount of all Letter of Credit Advances and
Undrawn Amounts shall not exceed the amount of its Revolving Credit Commitment, provided further that the
aggregate principal amount of all Revolving Credit Advances, together with the aggregate principal amount of all
Letter of Credit Advances and Undrawn Amounts, shall not exceed the aggregate amount of the Revolving Credit
Commitments of all of the Banks at such time. Each Revolving Credit Borrowing under this Section shall be in
an aggregate principal amount of $500,000 or any larger multiple of $100,000 (except that any such Revolving
Credit Borrowing may be in the aggregate amount of the Unused Revolving Credit Commitments) and shall be
made from the several Banks ratably in proportion to their respective Revolving Credit Commitments. Within
the foregoing limits, Borrower may borrow under this Section, repay or, to the extent permitted by Section 2.10,
prepay Revolving Credit Advances and reborrow under this Section at any time before the Termination Date.
SECTION 2.02
Method of Borrowing Revolving Credit Advances.
(a)
Borrower shall give the Agent notice in the form attached hereto as Exhibit B (a “Notice
of Borrowing”) prior to (i) 11:00 A.M. (Winston -Salem, North Carolina time) on the same Domestic Business
Day of each Base Rate Borrowing, and (ii) 11:00 A.M. (Winston-Salem, North Carolina time) on the same
Domestic Business Day of each SOFR Loan Borrowing, specifying:
(i)
the date of such Revolving Credit Borrowing, which shall be a Domestic Business
Day;
(ii)
the aggregate amount of such Revolving Credit Borrowing;
(iii)
whether such Revolving Credit Borrowing is to be a Daily Simple SOFR
Borrowing, Term SOFR Borrowing or Base Rate Borrowing, and
(iv)
in the case of a SOFR Loan Borrowing, the duration of the Interest Period
applicable thereto, subject to the provisions of the definition of Interest Period.
(b)
Except as provided in Section 2.02(d) of this Agreement, upon receipt of a Notice of
Borrowing, the Agent shall promptly notify each Bank of the contents thereof and of such Bank’s ratable share
of such Revolving Credit Borrowing and such Notice of Borrowing shall not thereafter be revocable by Borrower.
(c)
Except as provided in Section 2.02(d) of this Agreement, not later than 12:00 PM.
(Winston-Salem, North Carolina time) on the date of each Revolving Credit Borrowing, each Bank shall (except
as provided in subsection (d) of this Section) make available its ratable share of such Revolving Credit Borrowing,
in Federal or other funds immediately available in Winston-Salem, North Carolina, to the Agent at its address
referred to in or specified pursuant to Section 9.01. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make the funds so received from the Banks available
to Borrower at the Agent’s aforesaid address. Unless the Agent receives notice from a Bank, at the Agent’s
address referred to in Section 9.01, no later than 4:00 PM. (local time at such address) on the Domestic Business
Day before the date of a Revolving Credit Borrowing stating that such Bank will not make a Revolving Credit
Advance in connection with such Revolving Credit Borrowing, the Agent shall be entitled to assume that such
Bank will make a Revolving Credit Advance in connection with such Revolving Credit Borrowing and, in reliance
on such assumption, the Agent may (but shall not be obligated to) make available such Bank’s ratable share of
such Revolving Credit Borrowing to Borrower for the account of such Bank. If the Agent makes such Bank’s
ratable share available to Borrower and such Bank does not in fact make its ratable share of such Revolving Credit
Borrowing available on such date, the Agent shall be entitled to recover such Bank’s ratable share from such
Bank or Borrower (and for such purpose shall be entitled to charge such amount to any account of Borrower
maintained with the Agent), together with interest thereon for each day during the period from the date of such
Revolving Credit Borrowing until such sum shall be paid in full at a rate per annum equal to the rate set forth in
Section 2.06 for each such day during such period, provided that: (1) any such payment by Borrower of such
Bank’s ratable share and interest thereon shall be without prejudice to any rights that Borrower may have against
such Bank; and (2) until such Bank has paid its ratable share of such Revolving Credit Borrowing, together with
interest pursuant to the foregoing, it will have no interest in or rights with respect to such Revolving Credit
Borrowing for any purpose hereunder. If such Bank shall repay to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank’s Revolving Credit Advance included in such Revolving Credit
Borrowing for purposes of this Agreement.
(d)
At the Agent’s option and to facilitate the efficient administration of this Agreement, the
Agent shall be entitled to make settlements and adjustments on a weekly basis provided that: (1) all Revolving
Credit Borrowings, Revolving Credit Advances and all payments of principal with respect to such Revolving
Credit Borrowings and Revolving Credit Advances shall be shared by the Banks ratably in proportion to their
Revolving Credit Commitments and in accordance with this Agreement; and (2) all funds advanced by the Agent
under this Agreement and all funds received by the Agent under this Agreement shall be made or received, as the
case may be, by the Agent, as agent on behalf of the Banks and shall not constitute separate loans or advances
made by the Agent. Unless the Agent receives notice from a Bank, at the Agent’s address referred to in Section
9.01, no later than 4:00 RM. (local time at such address) on the Domestic Business Day before the date of a
Revolving Credit Borrowing stating that such Bank will not make a Revolving Credit Advance in connection
with such Revolving Credit Borrowing, the Agent may assume that each Bank will make a Revolving Credit
Advance in connection with each Revolving Credit Borrowing and, in reliance on such assumption, the Agent
may make available such Bank’s ratable share of such Revolving Credit Borrowing to Borrower for the account
of such Bank. No later than 11:00 A.M. (Winston-Salem, North Carolina time) on Friday of each week the Agent
shall advise each Bank of its ratable share of the Revolving Credit Borrowings and payments made or received
by the Agent for the period ending on the immediately preceding Wednesday . No later than 2:00 PM. (Winston-
Salem, North Carolina time) on such Friday the Agent and Banks shall effect payments (and credits) so that all
Revolving Credit Borrowings, Revolving Credit Advances and payments with respect to the Revolving Credit
Borrowings and Letters of Credit are shared by the Banks ratably; provided, however, at any time: (1) upon the
request of the Agent, each Bank shall, make its ratable share of any Revolving Credit Borrowing available to the
Agent on demand but in no event later than one Domestic Business Day following the Agent’s demand; and (2)
the Agent shall be entitled to recover such Bank’s ratable share of each Revolving Credit Borrowing from such
Bank, together with interest thereon for each day during the period from the date of any such demand until such
sum shall be paid in full at a rate per annum equal to the rate set forth in Section 2.06. Each Bank’s obligation
under this Section 2.02(d) shall be absolute and unconditional and shall not be affected by any circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense or other right which such Bank
or any other Person may have against the Agent requesting such adjustment or payment or any other Person for
any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the termination
of the Revolving Credit Commitment; (iii) any adverse change in the condition (financial or otherwise) of
Borrower, any Guarantor or any other Person; (iv) any breach of this Agreement or any of the other Loan
Documents by Borrower, any Guarantor or any other Bank; or (v) any other circumstance, happening or event
whatsoever whether or not similar to any of the foregoing.
(e)
Borrower shall elect the initial Interest Period to a SOFR Loan by its Notice of Borrowing
given to the Agent pursuant to Section 2.02(a) above. Borrower shall elect the duration of each succeeding
Interest Period by giving written notice to the Agent of such duration not later than 11:00 A.M. (Winston-Salem,
North Carolina time) on the day which is three (3) Domestic Business Days prior to the last day of the then current
Interest Period applicable to such SOFR Loan. If the Agent does not receive timely notice of the Interest Period
elected by Borrower, Borrower shall be deemed to have elected to continue such SOFR Loan at a rate based upon
Daily Simple SOFR as of the last day of the Interest Period applicable to such SOFR Loan subject to Section
2.02(f) below.
(f)
Borrower may, on the last Domestic Business Day of the then current Interest Period
applicable to any outstanding SOFR Loan, or on any Domestic Business Day with respect to Base Rate Loans,
convert any such SOFR Loan into a Base Rate Loan or any such Base Rate Loan to a SOFR Loan, in each case,
in the same aggregate principal amount, provided that (x) any conversion of a SOFR Loan shall be made only on
the last Domestic Business Day of the then current Interest Period applicable to such SOFR Loan, and (y) at the
Agent’s option, no conversion of a Base Rate Loan to a SOFR Loan shall be made, and no new SOFR Loan shall
be made, during the continuance of an Event of Default. If Borrower desires to convert a SOFR Loan or Base
Rate Loan, Borrower shall give the Agent written notice by no later than 3:00 p.m. (Winston-Salem, North
Carolina time) (i) on the day which is three (3) Domestic Business Days prior to the date on which such conversion
is to occur with respect to a conversion from a Base Rate Loan to a SOFR Loan, or (ii) on the day which is one
(1) Domestic Business Day prior to the date on which such conversion is to occur (which date shall be the last
Domestic Business Day of the Interest Period for the applicable SOFR Loan) with respect to a conversion from a
SOFR Loan to a Base Rate Loan, specifying, in each case, the date of such conversion, the SOFR Loan(s) or Base
Rate Loan(s) to be converted and if the conversion is to a SOFR Loan, the duration of the first Interest Period
therefor.
SECTION 2.03
Letters of Credit.
(a)
The Issuing Bank may, from time to time upon request of Borrower, in its sole discretion
issue Letters of Credit for the account of Borrower, subject to satisfaction of the conditions referenced in Section
3.03.
(b)
Each Letter of Credit shall be subject to the provisions of this Agreement and to the
provisions set forth in the Letter of Credit Agreement executed by Borrower in connection with the issuance of
such Letter of Credit. Borrower agrees to promptly perform and comply with the terms and conditions of each
Letter of Credit Agreement.
(c)
The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall
constitute for all purposes of this Agreement a Letter of Credit Advance in the amount of such draft. Upon written
demand by the Issuing Bank, with a copy to the Agent, each Bank shall purchase from the Issuing Bank, and the
Issuing Bank shall sell to each Bank, a participation interest in such Letter of Credit Advance equal to such Bank’s
Pro Rata Share of such Letter of Credit Advance as of the date of such purchase, by making available to the Agent
for the account of the Issuing Bank, in Federal or other funds immediately available an amount equal to such
Bank’s Pro Rata Share of the outstanding principal amount of such Letter of Credit Advance. Promptly after
receipt thereof, the Agent shall transfer such funds to the Issuing Bank. Borrower hereby agrees to each such sale
and purchase of participation interests in Letter of Credit Advances outstanding from time to time. Each Bank
agrees to purchase its participation interest in an outstanding Letter of Credit Advance on (i) the Domestic
Business Day on which demand therefor is made by the Issuing Bank, provided notice of such demand is given
not later than 1:00 PM. (Winston -Salem, North Carolina time) on such Domestic Business Day or (ii) the first
Domestic Business Day next succeeding the date of such demand if notice of such demand is given after 1:00
P.M. (Winston-Salem, North Carolina time) on any Domestic Business Day. The Issuing Bank makes no
representation or warranty and assumes no responsibility with respect to any sale and purchase of a participation
interest in any Letter of Credit Advance. If and to the extent that any Bank shall not have so made the amount
available to the Agent in connection with its purchase of a participation interest in any Letter of Credit Advance,
such Bank agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each
day from the date of demand by the Issuing Bank, until the date such amount is paid to the Agent, at the Federal
Funds Rate for the account of the Issuing Bank.
(d)
The obligation of each Bank to purchase a participation interest in any Letter of Credit
Advance pursuant to Section 2.03(c) shall be unconditional and shall not be affected by the existence of any
Default, the failure to satisfy any condition set forth in Section 3.1, 3.2 or 3.3 or the termination of the Revolving
Credit Commitments or Letter of Credit Commitments (whether by Borrower pursuant to Section 2.08 or by the
Agent pursuant to Section 6.1 or otherwise).
(e)
The Issuing Bank shall furnish (A) to the Agent and each Bank on the tenth Domestic
Business Day of each April, July, October and January, a written report summarizing the issuance and expiration
dates of Letters of Credit issued during the preceding calendar quarter and (B) to the Agent and each Bank upon
request a written report setting forth the aggregate Undrawn Amounts.
(f)
The failure of any Bank to purchase a participation interest in any Letter of Credit Advance
shall not relieve any other Bank of its obligation hereunder to purchase its participation interest in any Letter of
Credit Advance on such date, but no Bank shall be responsible for the failure of any other Bank to so purchase a
participation interest on such date.
(g)
Borrower shall pay to the Agent for the account of each Bank that has purchased a
participation interest in a Letter of Credit Advance on the earlier of demand and the Termination Date the
outstanding principal amount of such Letter of Credit Advance. The Agent will promptly distribute to each Bank
its ratable share of any payment of principal of or interest on any Letter of Credit Advance received by the Agent;
provided, however, that in the event that such payment received by the Agent is required to be returned, such
Bank will return to the Agent any portion thereof previously distributed by the Agent to it.
(h)
The Issuing Bank will notify Borrower and the Agent promptly of the presentment for
payment of any Letter of Credit, together with notice of the date such payment shall be made, and the Agent
promptly will notify the Banks of such matters.
SECTION 2.04
Notes.
(a)
The Revolving Credit Advances of each Bank shall be evidenced by a single Revolving
Credit Note payable to the order of such Bank for the account of its Lending Office in an amount equal to the
original principal amount of such Bank’s Revolving Credit Commitment.
(b)
Upon receipt of each Bank’s Notes pursuant to Section 3.01, the Agent shall deliver such
Notes to such Bank. Each Bank shall record, and prior to any transfer of its Notes shall endorse on the schedule
forming a part thereof appropriate notations to evidence, the date, amount and maturity of, and effective interest
rate for, each Revolving Credit Advance, as the case may be, made by it, the date and amount of each payment
of principal made by Borrower with respect thereto and such schedule shall constitute rebuttable presumptive
evidence of the principal amount owing and unpaid on such Bank’s Note; provided that the failure of any Bank
to make, or any error in making, any such recordation or endorsement shall not affect the obligation of Borrower
hereunder or under the Notes or the ability of any Bank to assign its Notes. Each Bank is hereby irrevocably
authorized by Borrower so to endorse its Notes and to attach to and make a part of any Note a continuation of any
such schedule as and when required.
SECTION 2.05
Maturity of Loans. Each Revolving Credit Advance included in any
Revolving Credit Borrowing shall mature, and the principal amount thereof shall be due and payable, subject to
Section 6.01, on the Termination Date.
SECTION 2.06
Interest Rates.
(a)
“Applicable Margin” means a percentage per annum equal to (i) in the case of Revolving
Credit Advances maintained as (A) Base Rate Advances, 0.00%, and (B) Daily Simple SOFR Advances or Term
SOFR Advances, 1.00% and (ii) in the case of calculating the unused fee pursuant to Section 2.07(a), 0.10% per
annum.
(b)
During each Interest Period in which a Revolving Credit Advance is a Base Rate Loan,
such Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day during the
applicable Interest Period, at a rate per annum equal to the Base Rate for such day plus the Applicable Margin.
Any overdue principal of and, to the extent permitted by applicable law, overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid in full at a rate per annum equal to the Default
Rate.
(c)
During each Interest Period in which a Revolving Credit Advance is an Daily Simple SOFR
Loan, such Daily Simple SOFR Loan shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to Daily Simple SOFR for such day plus the
Applicable Margin. Any overdue principal of and, to the extent permitted by applicable law, overdue interest on
any Daily Simple SOFR Loan shall bear interest, payable on demand, for each day until paid in full at a rate per
annum equal to the Default Rate.
(d)
During each Interest Period in which a Revolving Credit Advance is a Term SOFR Loan,
such Term SOFR Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to Term SOFR for such day plus the Applicable Margin. Any
overdue principal of and, to the extent permitted by law, overdue interest on any Term SOFR Loan shall bear
interest, payable on demand, for each day until paid at a rate per annum equal to the Default Rate.
(e)
Interest on each Base Rate Loan and SOFR Loan shall be payable for each Interest Period
on the Interest Payment Date immediately succeeding the last day of the Interest Period. Notwithstanding the
foregoing, (1) all accrued unpaid interest on the Revolving Credit Advances shall be paid in full on the
Termination Date; and (2) should the Revolving Credit Commitment be terminated at any time prior to the
Termination Date for any reason, any and all accrued unpaid interest shall be paid on the date of such termination.
(f)
Each Letter of Credit Advance shall bear interest on the outstanding principal amount
thereof, payable on demand, for each day from the date such Letter of Credit Advance is made until paid in full
at a rate per annum equal to the Base Rate, plus the Applicable Margin for Daily Simple SOFR Loans.
(g)
The Agent shall determine each interest rate applicable to the Loans hereunder. The Agent
shall give prompt notice to Borrower and the Banks by telecopy of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(h)
After the occurrence and during the continuance of a Default, the principal amount of the
Revolving Credit Advances (and, to the extent permitted by applicable law, all accrued interest thereon) may, at
the election of the Required Banks, bear interest at the Default Rate; provided, however, that automatically
whether or not the Required Banks elect to do so, any overdue principal of and, to the extent permitted by law,
overdue interest on any Loan shall bear interest payable on demand, for each day until paid at a rate per annum
equal to the Default Rate. Interest shall continue to accrue after the filing by or against any Loan Party of any
petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign.
SECTION 2.07
Fees.
(a)
Borrower shall pay to the Agent for the ratable account of each Bank an unused fee equal
to the product of: (i) the aggregate of the daily average amounts of such Bank’s Unused Revolving Credit
Commitment, times (ii) 0.10% per annum. Such unused fee shall accrue from and including the Closing Date to
and including the Termination Date. Unused fees shall be payable quarterly in arrears on each Quarterly Payment
Date and on the Termination Date; provided that should the Revolving Credit Commitments be terminated at any
time prior to the Termination Date for any reason, the entire accrued and unpaid fee shall be paid on the date of
such termination.
(b)
Borrower shall pay to the Agent for the ratable account of each Bank, with respect to each
Letter of Credit, a per annum letter of credit fee (the “Letter of Credit Fee”) equal to the product of: (i) the
aggregate average daily Undrawn Amounts, times (ii) a per annum percentage equal to the then Applicable
Margin for Daily Simple SOFR Advances (as set forth in Section 2.06(a)) (calculated in accordance with Section
2.13). Such Letter of Credit Fees shall be payable in arrears for each Letter of Credit on each Quarterly Payment
Date during the term of each respective Letter of Credit and on the termination thereof (whether at its stated expiry
date or earlier.)
SECTION 2.08
Optional Termination or Reduction of Revolving Credit Commitments.
Borrower may, upon at least 3 Domestic Business Days’ irrevocable notice to the Agent, terminate at any time,
or proportionately reduce from time to time by an aggregate amount of at least $500,000 or any larger multiple
of $100,000, the Revolving Credit Commitments; provided, however: (1) each termination or reduction, as the
case may be, shall be permanent and irrevocable; (2) no such termination or reduction shall be in an amount
greater than the Total Unused Revolving Credit Commitments on the date of such termination or reduction; and
(3) no such reduction pursuant to this Section 2.08 shall result in the aggregate Revolving Credit Commitments
of all of the Banks to be reduced to an amount less than $10,000,000, unless the Revolving Credit Commitments
are terminated in their entirety, in which case all accrued fees (as provided under Section 2.07) shall be payable
on the effective date of such termination.
SECTION 2.09
Mandatory Reduction and Termination of Revolving Credit Commitments.
The Revolving Credit Commitments shall terminate on the Termination Date and any Revolving Credit Advances
and if demand had not been earlier made Letter of Credit Advances then outstanding (together with accrued
interest thereon) shall be due and payable on such date.
SECTION 2.10
Optional Prepayments of Revolving Credit Advances.
(a)
Subject to any payments required pursuant to the terms of Article VIII, upon one Domestic
Business Day prior written notice, Borrower may prepay the Revolving Credit Advances in whole or in part
without premium or penalty (other than any payments required pursuant to the terms of Article VIII) at any time,
or from time to time in part in amounts aggregating at least $500,000.00, or any larger multiple of $100,000, by
paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment;
(b)
Upon receipt of a notice of prepayment pursuant to this Section, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank’s ratable share of such prepayment and such notice
shall not thereafter be revocable by Borrower.
SECTION 2.11
Mandatory Prepayments of Revolving Credit Advances.
(a)
On each date on which the Revolving Credit Commitments are reduced or terminated
pursuant to Section 2.08 or Section 2.09, Borrower shall repay or prepay such principal amount of the outstanding
Revolving Credit Advances, if any (together with interest accrued thereon and any amounts due under Section
8.05(a)), as may be necessary so that after such payment the aggregate unpaid principal amount of the Revolving
Credit Advances, together with the aggregate principal amount of all Letter of Credit Advances and Undrawn
Amounts does not exceed the aggregate amount of the Revolving Credit Commitments as then reduced.
(b)
In the event that the aggregate principal amount of all Revolving Credit Advances, together
with the aggregate principal amount of the Letter of Credit Advances and Undrawn Amounts at any one time
outstanding shall at any time exceed the aggregate amount of the Revolving Credit Commitments of all of the
Banks at such time, Borrower shall immediately repay so much of the Revolving Credit Advances as is necessary
in order that the aggregate principal amount of the Revolving Credit Advances thereafter outstanding, together
with the aggregate principal amount of the Letter of Credit Advances and Undrawn Amounts shall not exceed the
aggregate amount of the Revolving Credit Commitments of all of the Banks at such time.
SECTION 2.12
General Provisions as to Payments.
(a)
Borrower shall make each payment of principal of, and interest on, the Loans and of fees
hereunder, not later than 11:00 A.M. (Winston-Salem, North Carolina time) on the date when due, in Federal or
other funds immediately available in Winston -Salem, North Carolina, to the Agent at its address referred to in
Section 9.01. Subject to the terms of Section 2.02(d), the Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Agent for the account of the Banks; provided that payments of interest
shall be distributed by the Agent within three Domestic Business Days of the date such payment is received by
the Agent for the account of the Banks.
