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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K/A

(Amendment No. 1)

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): October 16, 2023 (October 15, 2023)

 

Rite Aid Corporation

(Exact name of registrant as specified in its charter)

 

Delaware   1-5742   23-1614034
(State or Other Jurisdiction
of Incorporation)
  (Commission File Number)   (IRS Employer
Identification Number)

 

P.O. Box 3165

Harrisburg, Pennsylvania 17105

(Address of principal executive offices, including zip code)

 

(717) 761-2633

(Registrant’s telephone number, including area code)

 

N/A

(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 (see General Instruction A.2. below):

 

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

 

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

 

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

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading
Symbol(s)
  Name of each exchange on 
which registered
Common Stock, $1.00 par value   RAD   The New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company 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.    ¨

 

 

 

 

 

Explanatory Note

 

This Form 8-K/A is filed as an amendment to the Current Report on Form 8-K filed by Rite Aid Corporation (“Rite Aid” or the “Company”) on October 16, 2023 (the “Original Form 8-K”) solely in order to file a corrected Exhibit 10.1 to the Original Form 8-K (which supersedes and replaces in its entirety Exhibit 10.1 to the Original Form 8-K). Other than such correction, there are no other changes to the Original Form 8-K, and the descriptions below repeat in their entirety the similar disclosure in the Original Form 8-K.

 

Item 1.01 Entry into a Material Definitive Agreement.

 

The information set forth below in Item 1.03 in this Current Report on Form 8-K under the captions “Restructuring Transactions”, “DIP ABL Credit Agreement”, “DIP Term Loan Credit Agreement”, and “Elixir Stalking Horse APA” is hereby incorporated by reference into this Item 1.01.

 

Item 1.03 Bankruptcy or Receivership.

 

Voluntary Petitions for Bankruptcy

 

On October 15, 2023 (the “Petition Date”), Rite Aid Corporation (“Rite Aid” or the “Company”) and certain of its direct and indirect subsidiaries (together with the Company, the “Debtors”) filed voluntary petitions to commence proceedings under chapter 11 (the “Chapter 11 Cases”) of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”). The Debtors have requested that the Chapter 11 Cases be jointly administered under the caption In re Rite Aid Corporation., et al. The Debtors continue to operate their business as “debtors in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Debtors filed with the Bankruptcy Court certain motions seeking a variety of customary “first day” relief, including authority to pay employee wages and benefits, to pay vendors and suppliers for goods and services provided both before and after the Petition Date, and to continue honoring insurance and tax obligations as they come due. In addition, the Company filed with the Bankruptcy Court a motion seeking approval of certain procedures relating to the marketing and auction (if necessary) of all or some of the Company’s assets and a motion (the “DIP Motion”) seeking approval of the Company’s entry into debtor-in-possession financing arrangements on the terms and conditions set forth in the DIP Credit Agreements (as defined and described below).

 

Additional information about the Chapter 11 Cases, including access to Bankruptcy Court documents, is available online at https://restructuring.ra.kroll.com/RiteAid, a website administered by Kroll Restructuring Administration, LLC, a third-party bankruptcy claims and noticing agent. The documents and other information on this web site are not part of this Current Report on Form 8-K and shall not be deemed incorporated by reference herein.

 

Restructuring Transactions

 

On October 15, 2023, prior to the commencement of the Chapter 11 Cases, the Company and certain of its direct and indirect subsidiaries (the “Company Parties”) reached an agreement in principle (the “Restructuring Term Sheet”) with certain holders of the Company’s 7.500% Senior Secured Notes due 2025 and 8.000% Senior Secured Notes due 2026 (together, the “Senior Secured Notes”) and the indentures relating to the same (such holders, the “Consenting Noteholders”) on the terms of a comprehensive restructuring transaction (the “Restructuring Transaction”) to be implemented through the Chapter 11 Cases. The Restructuring Term Sheet remains subject to definitive documentation, including execution of a restructuring support agreement (the “Restructuring Support Agreement”), which the Company expects to enter into with the Consenting Noteholders in the coming days. The Restructuring Support Agreement, if and when executed by the Company and the Consenting Noteholders, will be on substantially the same terms as those set forth in the Restructuring Term Sheet. Capitalized terms used but not otherwise defined in this “Restructuring Support Agreement” section of this Current Report on Form 8-K have the meanings given to them in the Restructuring Term Sheet and the Plan (as defined below), as applicable.

 

The Restructuring Transaction contemplates agreed-upon terms for a pre-arranged financial and operational restructuring (the “Restructuring”). Through the Restructuring, the Consenting Noteholders will, subject to certain terms and conditions and agreement on the terms of the Restructuring Support Agreement, support a restructuring of the existing debt of, existing equity interests in, and certain other obligations of the Company Parties, pursuant to a plan of reorganization (the “Plan”) under Chapter 11 of the Bankruptcy Code in the Chapter 11 Cases.

 

 

 

 

Subject to definitive documentation and the satisfaction of certain terms and conditions, the Restructuring contemplates a debt-for-equity transaction to be implemented through the Plan (the “Plan Restructuring”) pursuant to which holders of the Senior Secured Notes will receive, in full satisfaction of their claims, common equity of the Company or an entity formed to indirectly acquire substantially all of the assets and/or stock of the Company as may be contemplated by the Restructuring (“New Rite Aid”). In the event the Plan Restructuring is not effectuated in accordance with the terms and conditions of the Restructuring Term Sheet, the Restructuring Term Sheet contemplates that the Consenting Noteholders will agree, subject to agreement on the terms of the Restructuring Support Agreement and subject to certain terms and conditions, to purchase all, substantially all, or a material portion of the Company’s assets through a “credit bid” sale transaction under section 363 of the Bankruptcy Code (the “Credit Bid Transaction”). Any Plan Restructuring or Credit Bid Transaction will be subject to the Company’s potential receipt of otherwise “higher or better” offers pursuant to the court-approved sale to be run by the Debtors in Chapter 11 with respect to a sale of the Debtors’ assets. In a Plan Restructuring, Credit Bid Transaction, or any other transaction contemplated by the Restructuring Support Agreement, it is possible that holders of Secured Notes Claims receive all or a portion of their recovery in the form of cash proceeds of one or more asset sales or a combination of cash proceeds and equity in New Rite Aid.

 

The Plan, which remains subject to ongoing negotiations, embodies the terms set forth in the Restructuring Term Sheet, which, among other things, contemplates treatment of the claims of the Company’s stakeholders as set forth below. Bracketed items reflect the conditional nature of such treatment, as is set forth in the Plan.

 

·each holder of a claim on account of the DIP ABL Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit ABL Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP ABL Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit ABL Facility;

 

·each holder of a claim on account of the DIP FILO Facility shall receive, in full satisfaction of its claim, (a) in the event of a Plan Restructuring, its allocated share of the Exit FILO Term Loan Facility, or (b) in the event of a Credit Bid Transaction or an Alternative Sale Transaction, either, at the DIP FILO Lenders’ discretion, (i) payment in full, in Cash, or (ii) its allocated share of the Exit FILO Term Loan Facility;

 

·each holder of a DIP Term Loan Claim shall receive, in full and final satisfaction of its claim, payment in full, in Cash;

 

·to the extent any allowed ABL Facility Claim remains outstanding on the Effective Date, each holder of an ABL Facility claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, or reinstatement of the Allowed ABL Facility Claim under the Exit ABL Facility;

 

·to the extent any allowed FILO Term Loan Facility Claim remains outstanding on the Effective Date, each holder of a FILO Term Loan Facility Claim shall receive, in full and final satisfaction of its claim, either payment in full, in Cash, of all ABL Facility Claims, or reinstatement of the Allowed FILO Term Loan Facility Claims under the FILO Term Loan Facility;

 

·each holder of an allowed Senior Secured Notes Claim, in full satisfaction of its claim, shall receive (a) in the event of a Plan Restructuring, [(i) 100% of the common equity (the “New Common Stock”) of New Rite Aid, subject to dilution by the Management Incentive Plan, and any equity-linked securities issued to the holders of allowed General Unsecured Claims, plus (ii) its pro rata share of the takeback facility, if applicable; or (b) in the event the Restructuring Transaction is not a Plan Restructuring, [its pro rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery]];

 

·each holder of an allowed General Unsecured Claim, in full satisfaction of its claim, subject to (A) the DIP Term Loan Claims, the ABL Facility Claims, and the FILO Term Loan Facility Claims being satisfied in full, in Cash, or such other treatment acceptable to the DIP Lenders and / or the ABL Lenders and the FILO Lenders, as applicable, in their sole discretion, and (B) the satisfaction of any Allowed Adequate Protection Claims, shall receive [[__]% of an equity-linked instrument in New Rite Aid (form and terms to be determined), calculated as of the Effective Date and equal to the product of a formula calculated as the (midpoint value of owned real estate not encumbered prior to the Petition Date, less the costs and expenses to be paid by, or estimated to be paid by, the Debtors’ Estates to administer the Chapter 11 Cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of the equitized Senior Secured Notes Claims)];

 

·each Intercompany Claim shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Claim, or such other treatment as is reasonably determined by the Debtors;

 

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·each Intercompany Interest shall be, at the option of the Debtors, reinstated, set off, settled, distributed, contributed, cancelled, or released without any distribution on account of such Intercompany Interest, or such other treatment as is reasonably determined by the Debtors;

 

·all Existing Equity Interests in Rite Aid will be cancelled and extinguished, and Holders of Existing Equity Interests in Rite Aid shall receive no recovery on account of such Interests; and

 

·Section 510(b) Claims shall be discharged, cancelled, released, and extinguished without any distribution to Holders of such Claims.

 

The Restructuring Term Sheet contains milestones for the progress of the Chapter 11 Cases (the “Milestones”), which include the dates by which the Debtors are required to, among other things, obtain certain orders of the Court and consummate the Restructuring Transactions.

 

Although the Company intends to pursue the Restructuring as contemplated by the Restructuring Term Sheet, there can be no assurance that the Company will be successful in entering into a Restructuring Support Agreement on the terms set forth in the Restructuring Term Sheet and the terms of the Restructuring Support Agreement and Plan may be subject to material change. In addition, the transactions contemplated by the Restructuring Term Sheet are subject to approval by the Bankruptcy Court, among other conditions. Accordingly, no assurance can be given that the transactions described therein will be consummated on the expected terms, if at all.

 

The foregoing description of the Restructuring Term Sheet is not complete and is qualified in its entirety by reference to the Restructuring Term Sheet, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.

 

DIP ABL Credit Agreement

 

Subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP ABL Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP ABL Borrower, the “DIP ABL Loan Parties”), expect to enter into that certain debtor-in-possession credit agreement (the “DIP ABL Credit Agreement”) with the lenders from time to time party thereto (the “DIP ABL Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP ABL Agent”), on the terms and conditions set forth therein. Capitalized terms used but not otherwise defined in this “DIP ABL Credit Agreement” section of this Current Report on Form 8-K shall have the meanings given to them elsewhere in this Current Report on Form 8-K (or, if not defined herein, in the DIP ABL Credit Agreement). Pursuant to the DIP ABL Credit Agreement, the DIP ABL Lenders have agreed, upon the terms and conditions set forth therein, to make available to the DIP ABL Borrower a superpriority senior secured debtor-in-possession asset-based credit facility in the aggregate principal amount of $3.25 billion, consisting of (x) a $2.85 billion revolving credit facility (the “DIP Revolving Facility”), and (y) a $400 million first-in last-out term loan facility (the “DIP FILO Facility,” and, together with the DIP Revolving Facility, the “DIP ABL Facilities”) in order to (a) repay all outstanding obligations arising under, or related to, the Existing Credit Agreement and the Existing Facilities, (b) fund the Chapter 11 Cases, (c) provide working capital for the DIP ABL Loan Parties during the pendency of the Chapter 11 Cases, and (d) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP ABL Facilities, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The DIP ABL Loan Parties’ obligations under the DIP ABL Credit Agreement will be secured by liens on substantially all of the personal property of the DIP ABL Loan Parties, subject to certain exceptions.

 

The DIP ABL Facilities will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Revolving Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 3.25%. Additionally, the Company is required to pay a fee of 0.50% per annum on the daily unused amount of the commitments under the DIP Revolving Facility. The interest rate applicable to loans under the DIP FILO Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 5.25%, which margin is subject to downward adjustment to 4.75% upon the occurrence of certain paydown events, and a 1.00% upfront fee payable upon the Closing Date.

 

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The DIP ABL Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP ABL Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP ABL Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP ABL Lenders’ rights or liens granted under the DIP ABL Credit Agreement.

 

The foregoing description of the DIP ABL Credit Agreement and the DIP ABL Facilities does not purport to be complete and is qualified in its entirety by reference to the DIP ABL Credit Agreement, a substantially final form of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference.

 

DIP Term Loan Credit Agreement

 

Subject to the approval of the Bankruptcy Court, the Company, as borrower (the “DIP Term Loan Borrower”), and certain of the Company’s direct and indirect debtor-subsidiaries, as guarantors (together with the DIP Term Loan Borrower, the “DIP Term Loan Parties”), expect to enter into that certain debtor-in-possession term loan agreement (the “DIP Term Loan Credit Agreement,” and, together with the DIP ABL Credit Agreement, the “DIP Credit Agreements”) with the lenders from time to time party thereto (the “DIP Term Loan Lenders”) and Bank of America, N.A., as administrative agent and collateral agent (the “DIP Term Loan Agent”), on the terms and conditions set forth therein. Capitalized terms used but not otherwise defined in this “DIP Term Loan Credit Agreement” section of this Current Report on Form 8-K shall have the meanings given to them elsewhere in this Current Report on Form 8-K (or, if not defined herein, in the DIP Term Loan Credit Agreement). Pursuant to the DIP Term Loan Credit Agreement, the DIP Term Loan Lenders have agreed, upon the terms and conditions set forth therein, including the approval of the Bankruptcy Court, to make available to the DIP Term Loan Borrower a senior secured debtor-in-possession term loan credit facility in the aggregate principal amount of $200 million (the “DIP Term Loan Facility,” together with the DIP ABL Facility and the DIP FILO Facility, the “DIP Facilities”) in order to (a) fund the Chapter 11 Cases, (b) make certain other payments as more fully provided in the Bankruptcy Court orders approving the DIP Term Loan Facility, and (c) provide working capital for the DIP Term Loan Parties during the pendency of the Chapter 11 Cases, all in accordance with an Approved Budget (subject to the Permitted Variance) and as otherwise provided therein. The obligations under the DIP Term Loan Credit Agreement will be secured by liens on substantially all of the real and personal property of the DIP Term Loan Parties, subject to certain exceptions.

 

The DIP Term Loan Facility will mature on the date that is twelve months from the Closing Date. The interest rate applicable to loans under the DIP Term Loan Facility is an adjusted Term SOFR-based rate (determined in a customary manner) plus a margin of 7.50%.

 

The DIP Term Loan Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the DIP Term Loan Borrower and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Term Loan Credit Agreement also includes representations and warranties, mandatory prepayments, affirmative covenants and events of default customary for financings of this type. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code, and certain other events related to the impairment of the DIP Term Loan Lenders’ rights or liens granted under the DIP Term Loan Credit Agreement.

 

The foregoing description of the DIP Term Loan Credit Agreement and the DIP Term Loan Facility does not purport to be complete and is qualified in its entirety by reference to the DIP Term Loan Credit Agreement, a substantially final form of which is attached to this Current Report on Form 8-K as Exhibit 10.3 and is incorporated herein by reference.

 

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In connection with the Chapter 11 Cases, the Debtors filed the DIP Motion seeking Bankruptcy Court approval of their entry into and performance under the DIP Credit Agreements and use of cash collateral, as well as certain related relief. The Debtors expect that the Bankruptcy Court will grant the DIP Motion on an interim basis on or about October 16, 2023. The Debtors will seek the Bankruptcy Court’s approval of the DIP Motion on a final basis in the coming weeks.

 

Elixir Stalking Horse APA

 

On October 15, 2023, Hunter Lane, LLC, a subsidiary of the Company, and certain of Hunter Lane, LLC’s subsidiaries (collectively, the “Sellers”) entered into an asset purchase agreement (the “Elixir Stalking Horse APA”) with a buyer, MedImpact Healthcare Systems, Inc. (the “Buyer”), pursuant to which the Buyer has agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Sellers, which, collectively constitute the “Elixir Assets.” The Sellers are Debtors in the Chapter 11 Cases.

 

The acquisition of the Elixir Assets by the Buyer pursuant to the Elixir Stalking Horse APA is subject to approval of the Bankruptcy Court and one or more auctions, if necessary, to solicit higher or otherwise better bids. On October 15, 2023, the Debtors filed a motion (the “Bidding Procedures Motion”) seeking approval of, among other things, certain marketing, auction, and bidding procedures (“Bidding Procedures”), pursuant to which the Debtors will solicit and select the highest or otherwise best offer(s) for the sale or sales of the Elixir Assets and the Debtors’ retail asset portfolio. The Bidding Procedures Motion additionally seeks Bankruptcy Court approval of the Elixir Stalking Horse APA and designation of the Buyer as the “stalking horse” bidder for the Elixir Assets. The Debtors anticipate that the Bankruptcy Court will enter an order approving the relief requested in the Bidding Procedures Motion after a hearing scheduled for October 16. 2023.

 

In accordance with the Bidding Procedures, if the Debtors receive any higher or otherwise better bids by November 16, 2023, the Debtors expect to conduct an auction for the Elixir Assets by November 20, 2023. As the stalking horse bidder, the Buyer’s offer to purchase the Elixir Assets, as set forth in the Elixir Stalking Horse APA, serves as the minimum or bid floor on which the Debtors, their creditors, other stakeholders, and other bidders may rely. Other interested bidders will be permitted to participate in the auction for the Elixir Assets, if, in accordance with the Bidding Procedures, such interested bidders submit qualifying offers that are higher or otherwise better than the stalking horse bid.

 

Under the terms of the Elixir Stalking Horse APA, the Buyer has agreed, subject to Bankruptcy Court approval and absent any higher or otherwise better bid, to acquire the Elixir Assets from the Sellers for $575 million (the “Purchase Price”), subject to certain adjustments in accordance with the terms and conditions of the Elixir Stalking Horse APA, plus the assumption of specified liabilities related to the Elixir Assets. If the Sellers receive a better or otherwise higher bid and the Bankruptcy Court approves the Sellers’ consummation of an alternative sale of the Elixir Assets to any purchaser other than the Buyer, the Sellers will pay the Buyer a break-up fee and reimbursement of certain expenses associated with the negotiation, drafting, and execution of the Elixir Stalking Horse APA, not to exceed 3.5% of the Purchase Price in the aggregate, subject to approval by the Bankruptcy Court.

 

The foregoing description of the Bidding Procedures and Elixir Stalking Horse APA remain subject to approval by the Bankruptcy Court, is not complete, and is qualified in its entirety by reference to the Elixir Stalking Horse APA, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.4, and is hereby incorporated herein by reference.

 

Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

 

The filing of the Chapter 11 Cases constitutes an event of default that accelerated obligations under the following debt instruments and agreements (the “Debt Instruments”):

 

·Credit Agreement, dated as of December 20, 2018, among Rite Aid Corporation, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent, amended by (i) the First Amendment to Credit Agreement, dated as of January 6, 2020, among Rite Aid Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, (ii) the Second Amendment to Credit Agreement, dated as of August 20, 2021, among Rite Aid Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent and (iii) the Third Amendment to Credit Agreement, dated as of December 1, 2022, among Rite Aid Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent;

 

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·Indenture, dated as of August 1, 1993, between Rite Aid Corporation, as issuer, and Morgan Guaranty Trust Company of New York, as trustee, related to the Company’s 7.70% Notes due 2027;

 

·Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and U.S. Bank Trust National Association (as successor trustee to Morgan Guaranty Trust Company of New York) to the Indenture dated as of August 1, 1993, between Rite Aid Corporation and Morgan Guaranty Trust Company of New York, relating to the Company’s 7.70% Notes due 2027;

 

·Indenture, dated as of December 21, 1998, between Rite Aid Corporation, as issuer, and Harris Trust and Savings Bank, as trustee, related to the Company’s 6.875% Notes due 2028;

 

·Supplemental Indenture, dated as of February 3, 2000, between Rite Aid Corporation and Harris Trust and Savings Bank to the Indenture, dated December 21, 1998, between Rite Aid Corporation and Harris Trust and Savings Bank, related to the Company’s 6.875% Notes due 2028;

 

·Indenture, dated as of February 5, 2020, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., related to the Company’s 7.500% Senior Secured Notes due 2025;

 

·Indenture, dated as of July 27, 2020, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., related to the Company’s 8.000% Senior Secured Notes due 2026;

 

·Supplemental Indenture, dated as of August 27, 2021, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of February 5, 2020, related to the Company’s 7.500% Senior Secured Notes due 2025;

 

·Supplemental Indenture, dated as of August 27, 2021, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of July 27, 2020, related to the Company’s 8.000% Senior Secured Notes due 2026;

 

·Supplemental Indenture, dated as of March 31, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of February 5, 2020, related to the Company’s 7.500% Senior Secured Notes due 2025;

 

·Supplemental Indenture, dated as of March 31, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of July 27, 2020, related to the Company’s 8.000% Senior Secured Notes due 2026;

 

·Supplemental Indenture, dated as of September 19, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of February 5, 2020, related to the Company’s 7.500% Senior Secured Notes due 2025; and

 

·Supplemental Indenture, dated as of September 19, 2022, among Rite Aid Corporation, the subsidiary guarantors named therein and The Bank of New York Mellon Trust Company, N.A., to the Indenture, dated as of July 27, 2020, related to the Company’s 8.000% Senior Secured Notes due 2026.

 

The Debt Instruments provide that, as a result of the Chapter 11 Cases, the principal amount together with accrued and unpaid fees and interest thereon, and in the case of the indebtedness outstanding under the senior notes, premium, if any, thereon, shall be immediately due and payable. Accordingly, all long-term debt was classified as current on the unaudited condensed consolidated balance sheet as of September 2, 2023. However, any efforts to enforce payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases and the creditors’ rights in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code. Additionally, in connection with the Chapter 11 Cases, the Company has incurred, and expects to continue to incur, significant professional fees and other costs in connection with the Chapter 11 Cases. There can be no assurance that the Company’s current liquidity is sufficient to allow it to satisfy its obligations related to the Chapter 11 Cases or to pursue confirmation of the Plan.

 

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Item 7.01 Regulation FD Disclosure.

 

Press Release

 

On October 15, 2023, the Company issued a press release announcing the filing of the Chapter 11 Cases. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Cleansing Materials

 

In August and September 2023, the Company entered into confidentiality agreements with certain of the secured noteholders (as amended from time to time, the “Confidentiality Agreements”). Pursuant to the Confidentiality Agreements, the Company agreed to publicly disclose certain information upon the occurrence of certain events (the “Cleansing Materials”), including updated financial projections prepared by the Company and provided to such holders, which are attached to this Current Report on Form 8-K as Exhibit 99.2.

 

The Cleansing Materials are based solely on information available to the Company as of the date of the Cleansing Materials and were not prepared with a view toward public disclosure. The Cleansing Materials should not be relied on by any party for any reason. The Cleansing Materials should not be relied upon as a reliable prediction of future events. Neither the Company nor any third party has made or makes any representation to any person regarding the accuracy of any Cleansing Materials or undertakes any obligation to publicly update the Cleansing Materials to reflect circumstances existing after the date when the Cleansing Materials were prepared or conveyed or to reflect the occurrence of future events.

 

The information contained in this Item 7.01, including in Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

 

Item 8.01 Other Events.

 

Cautionary Note Regarding the Company’s Securities

 

The Company cautions that trading in its securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in the Chapter 11 Cases. In particular, the Company expects that its equity holders could experience a significant or complete loss on their investment, depending on the outcome of the Chapter 11 Cases.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Statements in this report that are not historical, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding the Debtors’ continued operation of the business as “debtors-in-possession”; the Company’s expectation to be granted “first day relief” and its impact on the ability to pay for continuing obligations, including, but not limited to, employee wages, vendors, suppliers for goods, services, taxes and insurance; the Company’s expectation that it will enter into the Restructuring Support Agreement with the Consenting Noteholders and the anticipated timeline for doing so; the Company’s expectation that the transactions contemplated by the Restructuring Term Sheet are consummated by the Bankruptcy Court in the terms outlined herein; the Company’s expectation regarding entry into the DIP Credit Agreements and the Bankruptcy Court’s approval thereof; the Company’s expectation regarding the Elixir Stalking Horse APA and the Bankruptcy Court’s approval thereof and of the Bidding Procedures; statements regarding the amount of professional fees and other costs incurred in connection with the Chapter 11 Cases; and any assumptions underlying any of the foregoing. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements.

 

7

 

 

These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: the Company’s ability to fund its planned operations for the next twelve months and its ability to continue as a going concern; the adverse impact of the Chapter 11 Cases on the Company’s business, financial condition, and results of operations; the Company’s ability to successfully consummate the Restructuring and emerge from the Chapter 11 Cases, including by entering into the Restructuring Support Agreement and ultimately satisfying the conditions and milestones set forth therein; the Company’s ability to improve its liquidity and long-term capital structure and to address its debt service obligations through the Restructuring; the Company’s ability to make the required payments under the agreements governing its current debt obligations; the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Restructuring and the Chapter 11 Cases; the Company’s ability to execute on currently contemplated asset sales; the effects of the Restructuring and the Chapter 11 Cases on the Company and the interests of various constituents; risks and uncertainties associated with the Restructuring, including the Company’s ability to receive approvals for debtor-in-possession financing, obtain confirmation of the Plan under the Chapter 11 Cases and successfully consummate the Restructuring; the Company’s ability to receive any required approvals of the Plan and the responses of its securityholders and other stakeholders, including those party to the Restructuring Term Sheet, and ultimately, the Restructuring Support Agreement; subject to the successful outcome of the Restructuring, the nature, cost, impact and outcome of pending and future litigation, other legal or regulatory proceedings, or governmental investigations and actions, including those related to opioids, “usual and customary” pricing, government payer programs, business practices, or other matters; the Company’s ability to maintain the listing of its common stock on the New York Stock Exchange (the “NYSE”), and the resulting impact of either (i) a delisting or (ii) remedies taken to prevent a delisting on the Company’s results of operations and financial condition]; the risks and certainties of assumptions made in any projections contained in the Cleansing Materials; and other risks and uncertainties described from time to time in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”).

 

These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of the Company’s most recent Annual Report on Form 10-K and in other documents that we file or furnish with the SEC, which you are encouraged to read. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made. The Company expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
Numbers
  Description   Incorporation By Reference To
10.1   *Restructuring Term Sheet   Filed herewith.
10.2   *Restructuring Term Sheet
*DIP ABL Credit Agreement
  Exhibit 10.2 to Form 8-K, filed on October 16, 2023
10.3   *DIP Term Loan Credit Agreement   Exhibit 10.3 to Form 8-K, filed on October 16, 2023
10.4   *Elixir Stalking Horse APA   Exhibit 10.4 to Form 8-K, filed on October 16, 2023
99.1   Press Release, dated October 15, 2023   Exhibit 99.1 to Form 8-K, filed on October 16, 2023
99.2   Cleansing Materials   Exhibit 99.2 to Form 8-K, filed on October 16, 2023
104   Cover Page Interactive Data File (embedded within the Inline XBRL document).    

  

 

*In accordance with Item 601(a)(5) of Regulation S-K, certain schedules or similar attachments to this exhibit have been omitted from this filing.

 

8

 

 

SIGNATURES

 

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

 

Dated: October 16, 2023

 

  RITE AID CORPORATION
     
  By: /s/ Matthew C. Schroeder
    Name: Matthew C. Schroeder
    Title: Executive Vice President and Chief Financial Officer

 

9

 

Exhibit 10.1

 

Execution Version

 

RSA
RSA

·     The Company and the ad hoc group of senior secured noteholders (the “Secured AHG”) shall enter into a restructuring support agreement (“RSA”) consistent with the terms set forth herein and as otherwise agreed by the Company and Consenting Noteholders that hold at least 66.67% of the aggregate principal amount of Secured Notes outstanding as of the petition date.

 

·      RSA effectiveness shall be subject to the following CP (in addition to other customary CPs):

 

o      RSA shall be entered into by holders of at least 66.67% of the aggregate principal amount of Secured Notes outstanding as of the petition date (such participating holders, the “Consenting Noteholders”);

 

o      RSA shall contain, among other terms, (i) a covenant by the Debtors to make commercially reasonable efforts to sell, transfer, or otherwise monetize the CMS Receivable and to keep the professionals for the Required Consenting Noteholders and DIP ABL/FILO/Term Loan Lenders reasonably informed on the status thereof; (ii) will commence a process to sell, transfer, or otherwise monetize the CMS Receivable, which process shall be on terms acceptable to DIP ABL/FILO/Term Loan Lenders, the Consenting Noteholders holding at least 66.67% of the Secured Notes held by all Consenting Noteholders (the “Required Consenting Noteholders”), and which process the Debtors, the Required Consenting Noteholders, and DIP ABL/FILO/Term Loan Lenders shall negotiate in good faith; and (iii) the Debtors will use good faith efforts to commence a RFP process to solicit third-party bids to become the Debtors’ primary pharmaceutical provider and to keep the professionals for the Required Consenting Noteholders and DIP ABL/FILO/Term Loan Lenders reasonably informed on the status thereof.

 

o      Company shall enter into agreement(s) on or before the Petition Date concerning the treatment of key critical vendors’ claims and contract(s) (as applicable) both during the chapter 11 case and on a post-emergence basis on terms acceptable to the Company and the Required Consenting Noteholders

 

o       Agreement on the Paydown Escrow Schedule and Cash Collateral provisions (defined and set forth below) among the Company, the ABL, and the Required Consenting Noteholders

 

·       The RSA shall provide that (a) the Consenting Noteholders reserve all rights as to Definitive Documents (to be defined in the RSA), including Global Bidding Procedures Order, the Interim DIP Order, the Interim Store Closing Order, the Confirmation Scheduling Order, the Plan, and the Disclosure Statement, that are filed within the first 30 days of the Petition Date, and no consent or approval by the Consenting Noteholders shall be deemed to have been given by a failure to object to such pleadings, (b) the Debtors and Consenting Noteholders shall negotiate in good faith on the form of all Definitive Documents, including amendments to any filed pleadings, and (c) upon the second business day following the date upon which the Final DIP Order is entered, the Required Consenting Noteholders shall have the option to terminate the RSA if any Definitive Documents, including any motions that have already been filed or orders that have already been entered, are not in form and substance acceptable to the Required Consenting Noteholders or otherwise inconsistent with the terms set herein.

 

 

 

 

 

Implementation
Mechanism

Chapter 11 Plan of Reorganization / Section 363 Process. The restructuring transactions will be effectuated through a chapter 11 plan (the “Plan Restructuring”) on terms acceptable to the Company and the Required Consenting Noteholders (the “Plan”) if, in addition to the satisfaction of other customary conditions and unless otherwise agreed by the Company and the Required Consenting Noteholders, (i) the Required Consenting Noteholders determine no later than two business days before the voting deadline in the Disclosure Statement Order that treatment and quantum of administrative expense and priority claims under the Plan is acceptable, (ii) the Confirmation Order is entered on or before the applicable milestone set forth below, and (iii) an Acceptable Sale Termination Event (as defined below) has not occurred (the “Plan Conditions”). To effectuate the restructuring transactions described herein, the Company Parties shall file a Plan that is materially consistent with this Term Sheet.

 

·     Required Consenting Noteholders to credit bid to purchase RAD 2.0 (defined as RAD Retail Business, excluding [400] stores contemplated for closure, subject to Designation Rights Arrangement) (the “AHG Credit Bid”).

 

·      If the Plan Conditions are satisfied on or before the applicable confirmation milestone set forth below, the AHG Credit Bid shall be effectuated pursuant to the Plan.

 

·      “Reorganized Rite Aid” is defined as RAD 2.0, less any additional stores closed pursuant to the Additional GOB Sales (defined below), less the assets sold in the PBM Sale, less any other assets sold pursuant to the Retail Sale Process.

 

If the Plan Conditions are not satisfied on or before the milestone set forth below, the AHG Credit Bid, subject to the results of the Retail Sale Process, shall be implemented pursuant to a sale order under section 363 of the Bankruptcy Code (the “Sale Order”) and a liquidating chapter 11 plan (in the event of the AHC Credit Bid, the “Credit Bid – 363 Sale”; and in the event of an alternative sale, the “Alternative Sale Transaction”).

 

Regardless of whether the parties are pursuing a Plan Restructuring, the Company will file a motion seeking approval of the AHG Credit Bid under section 363 (the “Sale Motion”) such that the hearing to approve the Sale Motion and entry of the Sale Order may occur on or before the applicable milestones set forth below if the Plan is not confirmed on or before the applicable confirmation milestone.

 

AHG Credit Bid

·      AHG Credit Bid shall be subject to the following CPs, in addition to other customary CPs:

 

o      Reasonably acceptable inventory and working capital on an enterprise and per-store basis;

 

o      Acceptable go-forward agreements with key vendors, including on treatment of any prepetition/administrative claims;

 

o      Acceptable exit financing from ABL/FILO lenders; and

 

o      NewCo to have access to sufficient liquidity at emergence / consummation of the sale.

 

·      Company and the AHG to engage in good faith discussions on Rite Aid 2.0 store footprint, with additional stores identified for closure to be incorporated into GOB process

 

 

 

 

 

Treatment of Claims & Interests under a Plan ABL / FILO Claims Repaid in full in cash at exit or upon consummation of third-party sales, unless ABL/FILO lenders agree to roll into exit financing

Senior DIP TL Claims

 

 

 

Repaid in full in cash at exit or upon consummation of third-party sales

Senior Secured Notes Claims (if any)

 

 

 

 

 

In the event of the Plan Restructuring, 100% of the new common stock in Reorganized Rite Aid, subject to dilution on account of the new stock issued pursuant to the Management Incentive Plan (the “New Common Stock”) and any equity-linked instruments issued to Holders of Allowed General Unsecured Claims, plus takeback debt in an amount to be determined by the Required Consenting Noteholders and the Company; or

 

In the event the Restructuring Transaction is not a Plan Restructuring, [its Pro Rata share of the Distributable Proceeds, if any, pursuant to the Waterfall Recovery.]