(b)
Whenever any payment of principal of, or interest on, the Revolving Credit Advances or
of fees shall be due on a day which is not a Domestic Business Day (including, without limitation, any payments
pursuant to Sections 2.02(c) and 2.02(d)), the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. If the date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(c)
All payments of principal, interest and fees and all other amounts to be made by Borrower
pursuant to this Agreement with respect to any Revolving Credit Advance or fee relating thereto shall be paid
without deduction for, and free from, any tax, imposts, levies, duties, deductions, or withholdings of any nature
now or at anytime hereafter imposed by any governmental authority or by any taxing authority thereof or therein
excluding in the case of each Bank, taxes imposed on or measured by its net income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Bank is organized or any political subdivision thereof and,
in the case of each Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of
such Bank’s applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, imposts,
levies, duties, deductions or withholdings of any nature being “Taxes”). In the event that Borrower is required
by applicable law to make any such withholding or deduction of Taxes with respect to any Revolving Credit
Advance or fee or other amount, Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which such deduction or withholding is made all
receipts and other documents evidencing such payment and shall pay to such Bank additional amounts as may be
necessary in order that the amount received by such Bank after the required withholding or other payment shall
equal the amount such Bank would have received had no such withholding or other payment been made. If no
withholding or deduction of Taxes are payable in respect of any Revolving Credit Advance or fee relating thereto,
Borrower shall furnish any Bank, at such Bank’s request, a certificate from each applicable taxing authority or an
opinion of counsel reasonably acceptable to such Bank, in either case stating that such payments are exempt from
or not subject to withholding or deduction of Taxes . If Borrower fails to provide such original or certified copy
of a receipt evidencing payment of Taxes or certificate(s) or opinion of counsel of exemption, Borrower hereby
agrees to compensate such Bank for, and indemnify them with respect to, the tax consequences of Borrower’s
failure to provide evidence of tax payments or tax exemption.
In the event any Bank receives a refund of any Taxes paid by Borrower pursuant to this Section
2.12, it will pay to Borrower the amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter it is required to return such refund, Borrower shall promptly repay to it the amount of such
refund.
Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements
and obligations of Borrower contained in this Section 2.12 shall be applicable with respect to any Participant,
Assignee or other Transferee, and any calculations required by such provisions (i) shall be made based upon the
circumstances of such Participant, Assignee or other Transferee, and (ii) constitute a continuing agreement and
shall survive the termination of this Agreement and the payment in full or cancellation of the Notes.
SECTION 2.13
Computation of Interest and Fees. Interest on the Revolving Credit
Advances shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Non-utilization fees, letter of credit fees and any other fees
payable hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).
SECTION 2.14
Intentionally Omitted.
SECTION 2.15
Intentionally Omitted.
SECTION 2.16
Intentionally Omitted.
SECTION 2.17
Increase in Commitments.
(a)
Borrower shall have the right, at any time and from time to time after the Closing Date by
written notice to and in consultation with the Agent, to request an increase in the aggregate Revolving Credit
Commitment (each such requested increase, a “Commitment Increase”), by having one or more existing Banks
increase their respective Revolving Credit Commitments then in effect (each, an “Increasing Bank”), by adding
as a Bank with a new Revolving Credit Commitment hereunder one or more Persons that are not already Banks
(each, an “Additional Bank”), or a combination thereof provided that (i) any such request for a Commitment
Increase shall be in a minimum amount of $5,000,000, (ii) immediately after giving effect to any Commitment
Increase, (y) the aggregate Revolving Credit Commitments shall not exceed $75,000,000 and (z) the aggregate of
all Commitment Increases effected shall not exceed $40,000,000, (iii) no Default shall have occurred and be
continuing on the applicable Commitment Increase Date (as hereinafter defined) or shall result from any
Commitment Increase, (iv) immediately after giving effect to any Commitment Increase (including any Revolving
Credit Borrowings in connection therewith and the application of the proceeds thereof), Borrower shall be in
compliance with the covenants contained in Article V, (v) subject to the terms of (vi), Borrower may invite an
Additional Bank to provide a Commitment Increase subject to the Agent’s consent to such Additional Bank in
writing which consent may not be unreasonably withheld; and (vi) Borrower shall give the existing Banks the
right of first refusal for participating in any such Commitment Increase by providing such notice to the Agent
fifteen (15) Domestic Business Days before making a request to any Person that is not already a Bank. An existing
Bank shall have priority over Additional Banks to participate in such requested Commitment Increase if such
existing Bank provides written notice of its election to participate within fifteen (15) Domestic Business Days of
such existing Bank’s receipt of such notice. Such notice from Borrower shall specify the requested amount of
the Commitment Increase. No Bank shall have any obligation to become an Increasing Bank. Any fees paid by
Borrower for a Commitment Increase to an Increasing Bank, an Additional Bank, or the Agent shall be for their
own account and shall be in an amount, if any, mutually agreed upon by each such party and Borrower, in each
party’s sole discretion.
(b)
Borrower, the other Loan Parties and each Additional Bank shall execute a joinder
agreement, and Borrower, the other Loan Parties and each Bank shall execute all such other documentation as the
Agent and Borrower may reasonably require, all in form and substance reasonably satisfactory to the Agent and
Borrower, to evidence the Revolving Credit Commitment adjustments referred to in Section 2.17.
(c)
If the aggregate Revolving Credit Commitments are increased in accordance with this
Section 2.17, Borrower (in consultation with the Agent), Increasing Bank(s) (if any) and Additional Bank(s) (if
any) shall agree upon the effective date (the “Commitment Increase Date,” which shall be a Domestic Business
Day not less than thirty (30) days prior to the Termination Date). The Agent shall promptly notify the Banks of
such increase and the Commitment Increase Date. Each of Borrower, the Guarantors, the Banks and the Agent
acknowledges and agrees that each Commitment Increase meeting the conditions set forth in this Section 2.17 (x)
shall not require the consent of any Guarantor or any Bank other than the Increasing Banks and Additional Banks
who have agreed to make such Commitment Increase and shall not constitute an amendment, modification or
waiver subject to Section 9.05 or Section 9.07 and (y) subject to clause (d) of this Section 2.17, shall be effective
as of the Commitment Increase Date.
(d)
Notwithstanding anything set forth in this Section 2.17 to the contrary, Borrower shall not
incur any Revolving Credit Advances pursuant to any Commitment Increase (and no Commitment Increase shall
be effective) unless the conditions set forth in Section 2.17(a) as well as the following conditions precedent are
satisfied on the applicable Commitment Increase Date:
(i)
The Agent shall have received the following, each dated the Commitment Increase
Date and in form and substance reasonably satisfactory to the Agent:
(A) a supplement to this Agreement signed by each Increasing Bank (if any) and
Additional Bank (if any), setting forth the reallocation of Revolving Credit Commitments referred to in Section
2.17(e), all other documentation required by the Agent pursuant to Section 2.17(b) and such other modifications,
documents or items as the Agent, such Banks or their counsel may reasonably request;
(B) an instrument, duly executed by Borrower and each Guarantor, if any,
acknowledging and reaffirming its obligations under this Agreement and the other Loan Documents to which it
is a party;
(C) a certificate of the secretary or an assistant secretary of Borrower and each
Guarantor, certifying to and attaching the resolutions adopted by the board of directors (or similar governing
body) of such party approving or consenting to such Commitment Increase;
(D) a certificate of the chief financial officer of Borrower, certifying that (x) as
of the Commitment Increase Date, all representations and warranties of Borrower and the Guarantors contained
in this Agreement and the other Loan Documents are true and correct (except to the extent any such representation
or warranty is expressly stated to have been made as of a specific date, in which case such representation or
warranty is true and correct as of such date), except that for purposes of this Section 2.17(d)(i) the representations
and warranties contained in Section 4.10(a) shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 5.01, (y) immediately after giving effect to such
Commitment Increase (including any Revolving Credit Borrowings in connection therewith and the application
of the proceeds thereof), Borrower is in compliance with the covenants contained in Article V, and (z) no Default
has occurred and is continuing, both immediately before and after giving effect to such Commitment Increase
(including any Revolving Credit Borrowings in connection therewith and the application of the proceeds thereof);
(E) an opinion or opinions of counsel for Borrower and the Guarantors, in a
form reasonably satisfactory to Agent and covering such matters as Agent may reasonably request, addressed to
the Agent and the Banks, together with such other documents, instruments and certificates as the Agent shall have
reasonably requested; and
(F) such other documents or items that the Agent, such Banks or their counsel
may reasonably request.
(e)
On the Commitment Increase Date, (i) the aggregate principal outstanding amount of the
Revolving Credit Advances (the “Initial Advances”) immediately prior to giving effect to the Commitment
Increase shall be deemed to be repaid, (ii) immediately after the effectiveness of the Commitment Increase,
Borrower shall be deemed to have made new Revolving Credit Borrowings of Revolving Credit Advances (the
“Subsequent Borrowings”) in an aggregate principal amount equal to the aggregate principal amount of the Initial
Advances and of the types and for the Interest Periods specified in a Notice of Borrowing delivered to the Agent
in accordance with Section 2.02(a), (iii) each Bank shall pay to the Agent in immediately available funds an
amount equal to the difference, if positive, between (y) such Bank’s pro rata percentage (calculated after giving
effect to the Commitment Increase) of the Subsequent Borrowings and (z) such Bank’s pro rata percentage
(calculated without giving effect to the Commitment Increase) of the Initial Advances, (iv) after the Agent
receives the funds specified in clause (iii) above, the Agent shall pay to each Bank the portion of such funds equal
to the difference, if positive, between (y) such Bank’s pro rata percentage (calculated without giving effect to the
Commitment Increase) of the Initial Advances and (z) such Bank’s pro rata percentage (calculated after giving
effect to the Commitment Increase) of the amount of the Subsequent Borrowings, (v) the Bank shall be deemed
to hold the Subsequent Borrowings ratably in accordance with their respective Revolving Credit Commitments
(calculated after giving effect to the Commitment Increase), (vi) Borrower shall pay all accrued but unpaid interest
on the Initial Advances to the Banks entitled thereto, and (vii) the signature pages hereto shall be deemed amended
to reflect the Revolving Credit Commitments of all Banks after giving effect to the Commitment Increase.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01
Conditions to First Borrowing. This Agreement shall become effective on
the date (the “Closing Date”) that each of the following conditions shall have been satisfied (or waived in
accordance with Section 9.05):
(a)
receipt by the Agent from each of the parties hereto of a duly executed counterpart of this
Agreement signed by such party;
(b)
receipt by the Agent of duly executed Notes for the account of each lender complying with
the provisions of Section 2.04;
(c)
receipt by the Agent of an opinion of Robinson, Bradshaw & Hinson, P.A., counsel for
Borrower and Guarantors, dated as of the Closing Date, covering such matters relating to the transactions
contemplated hereby as the Agent or any Bank may reasonably request;
(d)
receipt by the Agent of a certificate (the “Closing Certificate”), dated the date of the
Closing Date, substantially in the form of Exhibit D hereto, signed by a principal financial officer of the Borrower,
to the effect that (i) no Default has occurred and is continuing on the date of the Closing Date and (ii) the
representations and warranties of the Loan Parties contained in Article IV are true on and as of the date of the
Closing Date;
(e)
receipt by the Agent of all documents which the Agent or any Bank may reasonably request
relating to the existence of each Loan Party, the authority for and the validity of this Agreement, the Notes and
the other Loan Documents, and any other matters relevant hereto, all in form and substance satisfactory to the
Agent, including without limitation a certificate of incumbency of each Loan Party (the “Officer’s Certificate”),
signed by the Secretary or an Assistant Secretary of the respective Loan Party, substantially in the form of Exhibit
E hereto, certifying as to the names, true signatures and incumbency of the officer or officers of the respective
Loan Party, authorized to execute and deliver the Loan Documents, and certified copies of the following items:
(i) the Loan Party’s certificate of incorporation or articles of organization, as the case may be, (ii) the Loan Party’s
bylaws or operating agreement, as the case may be, (iii) a certificate of the Secretary of State of such Loan Party’s
State of organization as to the good standing of such Loan Party, and (iv) the action taken by the Board of
Directors of the Loan Party authorizing the Loan Party’s execution, delivery and performance of this Agreement,
the Notes and the other Loan Documents to which the Loan Party is a party;
(f)
evidence satisfactory to the Agent that the Previous Loan Agreement has been terminated
and all indebtedness, liabilities and obligations thereunder have been paid in full;
(g)
Borrower shall deliver to the Agent, and directly to any Bank requesting the same, a
Beneficial Ownership Certification in relation to it (or a certification that such Borrower qualifies for an express
exclusion from the “legal entity customer” definition under the Beneficial Ownership Regulations), in each case
at least five (5) Domestic Business Days prior to the Closing Date; and
(h)
such other documents or items as the Agent, the Banks or their counsel may reasonably
request.
The Agent shall promptly notify Borrower and the Banks of the Closing Date, and such notice shall be conclusive
and binding on all parties hereto.
SECTION 3.02
Conditions to All Borrowings. The obligation of each Bank to make a
Revolving Credit Advance on the occasion of each Revolving Credit Borrowing is subject to the satisfaction of
the following conditions:
(a)
receipt by the Agent of a Notice of Borrowing as required by Section 2.02;
(b)
the fact that, immediately before and after such Revolving Credit Borrowing, no Default
shall have occurred and be continuing;
(c)
the fact that the representations and warranties of the Loan Parties contained in Article IV
of this Agreement shall be true, on and as of the date of such Revolving Credit Borrowing; and
(d)
the fact that, immediately after such Revolving Credit Borrowing (i) the aggregate
outstanding principal amount of the Revolving Credit Advances of each Bank together with such Bank’s Pro Rata
Share of the aggregate outstanding principal amount of all Letter of Credit Advances and Undrawn Amounts, will
not exceed the amount of its Revolving Credit Commitment and (ii) the aggregate outstanding principal amount
of the Revolving Credit Advances together with the aggregate outstanding principal amount of all Letter of Credit
Advances and Undrawn Amounts, will not exceed the aggregate amount of the Revolving Credit Commitments
of all of the Banks as of such date.
Each Revolving Credit Borrowing hereunder shall be deemed to be a representation and warranty
by the Loan Parties on the date of such Revolving Credit Borrowing as to the truth and accuracy of the facts
specified in clauses (b), (c) and (d) of this Section; provided that a Revolving Credit Borrowing shall not be
deemed a representation or warranty as to the facts specified in clause (c) of this Section if the aggregate
outstanding principal amount of the Revolving Credit Advances immediately after such Revolving Credit
Borrowing will not exceed the aggregate outstanding principal amount of Revolving Credit Advances
immediately before such Revolving Credit Borrowing.
SECTION 3.03
Conditions to Issuance of Letters of Credit. The issuance by the Issuing
Bank of each Letter of Credit shall be subject to satisfaction of the conditions set forth in the related Letter of
Credit Agreement and satisfaction of the following conditions:
(a)
the fact that, immediately before and after the issuance of such Letter of Credit, no Default
shall have occurred and be continuing;
(b)
the fact that the representations and warranties of the Loan Parties contained in Article IV
of this Agreement shall be true, on and as of the date of issuance of such Letter of Credit;
(c)
the fact that, immediately after the issuance of such Letter of Credit: (i) the sum of (A) the
entire outstanding principal amount of the Revolving Credit Advances, (B) the aggregate outstanding principal
amount of the Letter of Credit Advances, and (C) the aggregate Undrawn Amounts, will not exceed the aggregate
amount of the Revolving Credit Commitments of all of the Banks at such time; and
(d)
no Letter of Credit shall have an expiry date or termination date on or after the earlier of:
(1) the date twelve months after the date of the issuance of such Letter of Credit; or (2) the date two Domestic
Business Days prior to the Termination Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Loan Parties represent and warrant that:
SECTION 4.01
Corporate Organization and Power. Each Loan Party (i) is a corporation,
limited partnership or limited liability company duly organized, formed or registered, as applicable, validly
existing and in good standing under the laws of its jurisdiction of incorporation or organization, as applicable,
and (ii) is qualified to do business and is in good standing in every other jurisdiction in which the nature of its
business or the ownership of its properties requires it to be so qualified and where failure to so qualify would have
a Material Adverse Effect. Each Loan Party has the requisite power and authority and the right to own and operate
its properties, to lease the property it operates under lease, and to conduct its business as now and proposed to be
conducted.
SECTION 4.02
Litigation; Government Regulation. There is no action, suit or proceeding
pending, or to the knowledge of the Loan Parties threatened, against or affecting the Loan Parties or any of their
respective Subsidiaries before any court or arbitrator or any governmental body, agency or official which could
have a Material Adverse Effect or which in any manner draws into question the validity or enforceability of, or
could impair the ability of the Loan Parties to perform their respective obligations under, this Agreement, the
Notes or any of the other Loan Documents. No Loan Party is in violation of or in default under any applicable
statute, rule, order, decree, writ, injunction or regulation of any governmental body (including any court) where
such violation would have a Material Adverse Effect.
SECTION 4.03
Taxes. There have been filed on behalf of the Loan Parties and their
respective Subsidiaries all Federal, state and local income, excise, sales, property and other tax returns which are
required to be filed by them and all taxes due pursuant to such returns or pursuant to any levy or assessment
received by or on behalf of the Loan Parties or any Subsidiary have been paid, unless such taxes are being
diligently contested by such Loan Party by appropriate proceedings, such Loan Party has established reserves in
accordance with GAAP and the failure to timely pay such taxes will not have a Material Adverse Effect. The
charges, accruals and reserves on the books of the Loan Parties and their respective Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Loan Parties, adequate. To the knowledge of each
Loan Party, no material controversy in respect of any taxes is pending or threatened. United States income tax
returns of the Loan Parties and their respective Subsidiaries have been closed through the Fiscal Year ended
January 30, 2022.
SECTION 4.04
Enforceability of Loan Documents: Compliance With Other Instruments.
The execution, delivery and performance by each Loan Party of this Agreement, the Notes and the other Loan
Documents to which it is a party (i) are within the corporate, partnership and limited liability powers of each Loan
Party, as applicable, and (ii) have been duly authorized by all necessary and appropriate corporate, partnership
and limited liability action, as applicable, and have been validly executed and delivered. Each of the Loan
Documents executed by each Loan Party is the legal, valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally or by general
equitable principles. No Loan Party or any Subsidiary of a Loan Party is in default in any material respect with
respect to any indenture, loan agreement, mortgage, lease, deed or similar agreement related to the borrowing of
monies to which such Loan Party is a party or by which it is bound. Neither the execution, delivery or performance
of the Loan Documents executed by the Loan Parties, nor compliance therewith: (a) conflicts or will conflict with
or results or will result in any breach of, or constitutes or will constitute with the passage of time or the giving of
notice or both, a default under, (i) the certificate of incorporation, certificate of partnership, articles of
organization, certificate of formation, bylaws, partnership agreement, operating agreement or any other organic
documents of any Loan Party or any Subsidiary of a Loan Party, (ii) any law, order, writ, injunction or decree of
any court or governmental authority, or (iii) any agreement or instrument to which any Loan Party or any
Subsidiary of a Loan Party is a party or by which any Loan Party or any Subsidiary of a Loan Party, or its
respective properties, is bound or (b) results or will result in the creation or imposition of any Lien upon the
properties or assets of any Loan Party or any Subsidiary of a Loan Party, except Permitted Liens.
SECTION 4.05
Governmental Authorization. No authorization, consent or approval of, or
declaration or filing with, any governmental authority is required for the valid execution, delivery and
performance by each Loan Party of the Loan Documents or the consummation by each Loan Party of the
transactions contemplated hereby and thereby. Each Loan Party has, and is in material good standing with respect
to, all governmental approvals, permits, certificates, licenses, inspections, consents and franchises necessary to
continue to conduct its respective businesses as heretofore conducted and to own or lease and operate its properties
as now owned or leased by it, except for those the failure to obtain which (or maintain good standing with regard
to) would not individually or in the aggregate have a Material Adverse Effect. None of such approvals, permits,
certificates, consents, or franchises contains any term, provision, condition or limitation materially more
burdensome than such as are generally applicable to Persons engaged in the same or similar business as such
Loan Party.
SECTION 4.06
No Default.
(a)
No Loan Party nor any of their respective Subsidiaries is in default under or with respect
to any agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound
that would reasonably be expected to result in a Material Adverse Effect.
(b)
No Default or Event of Default has occurred and is continuing.
SECTION 4.07
Margin Securities. No Loan Party nor any of their respective Subsidiaries
is engaged principally, or as one of its important activities, in the business of purchasing or carrying any Margin
Stock. No part of the proceeds of any Revolving Credit Advance will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or be used for any
purpose in each case which violates, or which is inconsistent with, the provisions of Regulation T, U or X. Neither
the making of any Revolving Credit Advance hereunder, nor the use of the proceeds thereof, will violate or be
inconsistent with the provisions of Regulation T, U or X of the FRB.
SECTION 4.08
Full Disclosure. None of the Loan Documents, nor any statements or
information furnished to Agent or any Bank by or on behalf of a Loan Party for purposes of or in connection with
this Agreement or any transaction contemplated by the Loan Documents, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements contained therein or herein not misleading
and all such statements and information are true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is stated or certified. There is no fact known to
any Loan Party not disclosed to the Banks in writing that has or, to the best of such Loan Party’s knowledge,
would have a Material Adverse Effect. As of the Closing Date, all of the information included in the Beneficial
Ownership Certification is true and correct.
SECTION 4.09
ERISA.
(a)
No accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, has occurred with respect to any Plan, and no termination event or Reportable
Event has occurred or is reasonably expected to occur with respect to any Plan. The present value of all accrued
benefits under each Plan (based on those assumptions used to fund such Plan) did not, as of the most recent
valuation date, exceed the then current value of the assets of such Plan allocable to such benefits. Full payment
has been made on or before the due date thereof of all amounts that each Loan Party and member of the Controlled
Group is required under the terms of each Plan to have paid as contributions to such Plan.
(b)
No Loan Party or any member of the Controlled Group has incurred any withdrawal
liability under Section 4201 of ERISA.
(c)
No Loan Party or any member of the Controlled Group has participated in any prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code), which has subjected, or may
subject, it to any material civil penalty or tax imposed by Section 502(i) of ERISA or Section 4975 of the Code,
respectively. No Loan Party has incurred, or is reasonably expected to incur, any liability to the PBGC (other
than for insurance premiums which have been paid when due).
(d)
To the knowledge of each Loan Party and based on actuarial reports, the present value
(determined using actuarial and other assumptions that are reasonable in respect of the benefits provided and the
employees participating) of the liability of each Loan Party and any member of the Controlled Group for post-
retirement benefits to be provided to its current and former employees under all welfare benefit plans (as defined
in Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all such plans allocable to such
benefits by an amount that would have a Material Adverse Effect.
(e)
The execution and delivery of this Agreement will not involve any transaction which is
subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant
to Section 4975 of the Code.
(f)
Neither the Loan Parties nor any member of the Controlled Group is making or has ever
made or been required to make any contributions to a Multiemployer Plan.
SECTION 4.10
Financial Statements.
(a)
The consolidated balance sheet of Borrower and its Consolidated Subsidiaries as of January
29, 2022 and the related consolidated statements of income, shareholders’ equity and cash flows for the Fiscal
Year then ended, reported on by PricewaterhouseCoopers LLP, copies of which have been delivered to each of
the Banks, fairly present in all material respects, in conformity with GAAP (except as otherwise noted therein),
and the consolidated financial position of Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
(b)
Since January 29, 2022, there has been no event, act, condition or occurrence having a
Material Adverse Effect.
SECTION 4.11
Title to Assets. Each of the Loan Parties and their respective Subsidiaries
has good, indefeasible and merchantable title in fee simple (or its equivalent under applicable law) to and
ownership of the Properties owned by it (as reflected in the Financial Statements) and all of its other material
assets, including without limitation, the assets reflected in the most recent Financial Statements, free and clear of
all Liens, except Permitted Liens, and except for financing statements filed in connection with the Permitted
Liens, no financing statement under the Uniform Commercial Code that names any Loan Party or any Subsidiary
of a Loan Party as debtor has been filed and is still in effect, and no Loan Party or any Subsidiary of a Loan Party
has signed any financing statement or any security agreement authorizing any secured party thereunder to file any
such financing statement. Each Loan Party enjoys peaceful and undisturbed possession under all of its material
leases and all such leases are valid and subsisting and in full force and effect. Each of the Loan Parties and their
respective Subsidiaries has title to its properties sufficient for the conduct of its business.
SECTION 4.12
Use of Proceeds. Borrower’s uses of the proceeds of each Revolving Credit
Advance made by Banks to Borrower pursuant to this Agreement are, and continue to be, legal and proper uses
and such uses are and will be consistent with the terms of Section 5.15 and all applicable laws and statutes, as in
effect from time to time.
SECTION 4.13
Environmental Matters. Except as would not individually or in the
aggregate have a Material Adverse Effect:
(a)
No Hazardous Materials have been or are being used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed or otherwise handled at, or shipped or transported to or
from or located on any Property (except in compliance with applicable Environmental Laws) and no part of any
Property, including the groundwater located thereon and thereunder, is presently known by such Loan Party or
any Subsidiary of a Loan Party to have concentrations of any Hazardous Materials in violation of applicable
Environmental Laws. To the knowledge of each Loan Party, no improvement located on any Property contains
any friable asbestos or asbestos-containing materials in material violation of any federal, state or local laws,
regulations or orders respecting such asbestos or asbestos-containing materials. To the knowledge of each Loan
Party, there were no Environmental Releases of Hazardous Materials in violation of Environmental Law on any
Property previously owned by such Loan Party or any Subsidiary of a Loan Party while such Loan Party or any
Subsidiary of a Loan Party owned such Property;
(b)
No Property has, to the knowledge of any Loan Party ever been used as or for a mine, a
gasoline service station, or an above-ground petroleum products storage facility, a landfill, a dump or other
disposal facility, or for industrial, or manufacturing purposes;
(c)
[reserved];
(d)
All activities, and operations of each Loan Party and each Subsidiary of a Loan Party meet
in all material respects the requirements of all applicable Environmental Laws;
(e)
Each Loan Party, to its knowledge, has never sent a Hazardous Material to a site which,
pursuant to CERCLA or any similar state law, (1) has been placed on the “National Priorities List” of hazardous
wastes, or (2) which is subject to a claim, an administrative order or other request to take “removal” or “remedial”
action (as defined under CERCLA) or to pay for the costs of cleaning up such a site;
(f)
Each Loan Party, to its knowledge, is not involved in any suit or proceeding nor has it
received any notice from any Environmental Authority with respect to a release of Hazardous Materials nor has
it received notice of any claims from any Person relating to personal injuries from exposure to Hazardous
Materials originating from a Property owned or operated by a Loan Party during the time of that Loan Party’s
ownership or operation thereof;
(g)
Each Loan Party has timely filed all material reports required to be filed, has acquired all
necessary Environmental Authorizations and has generated and maintained in all material respects all required
data, documentation and records as required by any applicable Environmental Laws; and
(h)
No Loan Party nor any Subsidiary of a Loan Party is subject to any Environmental Liability
and no Loan Party nor any Subsidiary of a Loan Party has been designated as a potentially responsible party under
CERCLA. None of the Properties have been identified on any current or proposed (i) National Priorities List
under 40 C.F.R. § 300, (ii) CERCLIS list or (iii) any list arising from a state statute similar to CERCLA.
SECTION 4.14
Assets for Conduct of Business. Each Loan Party possesses adequate
licenses, patents, patent applications, copyrights, trademarks, servicemarks and trade names to continue to
conduct its business as heretofore conducted, without any material conflict or infringement with the rights of
others.
SECTION 4.15
Compliance With Laws. Each Loan Party and each Subsidiary of a Loan
Party has duly complied with, and its Properties and business operations are in compliance in all material respects
with, the provisions of all federal, state and local laws, rules and regulations applicable to each such Loan Party
and each Subsidiary of a Loan Party, the Properties or the conduct of such business, including, without limitation,
all federal and state securities and antitrust laws, ERISA and Environmental Laws, except to the extent that the
failure to comply therewith could not, in the aggregate, have a Material Adverse Effect . There have been no
citations, notices or orders of noncompliance issued to any Loan Party or any Subsidiary of a Loan Party under
any federal, state or local law, rule or regulation applicable to each Loan Party and each Subsidiary of a Loan
Party which would have a Material Adverse Effect.
SECTION 4.16
Contracts. No Loan Party is a party to any contract or agreement, or subject
to any charge, corporate, partnership or limited liability company restriction, judgment, injunction, decree, rule,
regulation or order of any court or governmental authority, which has or would have a Material Adverse Effect.
SECTION 4.17
Subsidiaries. Each of the Loan Parties’ Subsidiaries is a corporation,
partnership or limited liability company (or in the case of Cedar Hill National Bank, a national bank) duly
organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization,
as the case may be, is duly qualified to transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, and has all organizational powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted, except to the extent that the failure to
comply therewith could not, in the aggregate, have a Material Adverse Effect. As of the Closing Date, no Loan
Party has any Subsidiaries except those Subsidiaries listed on Schedule 4.17, which accurately sets forth each
such Subsidiary’s complete name and jurisdiction of organization.
SECTION 4.18
Not an Investment Company. No Loan Party nor any Subsidiary of a Loan
Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.19
Public Utility Holding Company Act. No Loan Party nor any Subsidiary of
a Loan Party is a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a
“holding company” or of a “subsidiary company” of a “holding company”, as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
SECTION 4.20
Insolvency. After giving effect to the execution and delivery of the Loan
Documents and the making of the Revolving Credit Advances under this Agreement, no Loan Party will be
“insolvent”, within the meaning of such term as defined in § 101 of Title 11 of the United States Code or Section
2 of the Uniform Fraudulent Transfer Act, or any other applicable state law pertaining to fraudulent transfers, as
each may be amended from time to time, or be unable to pay its debts generally as such debts become due, or
have an unreasonably small capital to engage in any business or transaction, whether current or contemplated.
SECTION 4.21
Labor Matters. There are no significant strikes, lockouts, slowdowns or
other labor disputes against any Loan Party or any Subsidiary of any Loan Party pending or, to the knowledge of
any Loan Party, threatened which would have a Material Adverse Effect. The hours worked by and payment
made to employees of the Loan Parties and each Subsidiary of any Loan Party have not been in violation of the
Fair Labor Standards Act or any other applicable federal, state or foreign law dealing with such matters except to
the extent such violation would not have a Material Adverse Effect.
SECTION 4.22
Anti-Terrorism Laws. None of the Loan Parties, nor any of their respective
Subsidiaries, is in violation of any laws relating to terrorism or money laundering, including the Patriot Act.
SECTION 4.23
Compliance with Sanctions; Anti-Money Laundering Program; Anti-
Corruption Laws; Beneficial Ownership Regulation.
(a)
Neither Borrower nor any Affiliate of Borrower nor, to Borrower’s knowledge, any
director, officer, agent, employee of Borrower or any Affiliate of Borrower: (i) has used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity or to
influence official action; (ii) has made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) has made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment; or (iv) has violated or is in violation of any Anti-Corruption Laws
or Anti-Money Laundering Laws; and each of Borrower and each Affiliate of Borrower have conducted their
business in compliance with the Anti- Corruption Laws and Anti-Money Laundering Laws.
(b)
Neither: (i) Borrower, any Affiliate of Borrower, nor, to Borrower’s knowledge, any of
their respective directors, officers, agents, employees or Affiliates; nor (ii) to Borrower’s knowledge, any agent
or representative of Borrower or any such Affiliate that will act in any capacity in connection with any Revolving
Credit Advances or that will benefit from any Revolving Credit Advances: (A) is a Sanctioned Person or is owned
or controlled by a Sanctioned Person; (B) has any assets located in a Sanctioned Country; (C) directly or indirectly
derives revenues from investments in, or transactions with, Sanctioned Persons; or (D) has taken any action,
directly or indirectly, that violates any Sanctions, Anti-Corruption Laws or Anti-Money Laundering Laws.
(c)
No proceeds of any Revolving Credit Advance have been used, directly or indirectly, by
Borrower or any Affiliate of Borrower or any of their respective directors, officers, agents, employees, Affiliates,
agents or representatives for the purpose of funding, financing or facilitating any activity, business or transaction
of or with any Sanctioned Person, or of, with or in any Sanctioned Country, including, but not limited to, any
payment (directly or indirectly) to a Sanctioned Person or a Sanctioned Country, or that violates any Sanctions
applicable to any party hereto.
ARTICLE V
COVENANTS
The Loan Parties agree, jointly and severally, that, so long as any Bank has any Revolving Credit
Commitment hereunder or any Letter of Credit is outstanding or any amount payable under any Note or Letter of
Credit Advance remains unpaid:
SECTION 5.01
Information. Borrower will deliver to each of the Banks:
(a)
As soon as practicable and in any event 45 days after the close of each Fiscal Quarter
(except the fourth Fiscal Quarter in each Fiscal Year) of Borrower, a consolidated balance sheet of Borrower and
its Subsidiaries as of the close of such Fiscal Quarter and consolidated statements of income, retained earnings
and cash flows for that Fiscal Quarter and for the portion of the Fiscal Year then ended, prepared in accordance
with GAAP, applied on a basis consistent with that of the preceding period or containing disclosure of the effect
on the financial position or results of operation of any change in the application of accounting principles and
practices during the period and certified by the chief financial officer of Borrower;
(b)
As soon as practicable and in any event within 120 days after the close of each Fiscal Year
of Borrower an audited consolidated balance sheet of Borrower and its Subsidiaries as of the close of such Fiscal
Year, and an audited consolidated statement of income, retained earnings and cash flows prepared in accordance
with GAAP, each audited by PricewaterhouseCoopers LLP or such other independent certified public accountant
reasonably acceptable to the Agent in accordance with GAAP, applied on a basis consistent with those of the
preceding Fiscal Year or containing disclosure of the effect on the financial position or results of operation of any
change in the application of accounting principles and practices during the Fiscal Year; such financial statements
shall be accompanied by a report thereon by such certified public accountants, containing an opinion that is not
qualified with respect to scope, limitations or accounting principles followed by Borrower and its Subsidiaries
not being in accordance with GAAP, all in a form reasonably acceptable to Agent and the Banks;
(c)
Borrower shall notify the Agent and each Bank that previously received a Beneficial
Ownership Certification (or a certification that Borrower qualifies for an express exclusion to the “legal entity
customer” definition under the Beneficial Ownership Regulation) of any change in the information provided in
the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified
therein (or, if applicable, Borrower ceasing to fall within an express exclusion to the definition of “legal entity
customer” under the Beneficial Ownership Regulation) and (c) promptly upon the reasonable request of the Agent
or any Bank, provide the Agent or directly to such Bank, as the case may be, any information or documentation
requested by it for purposes of complying with the Beneficial Ownership Regulation;
(d)
As soon as practicable and in any event within 60 days after the close of each Fiscal Year
of Borrower, an operating and capital budget of Borrower and its Subsidiaries for the ensuing four (4) Fiscal
Quarters;
(e)
Concurrently with the delivery of the financial statements described in subsections (a) and
(b) above, a certificate (a “Compliance Certificate”) from Borrower, substantially in the form of Exhibit F hereto,
by a Designated Officer (i) certifying to the Banks that the Loan Parties have kept, observed, performed and
fulfilled in all material respects each and every covenant, obligation and agreement binding upon any Loan Party
contained in this Agreement or the other Loan Documents, (ii) calculating the financial covenants set forth in
Sections 5.03 and 5.05 hereof, (iii) setting forth the identity of the Subsidiaries of Borrower on the date of such
certificate; and (iv) certifying to the Banks that no Event of Default or Default has occurred, or specifying any
such Event of Default or Default;
(f)
within 5 Domestic Business Days after a Loan Party becomes aware of the occurrence of
any Default, if such Default is then occurring, a certificate of a Designated Officer of Borrower setting forth the
details thereof and the action which Borrower is taking or proposes to take with respect thereto;
(g)
promptly upon the mailing thereof to the shareholders of any Loan Party generally, copies
of all financial statements, reports and proxy statements so mailed;
(h)
to the extent not otherwise publicly available promptly upon the filing thereof, copies of
all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its
equivalent) and annual, quarterly or monthly reports which any Loan Party shall have filed with the SEC;
(i)
if and when any Loan Party or any member of the Controlled Group (i) gives or is required
to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any
Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such
notice;
(j)
promptly, but in no event later than three Domestic Business Days after a Designated
Officer of any Loan Party obtains knowledge thereof, give written notice to the Agent of: (a) any material
litigation or proceeding brought against any Loan Party, whether or not the claim is considered by any such Loan
Party to be covered by insurance (for the purpose hereof, any litigation against any Loan Party seeking to recover
$2,500,000 or more in damages shall be deemed material); (b) any written notice of a violation received by any
Loan Party from any governmental regulatory body or law enforcement authority which, if such violation were
established, would have a Material Adverse Effect; (c) any labor controversy that has resulted in a strike or other
work action that might reasonably be expected to have a Material Adverse Effect; (d) any attachment, Lien, or
levy that may be placed on or assessed against or threatened against any Loan Party, or any property of a Loan
Party, other than Permitted Liens; (e) any judgments or orders involving cost to the Loan Parties in aggregate of
more than $2,500,000 in any Fiscal Year; (f) any Event of Default; and (g) any other matter that has or would
have a Material Adverse Effect; and
(k)
from time to time such additional information regarding the financial position or business
of the Loan Parties and their respective Subsidiaries as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02
Inspection of Property, Books and Records. Borrower will (i) keep, and
will cause each Subsidiary to keep, proper books of record and account in which full, true and correct entries in
conformity with GAAP and applicable law shall be made of all dealings and transactions in relation to its business
and activities; (ii) permit, and will cause each Subsidiary of the Loan Parties to permit, with reasonable prior
notice and at reasonable times, the Agent or its designee, at the expense of the Loan Parties, to perform periodic
field audits and investigations of the respective Loan Parties, provided, however, that if no Event of Default has
occurred and is continuing, no more than one (1) examination per calendar year shall be at the expense of the
Loan Parties; and (iii) permit, and will cause each Subsidiary to permit, representatives of any Bank at such
Bank’s expense prior to the occurrence of an Event of Default and at Borrower’s expense after the occurrence of
an Event of Default to visit and inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their respective affairs, finances and accounts with their
respective officers, employees and upon the consent of such Loan Party, which shall not be unreasonably
withheld, its independent public accountants (and by this provision each Loan Party authorizes said accountants
to discuss the finances and affairs of such Loan Party and to provide said accountants with such further written
authorization as they may require), upon reasonable notice and at reasonable times and as often as may be
reasonably requested. The Loan Parties agree to cooperate and assist in such visits and inspections, in each case
at such reasonable times and during business hours and as often as may reasonably be desired.
SECTION 5.03
Minimum EBITDAR Coverage Ratio. Commencing as of the last day of
the first Fiscal Quarter of Fiscal Year 2022, and in each case continuing on the last day of each Fiscal Quarter
ending thereafter, the Minimum EBITDAR Coverage Ratio shall not be less than 1.15 to 1.0.
SECTION 5.04
Acquisitions.
(a)
No Loan Party nor any Subsidiary of a Loan Party shall make an Acquisition unless (i) the
Acquisition has been approved and recommended by the board of directors of the Person to be acquired or from
which such assets or business is to be acquired and the line or lines of business of the Person to be acquired are
the same as or reasonably related to one or more line or lines of business in which the Loan Party is engaged on
the Closing Date, (ii) no Default or Event of Default shall have occurred and be continuing either immediately
prior to or immediately after giving effect to such Acquisition, (iii) the Person acquired shall be a Subsidiary, or
be merged into a Loan Party, immediately upon consummation of the Acquisition (or if assets are being acquired,
the acquiror shall be a Loan Party), and (iv) after giving effect to such Acquisition: (A) the aggregate Costs of
Acquisition incurred by any Loan Party or any Subsidiary of a Loan Party in any single transaction or in a series
of related transactions shall not exceed $50,000,000; and (B) the aggregate Costs of Acquisition incurred by the
Loan Parties and all Subsidiaries of the Loan Parties during any Fiscal Year shall not exceed $75,000,000 in the
aggregate.
(b)
Not less than ten (10) Domestic Business Days prior to the consummation of any
Acquisition permitted under Section 5.04(a) with respect to which the Costs of Acquisition exceeds $10,000,000,
Borrower shall have delivered to the Agent and each Bank pro forma financial statements demonstrating that none
of the financial covenants set forth in Sections 5.03 and 5.05 will be violated after giving pro forma effect
(calculated pursuant to Section 1.08) to such Acquisition.
SECTION 5.05
Minimum Consolidated Tangible Net Worth. Consolidated Tangible Net
Worth shall at no time be less than the sum of (a) $190,000,000, plus, (b) if Net Income for any Fiscal
Ye
ar ending
January 28, 2023 and thereafter is a positive number, an amount equal to 15% of Net Income for such Fiscal Year,
(c) minus, the minimum threshold for shares repurchased to offset dilution from Borrower’s equity compensation
plans, not to exceed $10,000,000 per Fiscal Year ending after January 29, 2022.
SECTION 5.06
Restrictions on Dividends, etc. No Loan Party nor any Subsidiary of a Loan
Party shall:
(a)
with respect to Borrower, declare or pay any dividends (other than dividends payable solely
in its own Capital Stock) upon any of its Capital Stock unless, at such time, no Default or Event of Default shall
exist or would exist immediately after the payment of such dividend; or
(b)
repurchase shares of its own Capital Stock (or options or rights to acquire its Capital Stock),
provided, however, that Borrower or any Subsidiary may purchase shares of its own capital stock unless a Default
or Event of Default exists or would exist immediately after payment for any such purchase; or
(c)
with respect to Borrower, make any other distribution of property or assets (other than as
provided in paragraphs (a) and (b) of this Section 5.06) among the holders of shares of its Capital Stock.
SECTION 5.07
Banking Relationship. The Loan Parties shall transfer their primary
demand deposit accounts and cash management accounts for operations in the United States to the Agent and,
thereafter, shall maintain their primary demand deposit accounts and cash management accounts with the Agent.
The timing for such transfer shall be made in good faith and in the Loan Parties’ commercially reasonable business
judgement.
SECTION 5.08
Intentionally Omitted.
SECTION 5.09
Intentionally Omitted.
SECTION 5.10
Investments. No Loan Party nor any Subsidiary of a Loan Party shall make
Investments in any Person except:
(a)
Acquisitions permitted under Section 5.04;
(b)
Investments by Borrower in any Subsidiary or by any Subsidiary in Borrower or any other
Subsidiary;
(c)
cash and Investments made in accordance with Borrower’s Investment Policy, as such
Investment Policy may be amended or modified from time to time in Borrower’s commercially reasonable
judgment and upon notice to the Agent;
(d)
loans and advances to employees of a Loan Party for reasonable travel and business and
relocation expenses in the ordinary course of business;
(e)
loans to officers, directors and employees so that such officers, directors and employees
may acquire common stock of Borrower (so long as no Cash is actually advanced by Borrower or any of its
Subsidiaries in connection with such loans);
(f)
Borrower may enter into Hedge Agreements to the extent permitted by Section 5.27(h);
(g)
extensions of trade credit in the ordinary course of business;
(h)
prepaid expenses incurred in the ordinary course of business;
(i)
Investments received in connection with the bankruptcy or reorganization of suppliers and
customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(j)
Guarantees permitted by Section 5.27(g);
(k)
Investments in promissory notes and other non-cash consideration received in connection
with any asset sale permitted under clause (vi) of Section 5.14;
(l)
Investments in existence on the date hereof and described in Schedule 5.10;
(m)
Investments of any Person existing at the time such Person becomes a Subsidiary or
consolidates or merges with Borrower or any Subsidiary (including in connection with Acquisitions permitted
under Section 5.04), so long as such Investments were not made in contemplation of such Person becoming a
Subsidiary or of such merger;
(n)
Investments consisting of real property and cash to pay for incidental expenses in
connection with the Fort Mill Land; and
(o)
Investments not otherwise permitted under this Section 5.10 in an aggregate amount not
exceeding $15,000,000 at any one time; provided that any Investment made pursuant to this Section 5.10(o) that
is subsequently sold for cash or otherwise cancelled, liquidated or repaid for cash or made in any entity that
subsequently becomes a Subsidiary, the initial amount of such Investment shall not be included in this Section
5.10(o).