 

Admin/Priority Claims Treatment and quantum on terms acceptable to the Required Consenting Noteholders.
Unsecured Trade Claims Subject to same treatment as General Unsecured Claims (excl. Trade Claims), described below.
General Unsecured Claims (excl. Trade Claims) Subject to (i) DIP Term Loan Claims and ABL/FILO Claims being satisfied in full, in cash, or such other treatment acceptable to the DIP Term Loan Lenders and/or ABL/FILO lenders, as applicable, in their sole discretion, and (ii) the satisfaction of any Allowed Adequate Protection Claims, [---]% of an equity-linked instrument in Reorganized Rite Aid (form and terms to be determined), calculated as of the Plan Effective Date and equal to the product of a formula calculated as the (Midpoint Value of owned Real Estate not encumbered prior to the Petition Date, less the costs and expenses paid by, or estimated to be paid by, the Debtors’ estates to administer the chapter 11 cases) divided by (the sum of the numerator plus the total amount (including principal and accrued but unpaid interest) of equitized Senior Secured Notes Claims)
Equity Cancelled
MIP MIP at NewCo or Reorganized Rite Aid, as applicable, to be determined and allocated by the board of such entity
Treatment of Claims & Interests if AHG Credit Bid Implemented Through a 363 Sale

·      See Paydown and Escrow Schedule.

 

·      All proceeds, other than an agreed Wind-Down Budget, shall be used to repay DIP Term Loan Claims, ABL/FILO Claims, Secured Notes Claims, and, if applicable, any general unsecured claims in accordance with the priority set forth in Exhibit A (and otherwise in in accordance with Financing Order), or an otherwise agreed waterfall among the ABL/FILO Lenders, Company, and Required Consenting Noteholders.

 

·     Wind-Down Budget shall include an amount sufficient to fund the Professional Fee Escrow, administrative expense claims and priority claims (in an amount to be negotiated and acceptable to the Required Consenting Noteholders, the DIP Term Loan lenders, ABL/FILO lenders and the Company Parties as a condition precedent of the effectiveness of the Sale Order as set forth above), [WARN obligations], and other amounts to be agreed among the DIP Term Loan lenders, the ABL/FILO Lenders, Company, and Required Consenting Noteholders.

 

 

 

 

 

Store Rationalization

·      The AHG Credit Bid shall include the exclusive right, whether implemented through a Plan Restructuring or otherwise, exercisable in the Required Consenting Noteholders’ sole discretion, to designate the assumption, assumption and assignment, or rejection of store leases (the “Designation Rights”) as set forth in that certain store rationalization agreement between the Company Parties and the Consenting Noteholders, pursuant to which the stores designated for rejection shall become subject to a GOB sale process on terms acceptable to the Company Parties and the Required Consenting Noteholders (the “Additional GOB Sales”).

 

·       The following provisions apply with respect to the Designation Rights:

 

o     The Required Consenting Noteholders will have reasonable consent rights on sell vs. pour decisions with respect to all stores/assets subject to the GOB process.

 

o     The proceeds of prescription file sales in connection with of GOB sales (other than (x) Initial GOB Sales and (y) GOB sales conducted in connection with an exercise of remedies by ABL / FILO Lenders or DIP Term Loan Lenders or after a Cash Collateral Termination Event) representing [the excess above borrowing base advance amounts, determined in a manner acceptable to the ABL / FILO Lenders, the DIP Term Loan Lenders, and the Required Consenting Noteholders] to repay the DIP ABL facility and result in a corresponding permanent availability reserve.

 

·      It shall be a condition to closing of the AHG Credit Bid, whether such credit bid is effectuated through the Plan or through the Sale Order, that, prior to the day that is 120 days after the Petition Date, the Debtors shall have obtained an extension of the deadline to assume or reject the leases subject to the AHG Credit Bid to 210 days after the Petition Date.

 

PBM Sale

·      Sale of the PBM business to a third party if determined to be value-maximizing (based on good-faith discussions and consultation between Company, DIP Term lenders, ABL / FILO Lenders, and Required Consenting Noteholders); provided that the RSA will include a termination right exercisable by the Required Consenting Noteholders if the Company receives a Qualified Bid (other than any AHG Credit Bid) for the PBM business that is acceptable to the Required Consenting Noteholders that the Debtors decline to accept (an “Acceptable PBM Sale Termination Event”)

 

·      PBM Sale Timeline Deadlines, subject to Court availability

 

·       November 17, 2023 – Qualified Bid Deadline

 

·       November 29, 2023 – Auction

 

·       December 8, 2023 – Sale Hearing

 

·       See Paydown and Escrow Schedule.

 

CMS Receivable

·      See Paydown and Escrow Schedule below and RSA provisions above.

 

·      The sale, transfer, encumbrance, or monetization of the CMS Receivable and the process thereto shall be in accordance with this term sheet, the DIP ABL/FILO/Term Loan facilities and the Paydown and Escrow Schedule/priority set forth in Exhibit A.

 

 

 

 

 

Retail Business Sale

·     Company to run third party sale process for retail business, with to-be-agreed adjustment mechanics to the extent there are value-maximizing third party bids for particular assets, regions, or the Company as a whole

 

·      Closing of any sales to occur as soon as possible following receipt of necessary regulatory approvals

 

·      Retail Business Sale Timeline Deadlines, subject to Court availability

 

o     November 16, 2023 – Initial Indications of Interest Deadline

 

o     December 7, 2023 – Qualified Bid Deadline

 

o     December 15, 2023 – Auction

 

o     January 8, 2024

 

·       Disclosure Statement Hearing on updated Plan and Disclosure Statement, as updated to reflect auction results

 

·       Approval Hearing: Third-party 363 Sales

 

o     Approval Hearing:

 

·       AHG Credit Bid: (i) if Plan Restructuring à February 19, 2024 and (ii) if Credit-Bid 363 Sale à February 26, 2024

 

·      Third-party sales executable by Company in its business judgment in consultation with the Required Consenting Noteholders, ABL/FILO Lenders, and DIP Term Lenders.

 

·      The Required Consenting Noteholders shall have (i) an RSA termination right if (a) the Debtor seek approval of a Qualified Bid (other than the AHG Credit Bid) that the Required Consenting Noteholders do not support or (b) the Debtors refuse to seek approval of a Qualified Bid (other than the AHG Credit Bid) that is supported by the Required Consenting Noteholders, includes aggregate consideration of a value in excess of an amount to be agreed relative to the assets proposed to be sold in connection with such Qualified Bid, and is otherwise value maximizing and agreed to by and DIP ABL/FILO/Term Loan Lenders and (ii) a covenant that the Debtors will seek in good faith to maximize value to the greatest extent possible in pursuit of Qualified Bids (other than the AHG Credit Bid), take all such necessary actions to achieve that outcome, and work in good faith with the Consenting Noteholders in connection with such efforts.

 

·      Allocation of sale proceeds to be in accordance with the priority set forth in Exhibit A (and otherwise in in accordance with Financing Order), or otherwise on terms acceptable to the Company, DIP Term lenders, ABL/FILO Lenders, and Required Consenting Noteholders

 

Critical Vendors / First Day Relief All payments under first day motions (critical vendor, etc.) above $1 million to a single party (or group of affiliated parties) will be subject to Required Consenting Noteholders’ approval.

 

 

 

 

Case Milestones

·      Milestones acceptable, subject to ongoing discussions and agreements on other open terms.

 

·      October 15, 2023 – Petition Date; file “First Day Pleadings”, including Plan and Disclosure Statement.

 

o     Filing of store closing motion, which seeks authorization to establish procedures for the Company to conduct store closing sales, including sales (or pours) of prescription assets.

 

o     Filing of lease rejection motion, which seeks to reject unexpired leases of non-residential real property and abandon certain personal property on the premises of the rejected lease.

 

o     Filing of confirmation scheduling motion.

 

·      October 17, 2023

 

o     Entry of Global Bidding Procedures Order

 

o     Entry of Interim DIP Order

 

o     Entry of Interim Store Closing Order

 

o     Entry of Confirmation Scheduling Order

 

·      November 16, 2023

 

o     Entry of Final DIP Order

 

o     Entry of Final Store Closing Order

 

o     Entry of First Lease Rejection Order

 

o     Entry of Bar Date Order

 

·      December 7, 2023 – agreed form of Credit Bid APA among the Company and Consenting Noteholders consistent with the terms set forth herein

 

·         January 8, 2024

 

o     File Sale Motion (regardless of whether the parties are still seeking to consummate the Plan Restructuring as of such date) to approve AHG Credit Bid

 

o     Obtain entry of order approving third-party bids resulting from the retail business sale process

 

·      January 14, 2024 – Entry of Disclosure Statement Order

 

·      February 19, 2024 – Entry of Confirmation Order

 

·      February 26, 2024 - Entry the Sale Order if either (a) the Plan Conditions are not satisfied or (b) the Plan Conditions are satisfied but the Plan is not confirmed, in each case, on or before February 19

 

 

 

 

Adequate Protection For Senior Secured Notes Claims

Secured noteholders to consent to Company’s use of secured noteholders’ prepetition collateral, including cash collateral.

 

The cash collateral order shall include the following forms of adequate protection for the secured noteholders:

 

·      (a) to the extent of any diminution in value of the secured noteholders’ collateral, (i) valid, binding, enforceable, and perfected security interests in, and liens on, the Debtors’ assets, including pre-petition unencumbered assets (the “Unencumbered Assets”) of the Company as of the Petition Date, which liens and security interests shall be junior and subordinate to the carve-out and otherwise have the priority set forth in Exhibit A and (ii) allowed superpriority administrative expense claims as provided for in sections 503(b) and 503(7) of the Bankruptcy Code, subject to the carve-out and other priority terms set forth in Exhibit A; provided that, for the avoidance of doubt, such liens shall not prime the DIP Term Loan Lenders’ first-priority liens on the Unencumbered Assets.

 

·      (b) payment of the reasonable and documented prepetition and postpetition fees and expenses of Secured Notes Trustee (including Riker Danzig LLP) and the advisors to the Secured AHG (including Paul, Weiss, FTI, Evercore, and local counsel);

 

·      (c) the milestones set forth in this term sheet and otherwise set forth in the DIP documents;

 

·      (d) all reporting provided to the prepetition ABL Lenders and the DIP Lenders, including copies of the DIP Budget,(ii) weekly reporting and conference calls with the advisors to the Ad Hoc Group on status of the Retail Business sale process, (iii) weekly reporting on the status of lease renegotiations by property, including any settlements achieved with any landlords by property, and (iv) other customary reporting as reasonably requested by the advisors to the Ad Hoc Group;

 

·      (e) consent rights on payments on account of prepetition claims pursuant to any first day relief or otherwise in excess of $1 million to any single party or group of affiliated parties, including on account of 503(b)(9) claims;

 

·      (f) subject to entry of the Final DIP Order, standard 506(c) waiver, standard waiver of the equities of the case doctrine under section 552(b), and standard marshaling waiver; and

 

·      (g) the provisions set forth in the Paydown and Escrow Schedule.

 

Cash Collateral

·      The Required Consenting Noteholders shall have the right to terminate the Debtors’ use of cash collateral upon (a) the breach of any “ABL/FILO Case Milestone” (subject to the extension rights of the ABL/FILO/DIP TL agents for 10 BD in accordance with the ABL/FILO/DIP TL facilities) in effect as of the petition date, which may not be further extended, modified, or amended for the purposes of these provisions without the prior written consent of the Required Consenting Noteholders or (b) if the Plan is not confirmed or the order approving the Credit-Bid 363 Sale is not entered on or before [February 26, 2024] (each, a “Cash Collateral Termination Event”)

 

·     If any Cash Collateral Termination Event exists, holders of at least 66.67% in aggregate principal amount of the Secured Notes outstanding at the time of such Cash Collateral Termination Event (the “Required Secured Noteholders”) may elect to send a written notice to the ABL Agent, the DIP Agents, the Debtors and the Committee ( a “Cash Collateral Standstill Notice”), informing such parties that a Cash Collateral Termination Event has occurred and is continuing, and upon the expiration of 5 business days, the Required Secured Noteholders may elect to send a notice (“Cash Collateral Termination Notice”) to the Debtors and the ABL/TL Agents terminating the Debtors’ use of Cash Collateral effective as of the 30th day following delivery of such Cash Collateral Termination Notice (such date, the “Cash Collateral Termination Date”)

 

·     Following the occurrence of the Cash Collateral Termination Date, the ABL/FILO Agent and the DIP TL Agent retains the right to consent to the use cash collateral solely for the purpose of conducting a sale of all or substantially all of the DIP Collateral (i) on terms and conditions acceptable to the ABL/FILO Agent and the DIP TL Agent, (ii) with respect to Notes Priority Collateral, on terms and conditions acceptable to the Required Secured Noteholders; and (iii) with respect to DIP Collateral that is not Notes Priority Collateral, in good-faith consultation with, and reasonable updates to, the Required Secured Noteholders.

 

 

 

 

 

Paydown and Escrow Schedule

With respect to the application of (i) [PBM Sale Proceeds]1 and (ii) CMS Receivable Proceeds:

 

·      First $200 million to repay the DIP FILO Facility

 

·      Second $250 million escrowed solely for the benefit of the Second Lien Notes and to pay down the Second Lien Notes

 

·      Third, $100 million to repay the DIP ABL Facility (with a 100% corresponding permanent availability reserve)

 

·      Any additional proceeds shall be shared 50/50 between the DIP ABL Facility on the one hand and the Second Lien Notes on the other hand provided:

 

o    Any amounts paid to the DIP ABL Facility shall result in a corresponding permanent availability reserve; and

 

o    Any amounts paid to the Second Lien Notes shall be escrowed solely for the benefit of the Second Lien Notes

 

Any amounts escrowed for the benefit of the Second Lien Notes shall be held in an interest-bearing escrow account and not be used for any other purpose and shall be escrowed solely for the benefit of the Second Lien Notes to be released upon the earliest of (a) the effective date of the Plan; (b) consummation of a Sale approving the AHG Credit Bid and pursuant to such Sale, each of the ABL/FILO/DIP TL Facilities has either been paid in full in cash, consensually converted to an exit facility, or received such other treatment acceptable to the respective ABL/FILO/DIP TL Lenders in their sole discretion, or (c) consummation of a Sale approving a sale of substantially all of the Debtors’ assets to one or more third party purchasers and pursuant to such Sale, each of the ABL/FILO/DIP TL Facilities has either been paid in full in cash, consensually converted to an exit facility, or received such other treatment acceptable to the respective ABL/FILO/DIP TL Lenders in their sole discretion, provided, if the Second Lien Notes are otherwise paid in full, in Cash, from the proceeds of the Retail Sale Process, such escrowed amounts shall be released back to the applicable Debtor for distribution in accordance with the Plan. Notwithstanding the foregoing, upon the earliest to occur of (a) a DIP Termination Event, (b) Cash Collateral Termination Date or (c) any (x) termination of the RSA, or (y) breach by the Required Secured Noteholders that would give rise to a termination by the Debtors of the RSA, any amounts previously escrowed for the benefit of the Second Lien Notes shall be applied in accordance with the lien priorities set forth in Exhibit A/Financing Order; provided that (1) any application of escrowed funds (as a result of the occurrence of any event described in clauses (a) or (b)) to the payment of any revolving loans under the ABL/FILO/DIP TL shall be accompanied by a permanent reserve against the borrowing base and (2) any application of escrowed funds (as a result of the occurrence of any event described in cause (c)) to the payment of any revolving loans under the ABL/FILO/DIP TL may, at the sole discretion of the ABL Agent, be accompanied by a permanent reserve against the borrowing base.

 

  Nothing set forth in the RSA or any related document shall be deemed to amend or otherwise modify the terms and conditions of the ABL/FILO/DIP TL facilities or the Financing Orders.  The exercise of all rights and remedies with respect to collateral shall at all times remain subject to the Pre-Petition ICA and the Financing Order.
Other Key Provisions To Be Set Forth in RSA

D&O Indemnification. Under the restructuring transactions, all indemnifications currently in place (whether in the by-laws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Company Parties, as applicable, shall be assumed and survive the effectiveness of the restructuring.

 

D&O Policy Assumption. On the Plan Effective Date, the applicable Company Parties shall be deemed to have assumed all unexpired directors’, managers’, and officers’ liability insurance policies.

 

Releases and Exculpation. The Plan shall contain customary releases and exculpations, which, for the avoidance of doubt, shall be supported by the Secured AHG pursuant to the RSA to which this term sheet will be appended.

 

Fiduciary Out. The RSA shall contain a customary “fiduciary out” that each Debtor (and the Board thereof, including any special committee thereof) may exercise.

 

 

 

1Definitive documentation to include agreed formula for aggregate proceeds calculation.

 

 

 

 

Exhibit A

 

Priority Assets of the Type Constituting both
DIP Shared Collateral and ABL Priority
Collateral, and Proceeds of Avoidance
Actions with Respect to such Assets
Assets of the Type Constituting both DIP
Shared Collateral and Split-Lien Priority
Collateral  and Proceeds of Avoidance
Actions with Respect to such Assets
DIP Term Loan Exclusive Collateral
1st Priority Carve Out Carve Out Carve Out
2nd Priority Permitted Prior Liens Permitted Prior Liens Permitted Prior Liens
3rd Priority DIP ABL Liens DIP Term Loan Liens Notes Adequate Protection Liens DIP Term Loan Liens
4th Priority Prepetition ABL Adequate Protection Liens Notes Liens Notes Adequate Protection Liens
5th Priority Prepetition ABL Liens DIP ABL Liens DIP Term Loan Liens Prepetition ABL Adequate Protection Liens
6th Priority Notes Adequate Protection Liens Prepetition ABL Adequate Protection Liens  
7th Priority Notes Liens Prepetition ABL Liens  
           

 

 

 

 

Defined Terms:

 

DIP Shared Collateral” means the Debtors’ interest in all assets and properties (whether tangible or intangible), other than DIP Term Loan Exclusive Collateral, whether now owned by or owing to, or hereafter acquired by, or arising in favor of, the Debtors (including under any trade names, styles, or derivations thereof), and whether owned or consigned by or to, or leased from or to, the Debtors, and regardless of where located, of the type that would constitute Prepetition Collateral (but for application of section 552(b) of the Bankruptcy Code) and, upon entry of the Final Order, proceeds of Avoidance Actions (other than proceeds of Avoidance Actions constituting DIP Term Loan Exclusive Collateral).

 

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

 

Split-Lien Priority Collateral” has the meaning set forth in the Prepetition Intercreditor Agreement.

 

DIP Term Loan Exclusive Collateral” means the Debtors’ interest in all of following assets and properties, whether now owned by or owing to, or hereafter acquired by, or arising in favor of, the Debtors, and whether owned or consigned by or to, or leased from or to, the Debtors, and regardless of where located: (a) all real property and interests therein (including both fee and leasehold interests); (b) all proceeds of leasehold interests; (c) all equity interests in the direct or indirect subsidiaries of Rite Aid; (d) all other assets of the Debtors, other than to the extent constituting DIP Shared Collateral; (e) all “Commercial Tort Claims” (as defined in Article 9 of the Uniform Commercial Code) related to the foregoing; (f) all insurance policies relating to the foregoing; (g) except to the extent constituting DIP Shared Collateral, all “Documents”, all “General Intangibles”, all “Instruments” and all “Letter-of-Credit Rights” (as each quoted term is defined in Article 9 of the Uniform Commercial Code) related to the foregoing; (h) all collateral and guarantees given by any other person with respect to any of the foregoing, and all “Supporting Obligations” (including “Letter-of-Credit Rights”) (as each quoted term is defined in Article 9 of the Uniform Commercial Code) with respect to any of the foregoing; (i) all books and records to the extent relating to any of the foregoing; (j) all products and proceeds of the foregoing; and (k) upon entry of the Final DIP Order, proceeds of avoidance actions with respect to assets of the type referred to in clauses (a) through (d) of this definition; provided that DIP Term Loan Exclusive Collateral shall not include the Debtors’ real property leases (but shall include all proceeds of such leases) to the extent a grant of a security interest therein would violate or invalidate such lease or create a right of termination in favor of any other party thereto after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code and the Bankruptcy Code.

 

 

 

 

Exhibit 10.2

 

 

DEBTOR-IN-POSSESSION CREDIT AGREEMENT

 

dated as of October [●], 2023,

 

among

 

RITE AID CORPORATION,

as the Borrower

 

THE LENDERS PARTY HERETO,

 

and

 

bank of america, n.a.,

as Administrative Agent and Collateral Agent

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent
 

 

 

CAPITAL ONE, NATIONAL ASSOCIATION,

BMO BANK N.A.,

FIFTH THIRD BANK, NATIONAL ASSOCIATION,

MUFG BANK, LTD.,

PNC BANK, NATIONAL ASSOCIATION,

TRUIST BANK,

 

and

 

ING CAPITAL LLC,

as Co-Documentation Agents,

 

 

 

BofA SECURITIES, INC.,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

CAPITAL ONE, NATIONAL ASSOCIATION,

BMO BANK N.A.,

FIFTH THIRD BANK, NATIONAL ASSOCIATION,

MUFG BANK, LTD.,

PNC CAPITAL MARKETS LLC,

TRUIST SECURITIES, INC.,

 

and

 

ING CAPITAL LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I Definitions 2
   
SECTION 1.01. Defined Terms 2
SECTION 1.02. Classification of Loans and Borrowings 77
SECTION 1.03. Terms Generally 77
SECTION 1.04. Accounting Terms; GAAP 77
SECTION 1.05. Divisions 78
SECTION 1.06. Excluded Swap Obligations 78
SECTION 1.07. Times of Day 79
SECTION 1.08. Letter of Credit Amounts 79
SECTION 1.09. Interest Rates 79
     
ARTICLE II The Credits 80
   
SECTION 2.01. Commitments 80
SECTION 2.02. Loans and Borrowings 81
SECTION 2.03. Requests for Borrowings 82
SECTION 2.04. Swingline Loans 82
SECTION 2.05. Letters of Credit 84
SECTION 2.06. Funding of Borrowings 92
SECTION 2.07. Interest Elections 94
SECTION 2.08. Termination and Reduction of Commitments 95
SECTION 2.09. Repayment of Loans; Evidence of Indebtedness 96
SECTION 2.10. Amortization and Repayment of Term Loans 97
SECTION 2.11. Prepayment of Loans 98
SECTION 2.12. Fees 100
SECTION 2.13. Interest 102
SECTION 2.14. Alternate Rate of Interest; Illegality 102
SECTION 2.15. Increased Costs 106
SECTION 2.16. Break Funding Payments 107
SECTION 2.17. Taxes 107
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs 112
SECTION 2.19. Mitigation Obligations; Replacement of Lenders 114
SECTION 2.20. Borrowing Base Advance Rates; Reserves 115
SECTION 2.21. Incremental Loans 116
SECTION 2.22. Defaulting Lenders 117
SECTION 2.23. Protective Advances 119
     
ARTICLE III Representations and Warranties 120
   
SECTION 3.01. Organization; Powers 120

 

i

 

 

SECTION 3.02. Authorization; Enforceability 120
SECTION 3.03. Governmental Approvals; No Conflicts 121
SECTION 3.04. Financial Condition; No Material Adverse Effect; Approved Budget 121
SECTION 3.05. Properties 122
SECTION 3.06. Litigation and Environmental Matters 122
SECTION 3.07. Compliance with Laws and Agreements 123
SECTION 3.08. Investment and Holding Company Status 123
SECTION 3.09. Taxes 123
SECTION 3.10. ERISA 124
SECTION 3.11. Disclosure; Accuracy of Information 124
SECTION 3.12. Subsidiaries 124
SECTION 3.13. Insurance 124
SECTION 3.14. Labor Matters 124
SECTION 3.15. Real Estate Leases 125
SECTION 3.16. Federal Reserve Regulations 125
SECTION 3.17. Security Interests 125
SECTION 3.18. Use of Proceeds 125
SECTION 3.19. Anti-Corruption Laws and Sanctions 125
SECTION 3.20. Affected Financial Institutions; Covered Entities 126
SECTION 3.21. Chapter 11 Case Matters 126
     
ARTICLE IV Conditions 127
   
SECTION 4.01. Conditions Precedent to Effectiveness 127
SECTION 4.02. Conditions Precedent to each Credit Event 131
     
ARTICLE V Affirmative Covenants 132
   
SECTION 5.01. Financial Statements and Other Information 132
SECTION 5.02. Notices of Material Events 136
SECTION 5.03. Information Regarding Collateral 136
SECTION 5.04. Existence; Conduct of Business 137
SECTION 5.05. Payment of Obligations 137
SECTION 5.06. Maintenance of Properties 137
SECTION 5.07. Insurance 137
SECTION 5.08. Books and Records; Inspection and Audit Rights; Collateral and Borrowing Base Reviews 138
SECTION 5.09. Compliance with Laws 139
SECTION 5.10. Use of Proceeds and Letters of Credit 140
SECTION 5.11. Additional Subsidiaries 140
SECTION 5.12. Further Assurances 141
SECTION 5.13. [Reserved] 141
SECTION 5.14. Intercompany Transfers 141
SECTION 5.15. Inventory Purchasing 141
SECTION 5.16. Cash Management System 141
SECTION 5.17. Specified Elixir Assets 141

 

ii

 

 

SECTION 5.18. Company Financial Advisors and Lender Group Consultants 142
SECTION 5.19. Approved Budget 143
SECTION 5.20. Chapter 11 Case Milestones 144
SECTION 5.21. Compliance with Bankruptcy Court Orders, Bankruptcy Code, Etc. 145
SECTION 5.22. Real Estate Leases 145
SECTION 5.23. Assumption and Rejection of Contracts and Real Estate Leases 145
SECTION 5.24. Post-Closing Obligations 146
     
ARTICLE VI Negative Covenants 146
   
SECTION 6.01. Indebtedness; Certain Equity Securities 146
SECTION 6.02. Liens 150
SECTION 6.03. Fundamental Changes 152
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions 152
SECTION 6.05. Asset Sales 154
SECTION 6.06. Sale and Leaseback Transactions 155
SECTION 6.07. Hedging Agreements 155
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness 155
SECTION 6.09. Transactions with Affiliates 156
SECTION 6.10. Restrictive Agreements 157
SECTION 6.11. Amendment of Material Documents 159
SECTION 6.12. Minimum ABL Availability 160
SECTION 6.13. Restrictions on Asset Holdings by the Borrower 160
SECTION 6.14. Corporate Separateness 160
SECTION 6.15. Cash Management 161
SECTION 6.16. Use of Proceeds 161
SECTION 6.17. Intellectual Property Collateral 161
SECTION 6.18. Elixir Monetization Event 161
     
ARTICLE VII Events of Default 162
   
SECTION 7.01. Events of Default 162
SECTION 7.02. Application of Proceeds 168
     
ARTICLE VIII Rights of Agents 170
   
SECTION 8.01. Appointment and Authority of Agents 170
SECTION 8.02. Rights as a Lender 171
SECTION 8.03. Exculpatory Provisions 171
SECTION 8.04. Reliance by the Agents 172
SECTION 8.05. Delegation of Duties 172
SECTION 8.06. Resignation or Removal of an Agent 172
SECTION 8.07. Reports and Financial Statements 174

 

iii

 

 

SECTION 8.08. Non-Reliance on Agents and Other Lenders 175
SECTION 8.09. [Reserved] 175
SECTION 8.10. Split-Priority Implementing Agreements 175
SECTION 8.11. No Other Duties 175
SECTION 8.12. Agents May File Proofs of Claim; Credit Bidding 176
SECTION 8.13. Collateral and Guaranty Matters 177
SECTION 8.14. Additional Secured Parties 179
SECTION 8.15. Certain ERISA Matters 179
SECTION 8.16. Recovery of Erroneous Payments 180
     
ARTICLE IX Miscellaneous 181
   
SECTION 9.01. Notices 181
SECTION 9.02. Waivers; Amendments 183
SECTION 9.03. Expenses; Indemnity; Damage Waiver 187
SECTION 9.04. Successors and Assigns 189
SECTION 9.05. Survival 195
SECTION 9.06. Integration; Effectiveness 196
SECTION 9.07. Severability 196
SECTION 9.08. Right of Setoff 196
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process 197
SECTION 9.10. WAIVER OF JURY TRIAL 197
SECTION 9.11. [Reserved] 198
SECTION 9.12. Headings 198
SECTION 9.13. Confidentiality 198
SECTION 9.14. Interest Rate Limitation 199
SECTION 9.15. Certain Intercreditor Agreements and Financing Order 199
SECTION 9.16. Cash Sweep 200
SECTION 9.17. USA Patriot Act 200
SECTION 9.18. Certain Permitted Intercreditor Arrangements 200
SECTION 9.19. Loan Modification Offers 202
SECTION 9.20. No Advisory or Fiduciary Responsibility 203
SECTION 9.21. Electronic Execution; Electronic Records 204
SECTION 9.22. Acknowledgement and Consent to Bail-In of Affected Financial Institutions 205
SECTION 9.23. Acknowledgement Regarding Any Supported QFCs 206

 

iv

 

 

ANNEXES:    
     
Annex I – Approved Budget
 
SCHEDULES:    
     
Schedule 1.01(a) - Excluded Subsidiaries
Schedule 1.01(b) - Existing Letters of Credit
Schedule 1.01(c) - Specified Prescription File Stores
Schedule 2.01 - Commitments and Applicable Percentage
Schedule 3.04 - Undisclosed Liabilities
Schedule 3.05(a)(1) - Properties
Schedule 3.05(a)(2) - Owned Real Property
Schedule 3.05(a)(3) - Ground-Leased Real Property
Schedule 3.05(c) - Stores, Warehouses and Distribution Centers
Schedule 3.06(a) - Litigation
Schedule 3.06(b) - Environmental Matters
Schedule 3.06(c) - Hazardous Materials
Schedule 3.12 - Subsidiaries
Schedule 3.13 - Insurance
Schedule 3.14 - Labor
Schedule 3.15 - Real Estate Matters
Schedule 5.20 - Chapter 11 Case Milestones
Schedule 5.24 - Post-Closing Obligations
Schedule 6.01(a)(xii) - Existing Indebtedness
Schedule 6.01(b) - Equity Issuances
Schedule 6.02(a)(xi) - Liens
Schedule 6.04 - Investments
Schedule 6.08(a) - Restricted Payments
Schedule 6.09 - Affiliate Transactions
Schedule 9.01 - Notices
     
EXHIBITS:   (form of)
     
Exhibit A-1 - Revolving Credit Note
Exhibit A-2 - FILO Note
Exhibit A-3 - Term Note
Exhibit B - Assignment and Acceptance Agreement
Exhibit C - Borrowing Base Certificate
Exhibit D - Borrowing/Interest Election Request
Exhibit E - Compliance Certificate
Exhibit F-1 – F-4 - U.S. Tax Compliance Certificates
Exhibit G - Interim Financing Order
Exhibit H - Cash Management Order
Exhibit I - Allocation of Proceeds of Elixir Monetization Events and Specified Elixir Sale
Exhibit J - Owned Property Master List

 

v

 

 

DEBTOR-IN-POSSESSION CREDIT AGREEMENT

 

This DEBTOR-IN-POSSESSION CREDIT AGREEMENT, dated as of October [●], 2023, is among RITE AID CORPORATION, a Delaware corporation (the “Borrower”), each lender from time to time party hereto (each a “Lender”, and collectively, the “Lenders”), and BANK OF AMERICA, N.A., as administrative agent (in such capacity, including any successor thereto, the “Administrative Agent”) and collateral agent (in such capacity, including any successor thereto, the “Collateral Agent”) for the Senior Loan Secured Parties (as hereinafter defined), with BofA SECURITIES, INC., WELLS FARGO BANK, NATIONAL ASSOCIATION, CAPITAL ONE, NATIONAL ASSOCIATION, BMO BANK N.A., FIFTH THIRD BANK, NATIONAL ASSOCIATION, MUFG BANK, LTD, PNC CAPITAL MARKETS LLC, TRUIST SECURITIES, INC. and ING CAPITAL LLC, as joint lead arrangers and joint bookrunners hereunder (in such capacities, the “Arrangers”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as co-syndication agent hereunder (in such capacity, the “Syndication Agent”), and CAPITAL ONE, NATIONAL ASSOCIATION, BMO BANK N.A., FIFTH THIRD BANK, NATIONAL ASSOCIATION, MUFG BANK, LTD, PNC BANK, NATIONAL ASSOCIATION, TRUIST BANK and ING CAPITAL LLC, as co-documentation agents hereunder (in such capacity, the “Co-Documentation Agents”).

 

PRELIMINARY STATEMENTS

 

A.            On October [●], 2023 (the “Petition Date”), the Borrower and the Subsidiary Loan Parties commenced cases under Chapter 11 of the Bankruptcy Code, 11 U.S.C. 101 et seq. (the “Bankruptcy Code”), case numbers [●] through [●] (collectively, the “Chapter 11 Case”) by filing voluntary petitions for relief under Chapter 11 with the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”).

 

B.             The Borrower and the other Loan Parties continue to operate their businesses and manage their properties as debtors and debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

 

C.             The Borrower has requested, and the Lenders have agreed, upon the terms and conditions set forth in this Agreement, to make available to the Borrower a senior secured credit facility in an aggregate principal amount not to exceed $3,250,000,000 consisting of (x) a $2,850,000,000 revolving credit facility, and (y) a $400,000,000 first-in last-out term loan facility in order to (a) repay the Pre-Petition Obligations as provided herein, (b) fund the Chapter 11 Case in accordance with the Approved Budget (subject to the Permitted Variance) and as provided herein, (c) make certain other payments on the Closing Date as more fully provided herein, and (d) provide working capital for the Borrower and the Subsidiary Loan Parties during the pendency of the Chapter 11 Case in accordance with the Approved Budget (subject to the Permitted Variance) and as provided herein.

 

D.             The Borrower and the Subsidiary Loan Parties desire to secure the Senior Obligations under the Senior Loan Documents by granting to the Senior Collateral Agent, on behalf of itself and the other Secured Parties, a security interest in and liens upon substantially all of their assets, whether now existing or hereafter acquired, in each instance as more fully set forth in the Senior Loan Documents and in the Financing Order.

 

1

 

 

E.             All Senior Loan Obligations of the Borrower and the Subsidiary Loan Parties to the Lenders and other Senior Secured Parties under this Agreement and under the other Senior Loan Documents shall be full recourse to each of the Borrower and the Subsidiary Loan Parties, secured by the Collateral Agent’s security interest in and liens on all or substantially all of the assets of the Borrower and the other Loan Parties included in the Collateral and entitled to super-priority administrative claim status under the Bankruptcy Code as provided herein and in the Financing Order.

 

F.             Accordingly, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

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

 

2025 7.500% Note Indenture” means the Indenture dated as of February 5, 2020, as supplemented prior to the date hereof, among the Borrower, the Subsidiary Loan Parties party thereto and The Bank of New York Mellon Trust Company, as trustee, relating to the 2025 7.500% Notes.

 

2026 8.000% Note Indenture” means the Indenture dated as of July 27, 2020, as supplemented prior to the date hereof, among the Borrower, the Subsidiary Loan Parties party thereto and The Bank of New York Mellon Trust Company, as trustee, relating to the 2026 8.000% Notes.

 

2027 7.70% Note Indenture” means the Indenture dated as of August 1, 1993, as supplemented prior to the date hereof, between the Borrower and U.S. Bank Trust National Association (as successor to Morgan Guaranty Trust Company of New York), as trustee, relating to the 2027 7.70% Notes.