SECTION 5.11
Negative Pledge. No Loan Party nor any Subsidiary of a Loan Party will
create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except:
(a)
Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’
Liens, in each case, incurred in the ordinary course of business;
(b)
Liens incurred in the ordinary course of business in connection with worker’s
compensation, unemployment insurance or other forms of governmental insurance or benefits or to secure
obligations on surety or appeal bonds;
(c)
Liens for current taxes (including income withholding taxes), assessments or other
governmental charges that are (i) not delinquent or remain payable without any penalty or (ii) less than $5,000,000
in the aggregate, or (iii) being contested in good faith and with due diligence by appropriate proceedings, if the
affected Loan Party has established adequate reserves with respect thereto in accordance with GAAP or, with
respect to liens arising in connection with income tax withholding, such Loan Party has established adequate
reserves with respect thereto;
(d)
statutory liens of banks and other financial institutions arising during the collection of
instruments in the ordinary course of business;
(e)
pledges or deposits in the ordinary course of a Loan Party’s business to secure the
performance of leases or contracts entered into in the ordinary course of business;
(f)
Liens upon any assets subject to a Capital Lease and securing payment of the obligations
arising under such Capital Lease and any liens upon any equipment subject to an equipment operating lease and
securing payment of the obligations arising under such lease;
(g)
zoning restrictions, easements, licenses, landlord’s liens or restrictions on the use of
property which do not materially impair the use of such properly in the operation of the business of a Loan Party;
(h)
Liens securing the purchase price of assets attaching only to such assets securing aggregate
Debt of Loan Parties and their Subsidiaries not in excess of $5,000,000;
(i)
attachment, judgment or similar Liens arising in connection with court proceedings;
provided, that the execution or other enforcement of such Liens with respect to judgments or decrees involving
in the aggregate a liability of $5,000,000 or more is effectively stayed and the claims secured thereby are being
actively contested in good faith by appropriate proceedings and Borrower or any Subsidiary, as the case may be,
shall have set aside on its books, if required by GAAP, appropriate reserves for such Liens;
(j)
any Lien securing any obligations and liabilities arising under or in connection with any
cash management arrangements entered into in the ordinary course of business prior to, on or after the date hereof,
including, without limitation, any netting or set-off system for the calculation of interest with respect to debit
balances and credit balances under such arrangements; provided that the assets subject to any such Lien shall be
limited to the assets held from time to time at the financial institution providing such cash management
arrangements;
(k)
Liens arising in the ordinary course of business solely with respect to cash, cash equivalents
and Investments permitted by Section 5.10(c) in favor of a creditor depositary institution solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with such creditor depository institution;
(l)
(a) leases, licenses, subleases or sublicenses granted to other Persons in the ordinary course
of business which do not (i) interfere in any material respect with the business of of Borrower or any Subsidiary
or (ii) secure any Debt for borrowed money or (b) the rights reserved or vested in any Person by the terms of any
lease, license, franchise, grant or permit held by Borrower or any Subsidiary or by a statutory provision, to
terminate any such lease, license, franchise, grant or permit, or to require annual or periodic payments as a
condition to the continuance thereof;
(m)
Liens arising out of conditional sale, title retention, consignment or similar arrangements
for sale of goods entered into by Borrower or any Subsidiary in the ordinary course of business to the extent such
Liens do not attach to any assets other than the goods subject to such arrangements and are not intended as security
for financing transactions;
(n)
Liens on Cash securing letters of credit issued to secure a customs bonds in an aggregate
amount not exceeding $2,000,000;
(o)
Liens not described in subclauses (a) through (n) above or subclause (m) below that relate
to liabilities not in excess of $2,000,000 in the aggregate; and
(p)
Liens on the documents to be presented under documentary trade letters of credit permitted
under Section 5.27(n) (and the inventory the purchase, shipment or storage price of which is supported by such
documentary trade letters of credit), so long as such Liens are extinguished when such inventory is delivered to
the Loan Parties and provided that such Liens secure only the reimbursement obligations of the Loan Parties in
respect of such documentary trade letters of credit.
SECTION 5.12
Fundamental Changes. No Loan Party will, nor will it permit any
Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or otherwise sell or transfer all or substantially all of its assets, or all or substantially all of the
stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have
occurred and be continuing, (i) any Subsidiary may merge into or consolidate with Borrower or another Loan
Party in a transaction in which Borrower or such Loan Party is the surviving entity, (ii) any Loan Party (other
than Borrower) may merge into or consolidate with any other Loan Party in a transaction in which the surviving
entity is a Loan Party, (iii) any Subsidiary that is not a Loan Party may merge into or consolidate with another
Subsidiary that is not a Loan Party, and (iv) any Subsidiary may liquidate or dissolve if Borrower determines in
good faith that such liquidation or dissolution is in the best interests of Borrower and is not materially
disadvantageous to the Banks.
SECTION 5.13
Intentionally Omitted.
SECTION 5.14
Sales of Assets. No Loan Party will, nor will it permit any Subsidiary of a
Loan Party to, sell, lease or otherwise transfer any asset, except (i) sales, transfers, leases, licenses or other
dispositions of inventory for fair value in the ordinary course of business, (ii) the sale, exchange or other
disposition of cash, cash equivalents and other Investments, (iii) the sale, lease or other disposition of assets to
Borrower or any Subsidiary and so long as no Event of Default shall have occurred and be continuing or would
result therefrom, (iv) the sale, exchange or other disposition in the ordinary course of business of equipment,
capital assets or property no longer used or useful, or that is obsolete, redundant, worn-out, expired or surplus, in
the ordinary course of business, (v) dispositions resulting from any casualty or other damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding of, any property or asset of Borrower
or any Subsidiary , and (vi) during any Fiscal Year and to the extent not otherwise permitted under this Section
5.14, a transfer, lease or other disposition of assets; provided that the aggregate fair market value of all assets
disposed of in reliance on this clause (vi) during any such Fiscal Year shall not exceed 10% of Consolidated Total
Assets at the end of the most recent Fiscal Year immediately preceding such Fiscal Year .
SECTION 5.15
Use of Proceeds. No portion of the proceeds of the Revolving Credit
Advances will be used by Borrower or any Subsidiary (i) in connection with, either directly or indirectly, any
tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such
other corporation (other than an Acquisition permitted under Section 5.04), (ii) directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock which violates
Regulation T, U or X, or (iii) for any purpose in violation of any applicable law or regulation. The proceeds of
the Revolving Credit Advances shall be used for general corporate purposes and working capital.
SECTION 5.16
Compliance with Laws; Payment of Taxes. Each Loan Party will, and will
cause each Subsidiary of a Loan Party and each member of the Controlled Group to: (a) comply with applicable
laws (including but not limited to ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such compliance is being contested in good
faith through appropriate proceedings diligently pursued or except to the extent that the failure to comply
therewith could not be expected to have a Material Adverse Effect; (b) make timely payment of contributions
required to meet the minimum funding standards set forth in ERISA with respect to any Plan; (c) promptly, upon
the request of any Banks, furnish to the Agent and the Banks copies of any annual report required to be filed
under ERISA in connection with any Plan; (d) not take any action or fail to take action, the result of which action
or inaction could be a material liability of any Loan Party to the PBGC or to a Multiemployer Plan; (e) notify the
Agent and the Banks as soon as practicable of any Reportable Event and of any additional act or condition arising
in connection with any Plan which any Loan Party believes might constitute grounds for the termination thereof
by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer
such plan; and (f) observe and remain in compliance with all licenses, permits, franchises or other authorizations
necessary to the ownership of its properties or the conduct of its business, and all covenants and conditions of all
agreements and instruments to which a Loan Party is a party, except where the necessity of such compliance is
being contested in good faith through appropriate proceedings diligently pursued or except to the extent that the
failure to comply therewith could not be expected to have a Material Adverse Effect. Each Loan Party will, and
will cause each Subsidiary of a Loan Party to, pay promptly when due all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become a lien against the
property of a Loan Party or any Subsidiary of a Loan Party, except liabilities being contested in good faith by
appropriate proceedings diligently pursued and against which, if requested by the Agent, Borrower shall have set
up reserves in accordance with GAAP or except outstanding liabilities, in the aggregate at any one time, of less
than $10,000,000. No Loan Party shall participate in any Prohibited Transaction which could subject any Loan
Party to any material civil penalty under ERISA or material tax under the Code. Each Loan Party shall furnish to
Banks upon any Bank’s request such additional information about any Plan or other employee benefit plan as
may be reasonably requested by such Bank. The Plans shall be operated in such a manner that none of the Loan
Parties will incur any material tax liability under Section 4980B of the Code or any material liability to any
qualified beneficiary as defined in Section 4980B.
SECTION 5.17
Insurance. Notwithstanding any provision in any other Loan Documents
requiring specified types or amounts of insurance, each Loan Party will maintain, and will cause each Subsidiary
of a Loan Party to maintain (either in the name of such Loan Party or in such Subsidiary’s own name), with
financially sound and reputable insurance companies, worker’s compensation insurance, liability insurance and
insurance on its properties, assets and business, now owned or hereafter acquired, against such casualties, risks
and contingencies, and in such types and amounts as shall be selected by management of Borrower in its
reasonable discretion and as are customarily maintained by prudent companies similarly situated in Borrower’s
industries.
SECTION 5.18
Change in Fiscal Year . Each Loan Party will not change its Fiscal Year
without the consent of the Required Banks.
SECTION 5.19
Maintenance of Property. Each Loan Party will, and will cause each
Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and
condition, except (i) ordinary wear and tear and obsolescence and (ii) the occurrence of casualty events.
SECTION 5.20
Intentionally Omitted.
SECTION 5.21
Environmental Matters. No Loan Party or any Subsidiary of a Loan Party
will, nor will any Loan Party permit any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed or otherwise handled in the ordinary course of business and in material
compliance with all applicable Environmental Requirements.
SECTION 5.22
Intentionally Omitted.
SECTION 5.23
Intentionally Omitted.
SECTION 5.24
Transactions with Affiliates. No Loan Party nor any Subsidiary of a Loan
Party shall enter into, or be a party to, any transaction with any Affiliate of a Loan Party or such Subsidiary (which
Affiliate is not a Loan Party or a Subsidiary of a Loan Party), except as permitted by law and in the ordinary
course of business and pursuant to reasonable terms which are fully disclosed to the Agent and the Banks and are
no less favorable to the Loan Party or such Subsidiary than would be obtained in a comparable arm’s length
transaction with a Person which is not an Affiliate; provided, however, that nothing contained in this Section shall
prohibit: (A) transactions under incentive compensation plans, stock option plans and other employee benefit
plans, and loans and advances from any Loan Party or any subsidiary of a Loan Party to its officers, in each case
that have been approved by the board of directors, or a committee thereof, of any Loan Party or any subsidiary of
a Loan Party, and subject to any other applicable limitations and restrictions set forth in this Agreement, (B) the
payment by any Loan Party of reasonable and customary fees to members of its board of directors, and (C)
transactions among Borrower and its Subsidiaries (provided that such transactions shall remain subject to any
other applicable limitations and restrictions set forth in this Agreement).
SECTION 5.25
No Restrictive Agreement. No Loan Party will, nor will any Loan Party
permit any of its Subsidiaries to, enter into, after the date of this Agreement, any indenture, agreement, instrument
or other arrangement that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or
restraining, or imposes materially adverse conditions upon, any of the following by a Loan Party or any such
Subsidiary: (a) the declaration or payment of Restricted Payments or other distributions in respect of Capital Stock
of the Loan Party or any Subsidiary or (b) the prompt payment and performance of the Obligations when due,
including, without limitation, the amounts due under the Notes, according to the terms of this Agreement and the
other Loan Documents.
SECTION 5.26
Additional Domestic Subsidiaries. Borrower will cause each Person that
becomes a Wholly Owned Domestic Subsidiary after the Closing Date to promptly, but no later than twenty (20)
Domestic Business Days (as such date may be extended by the Agent) after the date on which such Person
becomes a Wholly Owned Domestic Subsidiary (other than any Wholly Owned Domestic Subsidiary that owns
any portion of the Fort Mill Land), to become a Guarantor by way of execution of a Joinder Agreement, in the
form attached hereto as Exhibit G. Borrower shall also cause the items specified in Section 3.01(e) to be delivered
to the Agent concurrently with the instrument referred to above, modified appropriately to refer to such instrument
and such Subsidiary.
SECTION 5.27
Additional Debt. No Loan Party or Subsidiary of a Loan Party shall directly
or indirectly issue, assume, create, incur or suffer to exist any Debt or the equivalent (including obligations under
Capital Leases), except for:
(a)
the Obligations owed to the Agent and Banks under this Agreement and the other Loan
Documents;
(b)
the Debt existing and outstanding on the Closing Date of the Loan Parties set forth in
Schedule 5.27 hereto (and renewals, refinancings and extensions thereof so long as the principal amount of such
Debt is not increased);
(c)
aggregate Debt of the Loan Parties and their Subsidiaries secured by Liens permitted under
Section 5.11(h);
(d)
Debt assumed in connection with any merger, acquisition or consolidation permitted
pursuant to Section 5.14 or 5.04 so long as (i) such assumed Debt does not exceed in the aggregate $20,000,000
and (ii) any such Debt exceeding $1,000,000 ranks no higher than pari passu with respect to the Obligations;
(e)
Debt permitted pursuant to Section 5.10;
(f)
endorsement of instruments or items of payment for deposit to the general account of the
Loan Parties or for delivery to Banks on account of the Obligations of Loan Parties;
(g)
Guarantees of Debt permitted by this Section 5.27 and other Guarantees in an aggregate
amount of no more than $15,000,000;
(h)
obligations (contingent or otherwise) of Borrower or any Guarantor existing or arising
under any Hedge Agreement; provided that such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks associated with interest rate or foreign
currency fluctuations and not for purposes of speculation;
(i)
the incurrence by Borrower or any Subsidiary of Debt in respect of workers’ compensation
claims, self-insurance obligations, bankers’ acceptances, performance and surety bonds and similar obligations
in the ordinary course of business;
(j)
the incurrence by Borrower or any Subsidiary of Debt owing under overdraft facilities in
connection with cash management arrangements and other bank product obligations;
(k)
the incurrence by Borrower or any Subsidiary of Debt in respect of Subordinated
Debentures so long as no Default or Event of Default results from the incurrence thereof;
(l)
the incurrence by Borrower or any Subsidiary of Debt in respect of store leases;
(m)
other Debt for borrowed money not otherwise permitted under this Section 5.27, the
aggregate outstanding principal amount of which shall not, at any time, exceed $25,000,000; and
(n)
reimbursement obligations in respect of letters of credit to provide security for customs
bonds or to purchase inventory in the ordinary course of business, provided that the stated amount of all such
letters of credit shall not exceed $35,000,000 in the aggregate.
SECTION 5.28
Intentionally Omitted.
SECTION 5.29
Intentionally Omitted.
SECTION 5.30
Intentionally Omitted.
SECTION 5.31
Compliance with Anti-Corruption Laws and Sanctions. Borrower will
maintain in effect and enforce policies and procedures designed to promote and achieve compliance by Borrower,
its Subsidiaries and their respective directors, officers, employees and agents with all applicable Anti-Corruption
Laws, Anti-Money Laundering Laws and Sanctions. Borrower and its Subsidiaries shall comply at all times with
all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.
SECTION 5.32
Capital Expenditures. Capital Expenditures will not at any time exceed an
aggregate amount of $50,000,000 during any Fiscal Year, commencing with the Fiscal Year ended January 28,
2022. If Borrower and the Subsidiaries do not utilize the entire amount of Capital Expenditures permitted in any
Fiscal Year, Borrower and the Subsidiaries may carry forward to the immediately succeeding Fiscal Year 50% of
such unutilized amount of Capital Expenditures (with Capital Expenditures made by Borrower and the
Subsidiaries in such succeeding Fiscal Year applied first to such carried forward amount).
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default. If one or more of the following events (“Events of Default”)
shall have occurred and be continuing:
(a)
Borrower shall fail to pay when due any principal of any Revolving Credit Advance, or
shall fail to pay when due any reimbursement for any amount disbursed under a Letter of Credit within three (3)
Domestic Business Days after such reimbursement shall become due, or shall fail to pay any interest on any
Revolving Credit Advance within five Domestic Business Days after such interest shall become due, or any Loan
Party shall fail to pay any fee or other amount payable hereunder within ten (10) Domestic Business Days after
such fee or other amount becomes due; or
(b)
any Loan Party shall fail to observe, perform or comply with any covenant contained in
Sections 5.03 to 5.15, inclusive, or Section 5.18 or 5.27; or
(c)
any Loan Party shall fail to observe or perform any covenant or agreement contained or
incorporated by reference in this Agreement (other than those covered by clause (a) or (b) above or clause (q)
below) for thirty days after the earlier of (i) the first day on which any Designated Officer of a Loan Party has
knowledge of such failure or (ii) written notice thereof has been given to a Designated Officer of Borrower by
the Agent at the request of any Bank; or
(d)
any representation, warranty, certification or statement made or deemed made by the Loan
Parties in Article IV of this Agreement or in any financial statement, material certificate or other material
document delivered pursuant to this Agreement shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
(e)
any Loan Party or any Subsidiary of a Loan Party shall fail to make any payment in respect
of Debt outstanding in an aggregate principal amount equal to or greater than $10,000,000 (other than the Notes)
when due or within any applicable grace period; or
(f)
any event or condition shall occur which results in the acceleration of the maturity of Debt
outstanding in an aggregate principal amount equal to or greater than $10,000,000 of any Loan Party or any
Subsidiary of a Loan Party (including without limitation any mandatory prepayment or purchase of such Debt by
any Loan Party (or its designee) or such Subsidiary of a Loan Party (or its designee) prior to the scheduled maturity
thereof), or enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Debt
or commitment or any Person acting on such holders’ behalf to accelerate the maturity thereof or terminate any
such commitment (including without limitation any required mandatory prepayment or purchase thereof prior to
the scheduled maturity thereof), without regard to whether such holders or other Person shall have exercised or
waived their right to do so; or
(g)
any Loan Party or any Subsidiary of a Loan Party (except for Immaterial Subsidiaries) shall
commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial pan of its
property, or shall consent to any such relief or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit
of creditors, or shall fail generally, or shall admit in writing its inability, to pay its debts as they become due, or
shall take any corporate action to authorize any of the foregoing; or
(h)
an involuntary case or other proceeding shall be commenced against any Loan Party or any
Subsidiary of a Loan Party (except for Immaterial Subsidiaries) seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a
period of 60 days; or an order for relief shall be entered against any Loan Party or any Subsidiary of a Loan Party
(except for Immaterial Subsidiaries) under the federal bankruptcy laws as now or hereafter in effect; or
(i)
any Loan Party or any member of the Controlled Group shall fail to pay when due any
material amount which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans shall be filed under Title IV of ERISA by any Loan Party, any member
of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515
or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such
Plan or Plans must be terminated; or
(j)
one or more judgments or orders for the payment of money involving an aggregate amount
equal to or greater than $10,000,000 shall be rendered against any Loan Party or any Subsidiary of a Loan Party
and such judgment or order shall not be paid, covered by a reputable and solvent insurance company, dismissed,
bonded, vacated, stayed or discharged for a period of 30 days; or
(k)
a notice of lien, levy or assessment is filed of record (other than with respect to a Permitted
Lien) on all or any portion of the assets of any Borrower by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other governmental agency, including, without
limitation, the Pension Benefit Guaranty Corporation, or if any taxes owing at the time or times hereafter by the
United States becomes a Lien or encumbrance upon any asset of any Loan Party or any Subsidiary (other than
with respect to Permitted Liens) and the same is not dismissed, released or discharged within 30 days after the
same becomes a lien or encumbrance or, in the case of ad valorem taxes, prior to the last day when payment may
be made without penalty; or
(l)
(i) any Person or two or more Persons acting in concert (other than John Cato) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the Securities Exchange Act
of 1934) of 50% or more of the outstanding shares of the voting stock of Borrower; or (ii) as of any date a majority
of the Board of Directors of Borrower consists of individuals who were not either (A) directors of Borrower as of
the corresponding date of the previous year, (B) approved or nominated to become directors by the Board of
Directors of Borrower of which a majority consisted of individuals described in clause (A), or (C) approved or
nominated to become directors by the Board of Directors of Borrower of which a majority consisted of individuals
described in clause (A) and individuals described in clause (B); or
(m)
any Loan Party is enjoined, restrained or in any way prevented by court order from
conducting all or any material part of its business affairs and such action has a Material Adverse Effect;
(n)
[reserved];
(o)
[reserved];
(p)
[reserved]; or
(q)
(i) any of the Guarantors shall fail to pay when due any Guaranteed Obligations or shall
fail to pay any fee or other amount payable hereunder when due; or (ii) any Guarantor shall disaffirm or deny its
obligations under Article X,
then, and in every such event, the Agent shall (i) if requested by the Required Banks, by notice to Borrower
terminate the Revolving Credit Commitments and they shall thereupon terminate, (ii) if requested by the Required
Banks, by notice to the Issuing Bank, instruct the Issuing Bank to declare an Event of Default under the Letter of
Credit Agreements, and (iii) if requested by the Required Banks, by notice to Borrower declare the Notes (together
with accrued interest thereon), the Revolving Credit Advances, and all other amounts payable hereunder and
under the other Loan Documents to be, and the Notes (together with all accrued interest thereon), the Revolving
Credit Advances, and all other amounts payable hereunder and under the other Loan Documents shall thereupon
become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Loan Parties; provided that if any Event of Default specified in clause (g) or (h)
above occurs with respect to any Loan Party, without any notice to any Loan Party or any other act by the Agent
or the Banks, the Revolving Credit Commitments shall thereupon automatically terminate and the Notes (together
with accrued interest thereon) and all other amounts payable hereunder and under the other Loan Documents shall
automatically become immediately due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Loan Parties. Notwithstanding the foregoing, the Agent shall have
available to it all other remedies at law or equity, and shall exercise any one or all of them at the request of the
Required Banks. Notwithstanding the foregoing, the Agent shall have available to it all rights and remedies
provided under the Loan Documents and in addition thereto, all other rights and remedies at law or equity, and
the Agent shall exercise any one or all of them at the request of the Required Banks.
SECTION 6.02
Notice of Default. The Agent shall give notice to Borrower of any Default
under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
SECTION 6.03
Cash Cover. If any Event of Default shall have occurred and be continuing,
Borrower shall, if requested by the Agent, pay to the Agent, for the benefit of the Banks an amount in immediately
available funds (which funds shall be held as collateral pursuant to arrangements satisfactory to the Agent) equal
to the aggregate Undrawn Amounts, provided that, if any Event of Default specified in clause (g) or (h) above
occurs, Borrower shall be obligated to pay such amount to the Agent forthwith without any notice to Borrower or
any other act by the Agent.
SECTION 6.04
Allocation of Proceeds. If an Event of Default has occurred and not been
waived, and the maturity of the Notes has been accelerated pursuant to Article VI hereof, all payments received
by the Agent hereunder, in respect of any principal of or interest on the Obligations or any other amounts payable
by Borrower or any other Loan Party hereunder, shall be applied by the Agent in the following order:
(a)
the reasonable expenses incurred in connection with retaking, holding, preserving,
processing, maintaining or preparing for sale, lease or other disposition of, any collateral, including reasonable
attorney’s fees and legal expenses pertaining thereto;
(b)
amounts due to the Banks, Agent and the Issuing Bank pursuant to Sections 2.07(a), 2.07(b)
and 9.03(a);
(c)
payments of interest on Revolving Credit Advances and Letter of Credit Advances, to be
applied for the ratable benefit of the Banks;
(d)
payments of principal of Revolving Credit Advances and Letter of Credit Advances, to be
applied for the ratable benefit of the Banks;
(e)
payments of cash amounts to the Agent in respect of outstanding Letters of Credit pursuant
to Section 6.03;
(f)
amounts due to the Issuing Bank, the Agent and the Banks pursuant to Sections 9.03(b)
and (c);
(g)
payments of all other amounts due under any of the Loan Documents, if any, to be applied
for the ratable benefit of the Banks;
(h)
any surplus remaining after application as provided for herein, to Borrower or otherwise as
may be required by applicable law.