 

2028 6.875% Note Indenture” means the Indenture dated as of December 21, 1998, as supplemented prior to the date hereof, between the Borrower and The Bank of New York Mellon Trust Company (as successor to Harris Trust and Savings Bank), as trustee, relating to the 2028 6.875% Notes.

 

ABL Availability” means, on any date of determination, (a) the ABL Loan Cap at such time minus (b) the Total ABL Outstandings at such time.

 

ABL Borrowing Base Amount” means an amount equal to the sum, without duplication, of the following:

 

(a)            the Accounts Receivable Advance Rate multiplied by the face amount of Eligible Accounts Receivable; plus

 

2

 

 

(b)            the Credit Card Receivable Advance Rate multiplied by the face amount of Eligible Credit Card Accounts Receivable; plus

 

(c)            the Pharmaceutical Inventory Advance Rate multiplied by the Eligible Pharmaceutical Inventory Value; plus

 

(d)            the Other Inventory Advance Rate multiplied by the Eligible Other Inventory Value; plus

 

(e)            the ABL Scripts Availability; minus

 

(f)             the FILO Push-Down Reserve; minus

 

(g)            the ABL Term Loan Push-Down Reserve; minus

 

(h)            the Elixir Proceeds Reserve; minus

 

(i)             the Carve Out Reserve; minus

 

(j)             any reserves established by the Administrative Agent, in accordance with Section 2.20(b), in the exercise of its commercially reasonable judgment to reflect Borrowing Base Factors.

 

provided, that, for purposes of determining the ABL Borrowing Base Amount at any date of determination, the amount set forth in clause (e) of this definition shall not exceed 32.5% of the ABL Borrowing Base Amount.

 

The ABL Borrowing Base Amount shall be computed and reported weekly with respect to Eligible Accounts Receivable, Eligible Inventory, Eligible Credit Card Accounts Receivable and Eligible Script Lists, in each case in accordance with Sections 2.20 and 5.01(f). The ABL Borrowing Base Amount at any time in effect shall be determined by reference to the Borrowing Base Certificate most recently delivered pursuant to Section 5.01(f), giving effect to reserves effected pursuant to Section 2.20(b) after the date of delivery thereof.

 

ABL Intercreditor Agreementmeans the Pari Passu Intercreditor Agreement, dated as of the Closing Date, by and among the Senior Collateral Agent and the ABL Term Loan Agent, as acknowledged by the Loan Parties, as may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

ABL License” means the irrevocable license granted by the Subsidiary Loan Parties to the Senior Collateral Agent for the benefit of the Senior Loan Secured Parties and the other Senior Secured Parties pursuant to Section 7.05 of the Senior Security Agreement.

 

ABL Loan Cap” means, at any time, an amount equal to the lesser of (a) the Total ABL Commitments and (b) the ABL Borrowing Base Amount.

 

ABL Priority Collateral” means all Collateral of the type that constitutes “ABL Priority Collateral” as defined in the Split-Priority Intercreditor Agreement. Notwithstanding the foregoing to the contrary, Collateral consisting of any Intellectual Property shall only be deemed ABL Priority Collateral until the occurrence of the Collateral Designation Date.  Thereafter, such Collateral consisting of any Intellectual Property shall be deemed to be Split-Lien Priority Collateral.

 

3

 

 

ABL Scripts Availability” means, at any time of determination of the ABL Borrowing Base Amount, the product of (a) Script Lists Advance Rate multiplied by (b) the Eligible Script Lists Value.

 

ABL Term Lenders” means those certain lenders and other financial institutions from time to time party to the ABL Term Loan Agreement as lenders.

 

ABL Term Loan Agent” means Bank of America, in its capacity as administrative agent and collateral agent under the ABL Term Loan Agreement and the other ABL Term Loan Documents, together with any of its successors or assigns in such capacities.

 

ABL Term Loan Agreement” means the Term Loan Agreement, dated as of the Closing Date, by and among the Loan Parties party thereto, the ABL Term Lenders, the ABL Term Loan Agent, and the other parties thereto, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

ABL Term Loan Borrowing Base Amount” means the “Borrowing Base Amount” as defined in the ABL Term Loan Agreement.

 

ABL Term Loan Documents” means, collectively, (a) the ABL Term Loan Agreement and (b) all agreements, documents and instruments at any time executed and/or delivered in connection therewith, each as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

ABL Term Loan Exclusive Collateral” means all “Term Loan Exclusive Collateral” as defined in the ABL Term Loan Agreement.

 

ABL Term Loan Exclusive Collateral Accounts” means one or more Deposit Accounts of the Borrower or a Subsidiary Loan Party, established at Bank of America, for the purpose (and solely for the purpose) of holding proceeds of ABL Term Loan Exclusive Collateral.

 

ABL Term Loan Obligations” means the “ Obligations” as defined in the ABL Term Loan Agreement.

 

ABL Term Loan Push-Down Reservemeans, at any time of determination, a reserve (established against the ABL Borrowing Base Amount) by the Administrative Agent at such time in an amount equal to the amount (if any) by which the aggregate outstanding principal amount of the ABL Term Loans exceeds the ABL Term Loan Borrowing Base Amount.

 

ABL Term Loans” means the “Loans” under and as defined in the ABL Term Loan Agreement.

 

4

 

 

ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

 

Accepting Lenders” shall have the meaning assigned to such term in Section 9.19(a).

 

Account” means (a) “accounts” as defined in the UCC, (b) all Payment Intangibles consisting of amounts owing from credit card and debit card issuers and processors and all rights under contracts relating to the creation or collection of such Payment Intangibles and (c) all rights to payment of a monetary obligation, whether or not earned by performance, (x) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (y) for services rendered or to be rendered, or (z) arising out of the use of a credit or charge card or information contained on or for use with the card. The term “Account” does not include (i) rights to payment evidenced by “chattel paper” or an “instrument,” (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, or (v) letter-of-credit rights or letters of credit.

 

Account Debtor” means an “account debtor” as such term is defined in the UCC, including a credit card or debit card issuer and a credit card or debit card processor.

 

Accounts Receivable Advance Rate” means the accounts receivable advance rate determined in accordance with Section 2.20(a).

 

Actual Cash Receipts” means, for any period of determination, the amount of all cash receipts actually received by the Loan Parties and their Subsidiaries (excluding, for the avoidance of doubt, any borrowings under this Agreement) from the operations of the Loan Parties and their Subsidiaries (including from any Asset Sales) during such period, which corresponds to the sum of (a) the cash receipts aggregated in the line items “Total Receipts” (or words of similar import) and “Script Sales” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) the cash receipts aggregated in the line item “Total Receipts” (or words of similar import) for such period in the “TWCF – PBM” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget and (c) the cash receipts aggregated in the line item “Total Receipts” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget.

 

Actual Net Cash Flow” means, the sum of (a) for any period of determination with respect to the Loan Parties and their Subsidiaries (other than, in each case, the Elixir Subsidiaries), the actual net cash flow of such Loan Parties and Subsidiaries for such period, which corresponds to the line item “Net Cash Flow” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) for any period of determination with respect to the Elixir Subsidiaries (other than Elixir Insurance Company), the actual net cash flow of the Elixir Subsidiaries (other than Elixir Insurance Company) for such period, which corresponds to the line item “Net Operating Cash Flow” (or words of similar import) for such period in the “TWCF– PBM” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget, and (c) for any period of determination with respect to the Elixir Subsidiaries, the actual net cash flow of Elixir Insurance Company for such period, which corresponds to the line item “Net Operating Cash Flow” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget.

 

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Actual Non-Operating Disbursement Amounts” means, for any period of determination, the amount of all non-operating disbursements actually paid by the Loan Parties and their Subsidiaries during such period, which corresponds to the disbursements described under the headings “Interest & Fees”, “Normal Course Professional Fees”, “Restructuring Professional Fees”, and “Other Non-Operating” (or words of similar import) for such period in the Approved Budget, all as determined in a manner consistent with the Approved Budget.

 

Actual Operating Disbursement Amounts” means, for any period of determination, the amount of all operating disbursements actually paid by the Loan Parties and their Subsidiaries during such period, which corresponds to the sum of (a) the disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) the disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “TWCF – PBM” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget, and (c) the disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget, all as determined in a manner consistent with the Approved Budget.

 

Actual Other Inventory Levels” means, as of any date of determination, the actual aggregate consolidated ledger Other Inventory levels of the Loan Parties as of such date, which corresponds to the budgeted consolidated ledger levels with respect to Other Inventory levels of the Loan Parties for such date set forth in the “Borrowing Base Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Other Inventory Balance” (or words of similar import), all as determined in a manner consistent with the Approved Budget.

 

Actual Other Inventory Receipts” means, for any period of determination, the aggregate amount of the value, determined at cost, of all Other Inventory actually received by the Loan Parties during such period, which corresponds to the Other Inventory receipts during such period set forth in the “Inventory Purchases Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “DSD Other & Warehouse Purchases” (or words of similar import), all as determined in a manner consistent with the Approved Budget.

 

Actual Pharmaceutical Inventory Levels” means, as of any date of determination, the actual aggregate consolidated ledger Pharmaceutical Inventory levels of the Loan Parties as of such date, which corresponds to the budgeted consolidated ledger levels with respect to Pharmaceutical Inventory levels of the Loan Parties for such date set forth in the “Borrowing Base Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Pharmacy Inventory Balance” (or words of similar import), all as determined in a manner consistent with the Approved Budget.

 

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Actual Pharmaceutical Inventory Receipts” means, for any period of determination, the aggregate amount of the value, determined at cost, of all Pharmaceutical Inventory actually received by the Loan Parties during such period, which corresponds to the Pharmaceutical Inventory receipts during such period set forth in the “Inventory Purchases Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Purchases [DSD McKesson]” (or words of similar import), all as determined in a manner consistent with the Approved Budget.

 

Additional Lender” means, at any time, any bank or other financial institution (other than any such bank or financial institution that is a Lender at such time) that agrees to provide any portion of any Incremental Facility pursuant to an Incremental Facility Agreement or Refinancing Indebtedness pursuant to a Refinancing Amendment, provided that each Additional Lender shall be subject to the approval of the Administrative Agent (such approval not to be unreasonably withheld) and the Borrower.

 

Additional Senior Debt” means any Indebtedness incurred by the Borrower (other than Indebtedness constituting Senior Loan Obligations) that is (x) Guaranteed by the Subsidiary Loan Parties pursuant to the Senior Subsidiary Guarantee Agreement (and not Guaranteed by any other Person) and (y) is secured by the Collateral on a pari passu basis (but without regard to control of remedies) with the Senior Loan Obligations pursuant to the Senior Security Agreement (and not secured by Liens on any other assets of the Borrower or any other Person (other than assets that, substantially concurrently with the incurrence of such Indebtedness, become Collateral on which a Lien is granted to the Senior Collateral Agent pursuant to the Senior Security Agreement and/or other Senior Collateral Documents to secure the Senior Loan Obligations)); provided, however, that (a) such Indebtedness is permitted to be incurred, secured and Guaranteed on such basis by the Senior Debt Documents, the Second Priority Debt Documents and the Split-Priority Debt Documents, and (b) the Representative for the holders of such Indebtedness shall have become party to and bound by the provisions of (i) the Senior Lien Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 5.02(c) thereof (and, if such Indebtedness will be the initial Additional Senior Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Senior Collateral Agent, the Administrative Agent and the Representative for such initial Additional Senior Debt shall have executed and delivered the Senior Lien Intercreditor Agreement) and (ii) each other Applicable Intercreditor Agreement then in effect, in accordance with the requirements thereof. Additional Senior Debt shall include any Registered Equivalent Notes and Guarantees thereof by the Subsidiary Loan Parties pursuant to the Senior Subsidiary Guarantee Agreement issued in exchange thereof. For the avoidance of doubt, (x) all Permitted First-Priority Debt shall constitute Additional Senior Debt, and (y) Split-Priority Term Loan Debt will not constitute Additional Senior Debt. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Additional Senior Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

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Additional Senior Debt Documents” means, with respect to any series, issue or class of Additional Senior Debt, the promissory notes, indentures, collateral documents and other operative agreements evidencing or governing such Indebtedness, including the Senior Collateral Documents executed in favor of the Additional Senior Debt Parties.

 

Additional Senior Debt Obligations” means, with respect to any series, issue or class of Additional Senior Debt, (a) all principal of, and interest payable with respect to, such Additional Senior Debt, (b) all other amounts payable to the related Additional Senior Debt Parties under the related Additional Senior Debt Documents (including in each case of clauses (a) and (b) above, any interest, fees and other amounts which accrue after the commencement of any case, proceeding or other action relating to a Bankruptcy Proceeding of the Borrower or any Subsidiary Loan Party, whether or not allowed or allowable, in whole or in part, as a claim in such Bankruptcy Proceeding) and (c) any renewals or extensions of the foregoing.

 

Additional Senior Debt Parties” means, with respect to any series, issue or class of Additional Senior Debt, the holders of such Indebtedness, any trustee or agent therefor under any related Additional Senior Debt Documents and the beneficiaries of each indemnification obligation undertaken by the Borrower or any Subsidiary Loan Party under any related Additional Senior Debt Documents, but shall not include the Loan Parties or any Subsidiary thereof (unless such Loan Party or such Subsidiary is a holder of such Indebtedness, a trustee or agent therefor or beneficiary of such an indemnification obligation).

 

Administrative Agent” shall have the meaning assigned to such term in the preamble to this Agreement.

 

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

 

Affected Class” shall have the meaning assigned to such term in Section 9.19(a).

 

Affected Financial Institution” means (a) any EEA Financial Institution or (b) any U.K. Financial Institution.

 

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

 

Agent Parties” has the meaning assigned to such term in Section 9.01(d).

 

Agents” means, collectively, the Administrative Agent, the Collateral Agent and the Senior Collateral Agent, in each case, in their respective capacities as such.

 

Agreement” means this Debtor-In-Possession Credit Agreement, as amended, amended and restated, restated, supplemented or otherwise modified and in effect from time to time.

 

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Alternate Base Rate” means, for any day, a fluctuating rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (c) Term SOFR plus 1.00%; and if the Alternate Base Rate as so determined shall be less than one percent, then the Alternate Base Rate shall be deemed to be one percent for purposes of this Agreement. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without regard to clause (c) of the first sentence of this definition until the circumstances giving rise to such circumstance no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or Term SOFR, as the case may be.

 

Annualized Transitioned Prescription File Amount” means, without duplication, with respect to any Specified Prescription File Store, as of any date of determination, an amount equal to (a) the aggregate number of Transitioned Prescription Files (if any) included as Eligible Script Lists during the twelve (12) fiscal months ended immediately prior to the closing of such Specified Prescription File Store multiplied by (b) solely to the extent that a period of 12 full fiscal months have not elapsed since the closure of any such Specified Prescription File Store, the Remaining Annualized Period multiplied by (c) the Applicable Retention Rate.

 

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries concerning or relating to bribery, corruption or money laundering (and including any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto), including the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010.

 

Applicable Credit Party” has the meaning set forth in Section 8.16.

 

Applicable Intercreditor Agreement” means, at any time of determination and solely to the extent then in effect, the ABL Intercreditor Agreement, the Junior Lien Intercreditor Agreement and/or the Split-Priority Intercreditor Agreement.

 

Applicable Percentage” means (a) in respect of the FILO Facility, with respect to any FILO Lender at any time, the percentage (carried out to the ninth decimal place) of the FILO Facility represented by (i) on or prior to the Closing Date, such FILO Lender’s FILO Commitment at such time and (ii) thereafter, the principal amount of such FILO Lender’s FILO Loans, (b) with respect to any Term Facility, with respect to any Term Lender at any time, the percentage (carried out to the ninth decimal place) of the Term Facility represented by, as applicable and as the context may require, (x) the principal amount of such Term Lender’s Term Loans, (y) Term Loans of any applicable Class, in each case, after giving effect to any Incremental Refinancing Term Loans made or to be made with respect to any Incremental Term Commitment, Loan Modification Term Loans made or to be made with respect to any Loan Modification Term Commitment and any Refinancing Term Loans made or to be made with respect to any Refinancing Term Commitment or (z) on or prior to the effectiveness of any Incremental Facility or Refinancing Amendment for all or a portion of the Term Facility, such Term Lender’s Incremental Term Commitment, Loan Modification Term Commitment or any Refinancing Term Commitment of any Class at such time, and (c) in respect of the Revolving Facility, with respect to any Revolving Lender at any time, the percentage (carried out to the ninth decimal place) of the Revolving Facility represented by such Revolving Lender’s Revolving Commitment or, as the context may require, Revolving Commitment of any applicable Class at such time, subject (in each case) to adjustment as provided herein. If the commitment of each Revolving Lender to make Revolving Loans, the obligation of the Issuing Banks to issue Letters of Credit and the obligation of the Swingline Lender to make Swingline Loans have been terminated or if the Total Revolving Commitments have expired, then the Applicable Percentage of each Revolving Lender in respect of the Revolving Facility or any Class of the Revolving Facility shall be determined based on the Applicable Percentage of such Revolving Lender in respect of the Revolving Facility most recently in effect (including, with respect to any such Class), giving effect to any subsequent assignments. The Applicable Percentage of each Lender in respect of each Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

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Applicable Rate” means, on any day:

 

(a)            with respect to the Revolving Facility, the Revolving Loans and Swingline Loans (other than any Revolving Loan under Other Revolving Commitments of any Revolving Commitment Series, a rate per annum equal to 2.25% in the case of any ABR Revolving Loan and 3.25% in the case of any Term SOFR Revolving Loan;

 

(b)            with respect to the FILO Facility and the FILO Loans, initially, a rate per annum equal to 4.25% in the case of any ABR FILO Loan and 5.25% in the case of any Term SOFR FILO Loan; provided that (i) to the extent (x) the FILO Loans shall have been prepaid with proceeds of a Specified Elixir Sale and/or Elixir Monetization Event by an aggregate amount of at least $100,000,000 (but less than $200,000,000) after the Closing Date and (y) the Script Lists Advance Rate for the FILO Borrowing Base Amount shall have been reduced by at least 500 basis points in accordance with this Agreement, on and as of the date the conditions set forth in the immediately foregoing clause (x) and (y) are satisfied, such rate per annum shall be reduced to a rate per annum equal to 4.00% in the case of any ABR FILO Loan and 5.00% in the case of any Term SOFR FILO Loan and (ii) to the extent (x) the FILO Loans shall have been prepaid with proceeds of a Specified Elixir Sale and/or Elixir Monetization Event by an aggregate amount of at least $200,000,000 after the Closing Date and (y) the Script Lists Advance Rate for the FILO Borrowing Base Amount shall have been reduced by at least 1,000 basis points in accordance with this Agreement, on and as of the date the conditions set forth in the immediately foregoing clause (x) and (y) are satisfied, such rate per annum shall be reduced to a rate per annum equal to 3.75% in the case of any ABR FILO Loan and 4.75% in the case of any Term SOFR FILO Loan;

 

(c)            with respect to the commitment fees payable pursuant to Section 2.12(a), a rate per annum equal to 0.50%; and

 

(d)            with respect to any (i) Term Loan, (ii) Revolving Loan under Other Revolving Commitments of any Revolving Commitment Series, or (iii) any commitment fees in respect of any of the foregoing, the “Applicable Rate” shall in each case be as set forth in the applicable Loan Modification Agreement, Refinancing Amendment, Loan Modification Agreement or Incremental Facility Amendment (as applicable) relating thereto.

 

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Applicable Retention Rate” means, with respect to the Transitioned Prescription Files of any Specified Prescription File Store, a percentage equal to the lesser of (a) 32.3% and (b) 0.75 multiplied by the Average Weekly Retention Rate; provided, however, that in the event that the Borrower shall not, at the reasonable request of the Administrative Agent, be able to provide reasonably detailed information as may be required to evidence the Average Weekly Retention Rate (or any subcomponent thereof), the Applicable Retention Rate with respect to any such Specified Prescription File Store (or the aggregate of all such Specified Prescription File Stores) shall be deemed to be zero (0).

 

Applicable Revolving Percentage” means with respect to any Revolving Lender at any time, such Revolving Lender’s Applicable Percentage in respect of the Revolving Facility (or, as the context may require, the Applicable Percentage in respect of the Revolving Facility reflecting a specified Class of Revolving Commitments) at such time.

 

Appropriate Lender” means, at any time, (a) with respect to any of the FILO Facility, Term Facility or the Revolving Facility, a Lender that has a Commitment with respect to such Facility or holds a FILO Loan, Term Loan or a Revolving Loan, respectively (or as applicable and as the context shall require, a Lender that has a Class of Commitments under such Facility or holds a specified Class of Loans) at such time, (b) with respect to the LC Sublimit, (i) each applicable Issuing Bank and (ii) if any Letters of Credit have been issued pursuant to Section 2.05, the Revolving Lenders and (c) with respect to the Swingline Sublimit, (i) the Swing Line Lender and (ii) if any Swing Line Loans are outstanding pursuant to Section 2.04, the Revolving Lenders.

 

Approved Budget” means the debtor-in-possession thirteen (13) week budget prepared by the Borrower, in the form of Annex I hereto, and initially furnished to the Administrative Agent on or before the Closing Date and which is approved by, and in form and substance satisfactory to, the Administrative Agent, in its sole discretion, as the same may or shall, as applicable, thereafter be updated, modified and/or supplemented from time to time as provided in Section 5.19. The initial Approved Budget shall commence as of the week of October 15, 2023. The Approved Budget shall include a weekly cash budget, including information on a line item basis as to (a) projected cash receipts, including from Asset Sales (corresponding to Budgeted Cash Receipts), (b) projected operating and non-operating disbursements (including separate line items for ordinary course operating expenses, capital expenditures, bankruptcy-related expenses (including a line item for professional fees and expenses budgeted for the Case Professionals on a weekly basis), and any other fees and expenses relating to the Senior Loan Documents) (corresponding to Budgeted Operating Disbursement Amounts and Budgeted Non-Operating Disbursement Amounts, as applicable), (c) projected net cash flow (corresponding to Budgeted Net Cash Flow), (d) projected Other Inventory and Pharmaceutical Inventory receipts (corresponding to Budgeted Other Inventory Receipts and Budgeted Pharmaceutical Inventory Receipts, respectively), (e) projected Other Inventory and Pharmaceutical Inventory levels (corresponding to Budgeted Other Inventory Levels and Budgeted Pharmaceutical Inventory Levels, respectively), and (f) projected total liquidity (including ABL Availability) and projected calculations of the ABL Borrowing Base Amount, the FILO Borrowing Base Amount and the ABL Term Loan Borrowing Base Amount. Notwithstanding anything to the contrary herein, the Approved Budget shall consist of files separately presenting the performance of (i) the Loan Parties and the Subsidiaries (in each other than any Elixir Subsidiaries), (ii) the Elixir Subsidiaries (other than Elixir Insurance Company) and (iii) Elixir Insurance Company (it being understood and agreed that the Administrative Agent may consent to the modification of such presentation in connection with any Specified Elixir Sale).

 

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Approved Budget Variance Report” means a weekly report, prepared by the Borrower (after consultation with the Company Financial Advisors) and provided by the Borrower to the Administrative Agent in accordance with Section 5.19(d), (a) showing by line item (i) Actual Cash Receipts, (ii) Actual Operating Disbursement Amounts, (iii) Actual Non-Operating Disbursement Amounts, (iv) Actual Net Cash Flow, (v) Actual Other Inventory Receipts, (vi) Actual Pharmaceutical Inventory Receipts, (vii) intercompany balances among Elixir Insurance Company and the Loan Parties, (viii) Actual Other Inventory Levels, (ix) Actual Pharmaceutical Inventory Levels, and (x) actual total liquidity (including ABL Availability) (in each case of clauses (i) through (vii) above, for the Prior Week, the most recent Cumulative Four-Week Period and the most recent Cumulative Period, and in each case of clauses (viii) through (x), as of the last day of the Prior Week), noting therein all variances, on a line-item basis, from amounts set forth for such period (or such date, as applicable) in the Approved Budget, and shall include or be accompanied by explanations for all material variances and (b) determining compliance with the covenants set forth in Section 5.19(c). The Approved Budget Variance Report shall be in a form, and shall contain supporting information, satisfactory to the Administrative Agent.

 

Approved Fund” means a CLO managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

Arrangers” as defined in the preamble of this Agreement.

 

Asset Sale” means any sale, lease, assignment, transfer or other disposition (including pursuant to a Sale and Leaseback Transaction) of any property or asset (whether now owned or hereafter acquired, whether in one transaction or a series of related transactions and whether by way of merger or otherwise) of the Borrower or any Subsidiary (including of any Equity Interest in a Subsidiary).

 

Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit B, or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

 

Attorney Costs” means the reasonable and documented fees, expenses and disbursements of the applicable law firm or external legal counsel.

 

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Attributable Debt” means, as to any particular Capital Lease or Sale and Leaseback Transaction under which the Borrower or any Subsidiary is at the time liable, as of any date as of which the amount thereof is to be determined (a) in the case of a transaction involving a Capital Lease, the amount as of such date of Capital Lease Obligations with respect thereto and (b) in the case of a Sale and Leaseback Transaction not involving a Capital Lease, the then present value of the minimum rental obligations under such Sale and Leaseback Transaction during the remaining term thereof (after giving effect to any extensions at the option of the lessor) computed by discounting the rental payments at the actual interest factor included in such payments or, if such interest factor cannot be readily determined, at the rate per annum that would be applicable to a Capital Lease of the Borrower having similar payment terms. The amount of any rental payment required to be made under any such Sale and Leaseback Transaction not involving a Capital Lease may exclude amounts required to be paid by the lessee on account of maintenance and repairs, insurance, taxes, assessments, utilities, operating and labor costs and similar charges, whether or not characterized as rent. Any determination of any rate implicit in the terms of a Capital Lease or a lease in a Sale and Leaseback Transaction not involving a Capital Lease made in accordance with generally accepted financial practices by the Borrower shall be binding and conclusive absent manifest error.

 

Auto-Extension Letter of Credit” has the meaning assigned to such term in Section 2.05(c).

 

Automatic Stay” shall mean the automatic stay imposed under Section 362 of the Bankruptcy Code.

 

Average Weekly Transitioned Prescription File Count” means, with respect to any Specified Prescription File Store, an amount equal to (a) the aggregate number of Transitioned Prescription Files (if any) included as Eligible Script Lists during the twelve (12) fiscal months ended immediately prior to the closing of such Specified Prescription File Store divided by (b) fifty-two (52).

 

Average Weekly Retention Rate” means, for any applicable period, with respect to the aggregate amount of Transitioned Prescription Files from any Specified Prescription File Store, the percentage derived by dividing (a) the average weekly number of Transitioned Prescription Files of such Specified Prescription File Store that are utilized by customers in another Store of a Subsidiary Loan Party (other than a Specified Prescription File Store) for such period by (b) the Average Weekly Transitioned Prescription File Count of such Specified Prescription File Store.

 

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, rule, regulation 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).

 

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Bank of America” means Bank of America, N.A. and its successors.

 

Bank of America Concentration Account” shall have the meaning assigned to such term in the Senior Security Agreement.

 

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

 

Bankruptcy Court” shall have the meaning assigned to such term in the preliminary statements hereto.

 

Bankruptcy Proceeding” means any proceeding under any Debtor Relief Law.

 

Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as in effect from time to time and applicable to the Chapter 11 Case.

 

Beneficial Ownership Certificationmeans a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.

 

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

 

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

 

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

 

BofA Securities” means BofA Securities, Inc., and its Subsidiaries and Affiliates.

 

Borrower” shall have the meaning assigned to such term in the preamble to this Agreement.

 

Borrower Materials” has the meaning specified in Section 5.01.

 

Borrowing” means (a) a Loan of the same Class and Type, made, converted or continued on the same date and, in the case of a Term SOFR Loan, as to which a single Interest Period is in effect or (b) a Swingline Loan.

 

Borrowing Base Certificate” means a certificate, substantially in the form of Exhibit C or in such other form as the Administrative Agent may approve, which shall be certified as complete and correct by a Financial Officer of the Borrower.

 

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Borrowing Base Factors” means (a) landlord’s liens affecting Eligible Inventory, (b) factors affecting the saleability or collectability of Eligible Accounts Receivable, Eligible Credit Card Accounts Receivable, Eligible Script Lists or Eligible Inventory at retail or in liquidation, (c) factors affecting the market value of Eligible Inventory, Eligible Accounts Receivable, Eligible Credit Card Accounts Receivable or Eligible Script Lists, (d) other impediments to the Senior Collateral Agent’s ability to realize upon the Eligible Accounts Receivable, the Eligible Credit Card Accounts Receivable, the Eligible Inventory or the Eligible Script Lists, (e) other factors affecting the credit value to be afforded the Eligible Accounts Receivable, Eligible Credit Card Accounts Receivables, the Eligible Inventory and the Eligible Script Lists, and (f) such other factors as the Administrative Agent from time to time determines in its commercially reasonable discretion as being appropriate to reflect criteria, events, conditions, contingencies or risks that adversely affect any component of the ABL Borrowing Base Amount, FILO Borrowing Base Amount or to reflect that a Default or an Event of Default then exists. Without limiting the generality of the foregoing, such Borrowing Base Factors may include, in the Administrative Agent’s commercially reasonable judgment acting in good faith (but are not limited to): (i) rent; (ii) customs duties, and other costs to release inventory that is being imported into the United States; (iii) outstanding taxes and other governmental charges, including ad valorem, real estate, personal property, sales and other taxes that may have priority over (or that is pari passu in priority to) the interests of the Senior Collateral Agent in the Collateral; (iv) if a Default or an Event of Default then exists, salaries, wages and benefits due to employees of the Borrower or any Subsidiary, (v) customer credit liabilities (including in respect of customer deposits, gift cards, merchandise credit and loyalty rewards programs), (vi) Senior Loan Bank Product Liabilities, (vii) warehousemen’s or bailee’s charges and other Permitted Encumbrances which may have priority over (or that is pari passu in priority to) the interests of the Senior Collateral Agent in the Collateral (other than (x) the senior Liens of the holders of the Existing Split-Priority Indebtedness (or their debt representative) on any Split-Lien Priority Collateral that secures the Existing Split-Priority Indebtedness or (y) the pari passu Liens of the ABL Term Loan Agent on any Collateral that secures the ABL Term Loan Obligations) and (viii) any administrative claims and priority claims in the Chapter 11 Case.

 

Borrowing Request” means a notice of Borrowing pursuant to Section 2.03, which shall be substantially in the form of Exhibit D or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent) appropriately completed and signed by a Responsible Officer of the Borrower.

 

BRG” means Berkeley Research Group, LLC.

 

Budgeted Cash Receipts” means, for any period of determination, an amount equal to the sum of (a) the budgeted cash receipts aggregated in the line items “Total Receipts” (or words of similar import) and “Script Sales” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) the budgeted cash receipts aggregated in the line item “Total Receipts” (or words of similar import) for such period in the “TWCF – PBM” tab of the “Elixir TWCF” portion of the Approved Budget, and (c) the budgeted cash receipts aggregated in the line item “Total Receipts” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget.

 

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Budgeted Net Cash Flow” means the sum of (a) for any period of determination with respect to the Loan Parties and their Subsidiaries (other than, in each case, the Elixir Subsidiaries), an amount equal to the budgeted net cash flow shown on the line item “Net Cash Flow” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) for any period of determination with respect to the Elixir Subsidiaries, the budgeted net cash flow of the Elixir Subsidiaries (other than Elixir Insurance Company) for such period, which corresponds to the line item “Net Operating Cash Flow” (or words of similar import) for such period in the “TWCF – PBM” tab of the “Elixir TWCF” portion of the Approved Budget, and (c) for any period of determination with respect to the Elixir Subsidiaries, the budgeted net cash flow of Elixir Insurance Company for such period, which corresponds to the line item “Net Operating Cash Flow” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget.

 

Budgeted Non-Operating Disbursement Amounts” means, for any period of determination, an amount equal to the sum of the budgeted non-operating disbursements described under the headings “Interest & Fees”, “Normal Course Professional Fees”, “Restructuring Professional Fees”, and “Other Non-Operating” (or words of similar import) for such period in the Approved Budget.

 

Budgeted Operating Disbursement Amounts” means, for any period of determination, an amount equal to the sum of (a) the budgeted operating disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “WCF” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget, (b) the budgeted operating disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “TWCF – PBM” tab of the “Elixir TWCF” portion of the Approved Budget, and (c) the budgeted operating disbursements aggregated in the line item “Total Operating Disbursements” (or words of similar import) for such period in the “TWCF – EIC” tab of the “Elixir TWCF” portion of the Approved Budget.

 

Budgeted Other Inventory Levels” means, as of any date of determination, the budgeted aggregate consolidated Other Inventory levels of the Loan Parties as of such date, as set forth in the “Borrowing Base Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Other Inventory Balance” (or words of similar import).

 

Budgeted Other Inventory Receipts” means, for any period of determination, the budgeted amount of the value, determined at cost, of all Other Inventory to be received by the Loan Parties during such period, as set forth in the “Inventory Purchases Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “DSD Other & Warehouse Purchases” (or words of similar import).

 

Budgeted Pharmaceutical Inventory Levels” means, as of any date of determination, the budgeted aggregate consolidated Pharmaceutical Inventory levels of the Loan Parties as of such date, as set forth in the “Borrowing Base Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Pharmacy Inventory Balance” (or words of similar import).

 

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Budgeted Pharmaceutical Inventory Receipts” means, for any period of determination, the budgeted amount of the value, determined at cost, of all Pharmaceutical Inventory to be received by the Loan Parties during such period, as set forth in the “Inventory Purchases Summary” tab of the “Retail & Corp Bank TWCF” portion of the Approved Budget opposite the heading “Purchases [DSD McKesson]” (or words of similar import).

 

Business Acquisition” means (a) an Investment by the Borrower or any of the Subsidiaries in any other Person (including an Investment by way of acquisition of debt or equity securities of any other Person) pursuant to which such Person shall become a Subsidiary or shall be merged into or consolidated with the Borrower or any of the Subsidiaries or (b) an acquisition by the Borrower or any of the Subsidiaries of the property and assets of any Person (other than the Borrower or any of the Subsidiaries) that constitute substantially all of the assets of such Person or any division or other business unit of such Person.

 

Business Day” means any day other than a Saturday, Sunday or day on which commercial banks in New York City or Boston, Massachusetts are authorized or required by law to close.

 

Capital Lease” means any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which, in accordance with GAAP, should be capitalized on the lessee’s balance sheet; provided, that notwithstanding the foregoing, only those leases (assuming for purposes hereof that such leases were in existence prior to giving effect to the adoption of ASU No. 2016-02 “Leases (Topic 842)” and ASU No. 2018-11 “Leases (Topic 842)”) that would have constituted Capitalized Leases or financing leases in conformity with GAAP as in effect prior to giving effect to the adoption of ASU No. 2016-02 “Leases (Topic 842)” and ASU No. 2018-11 “Leases (Topic 842)”, shall be considered Capitalized Leases or financing leases hereunder, and all calculations and deliverables under this Agreement or any other Senior Loan Document shall be made or delivered, as applicable, in accordance therewith (other than the financial statements delivered pursuant to Section 5.01 of this Agreement).

 

Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any Capital Lease, which obligations should be classified and accounted for as Capital Leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

Carve Out” has the meaning assigned to the term “Carve Out” in the Financing Order.

 

Carve Out Reserve” means the “Carve Out Borrowing Base Reserve” (as defined in the Financing Order), a reserve established (against the ABL Borrowing Base Amount) by the Administrative Agent in respect of the Carve Out in accordance with the Financing Order.

 

Carve Out Trigger Notice” has the meaning assigned to such term in the Financing Order.

 

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Case Professionals” means the Loan Parties’ and any Statutory Committee’s professionals, including the Company Financial Advisors, retained by any of them by final order of the Bankruptcy Court (which order has not been reversed, vacated or stayed unless such stay is no longer effective) under Section 327, 330 or 1103(a) of the Bankruptcy Code.

 

Cash Collateralize” means, to pledge and deposit with or deliver to the Collateral Agent, for the benefit of one or more of the Issuing Banks or Swingline Lender (as applicable) and the Lenders, as collateral for the Senior Obligations in respect of Letters of Credit, Senior Loan Obligations in respect of Swingline Loans, or obligations of Lenders to fund participations in respect of Senior Loan Obligations in respect of Letters of Credit and/or Senior Loan Obligations in respect of Swingline Loans (as the context may require), cash or deposit account balances or, if the Collateral Agent, the applicable Issuing Bank or Swingline Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to (x) the Collateral Agent and (y) the applicable Issuing Bank or the Swingline Lender. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such Cash Collateral and other credit support.

 

Cash Management Order” means the order of the Bankruptcy Court entered in the Chapter 11 Case, substantially in the form of Exhibit H and/or otherwise in form and satisfactory to the Loan Parties and the Administrative Agent, together with all extensions, modifications and amendments that are in form and substance acceptable to the Loan Parties and the Administrative Agent, which, among other matters, authorizes the Loan Parties to use their cash management system and treasury arrangements.

 

Cash Management System” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Cash Sweep Period” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Casualty/Condemnation” means any event that gives rise to Casualty/ Condemnation Proceeds.

 

Casualty/Condemnation Proceeds” means:

 

(a)            any insurance proceeds under any insurance policies or otherwise with respect to any casualty or other insured damage to any properties or assets of the Borrower or the Subsidiaries; and

 

(b)            any proceeds received by the Borrower or any Subsidiary in connection with any action or proceeding for the taking of any properties or assets of the Borrower or the Subsidiaries, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, by reason of any similar public improvement or condemnation proceeding;

 

minus, in each case (i) any fees, commissions and expenses (including the costs of adjustment and condemnation proceedings) and other costs paid or incurred by the Borrower or any Subsidiary in connection therewith, and (ii) the amount of any Indebtedness (or Attributable Debt), other than the Senior Obligations, together with premium or penalty, if any, and interest thereon (or comparable obligations in respect of Attributable Debt), that is secured by a Lien on (or if Attributable Debt, the lease of) the properties or assets in question with priority (with respect to such properties or assets) over the Senior Lien and any applicable Lien of the ABL Term Loan Agent created under the ABL Term Loan Documents, any Split-Priority Lien, and/or any Second Priority Lien, that is, subject to the terms of the Financing Order, required to be repaid as a result of the receipt by the Borrower or a Subsidiary of such payments or proceeds.

 

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Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934, as amended, and the rules of the SEC thereunder as in effect on the Closing Date) of 40% or more of the outstanding shares of common stock of the Borrower; (b) at the end of any period of 12 consecutive calendar months, the occupation of a majority of the seats on the board of directors of the Borrower by Persons who were not members of the board of directors of the Borrower on the first day of such period (other than any new directors whose election or appointment by such board of directors or whose nomination for election by the stockholders of the Borrower was approved by a vote of not less than three-fourths of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved); or (c) the occurrence of a “Change of Control”, as defined in any indenture or other agreement that governs the terms of any Material Indebtedness.

 

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

 

Chapter 11 Case” shall have the meaning assigned to such term in the preliminary statements hereto.

 

Chapter 11 Case Milestones” shall have the meaning assigned to such term in Section 5.20.

 

Charges” has the meaning assigned to such term in Section 9.14.

 

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Class” shall mean, (a) when used in respect of any Loan or Borrowing, whether such Loan or the Loans comprising such Borrowing are FILO Loans, Revolving Loans (other than any Revolving Loan under Other Revolving Commitments of any Revolving Commitment Series), Revolving Loans under any Other Revolving Commitments of a given Revolving Commitment Series, Refinancing Term Loans or Incremental Refinancing Term Loans; and (b) when used in respect of any Commitment, (i) whether such Commitment is in respect of a Commitment to make FILO Loans, (ii) whether such Commitment is a Revolving Commitment (other than any Other Revolving Commitment) or an Other Revolving Commitment of a given Revolving Commitment Series and (iii) whether such Commitment is an Incremental Term Commitment, Loan Modification Term Commitment or Refinancing Term Commitment, it being understood and agreed that any Incremental Term Commitment, Loan Modification Term Commitment, Refinancing Term Commitment or any Revolving Commitment Series that have different terms and conditions (together with the Commitments in respect thereof) from any Class of existing Incremental Term Commitments, existing Loan Modification Term Commitments, existing Refinancing Term Commitments or any existing Revolving Commitments Series, respectively, as applicable, shall be construed (together with the Loans thereunder) to be in separate and distinct Classes.

 

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

 

Closing Date” means October [●], 2023.

 

CME” means CME Group Benchmark Administration Limited.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Collateral” means all of the “Collateral” and “Senior Collateral” or other similar term referred to in the Senior Collateral Documents and all of the other property of the Loan Parties that is or is intended under the terms of the Senior Collateral Documents to be subject to Liens in favor of the Senior Collateral Agent for the benefit of the Senior Loan Secured Parties and the other Senior Secured Parties; provided that, without limiting the foregoing, (a) all of the property constituting (i) Second Priority Collateral, (ii) Split-Lien Collateral and/or (iii) “Collateral” (as defined in the ABL Term Loan Agreement), other than any ABL Term Loan Exclusive Collateral, shall, in each case, be subject to Liens in favor of the Senior Collateral Agent for the benefit of the Senior Loan Secured Parties and the other Senior Secured Parties and (b) such term shall also include all “DIP Shared Collateral” under and as defined in the Financing Order.  For the avoidance of any doubt, the term “Collateral” shall not include any ABL Term Loan Exclusive Collateral.

 

Collateral Agent” shall have the meaning assigned to such term in the preamble to this Agreement.

 

Collateral and Guarantee Requirement” means the requirement that:

 

(a)            the Collateral Agent shall have received from the Borrower and each Subsidiary Loan Party either (i) a counterpart of, or a supplement to, each Senior Collateral Document duly executed and delivered on behalf of such Loan Party or (ii) in the case of any Person that becomes a Subsidiary Loan Party after the Closing Date, a supplement to each applicable Senior Collateral Document, in the form specified therein, duly executed and delivered on behalf of such Subsidiary Loan Party;

 

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(b)            (i) the Administrative Agent shall be satisfied that, subject to the Financing Order and terms thereof, the Senior Collateral Documents (including the Financing Order) shall be effective to create in favor of the Collateral Agent a legal, valid and enforceable security interest and Lien upon the Collateral, with the priority set forth in the Financing Order, (ii) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Agents to be filed, registered or recorded to create the Liens intended to be created by the Senior Collateral Documents and perfect such Liens to the extent required by, and with the priority required by, this Agreement and the Senior Collateral Documents (including the Financing Order), shall have been filed, registered or recorded or delivered to the Senior Collateral Agent for filing, registration or recording, and (iii) the Agents shall have been provided with all authorizations, consents and approvals from each Loan Party, Governmental Authority and other Person reasonably requested by it to file, record or register all documents and instruments referred to in clause (b)(ii) of this definition; and

 

(c)            each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Senior Collateral Documents to which it is a party and the granting by it of the Liens thereunder.

 

Collateral Designation Date” means the date that each of the following conditions shall be first satisfied: (a) no Default or Event of Default shall have occurred and is continuing or would result from the designation of Intellectual Property as Split-Lien Priority Collateral; (b) the Borrower shall have repaid in full in cash all FILO Loans and other Senior Loan Obligations in respect of the FILO Facility; (c) all FILO Commitments shall have been terminated; (d) the Borrower shall have submitted a certificate of a Responsible Officer of the Borrower (i) designating Intellectual Property owned by the Subsidiary Loan Parties which constitutes Collateral as Split-Lien Priority Collateral and (ii) certifying that the condition set forth in clause (a) shall be satisfied at the time of such designation (after giving effect to such designation and the incurrence of any Indebtedness and other related transactions in connection therewith); provided, however, that notwithstanding such designation, (A) all such Collateral shall be expressly subject to the ABL License, and (B) such Intellectual Property shall continue to constitute Collateral securing the Senior Obligations, with the priority required by each Applicable Intercreditor Agreement.

 

Combined Borrowing Base Amount” means, at any time, an amount equal to the sum of (a) the ABL Borrowing Base Amount, plus (b) the FILO Borrowing Base Amount.

 

Combined Loan Cap” means, at any time, an amount equal to the sum of (a) the lesser of (i) the Total ABL Commitments at such time and (ii) the ABL Borrowing Base Amount at such time (calculated without giving effect to the FILO Push-Down Reserve), plus (b) lesser of (i) the FILO Facility at such time and (ii) the FILO Borrowing Base Amount at such time.

 

Commitment” means the Revolving Commitments (other than any Other Revolving Commitment), an Other Revolving Commitment of a given Revolving Commitment Series, the FILO Commitments, an Incremental Term Commitment, a Loan Modification Term Commitment and/or the Refinancing Term Commitments, or any combination thereof (as the context requires).

 

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Communication” means this Agreement, any Senior Loan Document and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to any Senior Loan Document.

 

Company Financial Advisors” means (a) Alvarez & Marsal North America, LLC, as financial and restructuring advisor to the Loan Parties, or any other financial/restructuring advisor reasonably acceptable to the Administrative Agent and (b) Guggenheim Securities, LLC, as investment banker to the Loan Parties, or any other investment banker reasonably acceptable to the Administrative Agent.

 

Compliance Certificate” means a certificate, substantially in the form of Exhibit E or in such other form as the Administrative Agent may approve, which shall be certified as complete and correct by a Financial Officer of the Borrower.

 

Conforming Changes” means, with respect to the use, administration of or any conventions associated with SOFR or any proposed Successor Rate or Term SOFR, as applicable, any conforming changes to the definitions of “Alternate Base Rate”, “SOFR”, “Term SOFR” and “Interest Period”, timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definitions of “Business Day” and “U.S. Government Securities Business Day”, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods) as may be appropriate, in the reasonable discretion of the Administrative Agent, to reflect the adoption and implementation of such applicable rate(s) and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary, after consultation with the Borrower, in connection with the administration of this Agreement or any other Senior Loan Document); provided that, notwithstanding anything herein to the contrary, no “Conforming Changes” shall result in any material effect on the timing or amount of payments or borrowings.

 

Consolidated Subsidiary” means, with respect to any Person, at any date, any Subsidiary or other entity the accounts of which would, in accordance with GAAP, be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date.

 

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

 

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Convertible Debt” means any debt security of the Borrower issued in the capital markets which, by its terms, may be converted or exchanged, in whole or part, at the option of the holder thereof into common Equity Interests of the Borrower.

 

Covered Party” has the meaning assigned to such term in Section 9.23(a).

 

Credit Card Accounts Receivable” means any Account due to any Subsidiary Loan Party from a credit card or debit card issuer or processor arising from purchases made on the following credit cards or debit cards: Visa, MasterCard, American Express, Diners Club, Discover, JCB, Carte Blanche and such other credit cards or debit cards as the Administrative Agent shall approve in its commercially reasonable judgment from time to time, in each case which have been earned by performance by such Subsidiary Loan Party but not yet paid to such Subsidiary Loan Party by the credit card or debit card issuer or the credit card or debit card processor, as applicable.

 

Credit Card Receivable Advance Rate” means the accounts receivable advance rate determined in accordance with Section 2.20(a).

 

Credit Extension Conditions” means, in relation to any determination thereof at any time, the requirement that:

 

(a)            Total Outstandings at such time shall not exceed the Combined Loan Cap at such time (other than as a result of any Protective Advance constituting an Overadvance);

 

(b)            Total ABL Outstandings at such time shall not exceed the ABL Loan Cap at such time (other than as a result of any Protective Advance constituting an Overadvance);

 

(c)            Total Revolving Outstandings at such time shall not exceed the Total Revolving Commitments at such time;

 

(d)            Revolving Exposure of any Lender (other than the Revolving Lender acting as the Swingline Lender) at such time shall not exceed the Revolving Commitment of such Lender at such time;

 

(e)            Total FILO Outstandings at such time shall not exceed the FILO Borrowing Base at such time, except to the extent a FILO Push-Down Reserve has been established in the amount of such excess;

 

(f)             LC Exposure of all Revolving Lenders at such time shall not exceed the LC Sublimit; and

 

(g)            Swingline Exposure of all Revolving Lenders at such time shall not exceed the Swingline Sublimit.

 

Cumulative Four-Week Period” means, as of any date of determination thereof, the four-week period up to and through the Saturday of the most recent week then ended, or if a four-week period has not then elapsed from the Petition Date, such shorter period since the Petition Date through the Saturday of the most recent week then ended.

 

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Cumulative Period” means, as of any date of determination thereof, the period from the Petition Date through the Saturday of the most recent week ended.

 

Daily Simple SOFR” with respect to any applicable determination date means the SOFR published on such date by the SOFR Administrator on the SOFR Administrator’s Website.

 

Debtor Relief Laws” means the Bankruptcy Code, 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 event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

Defaulting Lender” means, subject to Section 2.22(b), any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund all or any portion of its Loans unless such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith 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 Administrative Agent, any Issuing Bank, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans), (b) has notified the Borrower, the Administrative Agent, any Issuing Bank or the Swingline Lender in writing that it does not intend or expect to comply with its funding obligations hereunder or generally under other agreements in which it commits to extend credit, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith 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 Business Days after written request by the Administrative Agent, any Issuing Bank or the Borrower made in good faith, to provide a certification from an authorized officer of such Lender in writing to the Administrative Agent and the Borrower that it will comply with its obligations (and is financially able to meet such obligations) hereunder to fund prospective Loans and participations in outstanding Letters of Credit and Swingline Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written certification by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has (i) become the subject of a Bankruptcy Proceeding, (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 Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity (in each case of clause (i) or (ii), other than pursuant to an Undisclosed Administration) or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.22(b)) upon delivery of written notice of such determination to the Borrower, each Issuing Bank, the Swingline Lender and each Lender.

 

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Deposit Account” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Disqualified Institution” means:

 

(a)            any Person that is a competitor of the Borrower and identified by legal name by the Borrower in good faith in writing to the Administrative Agent from time to time after the Closing Date; and

 

(b)            any Affiliate of any Person described in clause (a) that is readily identifiable as such solely on the basis of its names (other than, solely in the case of Affiliates of any Person described in the foregoing clause (a), any such Affiliate that is a bank, financial institution or debt fund that regularly invest in commercial loans or similar extensions of credit in the ordinary course of business and for which no personnel involved with the relevant competitor make investment decisions);

 

provided that in no event shall any update to the list of Disqualified Institutions (i) be effective prior to two (2) Business Days after receipt thereof by the Administrative Agent or (ii) apply retroactively to disqualify any Persons that have previously acquired an assignment or participation interest under this Agreement or that is party to a pending trade; provided, however, that such Persons shall be prohibited from acquiring any additional assignment or participation interest under this Agreement following the effectiveness of such Person’s designation as a Disqualified Institution.

 

Disqualified Preferred Stock” means Preferred Stock of the Borrower that is not Qualified Preferred Stock.

 

dollars” and “$” each refer to lawful money of the United States of America.

 

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

 

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.

 

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

 

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

 

Electronic Copy” shall have the meaning set forth in Section 9.21.

 

Electronic Record” and “Electronic Signature” have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.

 

Eligible Accounts Receivable” means, at any date of determination, all Accounts (other than Credit Card Accounts Receivable) of the Subsidiary Loan Parties that satisfy at the time of creation and continue to meet the same at the time of such determination the usual and customary eligibility criteria established from time to time by the Administrative Agent (after consultation with the Borrower) in its commercially reasonable judgment. On the Closing Date, those criteria are:

 

(a)            such Account constitutes an “Account” within the meaning of the UCC;

 

(b)            all payments on such Account are by the terms of such Account due not later than 90 days after the date of service (i.e., the transaction date) and are otherwise on terms that are normal and customary in the business of the Borrower and the Subsidiaries;

 

(c)            such Account has been billed and has not remained unpaid for more than 120 days following the date of service;

 

(d)            such Account is denominated in dollars;

 

(e)            such Account arose from a completed, outright and lawful sale of goods or the completed performance of services by the applicable Subsidiary Loan Party and accepted by the applicable Account Debtor, and the amount of such Account has been properly recognized as revenue on the books of the applicable Subsidiary Loan Party;

 

(f)             such Account is owned solely by a Subsidiary Loan Party;

 

(g)            the proceeds of such Account are payable solely to a Deposit Account which (i) is under the control of the Senior Collateral Agent and (ii) has not been released or transferred in accordance with Section 5.16 or otherwise;

 

(h)            such Account arose in the ordinary course of business of the applicable Subsidiary Loan Party;

 

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(i)             not more than 50% of the aggregate amount of Accounts from the same Account Debtor and any Affiliates thereof remain unpaid for more than 120 days following the date of service;

 

(j)             such Account (i) does not arise under any (x) Medicare program or (y) any Medicaid program of any State which may limit recovery upon any such Account upon any Bankruptcy Proceeding related to a Subsidiary Loan Party (including Hawaii, Illinois, Minnesota, Montana, New Mexico and Ohio) and (ii) is not due from any Governmental Authority (other than from any Medicaid program of any State, except to the extent excluded pursuant to clause (j)(y) above);

 

(k)            to the knowledge of the Borrower and the Subsidiaries, no event of death, bankruptcy, insolvency or inability to pay creditors generally of the Account Debtor of such Account has occurred, and no notice thereof has been received;

 

(l)             payment of such Account is not being disputed by the Account Debtor thereof and is not subject to any material bona fide claim, counterclaim, offset or chargeback;

 

(m)           such Account complies in all material respects with the requirements of all applicable laws and regulations, whether Federal, state or local, including the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;

 

(n)            with respect to such Account, the Account Debtor (i) is organized in the United States (or, if such Account Debtor is not organized in the United States, such Account is supported by a letter of credit approved by the Administrative Agent in favor of the applicable Subsidiary Loan Party), and (ii) is not an Affiliate or Subsidiary or an Affiliate of any of the Loan Parties;

 

(o)            such Account (i) is subject to a perfected first-priority security interest in favor of the Senior Collateral Agent pursuant to the Senior Collateral Documents (subject to any Permitted Encumbrances; provided that the Administrative Agent shall have established appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances ranking senior to or pari passu with the Liens of the Senior Collateral Agent, in an amount not to exceed the claims secured by such Permitted Encumbrances) and (ii) is not subject to any other Lien (other than (x) any Lien created pursuant to the Senior Debt Documents, the Pre-Petition Senior Debt Documents, the ABL Term Loan Documents, the Split-Priority Debt Documents or the Second Priority Debt Documents or (y) Permitted Encumbrances (provided that the Administrative Agent may establish appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances, in an amount not to exceed the claims secured by such Permitted Encumbrances));

 

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(p)            with respect to any such Account for an amount greater than $5,000,000, the Account Debtor has not been disapproved by the Required Lenders (based, on the Required Lenders’ reasonable judgment, upon the creditworthiness of such Account Debtor);

 

(q)            the representations and warranties contained in the Senior Loan Documents with respect to such Account are true and correct in all material respects;

 

(r)             such Account does not consist of amounts due from vendors as rebates or allowances or reflect finance charges;

 

(s)            such Account is not due from an Account Debtor which is the subject of a Bankruptcy Proceeding or that is a Sanctioned Person; and

 

(t)             such Account is in full force and effect and constitutes a legal, valid and binding obligation of the Account Debtor, enforceable against such Account Debtor in accordance with its terms and the applicable Subsidiary Loan Party’s right to receive payment in respect of such Account is not contingent upon the fulfillment of any condition whatsoever.

 

Eligible Credit Card Accounts Receivable” means, at any date of determination, any Credit Card Account Receivable that (i) has been earned and represents the bona fide amounts due to a Subsidiary Loan Party from a credit card or debit card processor and/or credit card or debit card issuer, and in each case originated in the ordinary course of business of the applicable Subsidiary Loan Party and (ii) is not excluded as an Eligible Credit Card Accounts Receivable pursuant to any of clauses (a) through (j) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Accounts Receivable, a Credit Card Account Receivable shall indicate no Person other than a Subsidiary Loan Party as payee or remittance party. Eligible Credit Card Accounts Receivable shall not include any Credit Card Account Receivable if:

 

(a)            such Credit Card Account Receivable is not owned by a Subsidiary Loan Party or such Subsidiary Loan Party does not have good or marketable title to such Credit Card Account Receivable;

 

(b)            such Credit Card Account Receivable (i) does not constitute an “Account” (as defined in the UCC), or (ii) does not constitute a “Payment Intangible” (as defined in the UCC);

 

(c)            such Credit Card Account Receivable has been outstanding more than five Business Days;

 

(d)            the credit card or debit card issuer or credit card or debit card processor of the applicable credit card or debit card with respect to such Credit Card Account Receivable is the subject of any Bankruptcy Proceedings or is a Sanctioned Person;

 

(e)            such Credit Card Account Receivable is not a valid, legally enforceable obligation of the applicable credit card or debit card issuer with respect thereto;

 

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(f)             such Credit Card Account Receivable (i) is not subject to a perfected first-priority security interest in favor of the Senior Collateral Agent pursuant to the Senior Collateral Documents (subject to any Permitted Encumbrances; provided that the Administrative Agent shall have established appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances ranking senior to or pari passu with the Liens of the Senior Collateral Agent, in an amount not to exceed the claims secured by such Permitted Encumbrances), or (ii) is subject to any Lien whatsoever (other than (x) any Lien created pursuant to the Senior Debt Documents, the Pre-Petition Senior Debt Documents, the ABL Term Loan Documents, the Split-Priority Debt Documents or the Second Priority Debt Documents or (y) Permitted Encumbrances (provided that the Administrative Agent may establish appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances, in an amount not to exceed the claims secured by such Permitted Encumbrances));

 

(g)            such Credit Card Account Receivable does not conform in all material respects to all representations, warranties or other provisions in the Senior Loan Documents or in the credit card or debit card agreements relating to such Credit Card Account Receivable or any default exists under the applicable credit card or debit card agreement;

 

(h)            such Credit Card Account Receivable is subject to risk of set-off, non-collection or not being processed due to unpaid and/or accrued credit card or debit card processor fee balances, to the extent of the lesser of the balance of such Credit Card Account Receivable or unpaid credit card or debit card processor fees;

 

(i)             the proceeds of such Credit Card Account Receivable are not paid into a Deposit Account which (A) is under the control of the Senior Collateral Agent or (B) has been released or transferred in accordance with Section 5.16 or otherwise; or

 

(j)             such Credit Card Account Receivable does not meet such other usual and customary eligibility criteria for Credit Card Account Receivables as the Administrative Agent (after consultation with the Borrower) may determine from time to time in its commercially reasonable judgment.

 

In determining the amount to be so included in the calculation of the value of an Eligible Credit Card Accounts Receivable, the face amount thereof shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all customary fees and expenses in connection with any credit card or debit card arrangements and (ii) the aggregate amount of all cash received in respect thereof but not yet applied by the Subsidiary Loan Party to reduce the amount of such Eligible Credit Card Accounts Receivable.

 

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Eligible Inventory” means, at any date of determination, all inventory (as defined in the Uniform Commercial Code) owned by any Subsidiary Loan Party that satisfies at the time of such determination the usual and customary eligibility criteria established from time to time by the Administrative Agent (after consultation with the Borrower) in its commercially reasonable judgment. On the Closing Date, Eligible Inventory shall exclude, without duplication, the following:

 

(a)            any such inventory that has been shipped to a customer, even if on a consignment or “sale or return” basis, or is otherwise not in the possession or control of or any Subsidiary Loan Party or a warehouseman or bailee of any Subsidiary Loan Party;

 

(b)            any inventory against which any Subsidiary Loan Party has taken a reserve, to the extent of such reserve, to the extent specified by the Administrative Agent from time to time in its commercially reasonable judgment to reflect Borrowing Base Factors;

 

(c)            any inventory that has been discontinued or is otherwise of a type (SKU) not currently offered for sale on a regular basis by the Subsidiary Loan Parties (including any such inventory obtained in connection with a Business Acquisition) to the extent specified by the Administrative Agent from time to time in its commercially reasonable judgment to reflect Borrowing Base Factors;

 

(d)            (i) are to be returned to the vendor, or (ii) are bill and hold goods;

 

(e)            inventory acquired in a Business Acquisition, unless and until the Administrative Agent has completed or received (A) an appraisal of such inventory from appraisers reasonably satisfactory to the Administrative Agent, establishes an advance rate and reserves therefor and otherwise agrees that such inventory shall be deemed Eligible Inventory and (B) such other due diligence as the Administrative Agent may reasonably require, all of the results of the foregoing in respect of such inventory to be reasonably satisfactory to the Administrative Agent (provided that, for the avoidance of doubt, this clause shall not be construed to permit any Business Acquisition);

 

(f)             any inventory not located in the United States or otherwise not subject to a valid and perfected Lien of the Senior Collateral Agent in favor of the Senior Loan Secured Parties under the Senior Collateral Documents, subject to no prior or equal Lien other than in favor of the other Senior Secured Parties;

 

(g)            any supply, scrap or obsolete inventory or inventory that is otherwise unsaleable;

 

(h)            any inventory that is past its expiration date, is damaged or not in good condition, is packaging and shipping materials, is a sample used for marketing purposes or does not meet all material standards imposed by any Governmental Authority having regulatory authority over such inventory, except in each case to the extent of its net realizable value as determined by the Administrative Agent from time to time in its commercially reasonable judgment;

 

(i)             any inventory that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third Person from whom the Borrower or any of its Subsidiaries has received notice of a dispute in respect of such agreement, to the extent that the Administrative Agent determines, in its commercially reasonable judgment, that such dispute could be expected to prevent the sale of such inventory;

 

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(j)             any inventory which is subject to a negotiable document of title which has not been delivered to the Administrative Agent;

 

(k)            inventory that has been sold but not yet delivered or as to which a Subsidiary Loan Party has accepted a deposit;

 

(l)             any inventory to the extent that such inventory is not comprised of readily marketable materials of a type manufactured, consumed or held for resale by the Subsidiary Loan Parties in the ordinary course of business;

 

(m)           any inventory to the extent that such inventory consists of raw materials, component parts and/or work-in-progress or inventory that is subject to progress billing or retainage, or is inventory for which a performance, surety or completion bond or similar assurance has been issued;

 

(n)            any inventory in respect of which the applicable representations and warranties in the Senior Loan Documents are not true and correct in all material respects;

 

(o)            any inventory to which the Subsidiary Loan Parties do not have good title or any inventory which a Subsidiary Loan Party holds on consignment or on a “sale or return” basis;

 

(p)            any inventory that (i) is not subject to a perfected first-priority security interest in favor of the Senior Collateral Agent pursuant to the Senior Collateral Documents (subject to any Permitted Encumbrances; provided that the Administrative Agent shall have established appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances ranking senior to or pari passu with the Liens of the Senior Collateral Agent, in an amount not to exceed the claims secured by such Permitted Encumbrances), or (ii) is subject to any Lien whatsoever (other than (x) any Lien created pursuant to the Senior Debt Documents, the Pre-Petition Senior Debt Documents, the ABL Term Loan Documents, the Split-Priority Debt Documents or the Second Priority Debt Documents or (y) Permitted Encumbrances (provided that the Administrative Agent may establish appropriate reserves against the ABL Borrowing Base Amount (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances, in an amount not to exceed the claims secured by such Permitted Encumbrances));

 

(q)            any Pharmaceutical Inventory that is held at a Store location where the in-store pharmacy has been closed for business; and

 

(r)             any inventory that has been determined by the Administrative Agent, in its commercially reasonable judgment and after consultation with the Borrower, to be excluded from “Eligible Inventory” in order to reflect Borrowing Base Factors.

 

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Eligible Other Inventory Value” means, at any date of determination, an amount equal to (a) the cost of Eligible Inventory that is Other Inventory (less any appropriate reserve for obsolete Other Inventory and any profits accrued in connection with transfers of Other Inventory between the Borrower and the Subsidiaries or between Subsidiaries) at such date, in dollars, determined in accordance with GAAP consistently applied and on a basis consistent with that used in the preparation of the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders prior to the Closing Date or pursuant to Section 5.01(a), multiplied by (b) the Net Orderly Liquidation Rate with respect to such Other Inventory.

 

Eligible Pharmaceutical Inventory Value” means, at any date of determination, an amount equal to (a) the cost of Eligible Inventory that is Pharmaceutical Inventory (less any appropriate reserve for obsolete Pharmaceutical Inventory and any profits accrued in connection with transfers of Pharmaceutical Inventory between the Borrower and the Subsidiaries or between Subsidiaries) at such date, in dollars, determined in accordance with GAAP consistently applied and on a basis consistent with that used in the preparation of the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders prior to the Closing Date or pursuant to Section 5.01(a), multiplied by (b) the Net Orderly Liquidation Rate with respect to such Pharmaceutical Inventory.

 

Eligible Script Lists” means, at any date of determination, all Prescription Files owned and maintained on such date by the Subsidiary Loan Parties setting forth Persons (and addresses, telephone numbers or other contact information therefor) who currently purchase or otherwise obtain, in any Store owned or operated by any Subsidiary Loan Party, medication required to be dispensed by a licensed professional; provided that Eligible Script Lists shall not include any Prescription File if:

 

(a)            such Prescription File is located or otherwise maintained at premises other than those owned, leased or licensed and, in each case, controlled by a Subsidiary Loan Party;

 

(b)            such Prescription File (i) is not subject to a perfected first-priority security interest in favor of the Senior Collateral Agent pursuant to the Senior Collateral Documents (subject to any Permitted Encumbrances; provided that the Administrative Agent shall have established appropriate reserves (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances ranking senior to or pari passu with the Liens of the Senior Collateral Agent, in an amount not to exceed the claims secured by such Permitted Encumbrances), or (ii) is subject to any Lien whatsoever (other than (x) any Lien created pursuant to the Senior Debt Documents, the Pre-Petition Senior Debt Documents, the ABL Term Loan Documents, the Split-Priority Debt Documents or the Second Priority Debt Documents or (y) Permitted Encumbrances (provided that the Administrative Agent may establish appropriate reserves (as determined by the Administrative Agent in the exercise of its commercially reasonable judgment) with respect to any Permitted Encumbrances, in an amount not to exceed the claims secured by such Permitted Encumbrances));

 

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(c)            such Prescription File is related to a location referred to in clause (a) that has closed for business, except to the extent such Prescription File (x) has been utilized by the applicable customer at another operating Store location or (y) such Prescription File constitutes a Transitioned Prescription File;

 

(d)            Transitioned Prescription Files; provided that, until a period of twelve (12) fiscal months has elapsed since the closure of any Specified Prescription File Store, the Annualized Transitioned Prescription File Amount for such Specified Prescription File Store may be included as Eligible Script Lists (subject to compliance with the other requirements of this definition (other than clause (c) hereof));

 

(e)            such Prescription File is not of a type included in an appraisal of Prescription Files received by the Administrative Agent from time to time in accordance with this Agreement; or

 

(f)             such Prescription File is not in a form that may be sold or otherwise transferred or is subject to regulatory restrictions prohibiting the sale or transfer thereof.

 

For the avoidance of any doubt, Eligible Script Lists shall not include (x) any Prescription Files previously sold or disposed of or (y) any Prescription Files maintained at a Specified Prescription File Store (except to the extent constituting a Transitioned Prescription File, limited in all cases to the Transitioned Prescription Files Amount).

 

Eligible Script Lists Value” means, at any date of determination, the product of (a) the average, orderly liquidation value of such Eligible Script Lists, on a per Prescription File basis, net of (to the extent not given effect in the ordinary liquidation value) operating expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets, as reasonably determined from time to time by reference to the most recent appraisal of Prescription Files received by the Administrative Agent that is conducted by an independent appraiser satisfactory to the Administrative Agent, multiplied by (b) the number of Prescription Files in such Eligible Script Lists for the twelve (12) fiscal months most recently ended; provided, however, that the amount of Transitioned Prescription Files included in the determination of Eligible Scripts Lists Value shall equal Transitioned Prescription Files Amount.

 

Elixir Business Segment” means the business segment owned and operated by the Elixir Subsidiaries.

 

Elixir Insurance Company” means Elixir Insurance Company, an Ohio corporation.

 

Elixir Monetization Event” means a factoring transaction or securitization arrangement with respect to, or a financing secured by, the Specified Elixir Assets.

 

Elixir Proceeds Reserve” means the “Elixir Proceeds Reserve” (as defined in Exhibit I hereto), a reserve established and maintained (against the ABL Borrowing Base Amount) by the Administrative Agent as and when required, and otherwise in accordance with, the Exhibit I hereto.

 

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Elixir Subsidiaries” means, collectively, Hunter Lane, LLC and its direct and indirect Subsidiaries.

 

Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to pollution or protection of the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters (regarding exposure to Hazardous Materials).

 

Environmental Liability” means all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs, (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to: (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement to the extent liability is assumed or imposed with respect to any of the foregoing.

 

Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

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

 

ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to its withdrawal or partial withdrawal from any Multiemployer Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability on it or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA; or (h) the existence of any event or condition that could reasonably be expected to constitute grounds under ERISA for the termination by the PBGC of, or the appointment of a trustee to administer, any Plan.