ARTICLE VII
THE AGENT
SECTION 7.01
Appointment and Authority.
(a)
Each of the Banks and each Issuing Bank hereby irrevocably appoints, designates and
authorizes Wells Fargo to act on its behalf as the Agent hereunder and under the other Loan Documents and
authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent
by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. Except
as provided in Sections 7.6 the provisions of this Article are solely for the benefit of the Agent, the Banks, the
Issuing Banks and their respective Related Parties, and neither Borrower nor any Subsidiary thereof shall have
rights as a third-party beneficiary of any of such provisions;
(b)
It is understood and agreed that the use of the term “agent” herein or in any other Loan
Documents (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or
other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is
used as a matter of market custom, and is intended to create or reflect only an administrative relationship between
contracting parties.
SECTION 7.02
Rights as a Bank. The Person serving as the Agent hereunder shall have the
same rights and powers in its capacity as a Bank as any other Bank and may exercise the same as though it were
not the Agent and the term “Bank” or “Banks” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and
its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of banking, trust, financial advisory, underwriting,
capital markets or other business with Borrower or any Subsidiary or other Affiliate thereof as if such Person
were not the Agent hereunder and without any duty to account therefor to the Banks or to provide notice to or
consent of the Banks with respect thereto.
SECTION 7.03
Exculpatory Provisions.
(a)
The Agent, and their respective Related Parties shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents, and its duties hereunder and thereunder
shall be administrative in nature. Without limiting the generality of the foregoing, the Agent, and their respective
Related Parties:
(i)
shall not be subject to any agency, trust, fiduciary or other implied duties, regardless
of whether a Default or Event of Default has occurred and is continuing;
(ii)
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that the Agent is required to exercise as directed in writing by the Required Banks (or such other
number or percentage of the Banks as shall be expressly provided for herein or in the other Loan Documents),
provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel,
may expose the Agent to liability or that is contrary to any Loan Document or Applicable law, including for the
avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that
may effect a forfeiture, modification or termination of property of a Defaulting Bank in violation of any Debtor
Relief Law;
(iii)
shall not, have any duty to disclose, and shall not be liable for the failure to disclose
to any Bank, any Issuing Bank or any other Person, any credit or other information concerning the business,
prospects, operations, properties, assets, financial or other condition or creditworthiness of Borrower or any of its
respective Subsidiaries or Affiliates that is communicated to, obtained by or otherwise in the possession of the
Person serving as the Agent, or their respective Related Parties in any capacity, except for notices, reports and
other documents that are required to be furnished by the Agent to the Banks pursuant to the express provisions of
this Agreement; and
(iv)
shall not be required to account to any Bank or any Issuing Bank for any sum or
profit received by the Agent for its own account.
(b)
The Agent, and their respective Related Parties shall not be liable for any action taken or
not taken by it under or in connection with this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby (i) with the consent or at the request of the Required Banks (or such other number
or percentage of the Banks as shall be necessary, or as the Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Section 9.05) or (ii) in the absence of its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. The Agent
shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such
Default or Event of Default and indicating that such notice is a “Notice of Default” is given to the Agent by
Borrower, a Bank or an Issuing Bank.
(c)
The Agent, and their respective Related Parties shall not be responsible for or have any
duty or obligations to any Bank or Participant or any other Person to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions
set forth herein or therein or the occurrence of any Default or Event of Default, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Agent or (vii) the utilization of any Issuing Bank’s Letter
of Credit Commitment (it being understood and agreed that each Issuing Bank shall monitor compliance with its
own Letter of Credit Commitment without any further action by the Agent).
SECTION 7.04
Reliance by the Agent. The Agent shall be entitled to rely upon, shall be
fully protected in relying and shall not incur any liability for relying upon, any notice, request, certificate, consent,
communication, statement, instrument, document or other writing (including any electronic message, Internet or
intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or
by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying
and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must
be fulfilled to the satisfaction of a Bank or an Issuing Bank, the Agent may presume that such condition is
satisfactory to such Bank or such Issuing Bank unless the Agent shall have received notice to the contrary from
such Bank or such Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The
Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice
of any such counsel, accountants or experts. Each Bank or Issuing Bank that has signed this Agreement or a
signature page to an Assignment and Acceptance or any other Loan Document pursuant to which it is to become
a Bank or Issuing Bank hereunder shall be deemed to have consented to, approved and accepted and shall deemed
satisfied with each document or other matter required thereunder to be consented to, approved or accepted by
such Bank or Issuing Bank or that is to be acceptable or satisfactory to such Bank or Issuing Bank.
SECTION 7.05
Delegation of Duties. The Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-
agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of its duties and
exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub -agent, and
shall apply to their respective activities in connection with the syndication under this Agreement as well as
activities as Agent. The Agent shall not be responsible for the negligence or misconduct of any sub-agents except
to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the
Agent acted with gross negligence or willful misconduct in the selection of such sub agents.
SECTION 7.06
Resignation of Agent.
(a)
The Agent may at any time give notice of its resignation to the Banks, the Issuing Banks
and Borrower. Upon receipt of any such notice of resignation, the Required Banks shall have the right, in
consultation with Borrower, to appoint a successor, which shall be a bank or financial institution reasonably
experienced in serving as administrative agent on syndicated bank facilities with an office in the United States,
or an Affiliate of any such bank or financial institution with an office in the United States. If no such successor
shall have been so appointed by the Required Banks and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required
Banks) (the “Resignation Effective Date”), then the retiring Agent may (but shall not be obligated to), on behalf
of the Banks and the Issuing Banks, appoint a successor Agent meeting the qualifications set forth above. Whether
or not a successor has been appointed, such resignation shall become effective in accordance with such notice on
the Resignation Effective Date.
(b)
If the Person serving as Agent is a Defaulting Bank pursuant to clause (d) of the definition
thereof, the Required Banks may, to the extent permitted by applicable law, by notice in writing to Borrower and
such Person, remove such Person as Agent and, in consultation with Borrower, appoint a successor. If no such
successor shall have been so appointed by the Required Banks and shall have accepted such appointment within
30 days (or such earlier day as shall be agreed by the Required Banks) (the “Removal Effective Date”), then such
removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c)
With effect from the Resignation Effective Date or the Removal Effective Date (as
applicable), (i) the retiring or removed Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of
the Banks or the Issuing Banks under any of the Loan Documents, the retiring or removed Agent shall continue
to hold such collateral security until such time as a successor Agent is appointed) and (ii) except for any indemnity
payments or other amounts then owed to the retiring or removed Agent, all payments, communications and
determinations provided to be made by, to or through the Agent shall instead be made by or to each Bank and
each Issuing Bank directly, until such time, if any, as the Required Banks appoint a successor Agent as provided
for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Agent (other
than any rights to indemnity payments or other amounts owed to the retiring or removed Agent as of the
Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Agent shall
be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees
payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise
agreed between Borrower and such successor. After the retiring or removed Agent’s resignation or removal
hereunder and under the other Loan Documents, the provisions of this Article shall continue in effect for the
benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent or
relating to its duties as Agent that are carried out following its retirement or removal, including, without limitation,
any actions taken in connection with the transfer of agency to a replacement or successor Agent.
(d)
Any resignation by, or removal of, Wells Fargo as Agent pursuant to this Section shall also
constitute its resignation as an Issuing Bank. Upon the acceptance of a successor’s appointment as Agent
hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Issuing Bank, if in its sole discretion it elects to, (ii) the retiring Issuing Bank shall be
discharged from all of its respective duties and obligations hereunder or under the other Loan Documents, and
(iii) the successor Issuing Bank, if in its sole discretion it elects to, shall issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory
to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such
Letters of Credit.
SECTION 7.07
Non-Reliance on Agent and Other Banks. Each Bank and each Issuing
Bank expressly acknowledges that none of the Agent, or any of their respective Related Parties has made any
representations or warranties to it and that no act taken or failure to act by the Agent, or any of their respective
Related Parties, including any consent to, and acceptance of any assignment or review of the affairs of Borrower
and its Subsidiaries or Affiliates shall be deemed to constitute a representation or warranty of the Agent, or any
of their respective Related Parties to any Bank, or any Issuing Bank as to any matter, including whether the Agent,
or any of their respective Related Parties have disclosed material information in their (or their respective Related
Parties’) possession. Each Bank and each Issuing Bank expressly acknowledges, represents and warrants to the
Agent that (a) the Loan Documents set forth the terms of a commercial lending facility, (b) it is engaged in
making, acquiring, purchasing or holding commercial loans in the ordinary course and is entering into this
Agreement and the other Loan Documents to which it is a party as a Bank for the purpose of making, acquiring,
purchasing and/or holding the commercial loans set forth herein as may be applicable to it, and not for the purpose
of making, acquiring, purchasing or holding any other type of financial instrument, (c) it is sophisticated with
respect to decisions to make, acquire, purchase or hold the commercial loans applicable to it and either it or the
Person exercising discretion in making its decisions to make, acquire, purchase or hold such commercial loans is
experienced in making, acquiring, purchasing or holding commercial loans, (d) it has, independently and without
reliance upon the Agent, any other Bank or any of their respective Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and appraisal of, and investigations
into, the business, prospects, operations, property, assets, liabilities, financial and other condition and
creditworthiness of Borrower and its Subsidiaries, all applicable bank or other regulatory Applicable laws relating
to the Transactions and the transactions contemplated by this Agreement and the other Loan Documents and (e)
it has made its own independent decision to enter into this Agreement and the other Loan Documents to which it
is a party and to extend credit hereunder and thereunder. Each Bank and each Issuing Bank also acknowledges
that (i) it will, independently and without reliance upon the Agent, or any other Bank or any of their respective
Related Parties (A) continue to make its own credit analysis, appraisals and decisions in taking or not taking
action under or based upon this Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder based on such documents and information as it shall from time to time deem
appropriate and its own independent investigations and (B) continue to make such investigations and inquiries as
it deems necessary to inform itself as to Borrower and its Subsidiaries and (ii) it will not assert any claim in
contravention of this Section 7.07.
SECTION 7.08
No Other Duties, Etc. Anything herein to the contrary notwithstanding,
none of the syndication agents, documentation agents, co-agents, arrangers or bookrunners listed on the cover
page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Agent, a Bank or an Issuing Bank hereunder, but each
such Person shall have the benefit of the indemnities and exculpatory provisions hereof.
ARTICLE VIII
CHANGED CIRCUMSTANCES
SECTION 8.01
Circumstances Affecting Benchmark Availability. Subject to Section 8.03,
in connection with any request for a SOFR Loan or a conversion to or continuation thereof or otherwise, if for
any reason (i) the Agent shall determine (which determination shall be conclusive and binding absent manifest
error) that reasonable and adequate means do not exist for ascertaining Daily Simple SOFR pursuant to the
definition thereof or Term SOFR with respect to a proposed Term SOFR Loan on or prior to the first day of the
applicable Interest Period or (ii) the Required Banks shall determine (which determination shall be conclusive
and binding absent manifest error) that Daily Simple SOFR or Term SOFR, as applicable, does not adequately
and fairly reflect the cost to such Banks of making or maintaining any such Loan during, with respect to Term
SOFR, such Interest Period and, in the case of clause (ii), the Required Banks have provided notice of such
determination to the Agent, then, in each case, the Agent shall promptly give notice thereof to Borrower. Upon
notice thereof by the Agent to Borrower, any obligation of the Banks to make SOFR Loans, and any right of
Borrower to convert any Loan to or continue any Loan as a SOFR Loan, shall be suspended (to the extent of the
affected SOFR Loans or the affected Interest Periods) until the Agent (with respect to clause (ii), at the instruction
of the Required Banks) revokes such notice. Upon receipt of such notice, (A) Borrower may revoke any pending
request for a borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR
Loans or the affected Interest Periods) or, failing that, Borrower will be deemed to have converted any such
request into a request for a borrowing of or conversion to Base Rate Loans in the amount specified therein and
(B) any outstanding affected SOFR Loans will be deemed to have been converted into Base Rate Loans (I) with
respect to any Daily Simple SOFR Loans, immediately and (II) with respect to any Term SOFR Loans, at the end
of the applicable Interest Period. Upon any such prepayment or conversion, Borrower shall also pay accrued
interest on the amount so prepaid or converted.
SECTION 8.02
Laws Affecting SOFR Availability. If, after the date hereof, the
introduction of, or any change in, any applicable law or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any of the Banks (or any of their respective Lending Offices) with any
request or directive (whether or not having the force of law) of any such governmental authority, central bank or
comparable agency, shall make it unlawful or impossible for any of the Banks (or any of their respective Lending
Offices) to honor its obligations hereunder to make or maintain any SOFR Loan, or to determine or charge interest
based upon SOFR, Daily Simple SOFR, the Term SOFR Reference Rate or Term SOFR, such Bank shall
promptly give notice thereof to the Agent and the Agent shall promptly give notice to Borrower and the other
Banks (an “Illegality Notice”). Thereafter, until each affected Bank notifies the Agent and the Agent notifies
Borrower that the circumstances giving rise to such determination no longer exist, (i) any obligation of the Bank
to make Daily Simple SOFR Loans or Term SOFR Loans, as applicable, and any right of Borrower to convert
any Loan to a Daily Simple SOFR Loan or a Term SOFR Loan, as applicable, shall be suspended and (ii) if
necessary to avoid such illegality, the Agent shall compute the Base Rate without reference to clause (c) of the
definition of “Base Rate”. Upon receipt of an Illegality Notice, Borrower shall, if necessary to avoid such
illegality, upon demand from any Bank (with a copy to the Agent), prepay or, if applicable, convert all affected
SOFR Loans to Base Rate Loans (in each case, if necessary to avoid such illegality, the Agent shall compute the
Base Rate without reference to clause (c) of the definition of “Base Rate”) (A) with respect to any Daily Simple
SOFR Loans, on the Interest Payment Date therefor and (B) with respect to any Term SOFR Loans, on the last
day of the Interest Period therefor, if all affected Banks may lawfully continue to maintain such SOFR Loans to
such day, or immediately, if any Bank may not lawfully continue to maintain such SOFR Loans to such day.
Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or
converted.
SECTION 8.03
Benchmark Replacement Setting.
(a)
Benchmark Replacement.
(i)
Notwithstanding anything to the contrary herein or in any other Loan Document,
upon the occurrence of a Benchmark Transition Event with respect to any Benchmark, the Agent and Borrower
may amend this Agreement to replace such Benchmark with a Benchmark Replacement. Any such amendment
with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day
after the Agent has posted such proposed amendment to all affected Banks and Borrower so long as the Agent
has not received, by such time, written notice of objection to such amendment from Banks comprising the
Required Banks. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section
8.03(a)(i) will occur prior to the applicable Benchmark Transition Start Date.
(ii)
No Hedge Agreement shall be deemed to be a “Loan Document” for purposes of
this Section 8.03.
(b)
Benchmark Replacement Conforming Changes. In connection with the use, administration,
adoption or implementation of a Benchmark Replacement, the Agent will have the right to make Conforming
Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document,
any amendments implementing such Conforming Changes will become effective without any further action or
consent of any other party to this Agreement or any other Loan Document.
(c)
Notices; Standards for Decisions and Determinations. The Agent will promptly notify
Borrower and the Banks of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of
any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark
Replacement. The Agent will promptly notify Borrower of the removal or reinstatement of any tenor of a
Benchmark pursuant to Section 8.03(d) and the commencement of any Benchmark Unavailability Period. Any
determination, decision or election that may be made by the Agent or, if applicable, any Bank (or group of Banks)
pursuant to this Section 8.03, including any determination with respect to a tenor, rate or adjustment or of the
occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking
any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their
sole discretion and without consent from any other party to this Agreement or any other Loan Document, except,
in each case, as expressly required pursuant to this Section 8.03.
(d)
Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein
or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark
Replacement), (A) if any then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and
either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes
such rate from time to time as selected by the Agent in its reasonable discretion or (2) the regulatory supervisor
for the administrator of such Benchmark has provided a public statement or publication of information
announcing that any tenor for such Benchmark is not or will not be representative, then the Agent may modify
the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after
such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to
clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark
(including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is not or
will not be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify
the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after
such time to reinstate such previously removed tenor.
(e)
Benchmark Unavailability Period. Upon Borrower’s receipt of notice of the
commencement of a Benchmark Unavailability Period with respect to a given Benchmark, (A) Borrower may
revoke any pending request for a borrowing of, conversion to or continuation of any affected SOFR Loans to be
made, converted or continued during any Benchmark Unavailability Period and, failing that, Borrower will be
deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans
and (B) any outstanding affected SOFR Loans will be deemed to have been converted to Base Rate Loans (I) with
respect to any Daily Simple SOFR Loans, immediately and (II) with respect to any Term SOFR Loans, at the end
of the applicable Interest Period. During any Benchmark Unavailability Period with respect to any Benchmark
or at any time that a tenor for any then-current Benchmark is not an Available Tenor, the component of Base Rate
based upon the then-current Benchmark that is the subject of such Benchmark Unavailability Period or such tenor
for such Benchmark, as applicable, will not be used in any determination of Base Rate.
SECTION 8.04
Illegality. If, in any applicable jurisdiction, the Agent, any Issuing Bank or
any Bank determines that any applicable law has made it unlawful, or that any governmental authority has asserted
that it is unlawful, for the Agent, any Issuing Bank or any Bank to (i) perform any of its obligations hereunder or
under any other Loan Document, (ii) to fund or maintain its participation in any Loan or (iii) issue, make, maintain,
fund or charge interest or fees with respect to any extension of credit, such Person shall promptly notify the Agent,
then, upon the Agent notifying Borrower, and until such notice by such Person is revoked, any obligation of such
Person to issue, make, maintain, fund or charge interest or fees with respect to any such extension of credit shall
be suspended, and to the extent required by applicable law, cancelled. Upon receipt of such notice, the Loan
Parties shall, (A) repay that Person’s participation in the Loans or other applicable Obligations on (I) with respect
to any Daily Simple SOFR Loan, the applicable Interest Payment Date therefor or (II) with respect to any Term
SOFR Loan, the last day of the Interest Period therefor, or on another applicable date with respect to another
Obligation, occurring after the Agent has notified Borrower or, in each case, if earlier, the date specified by such
Person in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period
permitted by Applicable law) and (B) take all reasonable actions requested by such Person to mitigate or avoid
such illegality.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01
Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission or similar writing) and shall be given to such party
at its address or telecopy number set forth on the signature pages hereof or such other address or telecopy number
as such party may hereafter specify for the purpose by notice to each other party. Each such notice, request or
other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopy
number specified in this Section and the telecopy machine used by the sender provides a written confirmation
that such telecopy has been so transmitted or receipt of such telecopy transmission is otherwise confirmed, (ii) if
given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, and (iii) if given by any other means, when delivered at the address specified in this
Section; provided that notices to the Agent under Article II or Article VIII shall not be effective until received.
SECTION 9.02
No Waivers . No failure or delay by the Agent or any Bank in exercising
any right, power or privilege hereunder or under any Note or other Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.03
Expenses: Documentary Taxes: Indemnification.
(a)
The Loan Parties shall, jointly and severally, pay (i) all expenses of the Agent, including
fees and disbursements of the Agent in connection with any field audits and investigations as provided in Section
5.02 and fees and disbursements of one outside counsel for the Agent in connection with the preparation of this
Agreement and the other Loan Documents, any waiver or consent hereunder or thereunder or any amendment
hereof or thereof or any Default or alleged Default hereunder or thereunder and (ii) if a Default occurs, all out-
of-pocket expenses incurred by the Agent or any Bank, including reasonable and documented fees and
disbursements of counsel, in connection with such Default and collection and other enforcement proceedings
resulting therefrom, including reasonable and documented out-of-pocket expenses incurred in enforcing this
Agreement and the other Loan Documents.
(b)
The Loan Parties shall, jointly and severally, indemnify the Agent and each Bank against
any transfer taxes, documentary taxes, assessments or charges made by any Authority by reason of the execution
and delivery of this Agreement or the other Loan Documents.
(c)
The Loan Parties shall, jointly and severally, indemnify the Agent, the Banks and each
Affiliate thereof and their respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all third party losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims or damages arise out of or result from any actual or proposed use
by Borrower of the proceeds of any extension of credit by any Bank hereunder or breach by any Loan Party of
this Agreement or any other Loan Document or from investigation, litigation (including, without limitation, any
actions taken by the Agent or any of the Banks to enforce this Agreement or any of the other Loan Documents)
or other proceeding (including, without limitation, any threatened investigation or proceeding) relating to the
foregoing, and the Loan Parties shall reimburse the Agent and each Bank, and each Affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any expenses (including, without
limitation, reasonable and documented legal fees) incurred in connection with any such investigation or
proceeding; but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of, or breach of applicable law by, the Person to be indemnified.
SECTION 9.04
Sharing of Set-Offs. Each Bank agrees that if it shall, by exercising any right
of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Letter of Credit Advances and Notes held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of all Letter of Credit Advances and
principal and interest owing with respect to the Notes held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Letter of Credit Advances and Notes
held by the other Banks owing to such other Banks, and/or such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the Letter of Credit Advances and
Notes held by the Banks owing to such other Banks shall be shared by the Banks pro rata; provided that (i) nothing
in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and
to apply the amount subject to such exercise to the payment of indebtedness of the Loan Parties other than its
indebtedness under the Letter of Credit Advances and Notes, and (ii) if all or any portion of such payment received
by the purchasing Bank is thereafter recovered from such purchasing Bank, such purchase from each other Bank
shall be rescinded and such other Bank shall repay to the purchasing Bank the purchase price of such participation
to the extent of such recovery together with an amount equal to such other Bank’s ratable share (according to the
proportion of (x) the amount of such other Bank’s required repayment to (y) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the
total amount so recovered. The Loan Parties agree, to the fullest extent they may effectively do so under
applicable law, that any holder of a participation in the Letter of Credit Advances or Notes, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation were a direct creditor of the Loan
Parties in the amount of such participation.
SECTION 9.05
Amendments and Waivers.