 

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Escrow Notes” means Indebtedness consisting of debt securities issued by the Borrower or by an Escrow Notes Issuer, which debt securities (a) in the case of debt securities issued by an Escrow Notes Issuer, shall require the proceeds or substantially all the proceeds of such debt securities to be held as security for the repayment of such debt securities, or to be held in escrow, pending satisfaction or waiver of certain conditions set forth in the documentation governing such debt securities, (b) in the case of debt securities issued by an Escrow Notes Issuer, shall, other than Guarantees in respect of interest thereon, fees, and customary indemnities, provide recourse solely to the assets of such Escrow Notes Issuer and (c) shall be subject to mandatory redemption or prepayment if the conditions set forth in the documentation governing such debt securities are not satisfied by the date specified in such documentation; provided that in the case of debt securities issued by an Escrow Notes Issuer, upon satisfaction or waiver of such conditions, such Escrow Notes Issuer shall merge with and into the Borrower with the Borrower being the surviving corporation, and becoming the issuer under such debt securities, and such debt securities shall, after giving effect to such merger, constitute Permitted Unsecured Indebtedness which does not mature or require scheduled payments of principal prior to the date that is ninety (90) days after the Latest Maturity Date in effect at the time such Indebtedness is originally incurred as Escrow Notes; provided, further, that in the case of debt securities issued by the Borrower, upon satisfaction or waiver of such conditions, such debt securities shall constitute Permitted Unsecured Indebtedness which does not mature or require scheduled payments of principal prior to the date that is ninety (90) days after the Latest Maturity Date in effect at the time such Indebtedness is originally incurred as Escrow Notes. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Escrow Notes may be issued at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

Escrow Notes Issuer” means a Subsidiary of the Borrower that issues, or intends to issue, Escrow Notes, and that at the time such Escrow Notes are to be issued, does not own any operating assets.

 

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

 

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

 

Excluded Subsidiary” means each Subsidiary listed on Schedule 1.01(a) hereto; provided that (a) any Subsidiary that Guarantees any other Material Indebtedness of the Borrower shall not be deemed to be an “Excluded Subsidiary”, and (b) any Subsidiary that incurs Material Indebtedness (other than Indebtedness owing to the Borrower or any of its Subsidiaries) shall not be deemed to be an “Excluded Subsidiary”, to the extent any such Material Indebtedness is guaranteed by the Borrower or any Subsidiary Loan Party.

 

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Excluded Taxes” means, with respect to any Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income Taxes imposed on (or measured by) its net income (however denominated) or franchise Taxes, in each case, (i) imposed by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) that are Other Connection Taxes, (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction described in clause (a) above, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.19(b)), any U.S. Federal withholding Tax that (i) is in effect and would apply to amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to any withholding Tax pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.17(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA.

 

Existing Letters of Credit” means each letter of credit identified on Schedule 1.01(b) hereto.

 

Existing Non-Guaranteed Indebtedness” means Indebtedness outstanding as of the Petition Date under the Existing Non-Guaranteed Indentures.

 

Existing Non-Guaranteed Indentures” means, collectively, (a) the 2027 7.70% Note Indenture and (b) the 2028 6.875% Note Indenture.

 

Existing Split-Priority Indebtedness” means Indebtedness outstanding as of the Petition Date under the Existing Split-Priority Indentures.

 

Existing Split-Priority Indentures” means, collectively, (a) the 2025 7.500% Note Indenture and (b) the 2026 8.000% Note Indenture.

 

Facility” means the FILO Facility, Term Facility and/or the Revolving Facility, as applicable and as the context may require.

 

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

 

Federal Funds Effective Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

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Fee Letter” means the Fee Letter, dated as of the Closing Date, among the Borrower, the Administrative Agent and the other parties thereto.

 

FILO Borrowing Base Amount” means an amount equal to the sum, without duplication, of the following:

 

(a)            the Accounts Receivable Advance Rate multiplied by the face amount of Eligible Accounts Receivable; plus

 

(b)            the Credit Card Receivable Advance Rate multiplied by the face amount of Eligible Credit Card Accounts Receivable; plus

 

(c)            the Pharmaceutical Inventory Advance Rate multiplied by the Eligible Pharmaceutical Inventory Value; plus

 

(d)            the Other Inventory Advance Rate multiplied by the Eligible Other Inventory Value; plus

 

(e)            the FILO Scripts Availability; minus

 

(f)            any reserves established by the Administrative Agent, in accordance with Section 2.20(b), in the exercise of its commercially reasonable judgment to reflect Borrowing Base Factors (which reserves shall not be duplicative of reserves implemented against the ABL Borrowing Base Amount).

 

The FILO Borrowing Base Amount shall be computed and reported weekly with respect to Eligible Accounts Receivable, Eligible Inventory, Eligible Credit Card Accounts Receivable and Eligible Script Lists, in each case in accordance with Sections 2.20 and 5.01(f). The FILO Borrowing Base Amount at any time in effect shall be determined by reference to the Borrowing Base Certificate most recently delivered pursuant to Section 5.01(f), giving effect to reserves effected pursuant to Section 2.20(b) after the date of delivery thereof.

 

FILO Commitment” means, with respect to each FILO Lender, the commitment of such FILO Lender to make FILO Loans to the Borrower pursuant to Section 2.01(b), in an aggregate principal amount not to exceed the amount set forth opposite such FILO Lender’s name on Schedule 2.01 on and as of the Closing Date under the caption “FILO Commitment”.

 

FILO Facility” means, at any time (a) prior to the deemed funding of the FILO Loans on the Closing Date, the Total FILO Commitments of the FILO Lenders at such time and (b) thereafter, the sum of (x) the outstanding amount of the FILO Commitments at such time and (y) the aggregate outstanding principal amount of the FILO Loans made to the Borrower by the FILO Lenders at such time. The aggregate principal amount of the FILO Facility as of the Closing Date is $400,000,000.

 

FILO Lender” means (a) prior to the deemed funding of the FILO Loans on the Closing Date, any Lender that has a FILO Commitment at such time, and (b) thereafter, any Lender that holds a FILO Loan or FILO Commitment at such time.

 

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FILO Loan” means a Loan made pursuant to Section 2.01(b).

 

FILO Maturity Date” means October [●], 20241; provided that, if any such date is not a Business Day, the FILO Maturity Date shall be deemed to be the next preceding Business Day.

 

FILO Push-Down Reserve” means, at any time of determination, a reserve established (against the ABL Borrowing Base Amount) by the Administrative Agent at such time in an amount equal to the amount (if any) by which the Total FILO Outstandings exceed the FILO Borrowing Base Amount.

 

FILO Scripts Availability” means, at any time of determination of the FILO Borrowing Base Amount, the sum of (a) (i) Script Lists Advance Rate, multiplied by (ii) the Eligible Script Lists Value, plus (b) the amount of ABL Scripts Availability (in excess of 32.5% of the ABL Borrowing Base Amount) (if any) that is excluded from the ABL Borrowing Base Amount by operation of the first proviso set forth in the definition of the term “ABL Borrowing Base Amount”; provided that in no event shall the sum of (i) FILO Scripts Availability included in the determination of the FILO Borrowing Base Amount and (ii) ABL Scripts Availability included in the determination of the ABL Borrowing Base Amount exceed, in the aggregate, an amount equal to forty-three and one-half percent (43.5%) of the Combined Borrowing Base Amount.

 

Final Financing Order” means, the order of the Bankruptcy Court entered in the Chapter 11 Case after a final hearing under Bankruptcy Rule 4001(c)(2) or such other procedures as approved by the Bankruptcy Court, which order shall be in form and substance satisfactory to the Loan Parties and the Administrative Agent, and from which no appeal or motion to reconsider has been filed, together with all extensions, modifications and amendments thereto, in form and substance satisfactory to the Loan Parties and the Administrative Agent.

 

Final Order Entry Date” means the date on which the Bankruptcy Court enters the Final Financing Order.

 

Financial Officer” means with respect to any Person, the chief financial officer, principal accounting officer, treasurer, vice president of financial accounting, vice president (or more senior level officer) of finance or accounting, senior director of treasury or controller of such Person. Any document delivered hereunder that is signed by a Financial Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Financial Officer, shall be conclusively presumed to have acted on behalf of such Loan Party.

 

Financing Order” means, as the context may require, the Interim Financing Order or the Final Financing Order, whichever is then applicable.

 

Foreign Lender” means (a) if the Borrower is a U.S. Person, any Lender, with respect to such Borrower, that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, any Lender, with respect to such Borrower, that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

 

1 Note to Draft – One year from Closing Date.

 

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Fronting Exposure” means, at any time there is a Revolving Lender that is a Defaulting Lender, (a) with respect to any Issuing Bank, such Defaulting Lender’s LC Exposure with respect to Letters of Credit issued by such Issuing Bank other than LC Exposure as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (b) with respect to the Swingline Lender, such Defaulting Lender’s Applicable Percentage of outstanding Swingline Loans made by such Swingline Lender, other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

 

GAAP” means generally accepted accounting principles in the United States of America.

 

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

 

Government Lockbox Account” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Government Lockbox Account Agreement” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Government Lockbox Account Bank” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Ground-Leased Real Property” means real property that is ground leased by a Loan Party pursuant to a Real Estate Lease and a Loan Party owns the improvements on such real property, including all such real property described on Schedule 3.05(a)(3).

 

Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other monetary obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other monetary obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other monetary obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

 

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Hazardous Materials” means (a) petroleum products and byproducts, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, radon gas, chlorofluorocarbons and all other ozone-depleting substances, or (b) any chemical, material, substance, waste, pollutant or contaminant that is prohibited, limited or regulated by or pursuant to any Environmental Law.

 

Hedging Agreement” means any interest rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions.

 

HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended.

 

Incremental Commitment” has the meaning assigned to such term in Section 2.21.

 

Incremental Facility” has the meaning assigned to such term in Section 2.21.

 

Incremental Facility Amendment” has the meaning assigned to such term in Section 2.21.

 

Incremental Refinancing Term Loan” has the meaning assigned to such term in Section 2.21, and shall include each Class of such Loans established pursuant to an Incremental Facility Amendment.

 

Incremental Revolving Commitment” has the meaning assigned to such term in Section 2.21.

 

Incremental Senior Debt Refinancing Facility” has the meaning assigned to such term in Section 2.21.

 

Incremental Term Commitment” shall mean any Lender’s or Additional Lender’s commitment to make any Incremental Refinancing Term Loans pursuant to Section 2.21.

 

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Indebtedness” of any Person means, 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, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed by such Persons, provided that the amount of such Indebtedness will be the lesser of the fair market value of such property and the amount of Indebtedness of such other Person, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and (j) all Disqualified Preferred Stock valued, as of the date of determination, at the greater of (i) the maximum aggregate amount that would be payable upon maturity, or upon the mandatory redemption, repayment or repurchase thereof and (ii) the maximum liquidation preference of such Disqualified Preferred Stock. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

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

 

Indemnitee” has the meaning assigned to such term in Section 9.03(b).

 

Ineligible Person” has the meaning assigned to such term in Section 9.04(b)(ii)(E).

 

Information” has the meaning assigned to such term in Section 9.13.

 

Information Certificate” means a certificate in the form of Schedule 4 to the Senior Security Agreement or any other form approved by the Agents.

 

Intellectual Property” shall have the meaning set forth in the Senior Security Agreement.

 

Intercompany Inventory Purchase Agreement” means the Intercompany Inventory Purchase Agreement dated as of December 18, 2018 (as amended), among the Borrower, Rite Aid Hdqtrs. Corp., the Distribution Subsidiaries as defined and named therein and the Operating Subsidiaries as defined and named therein.

 

Intercreditor Agreements” means, collectively, the Senior Lien Intercreditor Agreement and each Applicable Intercreditor Agreement, in each case, to the extent then in effect.

 

Interest Election Request” means a notice of (a) a conversion of Loans from one Type to the other or (b) a continuation of Term SOFR Loans, in each case, pursuant to Section 2.07, which shall be substantially in the form of Exhibit D or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent) appropriately completed and signed by a Responsible Officer of the Borrower.

 

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Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the first day of each calendar month, (b) with respect to any Term SOFR Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

 

Interest Period” means, with respect to any Term SOFR Borrowing, the period commencing on the date such Term SOFR Borrowing is disbursed or converted or continued as a Term SOFR Borrowing and ending on the date that is one month thereafter; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day (unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day), (ii) any Interest Period of one month that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period, and (iii) no Interest Period for any applicable Class of Loans shall extend beyond the Latest Maturity Date for such applicable Class; provided that in the case of any Revolving Loan, no Interest Period shall extend beyond the next upcoming Revolving Maturity Date to occur. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

Interim Financing Order” means the order of the Bankruptcy Court entered in the Chapter 11 Case after an interim hearing, substantially in the form attached hereto as Exhibit G and/or otherwise in form and substance satisfactory to the Loan Parties and the Administrative Agent, together with all extensions, modifications, and amendments thereto approved by the Borrower and the Administrative Agent.

 

Investment” by any Person in any other Person means (a) any direct or indirect loan, advance or other extension of credit, assumption of debt, or capital contribution to or for the account of such other Person (by means of any transfer of cash or other property to any Person or any payment for property or services for the account or use of any Person, or otherwise), (b) any direct or indirect purchase or other acquisition of any Equity Interests, bond, note, debenture or other debt or equity security or evidence of Indebtedness, or any other ownership interest (including, any option, warrant or any other right to acquire any of the foregoing), issued by such other Person, whether or not such acquisition is from such or any other Person, (c) any direct or indirect payment by such Person on a Guarantee of or for the account of such other Person or any direct or indirect issuance by such Person of such a Guarantee (provided, however, that for purposes of Section 6.04, payments under Guarantees not exceeding the amount of the Investment attributable to the issuance of such Guarantee will not be deemed to result in an increase in the amount of such Investment), or (d) any Business Acquisition. Any repurchase by the Borrower of its own Equity Interests or Indebtedness shall not constitute an Investment for purposes of this Agreement. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such transfer or exchange.

 

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Issuing Bank Agreement” has the meaning assigned to such term in Section 2.05(k).

 

Issuing Banks” means Bank of America, N.A., Wells Fargo Bank, National Association, and any other Revolving Lender from time to time designated by the Borrower as an Issuing Bank, with the consent of such Revolving Lender (in its sole and absolute discretion) and the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), and their respective successors in such capacity (it being agreed that any such other Revolving Lender shall be under no obligation to be an Issuing Bank hereunder). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term “Issuing Banks” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate (it being agreed that such Issuing Bank shall, or shall cause such Affiliate to, comply with the requirements of Section 2.05(p) with respect to such Letters of Credit). At any time there is more than one Issuing Bank, any singular references to the Issuing Bank shall mean any Issuing Bank, each Issuing Bank, the Issuing Bank that has issued the applicable Letter of Credit, or all Issuing Banks, as the context may require.

 

Joint Venture” means, with respect to any Person, at any date, any other Person in whom such Person directly or indirectly holds an Investment consisting of an Equity Interest, and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person, if such statements were prepared in accordance with GAAP as of such date.

 

Junior Lien Intercreditor Agreement” means the Intercreditor Agreement, in substantially the form attached as Exhibit J-2 to the Pre-Petition Credit Agreement or such other form as is reasonably acceptable to the Administrative Agent and the Borrower, among the Loan Parties, the Senior Collateral Agent, the Administrative Agent as the Representative for the Senior Loan Secured Parties and the other Representatives from time to time party thereto.

 

Latest Maturity Date” means, at any date of determination, as applicable and as the context may require (a) the latest of (i) the latest Revolving Maturity Date, (ii) the latest FILO Maturity Date, (ii) the latest Term Facility Maturity Date, in each case, applicable to any Class of Loans or Commitments outstanding hereunder and in effect on such date of determination or (b) with respect to any Class of Commitments or Loans, the latest such date specified in clause (a) above with respect to such Class of Commitments or Loans.

 

LC Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit pursuant to Section 2.05, subject to the LC Sublimit and the limitation that the aggregate amount of Letters of Credit issued by (a) with respect to each of Bank of America, N.A. and Wells Fargo Bank, National Association, each in its capacity as an Issuing Bank shall not exceed $125,000,000 at any time outstanding with respect to any such Issuing Bank, and (b) with respect to each of Capital One, National Association, PNC Bank, National Association, BMO Bank, N.A., MUFG Bank, LTD., Fifth Third Bank, National Association, ING Capital LLC, and Truist Bank, each in in its capacity as an Issuing Bank shall not exceed $50,000,000 at any time outstanding (in each case of clause (a) and (b), unless otherwise agreed by such Issuing Bank); provided, however, that notwithstanding the foregoing to the contrary, any Issuing Bank may, in its sole discretion, issue Letters of Credit in an aggregate amount exceeding its LC Commitment, subject to the other Credit Extension Conditions.

 

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

 

LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Revolving Percentage of the total LC Exposure at such time.

 

LC Sublimit” has the meaning assigned to such term in Section 2.05(b)(i).

 

Lender Group Consultants” has the meaning assigned to such term in Section 5.18(b).

 

Lenders” shall have the meaning assigned to such term in the preamble to this Agreement and shall include any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, an Incremental Facility Amendment or a Refinancing Amendment, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance or otherwise in accordance with the terms of this Agreement. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.

 

Letter of Credit” means (a) each Existing Letter of Credit, and (b) any letter of credit issued pursuant to this Agreement under the Revolving Commitments.

 

Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, Capital Lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

 

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

 

Loan Modification Agreement” shall mean a Loan Modification Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, among the Borrower, the Subsidiary Loan Parties, as applicable, and one or more Accepting Lenders to reflect any Permitted Amendment.

 

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Loan Modification Offer” shall have the meaning assigned to such term in Section 9.19(a).

 

Loan Modification Term Commitment” shall mean any Accepting Lender’s commitment to convert or, continue (in the case of existing Term Loans), an Affected Class of Loans and/or Commitments as Loan Modification Term Loans pursuant to a Loan Modification Agreement effected under Section 9.19.

 

Loan Modification Term Loan” has the meaning assigned to such term in Section 9.19(c).

 

Loan Parties” means the Borrower and the Subsidiary Loan Parties.

 

Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement (including, unless the context otherwise requires, the Revolving Loans, the FILO Loans, the Term Loans, and the Swingline Loans.

 

Lockbox Account” shall have the meaning assigned to such term in the Senior Security Agreement.

 

Margin Stock” means “margin stock”, as such term is defined in Regulation U of the Board.

 

Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, properties or condition (financial or otherwise) of the Borrower and the Subsidiaries, taken as a whole, (b) the ability of any Loan Party to perform any of its material obligations under any Senior Loan Document to which it is a party or (c) the legality, validity or enforceability of the Senior Loan Documents (including the validity, enforceability or priority of security interests granted thereunder) or the rights of or benefits or remedies available to the Lenders under any Senior Loan Document. Notwithstanding the foregoing, (i) the filing of the Chapter 11 Case (and any defaults under pre-petition agreements, so long as the exercise of remedies as a result of such defaults are subject to the Automatic Stay or such agreements are voided or invalidated by the Bankruptcy Court) and (ii) the incurrence of any Pre-Petition claim or liability that is unsecured and junior in priority to the Senior Loan Obligations, will, individually and collectively, each not be deemed to have a Material Adverse Effect.

 

Material Indebtedness” means (a) the Indebtedness of the Borrower or the Subsidiaries arising under the ABL Term Loan Documents and (b) Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower or the Subsidiaries in an aggregate principal amount exceeding $5,000,000. For purposes of this definition, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

 

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Maximum Rate” has the meaning assigned to such term in Section 9.14.

 

Medicaid” means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility criteria, as set forth on Section 1396, et seq. of Title 42 of the United States Code.

 

Medicare” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the United States Code.

 

Moody’s” means Moody’s Investors Service, Inc., or any successor to its business of rating debt securities.

 

Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

Net Cash Proceeds” means:

 

(a)            with respect to any Asset Sale (other than in connection with an Elixir Monetization Event), an amount equal to the cash proceeds received by the Borrower or any of the Subsidiaries from or in respect of such Asset Sale (including, when received, any cash proceeds received in respect of any noncash proceeds of any Asset Sale), less the sum of the following:

 

(i)            reasonable costs and expenses paid or incurred in connection with such transaction, including any underwriting brokerage or other customary selling commissions and reasonable legal, advisory and other fees and expenses (including title and recording expenses, associated therewith); and

 

(ii)            the amount of any Indebtedness (or Attributable Debt), together with premium or penalty, if any, and accrued interest thereon (or comparable obligations in respect of Attributable Debt) secured by a Lien on (or if Attributable Debt, the lease of) any asset disposed of in such Asset Sale and discharged from the proceeds thereof, but only to the extent such Lien has priority over the Senior Lien, the Split-Priority Lien and the Second Priority Lien, in each case, with respect to such assets;

 

(b)            with respect to the proceeds received by the Borrower or a Subsidiary from or in respect of an issuance of Indebtedness for borrowed money, of equity securities, or of equity-linked (e.g., trust preferred) securities (other than, in any event, the proceeds of any Elixir Monetization Event), an amount equal to the cash proceeds received by the Borrower or any of the Subsidiaries from or in respect of such issuance, less any reasonable transaction costs, including investment banking and underwriting fees, discounts and commissions and any other expenses (including legal fees and expenses) reasonably incurred by such Person in respect of such issuance;

 

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(c)            with respect to a Casualty/Condemnation, the amount of Casualty/Condemnation Proceeds; and

 

(d)            with respect to any Elixir Monetization Event (whether by Asset Sale, incurrence of Indebtedness or otherwise), an amount equal to the cash proceeds received by the Borrower or any of the Subsidiaries from or in respect of such Elixir Monetization Event, less the sum of the following:

 

(i)            reasonable transaction costs and expenses paid or incurred in connection with such Elixir Monetization Event, including (A) investment banking and underwriting fees, discounts and commissions, (B) brokerage or other customary selling commissions, and (C) any other expenses (including legal and advisory fees and expenses) reasonably incurred; and

 

(ii)            an amount of proceeds reasonably acceptable to the Administrative Agent permitted to remain at Elixir Insurance Company.

 

Net Orderly Liquidation Rate” means, with respect to any type of inventory, at any date of determination, the fraction, expressed as a percentage (a) the numerator of which is the amount equal to the recovery on the aggregate amount of the applicable category of inventory at such time on a “going out of business sale” basis for such inventory, net of operating expenses, liquidation expenses and commissions reasonably anticipated in the disposition of such assets, as determined from time to time by reference to the most recent acceptable inventory appraisal (including desktop appraisal) received by the Administrative Agent that is conducted by an independent appraiser reasonably satisfactory to the Administrative Agent with respect to such type of inventory, and (b) the denominator of which is the cost of the aggregate amount of such category of inventory subject to such appraisal.

 

Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

 

Non-Extension Notice Date” has the meaning assigned to such term in Section 2.05(c).

 

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

 

Offer Period” has the meaning assigned to such term in Section 2.21.

 

Other Connection Taxes” means, with respect to any Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Senior Loan Document, or sold or assigned an interest in any Loan or Senior Loan Document).

 

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Other Incremental Revolving Commitments” has the meaning assigned to such term in Section 2.21.

 

Other Inventory” means all inventory other than Pharmaceutical Inventory.

 

Other Inventory Advance Rate” means the other inventory advance rate determined in accordance with Section 2.20(a).

 

Other Revolving Commitments” means, with respect to each Revolving Lender, each Class of Revolving Commitments resulting from (a) a modification of an existing Revolving Credit Commitments pursuant to a Loan Modification Agreement entered into in connection with a Loan Modification Offer, (b) Refinancing Revolving Commitments established pursuant to a Refinancing Amendment or (c) Other Incremental Revolving Commitments under an Incremental Facility established pursuant to an Incremental Facility Amendment. Any Other Revolving Commitments effected pursuant to a Loan Modification Agreement, Refinancing Amendment or Other Incremental Revolving Commitments established pursuant to an Incremental Facility Amendment, shall, in each case, be designated a series (each, an “Other Revolving Commitment Series”) of Other Revolving Commitments for all purposes of this Agreement; provided that any Other Revolving Commitments effected from an existing Class of Revolving Commitments may be, to the extent provided in the applicable Loan Modification Agreement, Refinancing Amendment or Incremental Facility Amendment, as applicable, designated as an increase in any previously established Revolving Commitment Series with respect to such Existing Revolving Tranche. The amount of Other Revolving Commitments on the Closing Date is $0. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Other Revolving Commitments may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

Other Taxes” means any and all present or future recording, filing, stamp, court or documentary, excise, transfer, sales, property or similar Taxes, charges or levies arising from any payment made under any Senior Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Senior Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).

 

Overadvance” means a Revolving Loan, Swingline Loan, advance, or providing of credit support (such as the issuance, renewal, amendment or extension of a Letter of Credit) to the Borrower to the extent that, immediately after the making of such Loan or advance or the providing of such credit support, ABL Availability is less than zero (or, solely, for purposes of determining the existence of a Protective Advance or Unintentional Overadvance, a Revolving Loan, Swingline Loan, advance, or providing of credit support resulting in ABL Availability being less than the amount required to be maintained pursuant to Section 6.12).

 

Owned Real Property” means real property that a Loan Party owns in fee simple absolute, including all such real property described on Schedule 3.05(a)(2).

 

Participant” has the meaning assigned to such term in Section 9.04(c)(i).

 

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Participant Register” has the meaning assigned to such term in Section 9.04(c)(i).

 

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

 

Permitted Amendments” shall have the meaning assigned to such term in Section 9.19(c).

 

Permitted Disposition” means any of the following:

 

(a)            dispositions of inventory at retail, cash, cash equivalents and other cash management investments and obsolete, unused, uneconomic or unnecessary equipment or inventory, or other assets, in each case in the ordinary course of business;

 

(b)            a disposition to a Subsidiary Loan Party, provided that if the property subject to such disposition constitutes Collateral immediately before giving effect to such disposition, such property continues to constitute Collateral subject to the Senior Lien;

 

(c)            a sale or discount, in each case without recourse and in the ordinary course of business, of overdue Accounts arising in the ordinary course of business, but only to the extent such Accounts are no longer Eligible Accounts Receivable and such sale or discount is in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale); and

 

(d)            non-exclusive licenses of Intellectual Property of the Borrower or any Subsidiary in the ordinary course of business, which do not interfere, individually or in the aggregate in any material respect with the conduct of the business of the Loan Parties and their Subsidiaries, taken as a whole, and leases, assignments or subleases in the ordinary course of business.

 

Permitted Encumbrances” means:

 

(a)            Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.05;

 

(b)            carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or are being contested in compliance with Section 5.05;

 

(c)            subject to the Financing Order and the terms thereof, pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;

 

(d)            subject to the Financing Order and the terms thereof, deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

 

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(e)            judgment liens in respect of Post-Petition judgments that do not constitute an Event of Default under Section 7.01(k);

 

(f)            easements, zoning restrictions, rights-of-way, encroachments and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not (i) materially detract from the value of the affected property or (ii) materially interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

 

(g)            any zoning, land use, environmental or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not (i) materially detract from the value of the affected property or (ii) materially interfere with the ordinary conduct of the business of the Borrower or any of the Subsidiaries;

 

(h)            licenses, sublicenses, leases or subleases granted in the ordinary course of business with respect to real property and, to the extent constituting a Lien, the Real Estate Leases for Ground-Leased Real Property;

 

(i)            landlord Liens arising by law securing obligations that are not overdue by more than sixty (60) days or that are being contested in good faith by appropriate proceedings;

 

(j)            Liens arising from precautionary UCC filings regarding operating leases or the consignment of goods to the Borrower or any Subsidiary;

 

(k)            Liens arising by virtue of statutory or common law provisions relating to banker’s Liens, Liens in favor of securities intermediaries, rights of set off or similar rights and remedies with respect to deposit accounts or securities accounts or other funds or assets maintained with depository institutions and securities intermediaries;

 

(l)            Liens in favor of a credit card or debit card processor arising in the ordinary course of business under any processor agreement and relating solely to the amounts paid or payable by, or customary deposits or reserves held by, such credit card or debit card processor;

 

(m)            Liens in favor of customs and revenues authorities imposed by applicable laws arising in the ordinary course of business in connection with the importation of goods and securing obligations (i) that are not overdue by more than thirty (30) days, or (ii)(A) that are being contested in good faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (C) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;

 

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(n)            Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

 

(o)            any interest or title of a lessor, sublessor, licensor or sublicensor under leases, subleases, licenses or sublicenses (including software and other technology licenses) entered into by the Borrower or any of its Subsidiaries in the ordinary course of business; and

 

(p)            to the extent existing as of the Petition Date, any encumbrance or restriction (including put and call arrangements) contained in the applicable organizational documents with respect to Equity Interests of any Joint Venture or similar arrangement pursuant to any Joint Venture or similar arrangement;

 

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

 

Permitted First Priority Debt” means any Indebtedness incurred by the Borrower (other than Indebtedness constituting Senior Loan Obligations) that is (x) Guaranteed by the Subsidiary Loan Parties pursuant to the Senior Subsidiary Guarantee Agreement (and not Guaranteed by any other Person) and (y) is secured by the Collateral on a pari passu basis (but without regard to control of remedies) with the Senior Loan Obligations pursuant to the Senior Security Agreement (and not secured by Liens on any other assets of the Borrower or any other Person (other than assets that, substantially concurrently with the incurrence of such Indebtedness, become Collateral on which a Lien is granted to the Senior Collateral Agent pursuant to the Senior Security Agreement and/or other Senior Collateral Documents)); provided, however, that (a) such Indebtedness is permitted to be incurred, secured and Guaranteed on such basis by each Senior Debt Document, each other Second Priority Debt Document and each Split-Priority Debt Document, (b) such Indebtedness constitutes Refinancing Indebtedness in respect of Revolving Loans, FILO Loans, or Term Loans, Revolving Commitments, FILO Commitments, Other Revolving Commitments or other Commitments, Permitted First Priority Debt incurred pursuant to Section 6.01(a)(i) or any combination of the foregoing, (c) such Indebtedness has a later maturity and a longer weighted average life than the Refinanced Debt (as defined in “Refinancing Indebtedness”) in respect of which such Indebtedness is Refinancing Indebtedness, (d) [reserved], (e) at the option of the Borrower, such Indebtedness may contain market call and make-whole provisions as of the time of its issuance or incurrence, (f) as of the date of incurrence, a member of the senior management of the Borrower determines in good faith that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on market terms and (g) the Representative for the holders of such Indebtedness shall have become party to and bound by the provisions of (i)  the Senior Lien Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 5.02(c) thereof (and, if such Indebtedness will be the initial Permitted First Priority Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Senior Collateral Agent, the Administrative Agent and the Representative for such initial Permitted First Priority Debt shall have executed and delivered the Senior Lien Intercreditor Agreement and (B) each Applicable Intercreditor Agreement then in effect, in accordance with the requirements thereof. Permitted First Priority Debt shall include any Registered Equivalent Notes and Guarantees thereof by the Subsidiary Loan Parties pursuant to the Senior Subsidiary Guarantee Agreement issued in exchange thereof. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Permitted First Priority Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

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Permitted Investments” means any investment by any Person in (a) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, (b) commercial paper rated at least A-1 by S&P and P-1 by Moody’s at the time of acquisition thereof, (c) time deposits with, including certificates of deposit issued by, any office located in the United States of any bank or trust company which is organized or licensed under the laws of the United States or any state thereof and at the time such deposit is made or certificate of deposit issued, has capital, surplus and undivided profits aggregating at least $500,000,000, (d) repurchase agreements with respect to securities described in clause (a) above entered into with an office of a bank or trust company meeting the criteria specified in clause (c) above at the time such repurchase agreement is entered into, provided in each case that such investment matures within one year from the date of acquisition thereof by such Person or (e) money market mutual funds at least 80% of the assets of which are held in investments referred to in clauses (a) through (d) above determined at the time of such investment (except that the maturities of certain investments held by any such money market funds may exceed one year so long as the dollar-weighted average life of the investments of such money market mutual fund is less than one year).

 

Permitted Prior Lien” means any Lien permitted by the Pre-Petition Credit Agreement, to the extent any such permitted Lien is valid, binding, enforceable, properly perfected, non-avoidable and senior in priority to the Liens securing the Pre-Petition Senior Obligations as of the Petition Date.

 

Permitted Real Estate Disposition” means (a) the sale of the Owned Real Property located at (i) 1426 Mount Ephraim Avenue, Camden, NJ, (ii) 7796 Munson Road, Mentor, OH, and (iii) 5272 Torresdale Avenue, Philadelphia, PA and (iv) 7301-7303 Frankford Avenue, Philadelphia, PA, in each case, in accordance with and as set forth in the applicable sale agreements for each property in the forms delivered to the Administrative Agent prior to the Closing Date (and without any material amendments thereto unless otherwise approved in accordance with the ABL Term Loan Agreement) and only so long as the Net Cash Proceeds thereof are applied to the ABL Term Loans in accordance with the ABL Term Loan Agreement and (b) the sale or other transfer of other real property and related improvements, including Sale and Leaseback Transactions, so long as (i) the consideration for such sale is at least the greater of (x) the fair market value of such real property (measured at the time of contractually agreeing to such sale) or (y) the value corresponding to such real property as shown in the column titled “Est. Property Value AS IS Occupied” on the tab titled “Summary” on Exhibit J, (ii) 100% of the consideration therefor shall consist of cash, (iii) such sale is to a non-affiliated third party, (iv) to the extent constituting a Sale and Leaseback Transactions, the applicable lease back to the relevant Loan Party in such Sale and Leaseback Transaction is on market terms (as reasonably determined by the Borrower in good faith), (v) the Net Cash Proceeds thereof are used to prepay the ABL Term Loans in accordance with the ABL Term Loan Agreement and (vi) the terms and conditions applicable to such sale are reasonably acceptable to the Administrative Agent.

 

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Permitted Second Priority Debt” means Second Priority Debt of the Borrower; provided that (a) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (b) if such Indebtedness is issued or incurred to Refinance existing Indebtedness, such Indebtedness has a later maturity and a longer weighted average life than such existing Indebtedness, (c) [reserved], (d) at the option of the Borrower, such Indebtedness may contain market call and make-whole provisions as of the time of its issuance or incurrence, and (e) as of the date of incurrence, a member of the senior management of the Borrower determines in good faith that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on market terms. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Permitted Second Priority Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

Permitted Split-Priority Term Loan Debt” means Split-Priority Term Loan Debt of the Borrower; provided that (a) if such Indebtedness is issued or incurred to Refinance existing Indebtedness, such Indebtedness has a later maturity and a longer weighted average life than such existing Indebtedness, (b) (i) to the extent such Indebtedness is incurred pursuant to “tranche B” term loan facilities, the applicable Split-Priority Debt Documents shall not include amortization provisions other than customary amortization provisions and amortization requirements for “tranche B” term loan Indebtedness, as determined as of the date of issuance or incurrence by a Responsible Officer of the Borrower in good faith and (ii) to the extent such Indebtedness is incurred pursuant to senior high yield notes or other senior notes, such Indebtedness (A) is not subject to mandatory redemption, repurchase, prepayment or sinking fund obligation (except customary asset sale or change-of-control provisions), in each case prior to the then Latest Maturity Date in effect and (B) has mandatory prepayment, repurchase or redemption, covenant, default and remedy provisions customary for senior high yield notes or other senior notes, as the case may be, in each case of clause (A) and (B), as determined as of the date of issuance or incurrence by a Responsible Officer of the Borrower in good faith, (c) at the option of the Borrower, such Indebtedness may contain prepayment premium provisions as of the time of its issuance or incurrence, and (d) as of the date of incurrence, a member of the senior management of the Borrower determines in good faith that such Indebtedness contains covenants and events of default on market terms. As of the Closing Date, the outstanding Permitted Split-Priority Term Loan Debt consists of the Existing Split-Priority Indebtedness. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, (x) no additional Permitted Split-Priority Term Loan Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing and (y) interest and fees in respect of the Existing Split-Priority Indebtedness shall constitute Permitted Split-Priority Term Loan Debt to the extent included in any Approved Budget.

 

Permitted Unsecured Indebtedness” means unsecured Indebtedness (including Convertible Debt) of the Borrower; provided that (a) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (b) if such Indebtedness is issued or incurred to refinance existing Indebtedness, such Indebtedness has a maturity that is no earlier than, and a weighted average life that is no shorter than, such existing Indebtedness, (c) such Indebtedness shall not mature or require scheduled payments of principal prior to the date that is 90 days after the Latest Maturity Date in effect at the time such Indebtedness is incurred, and (d) such Indebtedness shall otherwise be on terms acceptable to the Administrative Agent.

 

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Permitted Variance” has the meaning assigned to such term in Section 5.19(c).

 

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

 

Petition Date” shall have the meaning assigned to such term in the preliminary statements hereto.

 

Pharmaceutical Inventory” means all inventory consisting of products that can be dispensed only on order of a licensed professional.

 

Pharmaceutical Inventory Advance Rate” means the pharmaceutical inventory advance rate determined in accordance with Section 2.20(a).

 

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

 

Platform” has the meaning assigned to such term in Section 5.01(k).

 

Post-Petition” means the time period commencing immediately upon the filing of the Chapter 11 Case.

 

Preferred Stock” means, with respect to any corporation, capital stock issued by such corporation that is entitled to a preference or priority, in respect of dividends or distributions upon liquidation, over some other class of capital stock issued by such corporation.

 

Prepayment Event” means:

 

(a)            any sale, transfer or other disposition (including pursuant to a Sale and Leaseback Transaction) of any property or asset of the Borrower or any Subsidiary (including in connection with any Specified Sale Transaction and any Elixir Monetization Event), but excluding any sales, transfers or other dispositions described in clauses (a) and (d) of Section 6.05; or

 

(b)            any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary (including any Casualty/Condemnation); or

 

(c)            the incurrence by the Borrower or any Subsidiary of (i) any Indebtedness pursuant to an Elixir Monetization Event or (ii) any Indebtedness not permitted to be incurred under Section 6.02(a); or

 

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(d)            without limiting or duplicating any of the foregoing, any other Elixir Monetization Event;

 

provided, however, that, any of the events described in clauses (a) and (b) above pertaining solely to ABL Term Loan Exclusive Collateral shall not constitute a Prepayment Event hereunder.

 

Pre-Petition” means the time period ending immediately prior to the filing of the Chapter 11 Case.

 

Pre-Petition Agent” shall mean the “Administrative Agent”, “Collateral Agent” and “Senior Collateral Agent”, as such terms are defined in the Pre-Petition Credit Agreement.

 

Pre-Petition Credit Agreement” means that certain Credit Agreement, dated as of December 20, 2018, among the Borrower, the Pre-Petition Lenders, Bank of America, as the Pre-Petition Agent, and the other agents and arrangers party thereto, as amended, restated, supplemented or otherwise modified prior to the Closing Date.

 

Pre-Petition FILO Facility” means the “FILO Facility” as such term is defined in the Pre-Petition Credit Agreement.

 

Pre-Petition FILO Loans” means, at any time of determination, the “FILO Loans” (as such term is defined in the Pre-Petition Credit Agreement) at such time.

 

Pre-Petition FILO Obligations” means, at any time of determination, the Pre-Petition Senior Obligations relating to the Pre-Petition FILO Facility.“Pre-Petition LC Exposure” means the “LC Exposure” as defined in the Pre-Petition Credit Agreement.

 

Pre-Petition Lenders” means the “Lenders” from time to time party to the Pre-Petition Credit Agreement.

 

Pre-Petition Revolving Facility” means the “Revolving Facility”, as such term is defined in the Pre-Petition Credit Agreement.

 

Pre-Petition Revolving Loans” means, at any time of determination, the “Revolving Loans” (as such term is defined in the Pre-Petition Credit Agreement) at such time.

 

Pre-Petition Revolving Obligations” means, at any time of determination, the Pre-Petition Senior Obligations relating to the Pre-Petition Revolving Facility.

 

Pre-Petition Senior Obligations” means all “Senior Obligations”, as such term is defined in the Pre-Petition Credit Agreement.

 

Pre-Petition Senior Loan Documents” means the “Senior Loan Documents” as such term is defined in the Pre-Petition Credit Agreement.

 

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Pre-Petition Total Revolving Outstandings” means, at any time of determination, the “Total Revolving Outstandings” at such time under and as defined in the Pre-Petition Credit Agreement.

 

Prescription File” has the meaning specified in the Senior Security Agreement.

 

Prime Rate” means the rate of interest announced by Bank of America from time to time as its prime rate. Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate. Any change in such rate publicly announced by Bank of America shall take effect at the opening of business on the day specified in the announcement.

 

Prior Week” means, as of any date of determination, the immediately preceding week ended on a Saturday and commencing on the prior Sunday.

 

Protective Advance” means any extension of credit hereunder (including any such extension of credit resulting in an Overadvance) that is made, or is permitted to remain outstanding, by the Administrative Agent, in its sole discretion, to:

 

(a)            maintain, protect or preserve the value of the Collateral and/or the Administrative Agent’s, Collateral Agent’s, Senior Collateral Agent’s and the Senior Loan Secured Parties’ rights therein, including to preserve the Loan Parties’ business assets and infrastructure (such as the payment of insurance premiums, taxes, necessary suppliers, rent and payroll);

 

(b)            commence the exercise of remedies;

 

(c)            fund an orderly liquidation or wind-down of the Loan Parties’ assets or business or a Bankruptcy Proceeding (including the Chapter 11 Case) (whether or not occurring prior to or after the commencement of any such Bankruptcy Proceeding);

 

(d)            enhance the likelihood of, or maximize, the repayment of the Senior Loan Obligations or the Pre-Petition Senior Obligations; or

 

(e)            pay any other amount chargeable to the Borrower or the other Loan Parties hereunder or under any other Senior Loan Document or under any Pre-Petition Senior Loan Document;

 

provided that, (i) at the time the Administrative Agent shall elect to make, or permit such Protective Advance to remain outstanding, such Protective Advance, together with all other Protective Advances then outstanding, shall not exceed seven and one-half of one percent (7.5%) of the ABL Loan Cap at such time, (ii) unless a Liquidation is taking place, such Protective Advance may not remain outstanding for more than sixty (60) consecutive days and (iii) no Protective Advance shall be made or permitted to remain outstanding, if after giving effect thereto, the Total ABL Outstandings (including all Overadvances) shall exceed the Total ABL Commitments (as in effect prior to any termination of Commitments pursuant to Section 7.01 hereof). The forgoing shall not modify or abrogate any of the provisions of (A) Section 2.05 regarding any Revolving Lender’s obligations with respect to LC Disbursements, or (B) Section 2.04 regarding any Revolving Lender’s obligations with respect to participations in Swingline Loans and settlements thereof.

 

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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.

 

Public Lender” has the meaning assigned to such term in Section 5.01(k).

 

QFC Credit Support” has the meaning assigned to such term in Section 9.23.

 

Qualified Preferred Stock” means Preferred Stock of the Borrower that does not require any cash payment (including in respect of redemptions or repurchases), other than in respect of cash dividends, before the date that is six months after the Latest Maturity Date.

 

Real Estate Lease” means any agreement, whether written or oral, and all amendments, guaranties and other agreements relating thereto, pursuant to which a Loan Party is party for the purpose of using or occupying any real property for any period of time.

 

Refinance” means, with respect to any issuance of Indebtedness, to replace, renew, extend, refinance, repay, refund, repurchase, redeem, defease or retire, or to issue Indebtedness in exchange or as a replacement therefor, including any successive Refinancing. “Refinanced” and “Refinancing” shall have correlative meanings.

 

Refinanced Debt” has the meaning set forth in the definition of the term “Refinancing Indebtedness”.

 

Refinancing Amendment” means an amendment to this Agreement in form and substance reasonably satisfactory to the Administrative Agent and the Borrower executed by each of (a) the Borrower and each Subsidiary Loan Party, as applicable, (b) the Administrative Agent and (c) each Additional Lender and Lender that agrees to provide any portion of the Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 6.01(c).

 

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Refinancing Indebtedness” means Indebtedness (which shall be deemed to include Attributable Debt, Revolving Commitments and any other revolving commitments solely for the purposes of this definition), including any successive Refinancing Indebtedness, (a) issued, incurred or otherwise obtained (including by means of the extension or renewal of existing Indebtedness) in exchange for, or to extend, renew, replace or refinance, in whole or part, existing Indebtedness (provided that, if such existing Indebtedness is revolving Indebtedness, there is a corresponding reduction in the applicable lending commitments), Attributable Debt, Revolving Commitments or other revolving commitments (including Additional Senior Debt or any successive Refinancing Indebtedness) (“Refinanced Debt”) or (b) incurred pursuant to any Revolving Commitments that constitute Refinancing Indebtedness pursuant to clause (a) above; provided that (i) the terms of any such Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Loan Documents, (ii) such extending, renewing or refinancing Indebtedness (including, if such Indebtedness includes any Revolving Commitments, the unused portion of such Revolving Commitments) is in an original aggregate principal amount not greater than the aggregate principal amount of, and unpaid interest on, the Refinanced Debt (and, in the case of Refinanced Debt consisting, in whole or in part, of unused Revolving Commitments, the amount thereof) plus the amount of any premiums paid thereon, fees and expenses associated therewith and original issue discount related to such extending, renewing or refinancing Indebtedness, (iii) such Indebtedness has a maturity that is no earlier than, and a weighted average life that is no shorter than, the Refinanced Debt, (iv) at the option of the Borrower, such Indebtedness may contain call and make-whole provisions that are market with respect to such type of Indebtedness as of the time of its issuance or incurrence, (v) if the Refinanced Debt or any Guarantees thereof are subordinated in right of payment to the Senior Loan Obligations, such Indebtedness shall be subordinated in right of payment to the Senior Loan Obligations, on terms no less favorable, taken as a whole, to the holders of the Senior Loan Obligations than the subordination terms of such Refinanced Debt or Guarantees thereof, (vi) unless such Indebtedness is incurred pursuant to this Agreement (including any Refinancing Amendment executed in accordance with Section 6.01(c) or Loan Modification Agreement executed in accordance with Section 9.19), a member of the senior management of the Borrower determines in good faith at the time of incurrence that such Indebtedness contains covenants (including with respect to amortization and convertibility) and events of default on terms that are market with respect to such type of Indebtedness, (vii) such Indebtedness is benefited by Guarantees (if any) which, taken as a whole, are not materially less favorable to the Lenders than the Guarantees (if any) in respect of such Refinanced Debt, (viii) if such Refinanced Debt or any Guarantees thereof are secured, (1) such Indebtedness and any Guarantees thereof are either unsecured or secured only by such property or assets as secured the Refinanced Debt and Guarantees thereof and not any additional property or assets of the Borrower or any Subsidiary (other than (A) property or assets acquired after the issuance or incurrence of such Refinancing Indebtedness that would have been subject to the Lien securing refinanced Indebtedness if such Indebtedness had not been refinanced, (B) additions to the property or assets subject to the Lien, (C) the proceeds of the property or assets subject to the Lien and (D) if such Refinancing Indebtedness consists in whole or in part of Revolving Commitments, cash or cash equivalents to secure obligations in respect of letters of credit issued thereunder) and (2) if such Refinanced Debt is Second Priority Debt and such Refinancing Indebtedness is secured, such Indebtedness must be Permitted Second Priority Debt, (ix) if such Refinanced Debt and any Guarantees thereof are unsecured, such Indebtedness and Guarantees thereof are also unsecured, (x) any Net Cash Proceeds of such Indebtedness (other than any such Indebtedness that consists of unused Revolving Commitments) are used no later than forty-five (45) days following receipt thereof to repay the Refinanced Debt and pay any accrued interest, fees, premiums (if any) and expenses in connection therewith, provided that, if such Refinanced Debt (other than unused Revolving Commitments) comprises Indebtedness under this Agreement or Additional Senior Debt, then such Refinanced Debt shall be repaid, defeased or satisfied and discharged, and all accrued interest, fees and premiums (if any) in connection therewith shall be paid, on the date such Indebtedness is issued, incurred or obtained; and provided, further, that to the extent that such Refinanced Debt consists, in whole or in part, of Revolving Commitments or other revolving commitments (or Revolving Loans, Swingline Loans or other revolving loans incurred pursuant to any Revolving Commitments or other revolving commitments, as applicable), such Revolving Commitments, or other revolving commitments, as applicable, shall be terminated, and all accrued fees in connection therewith shall be paid, on the date such Indebtedness is issued, incurred or obtained, and (xi) if such Refinanced Debt is Indebtedness incurred under this Agreement or Additional Senior Debt and the Refinancing Indebtedness in respect thereof will be secured, then such Refinancing Indebtedness must be (A) Permitted First Priority Debt, (B) incurred pursuant to this Agreement (including pursuant to a Refinancing Amendment) or (C) Permitted Second Priority Debt, and in each case, subject to the Intercreditor Agreements. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Refinancing Indebtedness may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

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Refinancing Revolving Commitment” has the meaning assigned to such term in Section 6.01(c).

 

Refinancing Term Commitment” shall mean any Lender’s or Additional Lender’s commitment to make any Refinancing Term Loans pursuant to Section 6.01(c).

 

Refinancing Term Loan” has the meaning assigned to such term in Section 6.01(c).

 

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

 

Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same Guarantees) issued in a dollar for dollar exchange therefor pursuant to an exchange offer registered with the SEC.

 

Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, consultants (including, in the case of the Administrative Agent, the Lender Group Consultants), service providers, representatives and advisors of such Person and such Person’s Affiliates.

 

Remaining Annualized Periodmeans, with respect to any Specified Prescription File Store, for purposes of determining the Annualized Transitioned Prescription File Amount for such Specified Prescription File Store, the result of (a)(x) fifty-two (52) minus (y) the number of weeks that have elapsed since the date that such Specified Prescription File Store closed, divided by (b) fifty-two (52).

 

Remedies Notice Periodmeans the “Remedies Notice Period” as such term is defined in the Financing Order.

 

Removal Effective Date” has the meaning assigned to such term in Section 8.06(b).

 

Reports” has the meaning assigned to such term in Section 8.07(b).

 

Representatives” means the Senior Representatives, the Second Priority Representatives and the Split-Priority Representatives.

 

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Required FILO Lenders” means, at any time (a) prior to the deemed funding of the FILO Loans on the Closing Date, FILO Lenders holding FILO Commitments aggregating more than fifty percent (50%) of the Total FILO Commitments, and (b) thereafter, FILO Lenders whose percentage of the Total FILO Outstandings, aggregate more than fifty percent (50%) of such Total FILO Outstandings. The FILO Commitments and the share of Total FILO Outstandings of any Defaulting Lender shall be disregarded in determining Required FILO Lenders at any time.

 

Required Lenders” means, at any time, collectively, (a) Lenders holding more than fifty percent (50%) of the sum of (i) the Total Revolving Commitments, plus (ii) (A) at any time prior to the deemed funding of the FILO Loans on the Closing Date, the Total FILO Commitments, or (B) at any time thereafter, the Total FILO Outstandings plus (iii) in respect of the Term Facility, the aggregate principal amount of the Term Loans outstanding at such time, or (b) if the Commitments have been terminated, Lenders whose percentage of the Total Outstandings (calculated assuming settlement and repayment of all Swingline Loans by the Lenders) aggregate more than fifty percent (50%) of such Total Outstandings. The Commitments and the share of Total Outstandings of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in (x) any unreimbursed LC Disbursements that such Defaulting Lender that is a Revolving Lender has failed to fund or (y) any Swingline Loan that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the applicable Issuing Bank or Swingline Lender, as the case may be, in making such determination.

 

Required Revolving Lenders” means, at any time, Lenders having Revolving Commitments aggregating more than fifty percent (50%) of the sum of the Total Revolving Commitments, or if the Revolving Commitments have been terminated, Lenders whose percentage of the Total Revolving Outstandings (calculated assuming settlement and repayment of all Swingline Loans by the Lenders) aggregate more than fifty percent (50%) of such Total Revolving Outstandings. The Commitments and the share of Total Revolving Outstandings of any Defaulting Lender shall be disregarded in determining Required Revolving Lenders at any time; provided that the amount of any participation in any unreimbursed LC Disbursements or Swingline Loans that such Defaulting Lender that is a Revolving Lender has failed to fund that have not been reallocated to and funded by another Revolving Lender shall be deemed to be held by the Revolving Lender that is the applicable Issuing Bank or Swingline Lender, as the case may be, in making such determination.

 

Required Term Lenders” means, at any time Term Lenders whose percentage of the Total Term Outstandings, aggregate more than fifty percent (50%) of such Total Term Outstandings. The share of Total Term Outstandings of any Defaulting Lender shall be disregarded in determining Required Term Lenders at any time.

 

Rescindable Amount” has the meaning as defined in Section 2.18(d).

 

Resignation Effective Date” has the meaning assigned to such term in Section 8.06(a).

 

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

 

Responsible Officer” means the chief executive officer, president, each executive vice president, each vice president, each Financial Officer, or other similar officer of a Loan Party (or, solely in the case of Health Dialog Services Corporation, secretary) and, solely for purposes of the delivery of secretary’s certificates and incumbency certificates pursuant to Section 4.01, each secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice or other certificate to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent or with the consent of the Administrative Agent.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property, except dividends payable solely in shares of the Borrower’s common stock or Qualified Preferred Stock) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property, except payments made solely with common equity), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary.

 

Restructuring Support Agreement” means a restructuring support agreement, by and among the Loan Parties, certain holders of the Existing Split-Priority Indebtedness and the other parties thereto, entered into after the Closing Date, which is upon terms and conditions acceptable to the Administrative Agent, as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with this Agreement.

 

Revolving Availability Period” means in respect of any Class of Revolving Commitments, the period from and including the Closing Date (or, if later, the effective date for such Class of Revolving Commitments) to the earliest of (a) Revolving Maturity Date for such Class, (b) the date of termination of the Total Revolving Commitments pursuant to Section 7.01 or otherwise, and (c) the date of (i) the effectiveness of any plan of reorganization under Section 1129 of the Bankruptcy Code and/or (ii) the closing of a sale of all or substantially all of the working capital assets of the Loan Parties pursuant to Section 363 of the Bankruptcy Code.

 

Revolving Commitment” means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder (including, pursuant to any Incremental Revolving Commitment or any Other Incremental Revolving Commitment), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Lender’s name on Schedule 2.01 hereto under the caption “Revolving Commitment” (or, in the case of any Other Revolving Commitment, under the caption reflecting such Revolving Commitment Series) or opposite such caption in the Assignment and Acceptance pursuant to which such Revolving Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement or as amended from time to time pursuant to this Agreement (including in connection with any Loan Modification Agreement, Refinancing Amendment or Incremental Facility Amendment, as applicable) or any assignment of Revolving Commitments.

 

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Revolving Commitment Series” has the meaning assigned to such term in the definition of “Other Revolving Commitments”.

 

Revolving Exposure” means, with respect to any Revolving Lender at any time, the sum of the principal amount of such Revolving Lender’s Revolving Loans outstanding at such time, such Revolving Lender’s LC Exposure at such time, such Revolving Lender’s Swingline Exposure at such time, and such Revolving Lender’s Applicable Revolving Percentage of outstanding Protective Advances at such time.

 

Revolving Facility” means, as applicable and as the context may require, at any time (a) the Total Revolving Commitments of the Revolving Lenders at such time or (b) the aggregate principal amount of the Revolving Lenders’ Revolving Commitments under any specific Class. The aggregate principal amount of the Revolving Facility as of the Closing Date is $2,850,000,000.

 

Revolving Lender” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with any Revolving Exposure.

 

Revolving Loan” means a Loan made pursuant to Section 2.01(a).

 

Revolving Maturity Date” means, as the context may require, with respect to Revolving Commitments, October [●], 20242; provided that, if any such date is not a Business Day, the Revolving Maturity Date shall be deemed to be the next preceding Business Day.

 

S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor to its business of rating debt securities.

 

Sale and Leaseback Transaction” means any arrangement whereby the Borrower or a Subsidiary shall sell or transfer any office building (including its headquarters), distribution center, manufacturing plant, warehouse, Store, equipment or other property, real or personal, now or hereafter owned by the Borrower or a Subsidiary with the intention that the Borrower or any Subsidiary rent or lease the property sold or transferred (or other property of the buyer or transferee substantially similar thereto).

 

Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case of clauses (a) through (d) above that is a target of Sanctions, including a target of any country or territory sanctions program administered and enforced by OFAC.

 

 

2 Note to Draft – One year from Closing Date.

 

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Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated or blocked Persons maintained by OFAC, the U.S. Department of State, the United Nations, the United Kingdom or the European Union, (b) any Person operating, organized or resident in a Sanctioned Country, or (c) any Person owned 50% or more directly or indirectly owned or controlled (individually or in the aggregate) by, or acting on behalf of, any such Person or Persons described in the foregoing clauses (a) or (b) above.

 

Sanctions” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations, (c) His Majesty’s Treasury of the United Kingdom, or (d) the European Union.

 

Scheduled Unavailability Date” has the meaning specified in Section 2.14(b)(ii).

 

Script Lists Advance Rate” means the Script Lists advance rate determined in accordance with Section 2.20(a).

 

SEC” means the United States Securities and Exchange Commission and any successor agency thereto.

 

Second Priority Collateral” means all the “Second Priority Collateral” as defined in any Second Priority Collateral Document.

 

Second Priority Collateral Documents” means the Second Priority Subsidiary Security Agreement, the Second Priority Subsidiary Guarantee Agreement, the Second Priority Indemnity, Subrogation and Contribution Agreement, the Junior Lien Intercreditor Agreement and each of the security agreements and other instruments and documents executed and delivered by any Subsidiary Loan Party pursuant to any of the foregoing for purposes of providing collateral security or credit support for any Second Priority Debt Obligation or obligation under the Second Priority Subsidiary Guarantee Agreement.

 

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Second Priority Debt” means any Indebtedness incurred by the Borrower that is (x) Guaranteed by the Subsidiary Loan Parties pursuant to the Second Priority Subsidiary Guarantee Agreement (and not Guaranteed by any other Person) and (y) is secured by the Collateral on a junior basis to the Senior Loan Obligations (and not secured by Liens on any other assets of the Borrower or any other Person (other than assets that, substantially concurrently with the incurrence of such Indebtedness, become Collateral on which a Lien is granted to the Senior Collateral Agent pursuant to the Senior Security Agreement and/or other Senior Collateral Documents for the benefit of the Senior Loan Secured Parties)) but on a pari passu basis (but without regard to control of remedies) with the other Second Priority Debt Obligations and, if issued on or after the Closing Date, matures after the date that is 90 days after the Latest Maturity Date in effect on the date of issuance of such Indebtedness (subject to clause (f) of the definition of “Permitted Second Priority Debt”); provided, however, that (a) such Indebtedness is permitted to be incurred, secured and Guaranteed on such basis by each Senior Debt Document, each Split-Priority Debt Document and each other Second Priority Debt Document and (b) the Representative for the holders of such Second Priority Debt shall have become party to and bound by the terms of (x) the Junior Lien Intercreditor Agreement pursuant to, and by satisfying the conditions set forth therein (and, if such Indebtedness will be the initial Second Priority Debt incurred by the Borrower, then the Borrower, the Subsidiary Loan Parties, the Senior Collateral Agent, the Administrative Agent and the Representative for such initial Second Priority Debt shall have executed and delivered the Junior Lien Intercreditor Agreement) and (y) each other Applicable Intercreditor Agreement, in accordance with the requirements thereof. Second Priority Debt shall include any Registered Equivalent Notes issued in exchange thereof. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Second Priority Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

Second Priority Debt Documents” means, with respect to any series, issue or class of Second Priority Debt, the promissory notes, indentures, credit agreements and other operative agreements or instruments evidencing or governing such Indebtedness, including the Second Priority Collateral Documents.

 

Second Priority Debt Facility” means the indenture, credit agreement or other governing agreement or instrument with respect to any class or series of Second Priority Debt.

 

Second Priority Debt Obligations” means, with respect to any series, issue or class of Second Priority Debt, (a) all principal of, and interest payable with respect to, such Second Priority Debt, (b) all other amounts payable to the related Second Priority Debt Parties under the related Second Priority Debt Documents (including, in each case of clauses (a) and (b) above, any interest, fees and other amounts which accrue after the commencement of any case, proceeding or other action relating to a Bankruptcy Proceeding of the Borrower or any Subsidiary Loan Party, whether or not allowed or allowable, in whole or in part, as a claim in such Bankruptcy Proceeding) and (c) any renewals or extensions of the foregoing.

 

Second Priority Debt Parties” means, with respect to any series, issue or class of Second Priority Debt, the holders of such Indebtedness, any trustee or agent therefor under any related Second Priority Debt Documents and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any related Second Priority Debt Documents, but shall not include the Loan Parties or any Affiliates thereof (unless such Loan Party or Affiliate is a holder of such Indebtedness, a trustee or agent therefor or beneficiary of such an indemnification obligation).

 

Second Priority Indemnity, Subrogation and Contribution Agreement” means the Second Priority Indemnity, Subrogation and Contribution Agreement, in substantially the form of Exhibit I attached to the Pre-Petition Credit Agreement or such other form as is reasonably acceptable to the Administrative Agent and the Borrower.

 

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Second Priority Lien” means the Liens on the Second Priority Collateral in favor of the Second Priority Debt Parties under the Second Priority Collateral Documents.

 

Second Priority Representative” means, in respect of a Second Priority Debt Facility, the trustee, administrative agent, security agent or similar agent under such Second Priority Debt Facility, as the case may be, and each of their successors in such capacities.

 

Second Priority Subsidiary Guarantee Agreement” means the Second Priority Subsidiary Guarantee Agreement, in substantially the form of Exhibit G attached to the Pre-Petition Credit Agreement or such other form reasonably acceptable to the Administrative Agent and the Borrower.

 

Second Priority Subsidiary Security Agreement” means the Second Priority Subsidiary Security Agreement in substantially the form of Exhibit H attached to the Pre-Petition Credit Agreement or such other form reasonably acceptable to the Administrative Agent and the Borrower.

 

Senior Bank Products” means, collectively, (in each case, whether existing on the Closing Date or arising thereafter) (a) any services or facilities (other than Senior Cash Management Services) provided to any Loan Party or any Subsidiary by any Lender or any Affiliate of a Lender on account of (i) credit or debit cards, (ii) purchase cards, (iii) merchant services, (iv) lease financing or related services, and (v) supply chain financing, and (b) any Senior Hedging Agreements.

 

Senior Cash Management Agreement” means any agreement to provide Senior Cash Management Services.

 

Senior Cash Management Services” means any one or more of the following types of services or facilities provided to any Loan Party or any Subsidiary by any Lender or any Affiliate of a Lender (in each case, whether existing on the Closing Date or arising thereafter): (a) automated clearing house transfer transactions, (b) treasury and/or cash management services, including controlled disbursement services, cash vault services, depository, overdraft and electronic funds transfer services, and (c) deposit and other accounts.

 

Senior Collateral Agent” means the Collateral Agent, in its capacity as senior collateral agent for the Senior Loan Secured Parties and the other Senior Secured Parties under the Senior Collateral Documents, and any successor thereof or replacement senior collateral agent appointed in accordance with the terms of this Agreement, the Senior Security Agreement, the Senior Lien Intercreditor Agreement, and any Applicable Intercreditor Agreement.

 

Senior Collateral Documents” means the Financing Order, the Senior Security Agreement, the Senior Subsidiary Guarantee Agreement, the Senior Indemnity, Subrogation and Contribution Agreement, the Senior Lien Intercreditor Agreement (upon and after the initial execution and delivery thereof by the initial parties thereto), and each Applicable Intercreditor Agreement (upon and after the initial execution and delivery thereof by the initial parties thereto) and each of the security agreements and other instruments and documents executed and delivered by any Subsidiary Loan Party pursuant to any of the foregoing or pursuant to any Senior Debt Document for purposes of providing collateral security or credit support for any Senior Obligation or obligation under the Senior Subsidiary Guarantee Agreement.

 

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Senior Debt Documents” means (a) the Senior Loan Documents and (b) any Additional Senior Debt Documents.

 

Senior Hedging Agreement” means any Hedging Agreement entered into with the Borrower or any Subsidiary, if the applicable counterparty was a Lender or an Affiliate thereof (a) on the Closing Date, in the case of any Hedging Agreement entered into prior to the Closing Date or (b) at the time the Hedging Agreement was entered into, in the case of any Hedging Agreement entered into on or after the Closing Date.

 

Senior Indemnity, Subrogation and Contribution Agreement” means the Senior Indemnity, Subrogation and Contribution Agreement, dated as of the Closing Date, among the Borrower, the Subsidiary Loan Parties (including additional Subsidiary Loan Parties becoming party thereto in accordance with the terms thereof) and the Senior Collateral Agent.

 

Senior Lien” means the Liens on the Collateral in favor of the Senior Secured Parties under the Senior Collateral Documents.

 

Senior Lien Intercreditor Agreement” means the Intercreditor Agreement, in substantially the form attached as Exhibit J-1 to the Pre-Petition Credit Agreement or such other form as is reasonably acceptable to the Administrative Agent and the Borrower, among the Senior Collateral Agent, the Borrower, the Loan Parties, the Administrative Agent as the Representative for the Senior Loan Secured Parties and the other Senior Representatives from time to time party thereto for purposes thereof for any Additional Senior Debt Parties.

 

Senior Loan Bank Product Liabilities” means liabilities and obligations with respect to or arising from (a) any Senior Cash Management Services and (b) any Senior Bank Products, as each may be amended from time to time; provided that (i) the “Senior Loan Bank Product Liabilities” shall exclude any Excluded Swap Obligations and (ii) in order for any item described in clauses (a) or (b) above, as applicable, to be included for purposes of a distribution under Section 7.02 clauses ELEVENTH or TWELFTH, as applicable, if the provider of such Senior Cash Management Services or Senior Bank Products is any Person other than the Administrative Agent or its Affiliates, then the Administrative Agent shall have received from the applicable provider of such Senior Cash Management Services or Senior Bank Products (A) a written notice to the Administrative Agent of (x) the existence of such Senior Cash Management Services or Senior Bank Products, (y) the maximum dollar amount of obligations arising thereunder (“Senior Loan Bank Product Liabilities Amount”), and (z) the methodology to be used by such parties in determining the Senior Loan Bank Product Liabilities Amount owing from time to time, and (B) a report, at such times as may be requested by the Administrative Agent, setting forth the then outstanding Senior Loan Bank Product Liabilities Amount with respect to such Senior Bank Products and Senior Cash Management Services of such Person.

 

Senior Loan Bank Product Liabilities Amount” has the meaning set forth in the definition of “Senior Loan Bank Product Liabilities”.

 

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Senior Loan Documents” means this Agreement, the Letters of Credit, the Fee Letter, all Borrowing Base Certificates, all Compliance Certificates (including all Approved Budget Variance Reports attached thereto), the Information Certificate, any promissory notes issued to any Lender pursuant to this Agreement, each Refinancing Amendment, each Loan Modification Agreement, each Incremental Facility Amendment, and the Senior Collateral Documents and any other agreement now or hereafter executed and delivered in connection herewith (excluding agreements entered into in connection with any transaction arising out of any Senior Bank Products or Cash Management Services), each as amended and in effect from time to time.

 

Senior Loan Obligation Payment Date” means the date on which (a) the Senior Loan Obligations have been indefeasibly paid in full in cash (other than (i) contingent indemnification obligations and other obligations of the Loan Parties that expressly survive the termination of the Senior Loan Documents for which no claim has been asserted and (ii) Senior Loan Obligations with respect to Senior Loan Bank Product Liabilities not yet due and payable, except to the extent the Administrative Agent has received written notice, at least three (3) Business Days prior to any proposed Senior Loan Obligation Payment Date stating that arrangements reasonably satisfactory to the applicable provider thereof in respect of Senior Bank Products or Senior Cash Management Services have not been made), all Letters of Credit shall have expired or terminated (or been Cash Collateralized or backstopped in a manner reasonably satisfactory to the applicable Issuing Bank) and all LC Exposure have been reduced to zero (or Cash Collateralized or backstopped in a manner reasonably satisfactory to the applicable Issuing Bank), and (b) all lending commitments under this Agreement and the other Senior Loan Documents have been terminated.

 

Senior Loan Obligations” means (a) the principal of each Loan made under this Agreement, (b) all reimbursement and cash collateralization obligations in respect of letters of credit issued under this Agreement, (c) all Senior Loan Bank Product Liabilities, (d) all interest on the loans, letter of credit reimbursement, fees, indemnification and other obligations under this Agreement, or with respect to such Senior Loan Bank Product Liabilities (including any interest, fees and other amounts which accrue after the commencement of any case, proceeding or other action relating to a Bankruptcy Proceeding of the Borrower or any Subsidiary Loan Party, whether or not allowed or allowable, in whole or in part, as a claim in such Bankruptcy Proceeding), (e) all other amounts payable by the Borrower or any Subsidiary under the Senior Loan Documents or in respect of Senior Loan Bank Product Liabilities and (f) all increases, renewals, extensions and Refinancings of the foregoing.

 

Senior Loan Secured Parties” means collectively, the Administrative Agent, the Collateral Agent, the Senior Collateral Agent, the Lenders, the Issuing Banks, each co-agent or sub-agent of any Agent, each other party to this Agreement other than any Loan Party, each counterparty to a Senior Hedging Agreement or Senior Cash Management Agreement, the beneficiaries of each indemnification or expense reimbursement obligation undertaken by the Borrower or any other Loan Party under any Senior Loan Document, and the successors and permitted assigns of each of the foregoing.

 

Senior Obligations” means the Senior Loan Obligations and the Additional Senior Debt Obligations.

 

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Senior Representative” means, in respect of the Senior Loan Documents or any Additional Senior Debt Documents, the trustee, administrative agent, collateral agent, security agent or similar agent under such Senior Loan Documents or any Additional Senior Debt Documents, as the case may be, and each of their successors in such capacities.

 

Senior Secured Parties” means the Senior Loan Secured Parties and any Additional Senior Debt Parties.

 

Senior Security Agreement” means the Senior Security Agreement, dated as of the Closing Date, among the Borrower, the Subsidiary Loan Parties (including additional Subsidiary Loan Parties that become parties thereto in accordance with the terms thereof) and the Senior Collateral Agent, for the benefit of the Senior Secured Parties, as such agreement may be amended, supplemented or otherwise modified from time to time.