(a)
Any provision of this Agreement, the Notes or any other Loan Documents may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed by Borrower and the Required
Banks (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that no such
amendment or waiver shall (i) change the Revolving Credit Commitment of any Bank or subject any Bank to any
additional obligation without the written consent of such Bank, (ii) change the principal of or decrease the rate of
interest on any Revolving Credit Advance or decrease any fees (excluding fees payable solely to the Issuing Bank
for its own account) hereunder without the written consent of each Bank directly affected thereby, (iii) change
the date fixed for any payment of principal of or interest on any Revolving Credit Advance, or any fees (excluding
fees payable solely to the Issuing Bank for its own account) hereunder without the written consent of each Bank
directly affected thereby, (iv) change the amount of principal, decrease the amount of interest or decrease the
amount of fees (excluding fees payable solely to the Issuing Bank for its own account) due on any date fixed for
the payment thereof without the written consent of each Bank directly affected thereby, (v) change the percentage
of the Revolving Credit Commitments or of the aggregate unpaid principal amount of the Notes, or the percentage
of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other
provision of this Agreement without the written consent of each Bank directly affected thereby, (vi) change the
manner of application of any payments made under this Agreement or the other Loan Documents without the
written consent of each Bank directly affected thereby, (vii) release or substitute all or substantially all of the
collateral, if any, held as security for the Obligations without the written consent of each Bank, (viii) change or
modify the definition of “Required Banks,” without the written consent of each Bank directly affected thereby or
(ix) release any Guarantee given to support payment of the Guaranteed Obligations without the written consent
of the Required Banks, other than with respect to any Subsidiary Guarantor that is permitted to be dissolved or
liquidated pursuant to Section 5.12 or with respect to any Subsidiary Guarantor that is an Immaterial Subsidiary
excluded from clauses (g) and (h) of Section 6.01 (and in each such case the Agent may release the Guarantee of
the Subsidiary Guarantor without any further action by the Required Banks), and provided further that no
amendment or waiver shall, unless signed by the Issuing Bank, (A) modify or amend Section 2.03; or (B) change
in any manner, any term or condition applicable to the Letters of Credit or the Letter of Credit Agreements. The
amount of fees payable solely to the Issuing Bank for its own account may be amended, from time to time, by
Borrower and the Issuing Bank without the approval of any of the Banks.
(b)
Notwithstanding anything to the contrary herein, the Agent may, with the consent of
Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any
ambiguity, omission, mistake, defect or inconsistency.
SECTION 9.06
Margin Stock Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not, directly or indirectly (by negative pledge or otherwise), relying
upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.07
Successors and Assigns.
(a)
The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided that no Loan Party may assign or otherwise
transfer any of its rights under this Agreement.
(b)
Any Bank may at any time sell to one or more Persons (each a “Participant”) participating
interests in any Revolving Credit Advance owing to such Bank, any Note held by such Bank, any Revolving
Credit Commitment hereunder or any other interest of such Bank hereunder. In the event of any such sale by a
Bank of a participating interest to a Participant, such Bank’s obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the
holder of any such Note for all purposes under this Agreement, and Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement.
In no event shall a Bank that sells a participation be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not (except as provided below), without the consent
of the Participant, agree to (i) the change of any date fixed for the payment of principal of or interest on the related
Revolving Credit Advance or Revolving Credit Advances, (ii) the change of the amount of any principal, interest
or fees due on any date fixed for the payment thereof with respect to the related Revolving Credit Advance, or
Revolving Credit Advances, (iii) the change of the principal of the related Revolving Credit Advance or
Revolving Credit Advances, (iv) any change in the rate at which either interest is payable thereon or (if the
Participant is entitled to any part thereof) any fee is payable hereunder from the rate at which the Participant is
entitled to receive interest or any fee (as the case may be) in respect of such participation, (v) the release or
substitution of all or any substantial part of the collateral (if any) held as security for the Obligations, or (vi) the
release of any guaranty given to support payment of the Guaranteed Obligations. Each Bank selling a
participating interest in any Revolving Credit Advance, Note, Revolving Credit Commitment, or other interest
under this Agreement shall, within 10 Domestic Business Days of such sale, provide Borrower and the Agent
with written notification stating that such sale has occurred and identifying the Participant and the interest
purchased by such Participant; provided, that a Bank shall not be required to provide written notification of a
participation sold to an Affiliate of a Bank. The Loan Parties agree that each Participant shall be entitled to the
benefits of Article VIII with respect to its participation in Loans outstanding from time to time.
(c)
Any Bank may at any time assign to one or more banks or financial institutions (each an
“Assignee”) all, or a proportionate part of all, of its rights and obligations under this Agreement, the Notes and
the other Loan Documents, and such Assignee shall assume all such rights and obligations, pursuant to an
Assignment and Acceptance in the form attached hereto as Exhibit H, executed by such Assignee, such transferor
Bank and the Agent (and, in the case of: (i) an Assignee that is not then a Bank or an Affiliate of a Bank; and (ii)
an assignment not made during the existence of a Default or an Event of Default, by Borrower); provided that (i)
no interest may be sold by a Bank pursuant to this paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the transferor Bank’s Revolving Credit Commitment, Revolving Credit Advances, and
Letter of Credit Commitment (including without limitation a ratably equivalent portion of such transferor’s
obligations under Section 2.03(c)), (ii) the amount of the Revolving Credit Commitment of the assigning Bank
being assigned pursuant to such assignment (determined as of the effective date of the assignment) shall be equal
to $5,000,000 (or any larger multiple of $1,000,000) (except that any such assignment may be in the full amount
of the assigning Bank’s Revolving Credit Commitment), (iii) no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a Bank without the consent of Borrower,
which consent shall not be unreasonably withheld, provided that Borrower’s consent shall not be necessary with
respect to any assignment made during the existence of a Default or an Event of Default; (iv) a Bank may not
have more than two Assignees that are not then Banks at any one time, (v) no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a Bank, without the consent
of the Agent, which consent shall not be unreasonably withheld, provided, that although the Agent’s consent may
not be necessary with respect to an Assignee that is then a Bank or an Affiliate of a Bank, no such assignment
shall be effective until the conditions set forth in the following sentence are satisfied; and (vi) no interest in a
Letter of Credit Commitment (including without limitation any portion of such transferor’s obligations under
Section 2.03(c)) may be sold by a Bank pursuant to this paragraph (c) to any Assignee that is not then a Bank or
an Affiliate of a Bank, without the consent of the Issuing Bank, which consent may be withheld by the Issuing
Bank in its sole and absolute discretion. Upon (A) execution of the Assignment and Acceptance by such transferor
Bank, such Assignee, the Agent and (if applicable) Borrower, (B) delivery of an executed copy of the Assignment
and Acceptance to Borrower and the Agent, (C) payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such Assignee, and (D) payment by the
assigning Bank of a processing and recordation fee of $3,500 to the Agent if the Assignee is not a Bank or Affiliate
of a Bank and $1,000 if the Assignee is a Bank or Affiliate of a Bank, such Assignee shall for all purposes be a
Bank party to this Agreement and shall have all the rights and obligations of a Bank under this Agreement to the
same extent as if it were an original party hereto with a Revolving Credit Commitment, and Letter of Credit
Commitment (including, without limitation obligations under Section 2.03(c)) as set forth in such instrument of
assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by Borrower, the Banks or the Agent shall be required. Upon the consummation
of any transfer to an Assignee pursuant to this paragraph (c), the transferor Bank, the Agent and Borrower shall
make appropriate arrangements so that, if required, a new Note is issued to each of such Assignee and such
transferor Bank.
(d)
Subject to the provisions of Section 9.08, the Loan Parties authorize each Bank to disclose
to any Participant, Assignee or other transferee (each a “Transferee”) and any prospective Transferee any and all
financial and other information in such Bank’s possession concerning the Loan Parties which has been delivered
to such Bank by the Loan Parties pursuant to this Agreement or which has been delivered to such Bank by the
Loan Parties in connection with such Bank’s credit evaluation prior to entering into this Agreement. Any
Transferee and any prospective Transferee shall agree to be subject to the terms of Section 9.08 before receiving
any such information.
(e)
No Transferee shall be entitled to receive any greater payment under Section 8.03 than the
transferor Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is
made with Borrower’s prior written consent or by reason of the provisions of Section 8.02 or 8.03 requiring such
Bank to designate a different Lending Office under certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
(f)
Anything in this Section 9.07 to the contrary notwithstanding, any Bank may assign and
pledge all or any portion of the Loan and/or obligations owing to it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the FRB and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned Loan and/or obligations made by
Borrower to the assigning and/or pledging Bank in accordance with the terms of this Agreement shall satisfy
Borrower’s obligations hereunder in respect of such assigned Loan and/or obligations to the extent of such
payment. No such assignment shall release the assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.08
Confidentiality. Each Bank and each Transferee agrees to keep any
information delivered or made available by the Loan Parties, other than any such information that is available to
any Bank or Transferee on a nonconfidential basis prior to disclosure by any Loan Party, confidential from anyone
other than persons employed or retained by such Bank who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loan; provided, however, that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) upon the order of any court or administrative agency,
(iii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Bank, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in connection with any litigation to which
the Agent, any Bank or their respective Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (vii) to such Bank’s legal counsel and independent auditors
and (viii) to any actual or proposed Participant, Assignee other Transferee or prospective Transferee of all or part
of its rights hereunder which has agreed in writing, prior to receipt of any such information, to be bound by the
provisions of this Section 9.08 as if it were a Bank hereunder.
SECTION 9.09
Representation by Banks. Each Bank hereby represents that it is a
commercial lender or financial institution which makes loans in the ordinary course of its business and that it will
make its Revolving Credit Advances hereunder for its own account in the ordinary course of such business;
provided, however, that, subject to Section 9.07, the disposition of the Note or Notes held by that Bank shall at
all times be within its exclusive control.
SECTION 9.10
Obligations Several. The obligations of each Bank hereunder are several,
and no Bank shall be responsible for the obligations or commitment of any other Bank hereunder. Nothing
contained in this Agreement and no action taken by the Banks pursuant hereto shall be deemed to constitute the
Banks to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any
time hereunder to each Bank shall be a separate and independent debt, each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan Document and it shall not be necessary for any
other Bank to be joined as an additional party in any proceeding for such purpose.
SECTION 9.11
Survival of Certain Obligations. Sections 8.03(a), 8.03(b), 8.05 and 9.03,
the obligations of the Loan Parties thereunder, and Section 9.08, and the obligations of the Banks, Transferees
and prospective Transferees thereunder and with respect thereto, shall survive, and shall continue to be
enforceable notwithstanding, the termination of this Agreement and the Revolving Credit Commitments and the
payment in full of the principal of and interest on all Revolving Credit Advances.
SECTION 9.12
North Carolina Law. This Agreement and each Note shall be construed in
accordance with and governed by the law of the State of North Carolina.
SECTION 9.13
Severability. In case any one or more of the provisions contained in this
Agreement, the Notes or any of the other Loan Documents should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not
in any way be affected or impaired thereby and shall be enforced to the greatest extent permitted by law.
SECTION 9.14
Interest. In no event shall the amount of interest due or payable hereunder
or under the Notes exceed the maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently made to any Bank by Borrower or inadvertently received by any Bank, then such excess
sum shall be credited as a payment of principal, unless Borrower shall notify such Bank in writing that it elects
to have such excess sum returned forthwith. It is the express intent hereof that Borrower not pay and the Banks
not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid
by Borrower under applicable law.
SECTION 9.15
Interpretation. No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of such party having or being deemed to have structured or dictated
such provision.
SECTION 9.16
Consent to Jurisdiction. The Loan Parties (a) and each of the Banks and the
Agent irrevocably waives, to the fullest extent permitted by law, any and all right to trial by jury in any legal
proceeding arising out of this Agreement, any of the other Loan Documents, or any of the transactions
contemplated hereby or thereby, (b) submit to personal jurisdiction in the State of North Carolina, the courts
thereof and the United States District Courts sitting therein, for the enforcement of this Agreement, the Notes and
the other Loan Documents, (c) waives any and all personal rights under the law of any jurisdiction to object on
any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the State of North
Carolina for the purpose of litigation to enforce this Agreement, the Notes or the other Loan Documents, and (d)
agrees that service of process may be made upon it in the manner prescribed in Section 9.01 for the giving of
notice to Borrower. Nothing herein contained, however, shall prevent the Agent from bringing any action or
exercising any rights against any security and against the Loan Parties personally, and against any assets of the
Loan Parties, within any other state or jurisdiction.
SECTION 9.17
Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
SECTION 9.18
Patriot Act Notice. Each Bank and the Agent (the Agent for itself and not
on behalf of any Bank) hereby notifies each Loan Party that pursuant to the requirements of the Patriot Act it is
required to obtain, verify and record information that identifies such Loan Party, which information includes the
name and address of such Loan Party and other information that will allow such Bank or the Agent, as applicable,
to identify such Loan Party in accordance with such Patriot Act.
SECTION 9.19
No Fiduciary Relationship. Borrower and Guarantors, on behalf of
themselves and their respective subsidiaries, agree that in connection with all aspects of the transactions
contemplated hereby and any communications in connection therewith, Borrower, the Guarantors, the
Subsidiaries and their respective Affiliates, on the one hand, and the Agent, the Banks, the Issuing Bank and their
Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise,
any fiduciary duty on the part of the Agent, the Banks, the Issuing Bank or their Affiliates, and no such duty will
be deemed to have arisen in connection with any such transactions or communications.
SECTION 9.20
Acknowledgement and Consent to Bail-In of Affected Financial
Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement,
arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any
Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be
subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents
to, and acknowledges and agrees to be bound by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution
Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an
Affected Financial Institution; and
(b)
the effects of any Bail-In Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability;
(ii)
a conversion of all, or a portion of, such liability into shares or other instruments of
ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued
to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the
Write-Down and Conversion Powers of the applicable Resolution Authority.
SECTION 9.21
Certain ERISA Matters.
(a)
Each Bank (x) represents and warrants, as of the date such Person became a Bank party
hereto, and (y) covenants, from the date such Person became a Bank party hereto to the date such Person ceases
being a Bank party hereto, for the benefit of, the Agent, and their respective Affiliates, and not, for the avoidance
of doubt, to or for the benefit of Borrower or any other Loan Party, that at least one of the following is and will
be true:
(i)
such Bank is not using “plan assets” (within the meaning of Section 3(42) of ERISA
or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) of one or more Benefit Plans with
respect to such Bank’s entrance into, participation in, administration of and performance of the Loans, the Letters
of Credit or the commitments or this Agreement;
(ii)
the prohibited transaction exemption set forth in one or more PTEs, such as PTE
84-14 (a class exemption for certain transactions determined by independent qualified professional asset
managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts),
PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts),
PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23
(a class exemption for certain transactions determined by in-house asset managers), is applicable so as to exempt
from the prohibitions of Section 406 of ERISA and Section 4975 of the Code such Bank’s entrance into,
participation in, administration of and performance of the Loans, the Letters of Credit, the commitments and this
Agreement;
(iii)
(A) such Bank is an investment fund managed by a “Qualified Professional Asset
Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made
the investment decision on behalf of such Bank to enter into, participate in, administer and perform the Loans,
the Letters of Credit, the commitments and this Agreement, (C) the entrance into, participation in, administration
of and performance of the Loans, the Letters of Credit, the commitments and this Agreement satisfies the
requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Bank,
the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Bank’s entrance into,
participation in, administration of and performance of the Loans, the Letters of Credit, the commitments and this
Agreement; or
(iv)
such other representation, warranty and covenant as may be agreed in writing
between the Agent, in its sole discretion, and such Bank.
(b)
In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true
with respect to a Bank or (2) a Bank has provided another representation, warranty and covenant in accordance
with sub-clause (iv) in the immediately preceding clause (a), such Bank further (x) represents and warrants, as of
the date such Person became a Bank party hereto, to, and (y) covenants, from the date such Person became a Bank
party hereto to the date such Person ceases being a Bank party hereto, for the benefit of, the Agent, and their
respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of Borrower or any other Loan
Party, that none of the Agent, and their respective Affiliates is a fiduciary with respect to the assets of such Bank
involved in such Bank’s entrance into, participation in, administration of and performance of the Loans, the
Letters of Credit, the commitments and this Agreement (including in connection with the reservation or exercise
of any rights by the Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
SECTION 9.22
Erroneous Payments.
(a)
Each Bank, each Issuing Bank, and any other party hereto hereby severally agrees that if
(i) the Agent notifies (which such notice shall be conclusive absent manifest error) such Bank or Issuing Bank or
any other Person that has received funds from the Agent or any of its Affiliates, either for its own account or on
behalf of a Bank, Issuing Bank (each such recipient, a “Payment Recipient”) that the Agent has determined in its
sole discretion that any funds received by such Payment Recipient were erroneously transmitted to, or otherwise
erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Payment
Recipient) or (ii) any Payment Recipient receives any payment from the Agent (or any of its Affiliates) (x) that
is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or
repayment sent by the Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as
applicable, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by
the Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, as applicable, or (z)
that such Payment Recipient otherwise becomes aware was transmitted or received in error or by mistake (in
whole or in part) then, in each case, an error in payment shall be presumed to have been made (any such amounts
specified in clauses (i) or (ii) of this Section 9.22(a), whether received as a payment, prepayment or repayment of
principal, interest, fees, distribution or otherwise; individually and collectively, an “Erroneous Payment”), then,
in each case, such Payment Recipient is deemed to have knowledge of such error at the time of its receipt of such
Erroneous Payment; provided that nothing in this Section shall require the Agent to provide any of the notices
specified in clauses (i) or (ii) above. Each Payment Recipient agrees that it shall not assert any right or claim to
any Erroneous Payment, and hereby waives any claim, counterclaim, defense or right of set-off or recoupment
with respect to any demand, claim or counterclaim by the for the return of any Erroneous Payments, including
without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(b)
Without limiting the immediately preceding clause (a), each Payment Recipient agrees that,
in the case of clause (a)(ii) above, it shall promptly notify the Agent in writing of such occurrence.
(c)
In the case of either clause (a)(i) or (a)(ii) above, such Erroneous Payment shall at all times
remain the property of the Agent and shall be segregated by the Payment Recipient and held in trust for the benefit
of the Agent, and upon demand from the Agent such Payment Recipient shall (or, shall cause any Person who
received any portion of an Erroneous Payment on its behalf to), promptly, but in all events no later than one
Domestic Business Day thereafter, return to the Agent the amount of any such Erroneous Payment (or portion
thereof) as to which such a demand was made in same day funds and in the currency so received, together with
interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof)
was received by such Payment Recipient to the date such amount is repaid to the Agent at the greater of the
Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on interbank
compensation from time to time in effect.
(d)
In the event that an Erroneous Payment (or portion thereof) is not recovered by the Agent
for any reason, after demand therefor by the Agent in accordance with immediately preceding clause (c), from
any Bank that is a Payment Recipient or an Affiliate of a Payment Recipient (such unrecovered amount as to such
Bank, an “Erroneous Payment Return Deficiency”), then at the sole discretion of the Agent and upon the Agent’s
written notice to such Bank (i) such Bank shall be deemed to have made a cashless assignment of the full face
amount of the portion of its Loans (but not its commitments) with respect to which such Erroneous Payment was
made (the “Erroneous Payment Impacted Class”) to the Agent or, at the option of the Agent, the Agent’s
applicable lending affiliate in an amount that is equal to the Erroneous Payment Return Deficiency (or such lesser
amount as the Agent may specify) (such assignment of the Loans (but not commitments) of the Erroneous
Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) plus any accrued and unpaid interest
on such assigned amount, without further consent or approval of any party hereto and without any payment by
the Agent or its applicable lending affiliate as the assignee of such Erroneous Payment Deficiency Assignment.
The parties hereto acknowledge and agree that (1) any assignment contemplated in this clause (d) shall be made
without any requirement for any payment or other consideration paid by the applicable assignee or received by
the assignor, (2) the provisions of this clause (d) shall govern in the event of any conflict with the terms and
conditions of Section 9.07 and (3) the Agent may reflect such assignments in the register without further consent
or action by any other Person.
(e)
Each party hereto hereby agrees that (x) in the event an Erroneous Payment (or portion
thereof) is not recovered from any Payment Recipient that has received such Erroneous Payment (or portion
thereof) for any reason, the Agent (1) shall be subrogated to all the rights of such Payment Recipient with respect
to such amount and (2) is authorized to set off, net and apply any and all amounts at any time owing to such
Payment Recipient under any Loan Document, or otherwise payable or distributable by the Agent to such Payment
Recipient from any source, against any amount due to the Agent under this Section 9.22 or under the
indemnification provisions of this Agreement, (y) the receipt of an Erroneous Payment by a Payment Recipient
shall not for the purpose of this Agreement be treated as a payment, prepayment, repayment, discharge or other
satisfaction of any Obligations owed by Borrower or any other Loan Party;
provided
that this Section 9.22 shall
not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the
due date for), the Obligations of Borrower relative to the amount (and/or timing for payment) of the Obligations
that would have been payable had such Erroneous Payment not been made by the Agent;
provided
,
, that
for the avoidance of doubt, immediately preceding clauses (x) and (y) shall not apply to the extent any such
Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of
funds received by the Agent from Borrower or any other Loan Party for the purpose of making a payment on the
Obligations and (z) to the extent that an Erroneous Payment was in any way or at any time credited as payment
or satisfaction of any of the Obligations, the Obligations or any part thereof that were so credited, and all rights
of the Payment Recipient, as the case may be, shall be reinstated and continue in full force and effect as if such
payment or satisfaction had never been received.
(f)
Each party’s obligations under this Section 9.22 shall survive the resignation or
replacement of the Agent or any transfer of right or obligations by, or the replacement of, a Bank, the termination
of the commitments or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under
any Loan Document.
(g)
Nothing in this Section 9.22 will constitute a waiver or release of any claim of the Agent
hereunder arising from any Payment Recipient’s receipt of an Erroneous Payment.
ARTICLE X
GUARANTY
SECTION 10.01
Unconditional Guaranty. Each Guarantor hereby irrevocably,
unconditionally and jointly and severally guarantees, each as a primary obligor and not merely as a surety, to the
Agent, the Issuing Bank and the Banks the due and punctual payment of the principal of and the premium, if any,
and interest on the Guaranteed Obligations and any and all other amounts due under or pursuant to the Loan
Documents, when and as the same shall become due and payable (whether at stated maturity or by optional or
mandatory prepayment or by declaration, redemption or otherwise) in accordance with the terms of the Loan
Documents. The Guarantors’ guaranty under this Section is an absolute, present and continuing guarantee of
payment and not of collectability, and is in no way conditional or contingent upon any attempt to collect from
Borrower, any of the Guarantors or any other guarantor of the Guaranteed Obligations (or any portion thereof) or
upon any other action, occurrence or circumstances whatsoever. In the event that Borrower or any Guarantor
shall fail so to pay any such principal, premium, interest or other amount to the Agent, the Issuing Bank or a
Bank, the Guarantors will pay the same forthwith, without demand, presentment, protest or notice of any kind (all
of which are waived by the Guarantors to the fullest extent permitted by law), in lawful money of the United
States, at the place for payment specified in Loan Documents or specified by such Agent in writing, to such Agent.