 

Senior Subsidiary Guarantee Agreement” means the Senior Subsidiary Guarantee Agreement, dated as of the Closing Date, made by the Subsidiary Loan Parties (including additional Subsidiary Loan Parties that become parties thereto in accordance with the terms thereof) in favor of the Senior Collateral Agent, for the benefit of the Senior Secured Parties, as such agreement may be amended, supplemented or otherwise modified from time to time.

 

SOFR” means the Secured Overnight Financing Rate as administered by the SOFR Administrator.

 

SOFR Adjustment” means 0.10% (10 basis points).

 

SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of SOFR).

 

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 SOFR identified as such by the SOFR Administrator from time to time.

 

Specified Elixir Assets” means Medicare Part D payments owing to Elixir Insurance Company from the Center for Medicare & Medicaid Services (other than, for the avoidance of doubt, any such payments purchased prior to the Petition Date pursuant to Elixir Insurance Company’s existing receivables purchase arrangement).

 

Specified Elixir Sale” means any sale or other disposition of (a) all or any portion of the Elixir Business Segment and/or (b) all or any of the Equity Interests of the Elixir Subsidiaries as a going concern under Section 363 of the Bankruptcy Code or otherwise. Any Specified Elixir Sale shall be conducted pursuant to bidding procedures, sales procedures, approval orders, purchase agreements, agency documents or other agreements, documents or instruments, as applicable, in form and substance and on terms satisfactory to the Administrative Agent.

 

Specified Going Concern Sale” means a sale, in one or a series of related transactions, of all or substantially all of (or, if approved in writing by the Administrative Agent, certain of) the assets of the Loan Parties as a going concern under Section 363 of the Bankruptcy Code or otherwise. The Specified Going Concern Sale shall be conducted pursuant to bidding procedures, sales procedures, approval orders, purchase agreements, agency documents or other agreements, documents or instruments, as applicable, in form and substance and on terms satisfactory to the Administrative Agent.

 

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Specified Non-Going Concern Sale” means the sale or other disposition on an equity basis (or, if approved by the Administrative Agent in its sole discretion, on a fee basis) of the entire chain of Stores (or the entire chain of Stores remaining after completion of, or not contemplated to be included in, the Specified Going Concern Sale) and all of the assets relating thereto on a non-going concern basis under Section 363 of the Bankruptcy Code or otherwise. The Specified Non-Going Concern Sale shall be conducted pursuant to bidding procedures, sales procedures, approval orders, purchase agreements, agency documents or other agreements, documents or instruments, as applicable, in form and substance and on terms satisfactory to the Administrative Agent.

 

Specified Other Assets Sale” means a sale, in one or a series of related transactions, of all remaining assets of the Loan Parties under Section 363 of the Bankruptcy Code or otherwise, to the extent such assets are not otherwise included in any other Specified Sale Transaction. The Specified Other Assets Sale shall be conducted pursuant to bidding procedures, sales procedures, approval orders, purchase agreements, agency documents or other agreements, documents or instruments, as applicable, in form and substance and on terms satisfactory to the Administrative Agent.

 

Specified Prescription File Stores” means the Specified Stores set forth on Schedule 1.01(c) that have closed for business and, as to which, the Borrower (or other applicable Loan Party) has elected to transition (all or a portion of) the Prescription Files located at such Specified Store to another operating Store location (any such Prescription File subject to such transition, a “Transitioned Prescription File”).

 

Specified Sale Process Default” means any Event of Default under and as arising under the following Sections of this Agreement: (a) Section 7.01(a) or Section 7.01(b) (Non-Payment Events), (b) Section 7.01(c) (Incorrect Information), solely to the extent relating to information, or representations and warranties made in, any Approved Budget Variance Report, any Borrowing Base Certificate, any Compliance Certificate, or any reporting or information delivered with respect to achievement of any Chapter 11 Case Milestone, or (c) Section 7.01(d) with respect to a breach of (i) Section 5.01(f) (Borrowing Base Certificates), (ii) Section 5.19(c) (Approved Budget Covenant Compliance), (iii) Section 5.19(d) (Approved Budget Variance Reports), (iv) Section 5.20 (Chapter 11 Case Milestones) and (v) Section 6.12 (Minimum ABL Availability) (solely in the case of this clause (c), which Event of Default has occurred and is continuing for two (2) Business Days or more).

 

Specified Sale Transaction” means any or all of a Specified Going Concern Sale, a Specified Non-Going Concern Sale, a Specified Elixir Sale, or a Specified Other Assets Sale.

 

Specified Stores” means the Stores identified to the Administrative Agent, the Lenders, the ABL Term Loan Agent and the ABL Term Loan Lenders prior to the Petition Date; provided that the Loan Parties may adjust the identity and number of Specified Stores, in consultation with the Administrative Agent, except that any upward or downward adjustment of the total number of Specified Stores of greater than 75 Stores shall be subject to (a) the prior written consent of the Administrative Agent and (b) solely in the case of such an upward adjustment, the Borrower’s retention of a store closing consultant reasonably satisfactory to the Administrative Agent and the Borrower.

 

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Specified Store Closing Sale” means the closure of any Specified Stores and any related sale(s) of assets conducted pursuant to the Store Closing Order.

 

Split-Lien Collateral” means all assets of the Loan Parties of the type that constitutes “Split-Lien Collateral” (as defined in the Split-Priority Intercreditor Agreement) immediately prior to the Petition Date. For the avoidance of doubt, the term “Split-Lien Collateral” shall not include any ABL Term Loan Exclusive Collateral.

 

Split-Lien Priority Collateral” means all Split-Lien Collateral that constitutes “Split-Lien Priority Collateral” as defined in the Split-Priority Intercreditor Agreement.

 

Split-Priority Debt Documents” means, with respect to any series, issue or class of Split-Priority Term Loan Debt, the credit agreements, indentures, notes, instruments or other operative agreements evidencing or governing such Indebtedness.

 

Split-Priority Debt Facility” means the credit agreement or indenture with respect to any class or series of Split-Priority Term Loan Debt. As of the Closing Date, the outstanding Split-Priority Debt Facilities consist of the Existing Split-Priority Indentures.

 

Split-Priority Debt Parties” means, with respect to any series, issue or class of Split-Priority Term Loan Debt, the holders of such Indebtedness, any trustee or agent therefor under any related Split-Priority Debt Documents and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any related Split-Priority Debt Documents, but shall not include any Loan Party or any Affiliates thereof (unless such Loan Party or Affiliate is a holder of such Indebtedness, a trustee or agent therefor or beneficiary of such an indemnification obligation named as such in a Split-Priority Debt Document).

 

Split-Priority Implementing Agreements” has the meaning assigned to such term in the definition of “Split-Priority Term Loan Debt” herein.

 

Split-Priority Intercreditor Agreement” has the meaning assigned to such term in the definition of “Split-Priority Term Loan Debt” herein, and shall include, as of the Closing Date, that certain Intercreditor Agreement, dated as of February 5, 2020, by and between the Senior Collateral Agent and The Bank of New York Mellon Trust Company, as the initial Split-Priority Representative, as the same may be amended, amended and restated, restated supplemented or otherwise modified from time to time (including pursuant to the joinder dated as of July 27, 2020).

 

Split-Priority Lien” means the Liens on the Collateral in favor of the Split-Priority Debt Parties under the Split-Priority Debt Documents.

 

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Split-Priority Representative” means, in respect of any Split-Priority Debt Facility, the administrative agent, collateral agent, security agent or similar agent under such Split-Priority Debt Facility, as the case may be, and each of their successors in such capacities.

 

Split-Priority Term Loan Debt” means Indebtedness of the Borrower incurred after the Closing Date pursuant to either (a) a bank credit facility (other than this Agreement) that has terms customary for similarly structured “tranche B” term loan facilities or (b) senior high yield notes or other senior notes (whether such notes are issued for cash, in exchange for other notes of the Borrower or for other consideration), which Indebtedness (i) is Guaranteed by the Subsidiary Loan Parties and not by any other Person, (ii) does not mature earlier than the date that is 90 days after the Latest Maturity Date in effect on the date of incurrence of such Indebtedness (subject to clause (e) of the definition of “Permitted Split-Priority Term Loan Debt”), (iii) is secured (x) by the Split-Lien Priority Collateral on a first-priority basis (with the Senior Obligations being secured by the Split-Lien Priority Collateral on a second priority basis that is, however, senior, to any Liens or security interests securing Second Priority Debt) and (y) by the ABL Priority Collateral on a second-priority basis to the Liens and security interests securing the Senior Obligations (but on a basis senior to any Liens or security interests securing Second Priority Debt), and (iv) is not secured by Liens on any other assets other than the Collateral (or assets that, substantially concurrently with the incurrence of such Indebtedness, become Collateral on which a Lien is granted to the Senior Collateral Agent pursuant to the Senior Security Agreement and/or other Senior Collateral Documents for the benefit of the Senior Loan Secured Parties); provided, however, that (A) the incurrence and terms (including with respect to collateral, security interests and the priority thereof) of any such Indebtedness, including the terms of any credit, security, intercreditor or similar agreement entered into and of any instrument issued in connection therewith, are otherwise permitted by the Senior Debt Documents and the Second Priority Debt Documents (if any Second Priority Debt is outstanding); (B) the Senior Lien Intercreditor Agreement, the Junior Lien Intercreditor Agreement and the other Senior Collateral Documents, and, if any Second Priority Debt is outstanding, the Second Priority Collateral Documents, shall have been amended to the extent required to permit and implement the priority of the Liens securing such Split-Priority Term Loan Debt contemplated by clauses (iii)(x) and (iii)(y) above (or if there is no outstanding Additional Senior Debt and no outstanding Second Priority Debt, such agreements relating to intercreditor arrangements with respect to the Collateral may, alternatively, be replaced by an intercreditor agreement between the Representatives for the Senior Loan Secured Parties and the holders of such Split-Priority Term Loan Debt (a “Split-Priority Intercreditor Agreement”), in each case on terms and conditions reasonably acceptable to the Administrative Agent and, insofar as such amended agreements or replacement agreements deal with intercreditor issues relating to the relative rights of the Senior Secured Parties and the holders of Split-Priority Term Loan Debt in the Collateral, on terms and conditions both reasonably acceptable to the Administrative Agent and customary for similar intercreditor agreements relating to cross-collateralized asset-based credit facilities, on the one hand, and tranche B term loan facilities or senior high yield notes or other senior notes, as applicable, on the other hand (the amendments to agreements and any Split-Priority Intercreditor Agreement referred to in this clause (B) being referred to herein as the “Split-Priority Implementing Agreements”); (C) the applicable Split-Priority Representative shall have become party to the intercreditor agreements referred to in clause (B) of this proviso, which shall be in full force and effect and (D) the Administrative Agent shall have received a certificate, dated the date such Indebtedness is incurred and signed by a Financial Officer of the Borrower, confirming compliance with the requirements set forth in clause (A) of this proviso. As of the Closing Date, the outstanding Split-Priority Term Loan Debt consists of the Existing Split-Priority Indebtedness. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Split-Priority Term Loan Debt may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

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Statutory Committee” means any official committee of unsecured creditors in the Chapter 11 Case pursuant to Section 1102 of the Bankruptcy Code.

 

Store” means any retail store (which may include any real property, fixtures, equipment, inventory and Prescription Files related thereto) operated, or to be operated, by any Subsidiary Loan Party.

 

Store Closing Order” means any order of the Bankruptcy Court entered in the Chapter 11 Case approving the Loan Parties’ closure of Stores and sales of assets related thereto, which order shall be in form and substance satisfactory to the Loan Parties and the Administrative Agent, and from which no appeal or motion to reconsider has been filed, together with all extensions, modifications and amendments thereto, in form and substance satisfactory to the Loan Parties and the Administrative Agent.

 

Subject Modification” has the meaning specified in Section 9.02(d)(iii).

 

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

 

Subsidiary” means any subsidiary of the Borrower.

 

Subsidiary Loan Party” means each Subsidiary of the Borrower that becomes party to the Senior Subsidiary Guarantee Agreement on or after the Closing Date. Notwithstanding any provision in the Senior Loan Documents to the contrary, no Excluded Subsidiary shall be required to become a Subsidiary Loan Party.

 

Successor Rate” has the meaning specified in Section 2.14(b).

 

Supported QFC” has the meaning assigned to such term in Section 9.23.

 

Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Revolving Lender at any time shall be its Applicable Revolving Percentage of the total Swingline Exposure at such time.

 

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Swingline Lender” means Bank of America, in its capacity as the lender of Swingline Loans hereunder.

 

Swingline Loan” means a Loan made pursuant to Section 2.04.

 

Swingline Sublimit” has the meaning set forth in Section 2.04(a).

 

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

 

Term Facility” means, at any time, as applicable and as the context may require, (a) the aggregate principal amount of the Incremental Refinancing Term Loans, Loan Modification Term Loans and Refinancing Term Loans of all Term Lenders outstanding at such time (after giving effect to any Incremental Refinancing Term Loans made or to be made with respect to any Incremental Term Commitment, any Loan Modification Term Loans made or to be made with respect to any Loan Modification Term Commitment and any Refinancing Term Loans made or to be made with respect to any Refinancing Term Commitment) or (b) the aggregate principal amount of any specific Class of Term Loans of the applicable Term Lenders outstanding at such time (after giving effect to any Incremental Refinancing Term Loans made or to be made with respect to any Incremental Term Commitment, any Loan Modification Term Loans made or to be made with respect to any Loan Modification Term Commitment and any Refinancing Term Loans made or to be made with respect to any Refinancing Term Commitment). The aggregate principal amount of the Term Facility on the Closing Date is $0. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Term Facility may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

Term Facility Maturity Date” shall mean, with respect to any Class of Term Loans, the maturity date set forth in the Incremental Facility Amendment or Refinancing Amendment with respect to such Class of Term Loans; provided in each case that if such day is not a Business Day, the Term Facility Maturity Date shall be the Business Day immediately preceding such day.

 

Term Lender” means any Lender that holds (a) Incremental Refinancing Term Loans at such time or any Incremental Term Commitment in respect thereof at such time, (b) any Loan Modification Term Loans at such time or any Loan Modification Term Commitment in respect thereof at such time, or (c) Refinancing Term Loans at such time or any Refinancing Term Commitment in respect thereof at such time.

 

Term Loans” means, collectively (a) Incremental Refinancing Term Loans, (b) Loan Modification Term Loans and (c) Refinancing Term Loans.

 

Term SOFR” means:

 

(a)            for any Interest Period with respect to a Term SOFR Loan, the rate per annum equal to the Term SOFR Screen Rate two (2) U.S. Government Securities Business Days prior to the commencement of such Interest Period with a term equivalent to such Interest Period; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such Interest Period; and

 

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(b)            for any interest calculation with respect to an ABR Loan on any date, the rate per annum equal to the Term SOFR Screen Rate with a term of one month commencing that day;

 

provided that, if the Term SOFR determined in accordance with either of the foregoing provisions clause (a) or (b) of this definition would otherwise be less than one percent, the Term SOFR shall be deemed to be one percent for purposes of this Agreement.

 

Term SOFR Loan” means a Loan that bears interest based on clause (a) of the definition of “Term SOFR.”

 

Term SOFR Replacement Date” has the meaning specified in Section 2.14(b).

 

Term SOFR Screen Rate” means the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory to the Administrative Agent) and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).

 

Total ABL Commitments” means, at any time, the aggregate of (a) the Revolving Commitments at such time and (b) the Term Facility at such time.

 

Total ABL Outstandings” means, at any time, the sum of (a) the Total Revolving Outstandings at such time plus (b) the aggregate outstanding principal amount of all Term Loans at such time.

 

Total FILO Commitments” means, at any time, the aggregate of the FILO Commitments of all FILO Lenders at such time.

 

Total FILO Outstandings” means, at any time, the aggregate outstanding amount of all FILO Loans at such time.

 

Total Outstandings” means, at any time, the sum of (x) the Total ABL Outstandings at such time, plus (y) the Total FILO Outstandings at such time.

 

Total Revolving Commitments” means, at any time, the aggregate of the Revolving Commitments of all Revolving Lenders at such time.

 

Total Revolving Outstandings” means, at any time, the aggregate outstanding amount of (a) the Pre-Petition Total Revolving Outstandings at such time, (b) all Revolving Loans at such time, (c) all Swingline Loans at such time and (d) the LC Exposure at such time.

 

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Total Term Outstandings” means, at any time, the aggregate outstanding amount of all Term Loans at such time.

 

Transaction Expenses” means any fees or expenses (including without limitation arrangement or underwriting or similar fees as well as upfront fees or original issue discount) incurred or paid by the Borrower or any of the Subsidiaries in connection with the Transactions (including in connection with (a) this Agreement and the other Senior Loan Documents and (b) the ABL Term Loan Agreement and the other ABL Term Loan Documents).

 

Transactions” means, collectively, (a) the execution and delivery by the Loan Parties of the Senior Loan Documents to which they are a party and the making (or deemed making) of the Loans and the issuance of Letters of Credit (if any), in each case, on the Closing Date, (b) the execution and delivery by the Loan Parties of the ABL Term Loan Documents to which they are a party and the making of the ABL Term Loans on the Closing Date, (c) the payment of the Transaction Expenses, and (d) the undertaking of the transactions and obligations related to any of the foregoing.

 

Transitioned Prescription File” has the meaning set forth in the definition of “Specified Prescription File Store”.

 

Transitioned Prescription Files Amount” means, for all Specified Stores that have closed for business, an amount equal to the aggregate Annualized Transitioned Prescription File Amounts for all such Specified Stores; provided, however, that in no event shall the aggregate amount of all Transitioned Prescriptions Files included in determining the Annualized Transitioned Prescription File Amounts exceed the initial 8,500,000 of Transitioned Prescriptions Files since the Closing Date.

 

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

 

U.K. Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to 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.

 

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

 

Undisclosed Administration” means in relation to any Person, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Person is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.

 

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Uniform Commercial Code” or “UCC” means, unless otherwise specified, the Uniform Commercial Code as from time to time in effect in the State of New York.

 

Unintentional Overadvance” means an Overadvance which, to the Administrative Agent’s knowledge, did not constitute an Overadvance when made but which has become an Overadvance resulting from changed circumstances beyond the control of the Senior Loan Secured Parties, including (a) a reduction in the Net Orderly Liquidation Rate or otherwise, in the value of the Collateral, (b) components of the ABL Borrowing Base Amount or the FILO Borrowing Base Amount on any date thereafter being deemed ineligible, (c) the imposition of, or increase in, any reserves to reflect Borrowing Base Factors, the FILO Push-Down Reserve, the ABL Term Loan Push-Down Reserve, or the Carve Out Reserve, (d) a reduction in advance rates after the funding of any Loan or advance or the issuance, renewal or amendment of a Letter of Credit, (e) the return of uncollected checks or other items of payment applied to the reduction of Loans or other similar involuntary or unintentional actions, or (f) any misrepresentation by the Loan Parties.

 

USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

 

U.S. Government Securities Business Day” means any Business Day, except any Business Day on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business cause such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.

 

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

 

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

 

U.S. Trustee” shall mean the United State Trustee applicable to the Chapter 11 Case.

 

Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Sections 4203 and 4205, respectively, of ERISA.

 

Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

 

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

 

SECTION 1.03.          Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); provided, however, that amendments to the Second Priority Debt Documents after the Closing Date shall be effective for purposes of references thereto in this Agreement and the other Senior Loan Documents only if such amendments are permitted hereunder and under the Second Priority Debt Documents, the Additional Senior Debt Documents, the Senior Lien Intercreditor Agreement and the Junior Lien Intercreditor Agreement, as applicable, or are consented to in writing for such purpose by the Required Lenders (or such other percentage of the Lenders as may be specified herein) and the applicable holders of Second Priority Debt and Additional Senior Debt required by the terms of the Second Priority Debt Documents and the Additional Senior Debt Documents, as applicable, (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 1.04.          Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith; provided further that, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value,” as defined therein and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

 

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SECTION 1.05.          Divisions. For all purposes under the Senior 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 1.06.          Excluded Swap Obligations.

 

(a)            Notwithstanding any provision of this Agreement or any other Senior Loan Document, no Guarantee (including, for the avoidance of doubt, the guarantee obligations of each Subsidiary Loan Party under the Senior Loan Documents insofar as such Subsidiary Loan Party is jointly liable for obligations of any other Subsidiary Loan Party) by any Subsidiary Loan Party under any Senior Loan Document shall include a Guarantee of any Senior Obligation that, as to such Subsidiary Loan Party, is an Excluded Swap Obligation, and no Collateral provided by any Subsidiary Loan Party shall secure any Senior Obligation that, as to such Subsidiary Loan Party, is an Excluded Swap Obligation. In the event that any payment is made by, or any collection is realized from, any Subsidiary Loan Party as to which any Senior Obligations are Excluded Swap Obligations, or from any Collateral provided by such Subsidiary Loan Party, the proceeds thereof shall be applied to pay the Senior Obligations of such Subsidiary Loan Party as otherwise provided herein without giving effect to such Excluded Swap Obligations and each reference in this Agreement or any other Senior Loan Document to the ratable application of such amounts as among the Senior Obligations or any specified portion of the Senior Obligations that would otherwise include such Excluded Swap Obligations shall be deemed so to provide.

 

(b)            The following terms shall for purposes of this Section 1.06 have the meanings set forth below:

 

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

 

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Excluded Swap Obligation” means, with respect to Subsidiary Loan Party, any Swap Obligation if, and to the extent that, the Guarantee by such Subsidiary Loan Party of, or the grant by such Subsidiary Loan Party of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Subsidiary Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act at the time the Guarantee of such Subsidiary Loan Party becomes effective with respect to such related Swap Obligation.

 

Swap Obligation” means, with respect to any Subsidiary Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

SECTION 1.07.          Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

 

SECTION 1.08.          Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any letter of credit application or other issuer document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

SECTION 1.09.          Interest Rates. The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to any reference rate referred to herein or with respect to any rate (including, for the avoidance of doubt, the selection of such rate and any related spread or other adjustment) that is an alternative or replacement for or successor to any such rate (including any Successor Rate) (or any component of any of the foregoing) or the effect of any of the foregoing, or of any Conforming Changes. Any Person acting as the Administrative Agent and its affiliates or other related entities may engage in transactions or other activities unrelated to this Agreement that affect any reference rate referred to herein, or any alternative, successor or replacement rate (including any Successor Rate) (or any component of any of the foregoing) or any related spread or other adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any reference rate referred to herein or any alternative, successor or replacement rate (including any Successor Rate) (or any component of any of the foregoing), in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other Person 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 the selection of any such information source or service made by the Administrative Agent in its reasonable discretion or for any error or any other action or omission by such information source or service or calculation of any such rate (or component thereof) provided by any such information source or service.

 

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ARTICLE II

 

The Credits

 

SECTION 2.01.          Commitments.

 

(a)            Subject to the terms and conditions set forth herein, each Revolving Lender, severally and not jointly with any other Revolving Lender, agrees to make Revolving Loans denominated in dollars to the Borrower from time to time during the Revolving Availability Period in an aggregate principal amount that will not exceed its Revolving Commitment; provided that each of the Credit Extension Conditions shall be satisfied after giving effect to such any such Revolving Loans. Within the foregoing limits and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

 

(b)            Subject to the terms and conditions set forth herein, each FILO Lender, severally and not jointly with any other FILO Lender, shall be deemed to make a single Loan denominated in dollars to the Borrower on the Closing Date in the amount of such FILO Lender’s FILO Commitment in order to give effect to Section 2.01(e); provided that each of the Credit Extension Conditions shall be satisfied after giving effect to any such FILO Loans. The FILO Loan Borrowing on the Closing Date shall consist of FILO Loans made simultaneously by the FILO Lenders in accordance with their respective FILO Commitments. FILO Loans made to the Borrower that are repaid or prepaid may not be reborrowed.

 

(c)            Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all of the portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent, and such Lender.

 

(d)            Notwithstanding anything to the contrary contained in this Agreement or any other Senior Loan Document, on the Final Order Entry Date, but subject to the Financing Order, the total outstanding amount of the Pre-Petition Revolving Obligations shall constitute Senior Obligations under the Revolving Facility established pursuant to this Agreement in accordance with the Financing Order, with (i) the outstanding amount of all Pre-Petition Revolving Loans being refinanced as Revolving Loans under this Agreement on the Final Order Entry Date, and (ii) all accrued and unpaid interest, expenses, fees and other sums payable in respect of the Pre-Petition Revolving Obligations through the Final Order Entry Date, including any such amounts not previously paid as adequate protection payments pursuant to the Financing Order, being paid in cash by the Borrower to the Administrative Agent on the Final Order Entry Date; provided, however, that, on the Closing Date, (x) the outstanding amount of all Pre-Petition LC Exposure, shall constitute LC Exposure under this Agreement on the Closing Date (including all Existing Letters of Credit issued pursuant to the Pre-Petition Credit Agreement being deemed issued under this Agreement on the Closing Date) and (y) all Senior Bank Products (as defined in the Pre-Petition Credit Agreement) and Senior Cash Management Services (as defined in the Pre-Petition Credit Agreement) being deemed Senior Bank Products and Senior Cash Management Services for purposes of this Agreement and the other Senior Loan Documents.

 

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(e)            Notwithstanding anything to the contrary contained in this Agreement or any other Senior Loan Document, on the Closing Date, but subject to the Financing Order, the total outstanding amount of the Pre-Petition FILO Obligations shall constitute Senior Obligations under the FILO Facility established pursuant to this Agreement in accordance with the Financing Order, with (i) the outstanding amount of all Pre-Petition FILO Loans being refinanced as FILO Loans under this Agreement on the Closing Date, and (ii) all accrued and unpaid interest, expenses, fees and other sums payable in respect of the Pre-Petition FILO Obligations through the Closing Date, being paid in cash by the Borrower to the Administrative Agent on the Closing Date.

 

SECTION 2.02.          Loans and Borrowings.

 

(a)            Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Appropriate Lenders ratably in accordance with the amounts of their Applicable Percentage of the applicable Class of Commitments.

 

(b)            Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Term SOFR Loans as the Borrower may request in accordance herewith; provided that each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Term SOFR Loan by causing any branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligations of the Borrower to repay such Loan in accordance with the terms of this Agreement.

 

(c)            At the commencement of each Interest Period for any Term SOFR Borrowing, such Borrowing shall be in an aggregate principal amount that is an integral multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate principal amount that is an integral multiple of $1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate principal amount that is equal to the entire unused balance of the total Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple of $1,000,000. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) separate Interest Periods outstanding.

 

(d)            Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the applicable Latest Maturity Date for the relevant Class of Commitments.

 

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SECTION 2.03.          Requests for Borrowings. Each Borrowing shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be made by (a) telephone or (b) by submission of a Borrowing Request (including by electronic mail or facsimile), provided that each such Borrowing Request shall be submitted (a) in the case of a Borrowing of Term SOFR Loans, not later than 11:00 a.m. two Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 1:00 p.m. on the Business Day of the proposed Borrowing. Each telephonic notice and Borrowing Request shall be irrevocable. Each such telephonic notice and Borrowing Request shall specify the following information in compliance with Section 2.02:

 

(a)            whether the requested Borrowing is to be a Revolving Borrowing, Term Loan Borrowing or FILO Borrowing and the respective Class of Commitments subject to such Borrowing;

 

(b)            the aggregate principal amount of such Borrowing;

 

(c)            the date of such Borrowing, which shall be a Business Day;

 

(d)            whether such Borrowing is to be an ABR Borrowing or a Term SOFR Borrowing;

 

(e)            in the case of a Term SOFR Borrowing, the Interest Period (which, whether or not designated, shall be a period of one month, as contemplated by the definition of “Interest Period”); and

 

(f)            the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.

 

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Appropriate Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

SECTION 2.04.          Swingline Loans.

 

(a)            Subject to the terms and conditions set forth herein, the Swingline Lender may, in its sole discretion in reliance upon the agreements of the Revolving Lenders set forth in this Section 2.04, make Swingline Loans to the Borrower from time to time during the Revolving Availability Period (provided that such Swingline Lender shall not be required to make Swingline Loans after the Latest Maturity Date applicable to the Class of Revolving Commitments held by such Swingline Lender) in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $100,000,000 (the “Swingline Sublimit”), or (ii) failure of any of the Credit Extension Conditions to be satisfied; provided that (x) the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan and (y) the Swingline Lender shall not have any obligation, under this Agreement or otherwise, to make any Swingline Loan requested by the Borrower hereunder and may, in its sole discretion, decline to make a requested Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. Immediately upon the making of a Swingline Loan, the Swingline Lender shall be deemed to grant, and each Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swingline Lender a risk participation in such Swingline Loan in an amount equal to the product of such Revolving Lender’s Applicable Revolving Percentage (determined without regard to any separate Class or Classes of Revolving Commitments of such Lender) times the amount of such Swingline Loan.

 

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(b)            To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by (i) telephone or (ii) by submission of a Borrowing Request, provided that any such Borrowing Request (including by electronic mail or facsimile) shall be submitted not later than 1:00 p.m. on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a wire transfer to an account designated by the Borrower (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the relevant Issuing Bank) by 3:00 p.m. the requested date of such Swingline Loan, unless the Swingline Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Borrowing of Swingline Loans (A) directing the Swingline Lender not to make such Swingline Loan as a result of the failure of the Credit Extension Conditions to be satisfied), or (B) that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, in each case, other than as a result of a Protective Advance.

 

(c)            Interest on each Swingline Loan shall be payable on the Interest Payment Date with respect thereto.

 

(d)            The Administrative Agent shall (i) at any time when Swingline Loans in an aggregate principal amount of $10,000,000 or more are outstanding, at the request of the Swingline Lender in its sole discretion, or (ii) on the date that is seven days after the date on which a Swingline Loan was made, deliver on behalf of the Borrower a Borrowing Request pursuant to Section 2.03 for an ABR Revolving Borrowing in the amount of such Swingline Loans; provided, however, that the obligations of the Lenders to fund such Borrowing shall not be subject to the conditions set forth in Section 4.02.

 

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(e)            The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 p.m. on any Business Day require the Revolving Lenders to fund its participation interest on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate principal amount of Swingline Loans in which Revolving Lenders will fund its participation interest. Promptly upon receipt of such notice (but no later than 2:00 p.m. on such Business Day), the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender’s Applicable Revolving Percentage of such Swingline Loan(s). Each Revolving Lender hereby absolutely and unconditionally agrees, upon timely receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Revolving Lender’s Applicable Revolving Percentage of such Swingline Loan(s). Each Revolving Lender acknowledges and agrees that its obligation to acquire and fund participations in Swingline Loans pursuant to this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments (including any Class thereof), and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this Section by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this Section, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrower (or other Person on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent, and any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this Section, ratably, and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this Section shall not relieve the Borrower of any default in the payment thereof.

 

SECTION 2.05.          Letters of Credit.

 

(a)            General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance of (and the applicable Issuing Bank, as specified by the Borrower, will, in reliance on the agreements of the Revolving Lenders set forth in this Section 2.05, issue) Letters of Credit denominated in dollars for its own account or the account of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the relevant Issuing Bank, at any time and from time to time during the Revolving Availability Period (provided that such Issuing Bank shall not be required to issue such Letters of Credit after the Latest Maturity Date applicable to the Class of Revolving Commitments held by such Issuing Bank). Letters of Credit issued hereunder shall constitute utilization of the Revolving Commitments. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

 

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(b)           Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall deliver (or transmit by electronic communication (including by electronic mail or facsimile), if arrangements for doing so have been approved by the applicable Issuing Bank) to the relevant Issuing Bank and the Administrative Agent not later than 1:00 p.m. at least two (2) Business Days (or such later date and time as the Administrative Agent and such Issuing Bank may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with Section 2.05(c)), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by an Issuing Bank, the Borrower also shall submit a letter of credit application on such Issuing Bank’s standard form in connection with any request for a Letter of Credit. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions of this Agreement and, subject to Section 2.05(a), any letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, an Issuing Bank relating to any such Existing Letters of Credit.

 

(i)             A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the total LC Exposure shall not exceed $600,000,000 (the “LC Sublimit”) and (iii) each of the Credit Extension Conditions shall be satisfied. If the conditions for borrowing under Section 4.02 cannot be fulfilled, the Required Lenders may direct the Issuing Banks to, and the Issuing Banks thereupon shall, cease to issue Letters of Credit (other than as Protective Advances) until such conditions can be satisfied or are waived in accordance with Section 9.02.

 

(ii)           No Issuing Bank shall be under any obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing the Letter of Credit, or any law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Bank with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated or entitled to compensation hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it and for which such Issuing Bank is not otherwise compensated or entitled to compensation hereunder;

 

(B)          the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally;

 

(C)          except as otherwise agreed by the Administrative Agent and such Issuing Bank, the Letter of Credit is in an initial stated amount less than $100,000;

 

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(D)          any Revolving Lender is at that time a Defaulting Lender, unless such Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such Issuing Bank (in its sole discretion) with the Borrower or such Lender to eliminate such Issuing Bank’s actual or potential Fronting Exposure (after giving effect to Section 2.22(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other Senior Loan Obligations in respect of Letters of Credit as to which such Issuing Bank has actual or potential Fronting Exposure, as it may elect in its sole discretion;

 

(E)          the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder; or

 

(F)          the issuance of such Letter of Credit would cause the aggregate amount of the Letters Credit issued by such Issuing Bank to exceed such Issuing Bank’s LC Commitment.

 

(iii)          No Issuing Bank shall be under any obligation to amend any Letter of Credit if (A) such Issuing Bank would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

 

(c)           Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is one year after the date of the issuance of such Letter of Credit subject to the provisions of this Section 2.05(c), and (ii) the date that is five Business Days prior to the Revolving Maturity Date (applicable to the Class of Revolving Commitments with the Latest Maturity Date held by the Issuing Bank which issued such Letter of Credit). If the Borrower so requests in any applicable letter of credit application, the applicable Issuing Bank may, in its discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the applicable Issuing Bank to prevent any such extension at least once in each twelve (12) month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued, but not less than thirty (30) days prior to the scheduled expiration or renewal thereof. Unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Revolving Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the date set forth in clause (ii) above; provided, however, that the applicable Issuing Bank shall not permit any such extension if (A) such Issuing Bank has determined that it would not be permitted, or would have no obligation at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Revolving Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Revolving Lender or the Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the Issuing Bank not to permit such extension.

 

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(d)           Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof or extending the expiration date thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit in an amount equal to such Lender’s Applicable Revolving Percentage (determined without regard to any separate Class or Classes of Revolving Commitments of such Lender) of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the applicable Issuing Bank, such Lender’s Applicable Revolving Percentage of each LC Disbursement made by an Issuing Bank not later than 2:00 p.m. on the Business Day specified in the notice provided by the Administrative Agent to the Revolving Lenders pursuant to Section 2.05(e) until such LC Disbursement is reimbursed by the Borrower or at any time after any reimbursement payment is required to be refunded to the Borrower for any reason, including after the Revolving Maturity Date and any expiration of any Class of Commitments applicable to any Revolving Lender. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.05(d) in respect of Letters of Credit is absolute, unconditional and irrevocable and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Revolving Lender’s Applicable Revolving Percentage of the aggregate amount available to be drawn under such Letter of Credit at each time such Lender’s Commitment is amended pursuant to the operation of Section 2.21 or 2.22, as a result of an assignment in accordance with Section 9.04 or otherwise pursuant to this Agreement (including as a result of the expiration of any Class of Revolving Commitments).