The Guarantors further agree, promptly after demand, to pay to the Agent, the Issuing Bank and Banks the costs
and expenses incurred by such Agent, Issuing Bank or Bank in connection with enforcing the rights of such Agent,
Issuing Bank, and Banks against Borrower and any or all of the Guarantors (whether in a bankruptcy proceeding
or otherwise) following any default in payment of any of the Guaranteed Obligations or the obligations of the
Guarantors hereunder, including, without limitation, the reasonable fees and expenses of counsel to the Agent,
Issuing Bank and such Banks.
SECTION 10.02
Obligations Absolute. The obligations of the Guarantors hereunder are and
shall be absolute and unconditional, irrespective of the validity, regularity or enforceability of this Agreement,
any of the Guaranteed Obligations or any of the Loan Documents, shall not be subject to any counterclaim, set-
off, deduction or defense (other than the defense of payment or performance) based upon any claim any of the
Guarantors may have against Borrower, any other Guarantor or the Agent, Issuing Bank or any Bank hereunder
or otherwise, and shall remain in full force and effect without regard to, and shall not be released, discharged or
in any way affected by, to the fullest extent permitted by law, any circumstance or condition whatsoever (whether
or not any of the Guarantors shall have any knowledge or notice thereof), including, without limitation:
(a)
any amendment or modification of or supplement to any of the Loan Documents or any
other instrument referred to herein or therein, or any assignment or transfer of any thereof or of any interest
therein, or any furnishing or acceptance of additional security for any of the Guaranteed Obligations;
(b)
any waiver, consent or extension under any Loan Document or any such other instrument,
or any indulgence or other action or inaction under or in respect of, or any extensions or renewals of, any Loan
Document, any such other instrument or any Guaranteed Obligation;
(c)
any failure, omission or delay on the part of the Agent to enforce, assert or exercise any
right, power or remedy conferred on or available to the Agent, the Issuing Bank or any Bank against Borrower or
any Guarantor, any Subsidiary of Borrower or any Subsidiary of any Guarantor;
(d)
any bankruptcy, insolvency, readjustment, composition, liquidation or similar proceeding
with respect to Borrower, any Guarantor, any Subsidiary of Borrower or any Subsidiary of any Guarantor or any
property of Borrower, any Guarantor or any such Subsidiary or any unavailability of assets against which the
Guaranteed Obligations, or any of them, may be enforced;
(e)
any merger or consolidation of Borrower, any Subsidiary of Borrower or any Guarantor or
any of the Guarantors into or with any other Person or any sale, lease or transfer of any or all of the assets of any
of the Guarantors, Borrower or any Subsidiary of Borrower or any Guarantor to any Person;
(f)
any failure on the part of Borrower, any Guarantor or any Subsidiary of Borrower or any
Guarantor for any reason to comply with or perform any of the terms of any agreement with any of the Guarantors;
(g)
any exercise or non-exercise by the Agent, the Issuing Bank or any Bank, of any right,
remedy, power or privilege under or in respect of any of the Loan Documents or the Guaranteed Obligations,
including, without limitation, under this Section;
(h)
any default, failure or delay, willful or otherwise, in the performance or payment of any of
the Guaranteed Obligations;
(i)
any furnishing or acceptance of security, or any release, substitution or exchange thereof,
for any of the Guaranteed Obligations;
(j)
any failure to give notice to any of the Guarantors of the occurrence of any breach or
violation of, or any event of default or any default under or with respect to, any of the Loan Documents or the
Guaranteed Obligations;
(k)
any partial prepayment, or any assignment or transfer, of any of the Guaranteed
Obligations; or
(l)
any other circumstance (other than indefeasible payment in full) which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or which might in any manner or to any extent
vary the risk of such Guarantor.
The Guarantors covenant that their respective obligations hereunder will not be discharged except
by complete performance of the obligations contained in the Loan Documents and this Agreement and the final
and indefeasible payment in full of the Guaranteed Obligations. The Guarantors unconditionally waive, to the
fullest extent permitted by law (A) notice of any of the matters referred to in this Section, (B) any and all rights
which any of the Guarantors may now or hereafter have arising under, and any right to claim a discharge of the
Guarantor’s obligations hereunder by reason of the failure or refusal by the Agent, the Issuing Bank, or any Bank
to take any action pursuant to any statute (including, without limitation, Sections 26- 7, 26-8 or 26-9 of the North
Carolina General Statutes or any similar or successor provisions) permitting a Guarantor to request that the Agent
or any Bank attempt to collect the Guaranteed Obligations from Borrower, any of the Guarantors or any other
guarantor, (C) all notices which may be required by statute, rule of law or otherwise to preserve any of the rights
of the Agent, the Issuing Bank or any Bank against the Guarantors, including, without limitation, presentment to
or demand of payment from Borrower, any of the Subsidiaries of Borrower or any Guarantor, or any of the other
Guarantors with respect to any Loan Document or this Agreement, notice of acceptance of the Guarantors’
guarantee hereunder and/or notice to Borrower, any of the Subsidiaries of Borrower or any Guarantor, or any
Guarantor of default or protest for nonpayment or dishonor, (D) any diligence in collection from or protection of
or realization upon all or any portion of the Guaranteed Obligations or any security therefor, any liability
hereunder, or any party primarily or secondarily liable for all or any portion of the Guaranteed Obligations, and
(E) any duty or obligation of the Agent, the Issuing Bank or any Bank to proceed to collect all or any portion of
the Guaranteed Obligations from, or to commence an action against, Borrower, any Guarantor or any other Person,
or to resort to any security or to any balance of any deposit account or credit on the books of the Agent, the Issuing
Bank or any Bank in favor of Borrower, any Guarantor or any other Person, despite any notice or request of any
of the Guarantors to do so.
SECTION 10.03
Continuing Obligations: Reinstatement. The obligations of the Guarantors
under this Article X are continuing obligations and shall continue in full force and effect until such time as all of
the Guaranteed Obligations (and any renewals and extensions thereof) shall have been finally and indefeasibly
paid and satisfied in full. The obligations of the Guarantors under this Article X shall continue to be effective or
be automatically reinstated, as the case may be, if any payment made by Borrower, any Guarantor or any
Subsidiary of Borrower or any Guarantor on, under or in respect of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the recipient upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Borrower, any Guarantor or any such Subsidiary, or upon or as a result of the
appointment of a custodian, receiver, trustee or other officer with similar powers with respect to Borrower, any
Guarantor or any such Subsidiary or any substantial part of the property of Borrower, any Guarantor or any such
Subsidiary, or otherwise, all as though such payment had not been made. If an event permitting the acceleration
of all or any portion of the Guaranteed Obligations shall at any time have occurred and be continuing, and such
acceleration shall at such time be stayed, enjoined or otherwise prevented for any reason, including without
limitation because of the pendency of a case or proceeding relating to Borrower, any Guarantor or any Subsidiary
of Borrower or any Guarantor under any bankruptcy or insolvency law, for purposes of this Article X and the
obligations of the Guarantors hereunder, such Guaranteed Obligations shall be deemed to have been accelerated
with the same effect as if such Guaranteed Obligations had been accelerated in accordance with the terms of the
applicable Loan Documents or of this Agreement.
SECTION 10.04
Additional Security, Etc. The Guarantors authorize the Agent on behalf of
the Issuing Bank and Banks without notice to or demand on the Guarantors and without affecting their liability
hereunder, from time to time (a) to obtain additional or substitute endorsers or guarantors; (b) to exercise or refrain
from exercising any rights against, and grant indulgences to, Borrower, any Subsidiary of Borrower or any
Guarantor, any other Guarantor or others; and (c) to apply any sums, by whomsoever paid or however realized,
to the payment of the principal of, premium, if any, and interest on, and other obligations consisting of, the
Guaranteed Obligations. The Guarantors waive any right to require the Agent, the Issuing Bank or any Bank to
proceed against any additional or substitute endorsers or guarantors or Borrower or any of their Subsidiaries or
any other Person or to pursue any other remedy available to the Agent, the Issuing Bank or any such Bank.
SECTION 10.05
Information Concerning Borrower. The Guarantors assume all
responsibility for being and keeping themselves informed of the financial condition and assets of Borrower, the
other Guarantors and their respective Subsidiaries, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which the Guarantors
assume and insure hereunder, and agree that neither the Agent, the Issuing Bank nor any Bank shall have any
duty to advise the Guarantors of information known to the Agent, the Issuing Bank or any such Bank regarding
or in any manner relevant to any of such circumstances or risks.
SECTION 10.06
Guarantors’ Subordination. The Guarantors hereby absolutely subordinate,
both in right of payment and in time of payment, any present and future indebtedness of Borrower or any
Subsidiary of Borrower or any Guarantor to any or all of the Guarantors to the indebtedness of Borrower or any
such Subsidiary to the Issuing Bank or the Banks (or any of them),
provided
scheduled payments of principal, premium (if any) and interest in respect of such present or future indebtedness
so long as there is no Event of Default then in existence.
SECTION 10.07
Waiver of Subrogation. Until the final and indefeasible payment in full of
the Guaranteed Obligations, the Guarantors hereby waive any right of subrogation (under contract, Section 509
of the Bankruptcy Code or otherwise) or any other right of indemnity, reimbursement or contribution and hereby
waive any right to enforce any remedy that the Agent, the Issuing Bank or any Bank now has or may hereafter
have against Borrower, any Guarantor or any endorser or any other guarantor of all or any part of the Guaranteed
Obligations, and the Guarantors hereby waive any benefit of, and any right to participate in, any security or
collateral given to the Agent, the Issuing Bank or any Bank to secure payment or performance of the Guaranteed
Obligations or any other liability of Borrower to the Agent, the Issuing Bank or any Bank.
SECTION 10.08
Enforcement. In the event that the Guarantors shall fail forthwith to pay
upon demand of the Agent, the Issuing Bank or any Bank any amounts due pursuant to this Article X or to perform
or comply with or to cause performance or compliance with any other obligation of the Guarantors under this
Agreement, the Agent, the Issuing Bank and any Bank shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so due and unpaid or for the performance of or
compliance with such terms, and may prosecute any such action or proceeding to judgment or final decree and
may enforce such judgment or final decree against the Guarantors and collect in the manner provided by law out
of the property of the Guarantors, wherever situated, any monies adjudged or decreed to be payable. The
obligations of the Guarantors under this Agreement are continuing obligations and a fresh cause of action shall
arise in respect of each default hereunder.
SECTION 10.09
Miscellaneous. Except as may otherwise be expressly agreed upon in
writing, the liability of the Guarantors under this Article X shall neither affect nor be affected by any prior or
subsequent guaranty by the Guarantors of any other indebtedness to the Agent, the Issuing Bank or the Banks.
Notwithstanding anything in this Article X to the contrary, the maximum liability of each Guarantor hereunder
shall in no event exceed the maximum amount which could be paid out by such Guarantor without rendering such
Guarantor’s obligations under this Article X, in whole or in part, void or voidable under applicable law, including,
without limitation, (i) the Bankruptcy Code of 1978, as amended, and (ii) any applicable state or federal law
relative to fraudulent conveyances.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed,
under seal, by their respective authorized officers as of the day and year first above written.
THE CATO CORPORATION
By: /s/ Charles D. Knight
Charles D. Knight
Executive Vice President and Chief Financial Officer
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
THE CATO CORPORATION, as sole member or manager of CatoWest, LLC,
CatoSouth LLC, Cato WO LLC, Cato of Florida L.L.C., Cato of Tennessee, LLC,
Cato of Virginia, LLC, Cato of North Carolina, LLC, Cato of Illinois, LLC, Cato
of South Carolina, LLC and Ohio Cato Stores, LLC
By: /s/ Charles D. Knight
Charles D. Knight
Executive Vice President and Chief Financial Officer
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
CHW, LLC
By: /s/ Charles D. Knight
Charles D. Knight
President
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
CADEL LLC
By: CHW, LLC, its Member Manager
By: /s/ Charles D. Knight
Charles D. Knight
President
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
CATO OF TEXAS L.P.
By: Cato Southwest, Inc., as General Partner
By: /s/ Charles D. Knight
Charles D. Knight
President of Cato Southwest, Inc., General Partner
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
CATO SOUTHWEST, INC.
By: /s/ Charles D. Knight
Charles D. Knight
President
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
catocorp.com, LLC
By: /s/ Charles D. Knight
Charles D. Knight
President
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
CATO OF GEORGIA, LLC
By: /s/ Charles D. Knight
Charles D. Knight
President
c/o The Cato Corporation
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Christin Reische, Vice President and
General Counsel
Telecopy number: 704-551-7547
Telephone number: 704-554-8510
With a copy to:
8100 Denmark Road
Charlotte, North Carolina 28273
Attn: Charles D. Knight, Vice President and Chief Financial Officer
Telephone number: 704-551-7499
Email: Investorrelations@catocorp.com
COMMITMENTS
Revolving Credit Commitment:
$35,000,000
(Letter of Credit
Commitment: $35,000,000)
WELLS FARGO BANK, NATIONAL
ASSOCIATION , as Agent, Issuing Bank and as a
Bank
By: /s/ Brad D. Bostick
Name: Brad D. Bostick
Title: Senior Vice President
Lending Office
Wells Fargo Bank, National Association
301 S. Tryon Street, 28
th
Charlotte, NC 28288
MAC D1130-286
Attention of: Brad Bostick
Telephone No.: (704) 374-6812
Telecopier No
(704) 374-6483
Email:brad.bostick@wellsfargo.com
with a copy to
King & Spalding LLP
300 S Tryon Street
Suite 1700
Charlotte, NC 28202
Attention of: Aleksandra Kopec
Telephone: (704) 503-2587
Email: akopec@kslaw.com
SCHEDULE 1.01
Investment Policy
[Attached]
THE CATO CORPORATION
CASH INVESTMENT POLICY
I. OBJECTIVES
The objectives of the cash investment policy include maximum safety and preservation of principal,
maximum after-tax yield from cash assets and appropriate liquidity to meet normal cash needs.
II. AUTHORIZED OFFICIALS AND CONTROLS
A. The Chief Executive Officer, Chief Financial Officer and/or Treasurer each may execute a single non-
equity investment purchase or sale up to $10,000,000, and any single purchase or sale transaction
in excess of $10,000,000 must be approved in writing by two of the three designated officers and
evidence of such approval must be filed in the company’s records.
B. All equity investments, regardless of value, must be approved by two of the three designated officers
listed in A above.
C. The Treasurer will review a daily summary of investment activity presented in the Investment Position
Report to ensure investments adhere to the policy.
D. The daily administration of the investment activities will be done under the direction of the Treasurer.
In the absence of the Treasurer, the Treasury personnel will perform the daily administration.
E. Investment activity may be conducted by outside managers provided the manager(s) are approved
by two of the three designated corporate officers listed in A above. The manager must provide, under
a signed contract, that they will adhere to quality and liquidity guidelines contained in this policy.
III. INVESTMENT PARAMETERS
A. No investments will be made which violate covenants contained in bank loans or other agreements.
B. Safety of principal is the primary consideration.
C. Liquidity must be provided to meet the Company’s projected cash requirements.
D. The highest yield should be obtained providing for safety of principal and required liquidity.
E. All outside managers are required to conduct sufficient due diligence to support the viability of an
investment beyond any rating assigned by rating agencies and provide Cato with an outline of the
due diligence procedures followed.
F.
No foreign currency based investments are permitted.
G. No manager is permitted to invest in derivative investments except as outlined in Section I.
IV. DEFINITIONS
A. The following definitions apply to the terms used in this policy:
Security – An individual financial instrument (bond, share of stock, note, etc.) issued by a specific
company, government entity or bank. Separate purchases of the same instrument made at
different times are considered one security.
Portfolio – The total of the Company’s cash, cash equivalents, bond and equity investments.
Portfolio Division – A subset of the total portfolio subject to separate and distinct maturity and duration
limits.
Portfolio Division Limit – The maximum percentage that any portfolio division can be of the total
portfolio’s value at any one time.
Individual Security Limit – The maximum percentage that any security can be of the total portfolio’s
value at the time of a new security’s purchase, regardless of portfolio division.
Aggregate Category Limit – The maximum percentage that the total value of all securities in a
particular category can be of the total portfolio’s value at the time of a new security’s purchase,
regardless of portfolio division.
Maturity – The date on which the life of a financial instrument ends through cash or physical settlement
or expiration with no value. The maturity of a bond refers to the date that the debt will cease
to exist, at which time the issuer will redeem the bond by paying the principal (or face value).
V.
PORTFOLIO DIVISIONS
A. The Company’s total portfolio will be divided into four portfolio divisions each with a progressively
longer maximum maturity and average duration and a fifth division composed of any investments
described in Section VI, subsections G and H.
B. The securities in each of the first four divisions can be from any of the approved categories in Section
VI with the exception of subsections G and H.
C. The portfolio in total should have an average duration of no more than 2.5 years.
D. The five portfolio divisions are defined as follows:
●
maturity of one year. No portfolio division limit.
●
years. No portfolio division limit.
●
and average duration of 3.5 years. A portfolio division limit of 20%.
●
average duration of 5 years. A portfolio division limit of 5%.
●
division limit of 10%.
VI. AUTHORIZED INVESTMENT CATEGORIES
A. Money Market Funds:
Readily marketable funds that trade on a constant net asset value and which invest solely in
securities otherwise eligible for purchase/investment under this policy’s guidelines.
●
●
●
B. Taxable and Tax Advantaged Corporate Debt:
Instruments issued by US and foreign (only foreign corporate bonds) corporations. Includes
corporate notes, corporate bonds, floating rate notes, mutual funds and auction-rate preferred
stock, USD denominated and issued in the US.
●
Baa3/BBB-/BBB- with maximum maturity of 5 years for those securities rated lower than A3/A-
/A- by Moody’s or Standard & Poor’s. For securities rated A3/A-/A- or higher, permit maximum
security maturity of 10 years.
●
●
C. Taxable And Tax Advantaged Municipal Issues:
Investments in this category shall consist principally of obligations of
States/Municipalities/Institutions.
●
Baa3/BBB-/BBB- with maximum maturity of 5 years for those securities rated lower than A3/A-
/A- by Moody’s or Standard & Poor’s. For securities rated A3/A-/A- or higher, permit maximum
security maturity of 10 years. The implied rating of the underlying Letter of Credit may be used
if the issue is not rated.
●
advantaged issues.
●
●
D. Asset-Backed Securities
Investments in this category shall include, but not be limited to asset-backed obligations related to
real estate, automobile loans and credit card portfolios.
●
●
●
●
●
●
E. Repurchase Agreements:
Placed through recognized broker/dealers or banks acting as principal and backed: 1) direct
obligations of the U.S. Government having a present market value equal to the investment or, 2)
obligations of federal agencies having a present market value equal to the investment, or 3)
commercial paper of A2 or P2 or better quality having a present market value equal to the
investment.
●
●
F.
Money market instruments issued by US and foreign corporations and banks, issued in the US and
paid in US dollars. Includes CDs, Commercial Paper (including Asset Backed Commercial Paper),
Bankers Acceptances, time deposits.
●
Moody’s or A-1 by Standard & Poor’s.
●
●
G. Sovereign and supranational debt denominated in US dollars, issued under US securities law, may
be issued by Foreign agencies, Sovereigns, Supranational entities
●
Moody’s or A-1 by Standard & Poor’s.
●
●
H. U.S. Government and Government Sponsored Agency Securities Direct obligations of the U.S.
Government and those federal agencies whose obligations are guaranteed by the U.S. Government,
repurchase agreements collateralized by eligible investments of the US Government or US
Government agencies.
●
Moody’s or A-1 by Standard & Poor’s.
●
Moody’s or A- by Standard & Poor’s if security only has long term ratings.
●
US
●
I. Equities:
Common Stocks or equivalents including Unit Investment Trusts, preferred stocks, securities
convertible into common stock, partnerships investing in equities and mutual funds
●
●
●
VII. SECURITY LIMITATIONS
A. Single and aggregate security limitations apply to the portfolio’s total value at the time of the
security purchase. It is the Company’s intention to monitor the overall allocation of the portfolio.
VIII. INVESTMENTS OUTSIDE OF POLICY
A. It is understood that there may be corporate investments of a longer-term nature that are not
covered under this policy. These investments, which may include for example, equity-related
acquisitions, require separate Board approval and are not intended to be governed under this
Policy. Likewise, any permanent changes to these guidelines must be approved by the Board of
Directors.
SCHEDULE 4.17
Existing Subsidiaries
Name of Subsidiary
Jurisdiction of Organization
CatoWest, LLC
Nevada
Cedar Hill National Bank
United States
CHW, LLC
Delaware
Cato Southwest, Inc.
Delaware
CatoSouth LLC
North Carolina
Providence Insurance Company, Limited
North Carolina
CaDel LLC
Delaware
catocorp.com, LLC
Delaware
Cato of Texas L.P.
Cato WO LLC
Cato of Florida L.L.C.
Cato of Tennessee, LLC
Cato of Virginia, LLC
Cato of North Carolina, LLC
Cato of Illinois, LLC
Cato of South Carolina, LLC
Ohio Cato Stores, LLC
Cato of Georgia, LLC
Cato Overseas Limited
Shanghai Cato Overseas Business
Consultancy Company, Limited
Cato Overseas Services Limited
Cato Employee Services Management, LLC
Cato Employee Services L.P.
Texas
Delaware
Florida
Tennessee
Virginia
North Carolina
Illinois
South Carolina
Ohio
Georgia
Hong Kong
China
Hong Kong
Texas
Texas
Cato Services Vietnam Company Limited
Vietnam
Cato Land Development, LLC
South Carolina
Fort Mill Land Development LLC
North Carolina
SCHEDULE 5.10
Existing Investments
None.
SCHEDULE 5.27
Existing Debt
Schedule of Indebtedness
As of May 19, 2022
Equipment Leases:
●
Hendrix Business Systems – maturing on September 2024
o
29 payments totaling $174,754.00
●
CSI Leasing Inc. – maturing on May 2024
o
25 payments totaling $1,287,335.00
EXHIBIT A
REVOLVING CREDIT NOTE
$_________ Charlotte, North Carolina
__________ __, 2022
For value received, THE CATO CORPORATION (the “Borrower”) promises to pay to the order
of ____________________ (the “Bank”), for the account of its Lending Office, the principal sum of
_____________________________________________ and No/100 Dollars ($___________), or such lesser
amount as shall equal the unpaid principal amount of each Revolving Credit Advance made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates and in the amounts provided in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of this Note on the
dates and at the rate or rates provided for in the Credit Agreement. Interest on any overdue principal of and, to
the extent permitted by law, overdue interest on the principal amount hereof shall bear interest at the Default Rate,
as provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in federal or other immediately available funds at the office of Wells Fargo Bank,
National Association, 301 S. Tryon Street, 28
th
as may be specified from time to time pursuant to the Credit Agreement.
All Revolving Credit Advances made by the Bank, the interest rates from time to time applicable
thereto and all repayments of the principal thereof shall be recorded by the Bank and, prior to any transfer hereof,
endorsed by the Bank on the schedule attached hereto, or on a continuation of such schedule attached to and made
a part hereof; provided that the failure of the Bank to make, or any error of the Bank in making, any such
recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit
Agreement.
This Note is one of the Notes referred to in the Credit Agreement dated as of _________ __, 2022
among the Borrower, the Initial Guarantors, the banks listed on the signature pages thereof and their successors
and assigns, Wells Fargo Bank, National Association, as Issuing Bank and as Agent (as the same may be amended
or modified from time to time, the “Credit Agreement”). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment and the
repayment hereof and the acceleration of the maturity hereof.
The Borrower hereby waives presentment, demand, protest, notice of demand, protest and
nonpayment and any other notice required by law relative hereto, except to the extent as otherwise may be
expressly provided for in the Credit Agreement.
The Borrower agrees, in the event that this Note or any portion hereof is collected by law or
through an attorney at law, to pay all reasonable costs of collection, including, without limitation, reasonable
attorneys’ fees.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Credit Note to be duly
executed under seal, by its duly authorized officer as of the day and year first above written.
THE CATO CORPORATION
By: (SEAL)
Title:
Revolving Credit Note (cont’d)
ADVANCES AND PAYMENTS OF PRINCIPAL
Date
Interest
Rate
Amount of
Loan
Amount of
Principal
Repaid
Notation
Made By
EXHIBIT B
NOTICE OF BORROWING
____________, 20__
To: Wells Fargo Bank, National Association
Re: Credit Agreement (as amended and modified from time to time, the “Credit Agreement”) dated as
of ________ __, 2022 among The Cato Corporation, the Initial Guarantors, Wells Fargo Bank,
National Association, as Issuing Bank and Agent and the Banks listed on the signature pages
thereof
Ladies & Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall have the meanings attributable
thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02 of the Credit Agreement.
The Borrower hereby requests a [Daily Simple SOFR Borrowing] [Term SOFR Borrowing] [Base
Rate Borrowing] in the aggregate principal amount of $____________ to be made on ____________, 20__, and
for interest to accrue thereon at the rate established by the Credit Agreement for [Daily Simple SOFR Loans]
[Term SOFR Loans] [Base Rate Loans]. [If [Daily Simple SOFR Loan Borrowing] [Term SOFR Borrowing],
the duration of the Interest Period with respect thereto shall be [1 month] [2 months] [3 months] [6 months]].
The Borrower has caused this Notice of Borrowing to be executed and delivered by its duly
authorized officer this _____ day of ____________, 20__.
THE CATO CORPORATION
By:
Title:
EXHIBIT C
[Reserved.]
EXHIBIT D
CLOSING CERTIFICATE
Reference is made to the Credit Agreement (the “Credit Agreement”) dated as of ______ __, 2022 among
The Cato Corporation, the Initial Guarantors, Wells Fargo Bank, National Association, as Issuing Bank and Agent
and the banks listed on the signature pages thereof. Capitalized terms used herein have the meanings ascribed
thereto in the Credit Agreement.
Pursuant to Section 3.01(d) of the Credit Agreement, _____________________, the duly authorized
______________________ of the Borrower hereby certifies to the Agent and the Banks that: (i) no Default has
occurred and is continuing on the date hereof; and (ii) the representations and warranties of the Borrower and the
Initial Guarantors contained in Article IV of the Credit Agreement are true on and as of the date hereof.
Certified as of the _____ day of _________, 2022.
THE CATO CORPORATION
By:
Title:
EXHIBIT E
SECRETARY’S CERTIFICATE
The undersigned, _____________, ____________ Secretary of _______________, a
_____________ corporation (the “Company”), hereby certifies that he has been duly elected,
qualified and is acting in such capacity and that, as such, he is familiar with the facts herein certified and is duly
authorized to certify the same, and hereby further certifies, in connection with that certain Credit Agreement dated
as of _________ __, 2022 among The Cato Corporation, the Initial Guarantors listed therein, Wells Fargo Bank,
National Association, as Issuing Bank and Agent and the Banks listed on the signature pages thereof that:
1. Attached hereto as Exhibit A is a complete and correct copy of the Certificate of
[Incorporation/Organization/Partnership] of the Company as in full force and effect on the date hereof as certified
by the Secretary of State of the State of _____________, Company’s state of organization.
2. Attached hereto as Exhibit B is a complete and correct copy of the Certificate of Good
Standing of the Company issued by the Secretary of State of the State of _____________, Company’s state of
organization.
3. Attached hereto as Exhibit C is a complete and correct copy of the
[Bylaws/Operating/Partnership Agreement] of the Company as in full force and effect on the date hereof.
4. Attached hereto as Exhibit D is a complete and correct copy of the resolutions duly adopted
by the [Board of Directors/Managers/Members/Partners] of the Company on ____________ __, 2022, approving
and authorizing the execution and delivery of the Credit Agreement, the Notes (as such term is defined in the
Credit Agreement) and the other Loan Documents (as such term is defined in the Credit Agreement) to which the
Company is a party. Such resolutions have not been repealed or amended and are in full force and effect, and no
other resolutions or consents have been adopted by the [Board of Directors/Managers/Members/Partners] of the
Company in connection therewith.
5.
Each person who, as an officer of the Company signed the Credit Agreement, the Notes
and the other Loan Documents to which the Company is a party, was duly elected, qualified and acting as such at
the time such person signed the Credit Agreement, the Notes and the other Loan Documents to which the
Company is a party, and his or her respective signature appearing below and in such Loan Documents is such
officer’s genuine signature.
Name
Office
Signature
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
_______________________
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the ____ day of
____________ __, 2022.
Name:
Title:
EXHIBIT F
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of _________ __, 2022 (as modified and
supplemented and in effect from time to time, the “Credit Agreement”) among The Cato Corporation, the Initial
Guarantors, Wells Fargo Bank, National Association, as Issuing Bank and Agent and the Banks listed on the
signature pages thereof. Capitalized terms used herein shall have the meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 5.01(e) of the Credit Agreement, the undersigned hereby certifies that:
1. He is a duly elected Secretary of the Borrower.
2. The Loan Parties have kept, observed, performed and fulfilled in all material respects each and
every covenant, obligation and agreement binding upon any Loan Party in the Credit Agreement or the other Loan
Documents.
3.
Attached to this Certificate as Attachment A is a Compliance Checklist calculating the financial
covenants set forth in the Credit Agreement as of _________ __, 2022 (the “Compliance Date”).
4. Attached to this Certificate as Attachment B is a list of the Subsidiaries of the Borrower as of the
date hereof.
5.
No Default or Event of Default is in existence on and as of the date hereof.
IN WITNESS WHEREOF
, the undersigned has executed and delivered this Certificate as of the ____
day of ____________ __, 2022.
THE CATO CORPORATION
By:
Name:
Title:
ATTACHMENT A
COMPLIANCE CHECKLIST
(see attached)
ATTACHMENT B
SUBSIDIARIES
CatoWest, LLC
Cedar Hill National Bank
CHW, LLC
Cato Southwest, Inc.
CatoSouth LLC
Providence Insurance Company, Limited
CaDel LLC
catocorp.com, LLC
Cato of Texas L.P.
Cato WO LLC
Cato of Florida L.L.C.
Cato of Tennessee, LLC
Cato of Virginia, LLC
Cato of North Carolina, LLC
Cato of Illinois, LLC
Cato of South Carolina, LLC
Ohio Cato Stores, LLC
Cato of Georgia, LLC
Cato Overseas Limited
Shanghai Cato Overseas Business
Consultancy Company, Limited
Cato Overseas Services Limited
Cato Employee Services Management, LLC
Cato Employee Services L.P.
Cato Services Vietnam Company Limited
Cato Land Development, LLC
Fort Mill Land Development
EXHIBIT G
JOINDER AND REAFFIRMATION AGREEMENT
THIS JOINDER AND REAFFIRMATION AGREEMENT (the “Agreement”), dated as of
____________, 20__, is by and between [_______________] (the “New Guarantor”), THE CATO
CORPORATION (the “Borrower”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Agent”).
The Borrower, the Guarantors, the Banks and the Agent have entered into that certain Credit Agreement
dated as of ____________ __, 2022 (as amended, modified, supplemented, renewed and extended, the “Credit
Agreement”). All of the defined terms in the Credit Agreement are incorporated herein by reference.
The New Guarantor is a Subsidiary. The Borrower and the New Guarantor have requested that the New
Guarantor become a Guarantor under the Credit Agreement, in accordance with Section 5.26 of the Credit
Agreement.
Accordingly, the Borrower, New Guarantor and Agent hereby agree as follows:
1. The New Guarantor and the Borrower hereby acknowledge, agree and confirm that, by their
execution of this Joinder Agreement, the New Guarantor will be deemed to be a party to the Credit Agreement
and a “Guarantor” for all purposes of the Credit Agreement, the Note and the other Loan Documents, and shall
have all of the obligations of a Guarantor thereunder as if it had executed the Credit Agreement and the other
Loan Documents. The New Guarantor assumes and agrees to be bound by and comply with, all of the terms,
provisions and conditions contained in the Credit Agreement and the other Loan Documents and all duties and
obligations thereunder, as fully and completely as all other Guarantors thereunder, jointly and severally,
individually and collectively, with all other Guarantors, including without limitation (i) all of the representations,
warranties, covenants, undertakings and obligations set forth in the Credit Agreement and the other Loan
Documents, and (ii) all waivers set forth in the Credit Agreement and the other Loan Documents.
2. The New Guarantor has received a copy of the Credit Agreement and the Schedules and Exhibits
thereto and the other Loan Documents. The information on the Exhibits and Schedules to the Credit Agreement
are amended to provide the information shown on the attached Schedule A.
3.
The New Guarantor hereby waives presentment, demand, protest, acceptance, notice of demand,
protest and nonpayment and any other notice required by law relative to the Credit Agreement, the Obligations,
the Notes and the other Loan Documents.
4. This Agreement may be executed in counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.
5. Except as set forth expressly herein, all terms of the Credit Agreement and the other Loan
Documents, shall be and remain in full force and effect and shall constitute the legal, valid, binding and
enforceable obligations of the Borrower and Guarantors to Agent and Banks. To the extent any terms and
conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the
Credit Agreement, after giving effect to this Joinder Agreement, such terms and conditions are hereby deemed
modified and amended accordingly to reflect the terms and conditions of the Credit Agreement as modified and
amended hereby. In any event, this Joinder Agreement and the documents executed in connection therewith shall
not, individually or collectively, constitute a novation.
6.
To induce the Agent and Banks to enter into this Joinder Agreement, the Borrower and New
Guarantor hereby (a) restate and renew each and every representation and warranty heretofore made by them
under, or in connection with the execution and delivery of, the Credit Agreement and the other Loan Documents;
(b) restate, ratify and reaffirm each and every term and condition set forth in the Credit Agreement and in the
Loan Documents, effective as of the date hereof; (c) acknowledge and agree that, as of the date hereof, there exists
no right of offset, defense, counterclaim or objection in favor of the Borrower as against the Agent or any Bank
with respect to the payment or performance of its Obligations; and (d) certifies that no Default or Event of Default
exists.
7. This Joinder Agreement shall be governed by, and construed in accordance with, the laws of the
State of North Carolina.
8. Borrower and New Guarantor agree to pay upon request the actual costs and expenses of the Agent
and Banks reasonably incurred in connection with the preparation, execution, delivery and enforcement of this
Joinder Agreement and all other Loan Documents executed in connection herewith, the closing hereof, and any
other transactions contemplated hereby, including the reasonable fees and out-of-pocket expenses of Agent’s legal
counsel.
IN WITNESS WHEREOF, the New Guarantor and the Borrower have caused this Joinder Agreement to
be duly executed by its authorized officers for the benefit of the Agent and the Banks as of the day and year first
above written.
NEW GUARANTOR
[ ](SEAL)
By:
Title:
THE CATO CORPORATION
By:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent
and as a Bank
By: (SEAL)
Title:
[OTHER BANK]
By: (SEAL)
Title:
Schedule A to Joinder Agreement
[Provide Information here to update Schedules and Exhibits
to Credit Agreement and other Loan Documents]
EXHIBIT H
ASSIGNMENT AND ACCEPTANCE
Dated ____________ __, _____
Reference is made to the Credit Agreement dated as of ____________ __, 2022 (together with all
amendments and modifications thereto, the “Credit Agreement”) among The Cato Corporation, the Initial
Guarantors, Wells Fargo Bank, National Association, as Issuing Bank and Agent and the Banks listed on the
signature pages thereof. Terms defined in the Credit Agreement are used herein with the same meaning.
____________________________________________________ (the “Assignor”) and
______________________________________________ (the “Assignee”) agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse to the Assignor,
and the Assignee hereby purchases and assumes from the Assignor, a _____% interest in and to all of the
Assignor’s rights and obligations under the Credit Agreement as of the Effective Date (as defined below)
(including, without limitation; (i) a _____% interest (which on the Effective Date hereof is $__________) in the
Assignor’s Revolving Credit Commitment; (ii) a_____% interest (which on the Effective Date hereof is
$__________) in the Revolving Credit Advances owing to the Assignor; (iii) a _____% interest (which on the
Effective Date hereof is $__________) in the Letter of Credit Advances owing to the Assignor; and (iv) a _____%
interest (which on the Effective Date hereof is $__________) in the Assignor’s Letter of Credit Commitment
(including without limitation a _____% interest in the Assignor’s obligations under Section 2.03(c) of the Credit
Agreement).
2.
The Assignor (i) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in connection with the Credit Agreement, any
other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that it is the legal and beneficial owner of the interest being
assigned by it hereunder, that such interest is free and clear of any adverse claim and that as of the date hereof its
Revolving Credit Commitment (without giving effect to assignments thereof which have not yet become
effective) is $__________ and the aggregate outstanding principal amount of Revolving Credit Advances owing
to it (without giving effect to assignments thereof which have not yet become effective) is $__________, as of
the date hereof its Letter of Credit Commitment (without giving effect to assignments thereof which have not yet
become effective) is $__________, and the aggregate outstanding principal amount of Letter of Credit Advances
owing to it (without giving effect to assignments thereof which have not yet become effective) is $__________;
(ii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of
the Borrower or the performance or observance by the Borrower of any of its obligations under the Credit
Agreement, any other Loan Document or any other instrument or document furnished pursuant thereto; and (iii)
attaches the Revolving Credit Note referred to in paragraph 1 above and requests that the Agent exchange such
Note as follows: [a new Revolving Credit Note dated ____________, ____ in the principal amount of
______________ payable to the order of the Assignee] [a Revolving Credit Note dated ____________, _____ in
the principal amount of $____________ payable to the order of the Assignor].
3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements referred to in Section 4.10(a) thereof (or any more recent financial
statements of the Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment
and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any
other Bank and based on such documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is a
bank or financial institution; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Agreement as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a
Bank; (vi) specifies as its Lending Office (and address for notices) the office set forth beneath its name on the
signature pages hereof, (vii) represents and warrants that the execution, delivery and performance of this
Assignment and Acceptance are within its corporate powers and have been duly authorized by all necessary
corporate action.
4.
The Effective Date for this Assignment and Acceptance shall be _______________ (the
“Effective Date”). Following the execution of this Assignment and Acceptance, it will be delivered to the Agent
for execution and acceptance by the Agent [and to the Issuing Bank for execution by the Issuing Bank]
1
the Borrower for execution by the Borrower].
2
5. Upon such execution and acceptance by the Agent [and execution by the Borrower]
2
execution by the Issuing Bank]
1
, from and after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent rights and obligations have been transferred to it by this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Assignment and Acceptance, relinquish its rights (other
than under Section 9.03 of the Credit Agreement) and be released from its obligations under the Credit Agreement.
6. Upon such execution and acceptance by the Agent [and execution by the Borrower] [and
execution by the Issuing Bank] from and after the Effective Date, the Agent shall make all payments in respect
of the interest assigned hereby to the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to such acceptance by the Agent directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in accordance with,
the laws of the State of North Carolina.
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
Lending Office:
[Address]
1
2
WELLS FARGO BANK, NATIONAL ASSOCIATION , as Agent
By:
Title:
THE CATO CORPORATION
3
By:
Title:
3
EXHIBIT 99.1
The CATO Corporation
NEWS RELEASE
FOR IMMEDIATE RELEASE
For Further Information Contact:
CATO REPORTS 1Q EARNINGS
CHARLOTTE, N.C. (May 19, 2022) – The Cato Corporation (NYSE: CATO) today reported net
income of $9.7 million or $0.46 per diluted share for the first quarter ended April 30, 2022, compared
to net income of $20.7 million or $0.92 per diluted share for the first quarter ended May 1, 2021.
Sales for the first quarter ended April 30, 2022 were $204.9 million, or a decrease of 3% from sales of
$211.2 million for the first quarter ended May 1, 2021. The Company’s same-store sales for the
quarter decreased 2% compared to 2021.
"Our first quarter sales were negatively impacted by cooler, wetter weather,” said John Cato,
Chairman, President and Chief Executive Officer.
“As anticipated, we continued to
experience late
merchandise shipments, a result of the supply chain disruption and overseas COVID restrictions,
coupled with the pressure of inflation on consumers’ discretionary income and intermittent store
closings due to the effects of the tight labor market.
”
First-quarter gross margin decreased from 41.5% to 35.5% of sales in 2022 due to lower
merchandise margins.
Selling, General and Administrative expenses as a percent of sales
decreased from 29.9% to 29.5% of sales during the quarter primarily due to decreased incentive
compensation expense, partially offset by increased payroll, reflecting more normalized operations,
compared to the prior year.
Income tax expense for the quarter was $1.9 million compare
d to $3.1
million last year.
“The effects of continued late merchandise shipments, inflation-related increases to our costs and
increased pressure on our customers’ discretionary income are expected to remain challenging
throughout the year,” stated Mr. Cato. “As we move forward, following two years of unpredictable
business cycles, we are cautious about the remainder of the year in the face of these ongoing
uncertainties.”
During the first quarter ended April 30, 2022, the Company opened 4 stores and relocated 1 store.
As of April 30, 2022, the Company operated 1,315 stores in 32 states, compared to 1,325 stores in 32
states as of May 1, 2021.
The Cato Corporation is a leading specialty retailer of value-priced fashion apparel and accessories
operating three concepts, “Cato,” “Versona” and “It’s Fashion.” The Company’s Cato stores offer
exclusive merchandise with fashion and quality comparable to mall specialty stores at low prices
every day. The Company also offers exclusive merchandise found in its Cato stores at
www.catofashions.com. Versona is a unique fashion destination offering apparel and accessories
including jewelry, handbags and shoes at exceptional prices every day. Select Versona merchandise
can also be found at www.shopversona.com. It’s Fashion offers fashion with a focus on the latest
trendy styles for the entire family at low prices every day.
Statements in this press release that express a belief, expectation or intention, as well as those that are not a historical
fact,
ncluding, without limitation, statements regarding the Company’s expected or estimated operational financial results,
activities or opportunities, and potential impacts and effects of the coronavirus are considered “forward-looking” within the
meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current
expectations that are subject to known and unknown risks, uncertainties and other factors that could cause actual results
to differ materially from those contemplated by the forward -looking statements. Such factors include, but are not limited
to, any actual or perceived deterioration in the conditions that drive consumer confidence and spending, including, but not
limited to, prevailing social, economic, political and public health conditions and uncertainties, levels of unemployment,
fuel, energy and food costs, wage rates, tax rates, interest rates, home values, consumer net worth and the availability of
credit; changes in laws or regulations affecting our business including but not limited to tariffs; uncertainties regarding the
impact of any governmental action regarding, or responses to, the foregoing conditions; competitive factors and pricing
pressures; our ability to predict and respond to rapidly changing fashion trends and consumer demands; our ability to
successfully implement our new store development strategy to increase new store openings and the ability of any such
new stores to grow and perform as expected; adverse weather, public health threats (including the global coronavirus
(COVID-19) outbreak) or similar conditions that may affect our sales or operations; inventory risks due to shifts in market
demand, including the ability to liquidate excess inventory at anticipated margins; and other factors discussed under “Risk
Factors” in Part I, Item 1A of the Company’s most recently filed annual report on Form 10-K and in other reports the
Company files with or furnishes to the SEC from time to time. The Company does not undertake to publicly update or
revise the forward-looking statements even if experience or future changes make it clear that the projected results
expressed or implied therein will not be realized. The Company is not responsible for any changes made to this press
release by wire or Internet services
.
* * *
THE CATO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE PERIODS ENDED APRIL 30, 2022 AND MAY 1, 2021
(Dollars in thousands, except per share data)
Q
u
a
r
t
e
r
E
n
d
e
d
April 30,
%
May 1,
%
2
0
2
2
Sales
2
0
2
1
Sales
REVENUES
$
204,933
100.0%
$
211,234
100.0%
finance,
charges)
1,788
0.9%
1,851
0.9%
206,721
100.9%
213,085
100.9%
GROSS MARGIN (Memo)
72,690
35.5%
87,559
41.5%
COSTS AND EXPENSES,
NET
132,243
64.5%
123,675
58.5%
administrative
60,441
29.5%
63,237
29.9%
2,743
1.3%
3,042
1.4%
(403)
-0.2%
(663)
-0.3%
195,024
95.2%
189,291
89.6%
Income (Loss) Before Income
Taxes
11,697
5.7%
23,794
11.3%
Income Tax Expense (Benefit)
1,949
1.0%
3,081
1.5%
Net Income (Loss)
$
9,748
4.8%
$
20,713
9.8%
Basic Earnings Per Share
$
0.46
$
0.92
Basic Weighted Average
Shares
21,345,489
22,512,566
Diluted Earnings Per Share
$
0.46
$
0.92
THE CATO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Ap
ril
30,
January
29,
202
2
2022
(Un
aud
ited
)
(Unaudite
d)
ASSETS
Current Assets
$
25,881
$
19,759
120,021
145,998
3,920
3,919
60,121
55,812
127,576
124,907
6,029
5,273
Total Current Assets
343,548
355,668
Property and Equipment - net
67,079
63,083
Noncurrent Deferred Income
Taxes
9,674
9,313
Other Assets
23,192
24,437
Right-of-Use Assets, net
168,537
181,265
$
612,030
$
633,766
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current Liabilities
$
172,569
$
177,327
Current Lease Liability
63,175
66,808
Noncurrent Liabilities
17,797
17,914
Lease Liability
107,837
117,521
Stockholders' Equity
250,652
254,196
$
612,030
$
633,766