 

(e)           Reimbursement. If any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 3:30 p.m. on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m. on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 1:00 p.m. on the Business Day immediately following the day that the Borrower receives such notice; provided that, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Revolving Percentage (determined without regard to any separate Class or Classes of Revolving Commitments of such Lender) thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent such Applicable Revolving Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the relevant Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.05(e), the Administrative Agent shall distribute such payment to such Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this Section 2.05(e) to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this Section 2.05(e) to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. If any Revolving Lender fails to make available to the Administrative Agent for the account of the applicable Issuing Bank any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(e), then, without limiting the other provisions of this Agreement, the applicable Issuing Bank shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such Issuing Bank at a rate per annum equal to the greater of the Federal Funds Effective Rate and a rate determined by the applicable Issuing Bank in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by such Issuing Bank in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Loan included in the relevant Revolving Borrowing or payment in respect of its participation interest in respect of the relevant LC Disbursement, as the case may be. A certificate of any Issuing Bank submitted to any Revolving Lender (through the Administrative Agent) with respect to any amounts owing under this section shall be conclusive absent manifest error.

 

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(f)           Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.05(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement in such draft or other document being untrue or inaccurate in any respect, or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit, (iv) waiver by any Issuing Bank of any requirement that exists for such Issuing Bank’s protection and not the protection of the Borrower or any waiver by such Issuing Bank which does not in fact materially prejudice the Borrower, (v) any payment made by any Issuing Bank in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable, (vi) payment by the applicable Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, or any payment made by any Issuing Bank under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any Bankruptcy Proceeding; or (vii) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. None of the Administrative Agent, any Lender or any Issuing Bank, or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the relevant Issuing Bank; provided that the foregoing shall not be construed to excuse such Issuing Bank or its Related Parties from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the fullest extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s or its Related Parties gross negligence or willful misconduct (as determined by a court of competent jurisdiction by a final and non-appealable judgment) in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of an Issuing Bank or its Related Parties (as determined by a court of competent jurisdiction by a final and non-appealable judgment), such Issuing Bank or its Related Parties shall be deemed to have exercised care in each such determination, and that:

 

(i)            an Issuing Bank may replace a purportedly lost, stolen, or destroyed original Letter of Credit or missing amendment thereto with a certified true copy marked as such or waive a requirement for its presentation;

 

(ii)            an Issuing Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit and without regard to any non-documentary condition in such Letter of Credit;

 

(iii)           an Issuing Bank shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

 

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(iv)           this sentence shall establish the standard of care to be exercised by an Issuing Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

 

(g)           Without limiting the foregoing, none of the Administrative Agent, the Lenders, any Issuing Bank, or any of their Related Parties shall have any liability or responsibility by reason of (i) any presentation that includes forged or fraudulent documents or that is otherwise affected by the fraudulent, bad faith, or illegal conduct of the beneficiary or other Person, (ii) an Issuing Bank declining to take-up documents and make payment (A) against documents that are fraudulent, forged, or for other reasons by which that it is entitled not to honor or (B) following a Borrower’s waiver of discrepancies with respect to such documents or request for honor of such documents or (iii)  an Issuing Bank retaining proceeds of a Letter of Credit based on an apparently applicable attachment order, blocking regulation, or third-party claim notified to such Issuing Bank.

 

(h)           The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the applicable Issuing Bank. The Borrower shall be conclusively deemed to have waived any such claim against each Issuing Bank and its correspondents unless such notice is given as aforesaid.

 

(i)            Disbursement Procedures. The applicable Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by electronic mail or facsimile) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

 

(j)           Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to Section 2.05(e), then Section 2.13(c) shall apply. Interest accrued pursuant to this Section 2.05(j) shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.05(e) to reimburse such Issuing Bank shall be for the account of such Lender to the extent of such payment.

 

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(k)           Resignation or Replacement of the Issuing Bank. An Issuing Bank may resign at any time by giving 180 days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, and an Issuing Bank may be replaced at any time by written agreement (an “Issuing Bank Agreement”) among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank, which shall set forth the LC Commitment of such successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any Issuing Bank Agreement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto to the extent of its Commitment hereunder and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. Upon the expiration of the Revolving Commitments of an Issuing Bank (upon the occurrence of the Latest Maturity Date applicable to any Class of Revolving Commitments of such Issuing Bank), such Issuing Bank shall be deemed to have resigned as an Issuing Bank hereunder without the requirement for any further notice to or consent from any other Person unless such Issuing Bank shall have previously agreed to act as an Issuing Bank with respect to any Class of Revolving Commitments with a later maturity.

 

(l)           Applicability of ISP and UCP. Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued by it (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, no Issuing Bank shall be responsible to the Borrower for, and no Issuing Bank’s rights and remedies against the Borrower shall be impaired by, any action or inaction of any Issuing Bank required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where any Issuing Bank or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade – International Financial Services Association (BAFT), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

 

(m)           Role of Issuing Bank. Each Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each Issuing Bank shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article VIII with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article VIII included such Issuing Bank with respect to such acts or omissions, and (B) as additionally provided herein with respect to such Issuing Bank.

 

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(n)           Cash Collateralization. If any Event of Default shall occur and be continuing, the Borrower shall (or shall cause Subsidiary Loan Parties to), promptly (and in any event within one (1) Business Day following receipt by the Borrower of a written demand for the deposit of cash collateral pursuant to this paragraph from the Administrative Agent (or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure)) deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to 103% of the total LC Exposure as of such date plus any accrued and unpaid interest thereon. The Borrower also shall (or shall cause Subsidiary Loan Parties to) deposit cash collateral pursuant to this Section 2.05(n) (i) as and to the extent required by (x) Section 2.11(b), and any such cash collateral so deposited and held by the Administrative Agent hereunder shall constitute part of the ABL Borrowing Base Amount for purposes of determining compliance with Section 2.11(b) and (y) any other provision of this Agreement, and (ii) if any Letter of Credit remains outstanding after the date specified in Section 2.05(c)(ii), with respect to any Issuing Bank, in an amount equal to 100% of the stated amount of each such Letter of Credit. Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. The Administrative Agent shall, at the Borrower’s risk and expense, invest all such deposits in Permitted Investments chosen in the sole discretion of the Administrative Agent after consultation with the Borrower, provided that no consultation shall be required if a Default has occurred and is continuing. Other than any interest earned in respect of the investment of such deposits, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has not been reimbursed (together with related fees, costs, and customary processing charges) and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to (i) the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure and (ii) in the case of any such application at a time when any Revolving Lender is a Defaulting Lender (but only if, after giving effect thereto, the remaining cash collateral shall be less than the aggregate LC Exposure of all the Defaulting Lenders), the consent of each Issuing Bank), be applied to satisfy the Senior Loan Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived (or, during a Cash Sweep Period, paid into the Bank of America Concentration Account). If the Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), (c) or (d), such amount (to the extent not applied as aforesaid or as otherwise provided herein) shall be returned to the Borrower as and to the extent that, after giving effect to such return, the Borrower would remain in compliance with Section 2.11(b), (c) or (d), no Issuing Bank shall have any exposure in respect of any outstanding Letter of Credit that is not fully covered by the Revolving Commitments of the Non-Defaulting Lenders and/or the remaining cash collateral and no Default shall have occurred and be continuing. Unless and except to the extent that the deposit of cash collateral directly by the Borrower would not result in an obligation to grant a security interest in such cash collateral to the holders of other outstanding Indebtedness of the Borrower, the Borrower will cause Subsidiary Loan Parties to deposit all cash collateral required to be deposited pursuant to this Section 2.05(n), Section 2.11(b) or otherwise.

 

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(o)           Additional Issuing Banks. The Borrower may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement. Any Lender designated as an issuing bank pursuant to this Section 2.05(o) shall be deemed to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Issuing Banks and such Lender in its capacity as an Issuing Bank.

 

(p)           Reporting by Issuing Banks to the Administrative Agent. At the end of each week and otherwise upon request of the Administrative Agent, each Issuing Bank shall provide the Administrative Agent with a certificate identifying the Letters of Credit issued by such Issuing Bank and outstanding on such date, the amount and expiration date of each such Letter of Credit, the beneficiary thereof, the amount, if any, drawn under each such Letter of Credit and any other information reasonably requested by the Administrative Agent with respect to such Letters of Credit. The Administrative Agent shall promptly enter all such information received by it pursuant to this Section 2.05(p) in the Register.

 

(q)           Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse, indemnify and compensate the applicable Issuing Bank hereunder for any and all drawings under such Letter of Credit as if such Letter of Credit had been issued solely for the account of the Borrower. The Borrower irrevocably waives any and all defenses that might otherwise be available to it as a guarantor or surety of any or all of the obligations of such Subsidiary in respect of such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

 

SECTION 2.06.                  Funding of Borrowings.

 

(a)           Each Appropriate Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by (i) in the case of Term SOFR Borrowings, 12:00 p.m., and (ii) in the case of ABR Borrowings, 3:00 p.m., in each case, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the Borrower by wire transfer, in like funds, to an account designated by the Borrower in the applicable Borrowing Request. Wire transfers to the Borrower of all Loans (other than Swingline Loans and same-day ABR Revolving Borrowings) shall be made no later than 2:00 p.m. Wire transfers to the Borrower of Swingline Loans and same-day ABR Revolving Borrowings shall be made no later than 4:00 p.m.

 

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(b)           Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing (or, in the case of any Borrowing of ABR Loans, prior to 2:00 p.m. on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date (or, in the case of a Borrowing of ABR Loans, that such Lender has made such share available by the time required) in accordance with Section 2.06(a) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing or (ii) in the case of the Borrower, the interest rate applicable to ABR Revolving Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(c)           If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided herein, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to any applicable extension of credit set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)           The obligations of the Lenders hereunder to make Loans, to fund participations in Letters of Credit and Swingline Loans and to make payments pursuant to Section 9.03(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 9.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 9.03(c).

 

(e)           Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

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SECTION 2.07.                  Interest Elections.

 

(a)           Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of Term SOFR Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of Term SOFR Borrowings, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans (of any Class) comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

 

(b)           To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by (i) telephone, or (ii) submission of an Interest Election Request (including by electronic mail or facsimile) by the time that a Borrowing Request would be required to be made under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such notice and Interest Election Request shall be irrevocable and, in the case of an Interest Election Request, signed by the Borrower.

 

(c)           Each Interest Election Request shall specify the following information in compliance with Section 2.02 and this Section 2.07(c):

 

(i)        the Borrowing and Class of Loans to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

 

(ii)       the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

 

(iii)       whether the resulting Borrowing is to be an ABR Borrowing or a Term SOFR Borrowing; and

 

(iv)      if the resulting Borrowing is a Term SOFR Borrowing, the Interest Period to be applicable thereto after giving effect to such election (which, whether or not designated, shall be a period of one month, as contemplated by the definition of “Interest Period”).

 

(d)           Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Appropriate Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e)           If the Borrower fails to deliver a timely Interest Election Request with respect to a Term SOFR Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Term SOFR Borrowing and (ii) unless repaid, each Term SOFR Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. Except as otherwise provided herein, a Term SOFR Loan may be continued or converted only on the last day of an Interest Period for such Term SOFR Loan.

 

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(f)           A Revolving Loan Borrowing, a Term Loan Borrowing or FILO Loan Borrowing may not be converted to or continued as a Term SOFR Borrowing if after giving effect thereto the Interest Period therefor would end after the earliest Revolving Maturity Date, the earliest Term Facility Maturity Date or the FILO Maturity Date, as applicable for such Class.

 

(g)           With respect to SOFR or Term SOFR, the Administrative Agent, in consultation with the Borrower, will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Senior 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; provided, that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Conforming Changes to the Borrower and the Lenders reasonably promptly after such amendment becomes effective. Notwithstanding anything herein or in any other Senior Loan Document to the contrary, the Administrative Agent and the Borrower shall cooperate in good faith and use commercially reasonable efforts to satisfy any applicable requirements under proposed or final United States Treasury Regulations or other regulatory guidance such that any amendments implementing such Conforming Changes shall not result in a deemed exchange of any Loan under Section 1001 of the Code.

 

SECTION 2.08.                  Termination and Reduction of Commitments.

 

(a)           Unless previously terminated in accordance with the terms of this Agreement, (i) the Revolving Commitments shall terminate on the Revolving Maturity Date (applicable to such Class of Revolving Commitments), (ii) the FILO Commitments shall terminate on the Closing Date upon the deemed making of the FILO Loans on such date by the applicable FILO Lenders, and (iii) each Incremental Term Commitment, Loan Modification Term Commitment and each Refinancing Term Commitment shall terminate upon the funding of the related Incremental Refinancing Term Loan, Loan Modification Term Loan or Refinancing Term Loan, as applicable, or otherwise in accordance with the applicable Incremental Facility Amendment, Loan Modification Offer and/or Refinancing Amendment.

 

(b)           The Borrower may at any time terminate, or from time to time reduce, the unused Revolving Commitments of any Class; provided that (i) each such reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.11, the Total Revolving Exposure would exceed the Total Revolving Commitments or the Swingline Sublimit or the LC Sublimit shall exceed the Total Revolving Commitments.

 

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(c)           The Borrower shall notify the Administrative Agent of any election to terminate or reduce the unused Revolving Commitments under Section 2.08(b) at least one (1) Business Day prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Revolving Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of voluntary termination or reduction of the Revolving Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or other financings, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Revolving Commitments of any Class shall be permanent. Each reduction of the Revolving Commitments of any Class shall be made ratably among the Lenders in accordance with their Applicable Revolving Percentage of such Class.

 

SECTION 2.09.                  Repayment of Loans; Evidence of Indebtedness.

 

(a)           The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent, for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of a particular Class of such Lender on the Revolving Maturity Date of such Class of Revolving Loan (it being understood and agreed that, subject to the other terms and conditions hereof, the Borrower may make Borrowings of Revolving Loans under any remaining Revolving Commitments of any other Class to effect such repayment), (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of (A) the Revolving Maturity Date (applicable to the Class of Revolving Commitments with the Latest Maturity Date held by the Swingline Lender) and (B) the date that is seven days after the date on which such Swingline Loan was made; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested, (iii) to the Administrative Agent, for the account of each FILO Lender, the then unpaid principal amount of each FILO Loan of such Lender on the FILO Maturity Date, (iv) to the Administrative Agent, for the account of each Term Lender, the then unpaid principal amount of the Term Loans of each applicable Class on the Term Facility Maturity Date for such Class, and (v) to the Administrative Agent, for the account of the applicable Senior Loan Secured Parties, upon the occurrence of any of the following: (A) the effective date of any plan of reorganization under Section 1129 of the Bankruptcy Code, (B) the closing date of a sale of all or substantially all of the working capital assets of the Loan Parties pursuant to Section 363 of the Bankruptcy Code, and (C) the date of the termination or expiration of all outstanding Commitments hereunder, all outstanding Senior Obligations (other than contingent indemnification obligations and other obligations of the Loan Parties that expressly survive the termination of the Senior Loan Documents for which no claim has been asserted).

 

(b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

 

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

 

(d)           The entries made in the accounts maintained pursuant to Section 2.09(b) or (c) shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)           Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in the form attached hereto as Exhibit A-1, A-2 or A-3, as applicable, or in such other form approved by the Administrative Agent and the Borrower. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04(b)) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

 

(f)           Upon the occurrence of a Revolving Maturity Date for any applicable Class of Revolving Loans, the Applicable Revolving Percentages with respect to each remaining Class of Revolving Commitments shall be readjusted without any further action or consent of any other party, to reflect the expiration of the Class of Revolving Commitments as to which the Revolving Maturity Date has occurred.  In connection with the foregoing, the Revolving Lenders immediately after effectiveness to the readjusted Applicable Revolving Percentages shall purchase and assign at par such amounts of the Revolving Loans outstanding at such time as the Administrative Agent may require such that all of the Revolving Lenders effectively participate in each of the outstanding Revolving Loans on a pro rata basis in accordance with their readjusted Applicable Revolving Percentages.  The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

 

SECTION 2.10.                  Amortization and Repayment of Term Loans.

 

(a)           The principal amount of each Class of Term Loans shall mature on such date and shall amortize in such amounts payable at such times as are set forth in the applicable Refinancing Amendment, Incremental Facility Agreement or Loan Modification Agreement. Except as otherwise provided in the applicable Refinancing Amendment, Incremental Facility Amendment or Loan Modification Agreement, any prepayment of a Term Borrowing pursuant to Section 2.11(b), (c) or (d) shall be applied to reduce the subsequent scheduled repayments of such Borrowings in direct order of their maturity.

 

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(b)           Prior to any repayment of any Term Borrowing hereunder, the Borrower shall select the Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by electronic mail or facsimile) of such selection not later than 1:00 p.m. two (2) Business Days before the scheduled date of such repayment. Each repayment of an Term Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.

 

SECTION 2.11.                  Prepayment of Loans.

 

(a)           The Borrower shall have the right, at any time and from time to time, to prepay any Borrowing in whole or in part, subject to the requirements of this Section; provided, however, that any partial prepayment made pursuant to this Section 2.11(a) shall be in a principal amount that is a multiple of $1,000,000 and not less than $5,000,000; provided, further, that the Borrower shall not be permitted to prepay any FILO Loan, other than (i) in connection with a termination of the Total ABL Commitments and payment in full in cash of all Senior Loan Obligations under the Senior Loan Documents, or (ii) in connection with any mandatory prepayments required pursuant to this Section 2.11.

 

(b)       (i)        In the event and on each date that the Total Outstandings on such date exceed the Combined Loan Cap (other than as a result of Protective Advances pursuant to Section 2.23(a)), the Borrower shall on each such date apply an amount equal to such excess as follows: first, to repay the outstanding Pre-Petition Revolving Loans, until paid in full, second, to the extent of any remaining excess, or if no Pre-Petition Revolving Loans are outstanding, to prepay Revolving Borrowings and Swingline Loans, until paid in full, third, to the extent of any remaining excess or, if no Revolving Borrowings or Swingline Loans are outstanding, to make a deposit in a cash collateral account maintained by the Administrative Agent pursuant to Section 2.05(n) to Cash Collateralize outstanding LC Exposure, fourth, to the extent of any remaining excess, to prepay any Term Loans, and fifth, to the extent after giving effect to any such prepayments and provision of cash collateral, the Total FILO Outstandings exceed the FILO Borrowing Base Amount, to prepay FILO Loans in an amount equal to such excess.

 

(ii)        In the event and on each date that the Total ABL Outstandings on such date exceed the then-current ABL Borrowing Base Amount (other than as a result of Protective Advances pursuant to Section 2.23(a)), the Borrower shall on each such date apply an amount equal to such excess as follows: first, to repay the outstanding Pre-Petition Revolving Loans, until paid in full, second, to the extent of any remaining excess, or if no Pre-Petition Revolving Loans are outstanding, to prepay Revolving Borrowings and Swingline Loans, until paid in full, third, to the extent of any remaining excess or, if no Revolving Borrowings or Swingline Loans are outstanding, to make a deposit in a cash collateral account maintained by the Administrative Agent pursuant to Section 2.05(n) to Cash Collateralize outstanding LC Exposure, fourth, to the extent of any remaining excess, to prepay any Term Loans, and fifth, to the extent after giving effect to any such prepayments and provision of cash collateral, the Total FILO Outstandings exceed the FILO Borrowing Base Amount, to prepay FILO Loans in an amount equal to such excess.

 

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(iii)       In the event and on each date that the Total Revolving Outstandings exceed the Total Revolving Commitments, the Borrower shall on such date apply an amount equal to such excess first, to repay the outstanding Pre-Petition Revolving Loans, second, to the extent of any remaining excess, or if no Pre-Petition Revolving Loans are outstanding, to prepay Revolving Borrowings and Swingline Borrowings, until paid in full, and third, to the extent of any remaining excess, or if no Revolving Borrowings or Swingline Loans are outstanding, to a cash collateral account maintained by the Administrative Agent pursuant to Section 2.05(n) to Cash Collateralize outstanding LC Exposure.

 

(c)           During the continuance of a Cash Sweep Period, the Loans shall be repaid daily in accordance with (and to the extent required under) the provisions of the Senior Security Agreement and Section 7.02 (without regard to minimum and integral amounts); provided that (i) the Net Cash Proceeds of Prepayment Events shall be applied as set forth in Section 2.11(d) and (ii) any payment required by Section 2.11(b) or Section 2.11(e) shall be applied as set forth in such Sections.

 

(d)           Subject to the terms of the Financing Order and the ABL Intercreditor Agreement, (i) in the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event (other than any Prepayment Event resulting from the Specified Elixir Sale or an Elixir Monetization Event), the Borrower shall promptly (and in any event within one (1) Business Day) after such Net Cash Proceeds are received, deliver to the Administrative Agent an aggregate amount equal to 100% of the Net Cash Proceeds resulting from such Prepayment Event, which Net Cash Proceeds shall be applied first, to repay the outstanding Pre-Petition Revolving Loans, until paid in full, second, to the extent of any remaining excess, or if no Pre-Petition Revolving Loans are outstanding, to prepay Revolving Loans and Swingline Loans, until paid in full, third, to the extent of any remaining excess or, if no Revolving Loans or Swingline Loans are outstanding, to make a deposit in a cash collateral account maintained by the Administrative Agent pursuant to Section 2.05(n) to Cash Collateralize outstanding LC Exposure, fourth, to the extent of any remaining excess, to prepay any Term Loans, and fifth, to the extent after giving effect to any such prepayments and provision of cash collateral, the Total FILO Outstandings exceed the FILO Borrowing Base Amount, to prepay FILO Loans in an amount equal to such excess; and (ii) in the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event resulting from the Specified Elixir Sale or any Elixir Monetization Event, the Borrower shall promptly (and in any event within one (1) Business Day) after such Net Cash Proceeds are received, deliver to the Administrative Agent an aggregate amount equal to 100% of the Net Cash Proceeds resulting from such Prepayment Event, which Net Cash Proceeds shall be applied in accordance with Exhibit I (it being understood and agreed that amounts jointly determined by the Borrower and the Administrative Agent to be due to any Person (other than any Senior Secured Party), in accordance with Exhibit I, may, at the Administrative Agent’s option, be delivered directly to such Person).

 

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(e)           On March 1, 2024, solely to the extent a Specified Elixir Sale has not been consummated prior to such date, the Borrower shall repay outstanding FILO Loans in an amount equal to the result (not less than zero) of (i) $100,000,000, minus (ii) the aggregate amount of Net Cash Proceeds of an Elixir Monetization Event applied to the FILO Loans in accordance with Exhibit I on or prior to March 1, 2024.

 

(f)            In connection with any optional or mandatory prepayment of Loans, outstanding ABR Loans of the applicable Class of Loans subject to such prepayment shall be repaid before outstanding Term SOFR Loans of such Class are repaid.

 

(g)           The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) of any optional or mandatory prepayment of Loans (other than pursuant to Section 2.11(b) or (c)) by (x) telephone or (y) in writing (including by electronic mail or facsimile). Such written notice of prepayment shall be delivered (i) in the case of prepayment of a Term SOFR Loan, not later than 1:00 p.m. one (1) Business Day before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 1:00 p.m. on the Business Day of such prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 1:00 p.m. on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the Borrowings to be prepaid and the principal amount and Class of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of optional prepayment delivered by the Borrower pursuant to this Section may state that it is conditioned on the effectiveness of other credit facilities or other financing, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the applicable Appropriate Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. Payments shall be without premium or penalty, provided that the Borrower shall reimburse the Lenders for funding losses in accordance with Section 2.16.

 

(h)           Notwithstanding anything to the contrary herein, no optional prepayment of the FILO Loans may be made prior to termination of the Revolving Commitments.

 

SECTION 2.12.                  Fees.

 

(a)           The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the Applicable Rate per annum on the daily unused amount of the Revolving Commitment of each applicable Class of such Lender during the period from and including the Closing Date to but excluding the date on which such Commitment terminates. Accrued commitment fees shall be payable in arrears on the first day of each calendar month and on the date on which the Total Revolving Commitments terminate (or, if earlier, with respect to any Class of Revolving Commitments, the Revolving Maturity Date for such Class), commencing on the first such date to occur after the Closing Date. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees pursuant to this Section 2.12(a), a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose), provided that if a Lender shall have more than one Class of Revolving Commitments, such Revolving Commitments of each Class shall be deemed to be used to the extent of such Revolving Loans and LC Exposure on a ratable basis.

 

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(b)           The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as in effect from time to time for interest on Term SOFR Revolving Loans on the daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment of an applicable Class terminates and the date on which such Lender ceases to have any LC Exposure (with any LC Exposure of a Lender that has more than one Class of Revolving Commitments being deemed to be allocated between each Class of such Revolving Commitments on a ratable basis), and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the daily outstanding amount of such Issuing Bank’s Letters of Credit during the period from and including the Closing Date to but excluding the later of the date of termination of the Total Revolving Commitments and the date on which there ceases to be any LC Exposure (or, if earlier, the Latest Revolving Maturity Date of Revolving Commitments held by such Issuing Bank), as well as such Issuing Bank’s customary issuance, presentation, amendment and other processing fees, and other standard costs and charges with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees, fronting fees and other fees accrued shall be paid monthly in arrears on the first day of each calendar month, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Total Revolving Commitments terminate (or, if earlier, the termination of Revolving Commitments of all Classes of any applicable Lender) and any such fees accruing after the date on which the Total Revolving Commitments terminate shall be payable on demand. Any other fees payable to an Issuing Bank pursuant to this Section 2.12(b) shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

 

(c)           The Borrower agrees to pay to the Administrative Agent and the Collateral Agent, for their own accounts, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent or the Collateral Agent, as the case may be.

 

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

 

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(e)           The Borrower agrees to pay the fees set forth in each Incremental Facility Amendment, Refinancing Amendment and/or Loan Modification Agreement relating to the applicable Other Revolving Commitments and the Term Loans.

 

SECTION 2.13.                  Interest.

 

(a)           The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(b)           The Loans comprising each Term SOFR Borrowing shall bear interest at Term SOFR for the Interest Period in effect for such Borrowing plus the Applicable Rate.

 

(c)           Notwithstanding the foregoing, upon the occurrence and during the continuation of an Event of Default, at the option of the Administrative Agent or at the request of the Required Lenders (or, immediately (without any further act of any Person), upon the occurrence of an Event of Default under clause (a) or clause (b) of Section 7.01), the Borrower shall pay interest on all of the Senior Loan Obligations to but excluding the date of actual payment, after as well as before judgment, (i) in the case of principal, at a rate per annum equal to 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding sub-sections of this Section and (ii) in the case of any other amount, at a rate per annum equal to 2.00% plus the rate applicable to ABR Revolving Loans as provided in Section 2.12(a).

 

(d)           Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and (i) in the case of FILO Loans, on the FILO Maturity Date, (ii) in the case of Revolving Loans of each Class on the earlier of the Revolving Maturity Date of such Class and the date on which the Total Revolving Commitments are terminated, and (iii) in the case of Term Loans, the Term Facility Maturity Date; provided that (i) interest accrued pursuant to Section 2.13(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period with respect to the applicable Class), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Term SOFR Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion, together with any amounts due and payable pursuant to Section 2.16.

 

(e)           All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate (including ABR Loans determined by reference to Term SOFR) shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive absent manifest error.

 

SECTION 2.14.                 Alternate Rate of Interest; Illegality.

 

(a)           If in connection with any request for a Term SOFR Loan or a conversion of ABR Loans to Term SOFR Loans or continuation of any such Loans, as applicable,

 

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(i)        the Administrative Agent determines that (A) no Successor Rate has been determined in accordance with Section 2.14(b) and the circumstances under clause (i) of Section 2.14(b) or the Scheduled Unavailability Date has occurred, or (B) adequate and reasonable means do not exist for determining Term SOFR for any requested Interest Period with respect to a proposed Term SOFR Loan or in connection with an existing or proposed ABR Loan; or

 

(ii)        the Administrative Agent is advised by the Required Lenders that Term SOFR for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

 

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, electronic mail or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) the obligation of the Lenders to make or maintain Term SOFR Loans shall be suspended, (to the extent of the affected Term SOFR Loans or Interest Periods), (ii) in the event of a determination described in the preceding sentence with respect to the Term SOFR component of the Alternate Base Rate, the utilization of the Term SOFR component in determining the Alternate Base Rate shall be suspended, (iii) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Term SOFR Borrowing shall be ineffective and (iv) if any Borrowing Request requests a Term SOFR Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

(b)           Replacement of Term SOFR or Successor Rate. Notwithstanding anything to the contrary in this Agreement or any other Senior Loan Document, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrower) that the Borrower or Required Lenders, as applicable, have determined that:

 

(i)        adequate and reasonable means do not exist for ascertaining a one month interest period of Term SOFR, including because the Term SOFR Screen Rate is not available or published on a current basis and such circumstances are unlikely to be temporary; or

 

(ii)        CME or any successor administrator of the Term SOFR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent or such administrator with respect to its publication of Term SOFR, in each case, acting in such capacity, has made a public statement identifying a specific date after which one month interest periods of Term SOFR or the Term SOFR Screen Rate shall or will no longer be made available, or permitted to be used for determining the interest rate of U.S. dollar denominated syndicated loans, or shall or will otherwise cease, provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent, that will continue to provide such interest periods of Term SOFR after such specific date (the latest date on which one month interest periods of Term SOFR or the Term SOFR Screen Rate are no longer available permanently or indefinitely, the “Scheduled Unavailability Date”);

 

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then, on a date and time determined by the Administrative Agent (in consultation with the Borrower) (any such date, the “Term SOFR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, Term SOFR will be replaced hereunder and under any Senior Loan Document with Daily Simple SOFR plus the SOFR Adjustment, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Senior Loan Document (the “Successor Rate”).

 

If the Successor Rate is Daily Simple SOFR plus the SOFR Adjustment, all interest payments will be payable on a monthly basis, on the first Business Day of each calendar month.

 

Notwithstanding anything to the contrary herein, (i) if the Administrative Agent determines that Daily Simple SOFR is not available on or prior to the Term SOFR Replacement Date, or if (ii) the events or circumstances of the type described in Section 2.14(b)(i) or (ii) have occurred with respect to the Successor Rate then in effect, then in each case, the Administrative Agent and the Borrower may amend this Agreement solely for the purpose of replacing Term SOFR or any then current Successor Rate in accordance with this Section 2.14 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with an alternative benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated credit facilities syndicated and agented in the United States for such alternative benchmark, and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. denominated credit facilities syndicated and agented in the United States for such benchmark. For the avoidance of doubt, any such proposed rate and adjustments shall constitute a “Successor Rate”. Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.

 

The Administrative Agent will promptly (in one or more notices) notify the Borrower and each Lender of the implementation of any Successor Rate.

 

Any Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, each Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent (after consultation with the Borrower).

 

Notwithstanding anything else herein, if at any time any Successor Rate as so determined would otherwise be less than one percent, the Successor Rate will be deemed to be one percent for the purposes of this Agreement and the other Senior Loan Documents.

 

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In connection with the implementation and administration of a Successor Rate, the Administrative Agent will have the right, after consultation with the Borrower, to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Senior Loan Document, any amendments implementing such Conforming Changes will become effective only after written notice thereof to the Borrower but otherwise without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Conforming Changes to the Borrower and the Lenders reasonably promptly after such amendment becomes effective. Notwithstanding anything herein or in any other Senior Loan Document to the contrary, the Administrative Agent and the Borrower shall cooperate in good faith and use commercially reasonable efforts to satisfy any applicable requirements under proposed or final United States Treasury Regulations or other regulatory guidance such that any amendments implementing such Conforming Changes shall not result in a deemed exchange of any Loan under Section 1001 of the Code.

 

For purposes of this Section 2.14, those Lenders that either have not made, or do not have an obligation under this Agreement to make, the relevant Loans in Dollars shall be excluded from any determination of Required Lenders.

 

(c)           Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain or fund Loans whose interest is determined by reference to SOFR or Term SOFR, or to determine or charge interest rates based upon SOFR or Term SOFR, then, upon notice thereof by such Lender to the Borrower (through the Administrative Agent), (a) any obligation of such Lender to make or continue Term SOFR Loans or to convert ABR Loans to Term SOFR Loans shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining ABR Loans the interest rate on which is determined by reference to the Term SOFR component of the Alternate Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR component of the Alternate Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (i) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Term SOFR Loans of such Lender to ABR Loans (the interest rate on which ABR Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR component of the Alternate Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term SOFR Loan to such day, or immediately, if such Lender may not lawfully continue to maintain such Term SOFR Loan and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon SOFR, the Administrative Agent shall during the period of such suspension compute the Alternate Base Rate applicable to such Lender without reference to the Term SOFR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon SOFR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 2.16.

 

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SECTION 2.15.                  Increased Costs.

 

(a)           If any Change in Law shall:

 

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

 

(ii)       impose on any Lender or any Issuing Bank any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or

 

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

 

and the result of any of the foregoing shall be to increase the cost to such Agent, such Lender or such Issuing Bank, as applicable, of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Agent, such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit) or to reduce the amount of any sum received or receivable by such Agent, such Lender or such Issuing Bank hereunder (whether of principal, interest or any other amount), then the Borrower will pay to such Agent, such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Agent, such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered to the extent notification thereof is delivered to the Borrower as set forth in this Section 2.15.

 

(b)           If any Lender or any Issuing Bank determines that any Change in Law regarding capital requirements or liquidity has or would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital or liquidity adequacy), then from time to time the Borrower will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered. Each Lender will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge that will entitle such Lender to compensation pursuant to this Section 2.15; provided that the failure to provide such notification will not affect such Lender’s rights to compensation hereunder.

 

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(c)           A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as specified in Section 2.15(a) or (b) shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

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

 

(e)           Notwithstanding anything contained herein to the contrary, no Lender or Issuing Bank shall be entitled to any compensation pursuant to this Section unless such Lender or Issuing Bank certifies in its reasonable good faith determination that it is imposing such charges or requesting such compensation from borrowers (similarly situated to the Borrower) under comparable syndicated credit facilities as a matter of general practice and policy.

 

SECTION 2.16.                 Break Funding Payments. In the event of (a) the payment of any principal of any Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Loan other than an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan other than an ABR Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(g) and is revoked in accordance therewith), or (d) the assignment of any Term SOFR Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event, but excluding any loss of margin. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

 

SECTION 2.17.                 Taxes.

 

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

 

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(b)           In addition, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

 

(c)           The Borrower shall indemnify each Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes payable or paid by, or required to be deducted or withheld from a payment to, such Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder or under any other Senior Loan Document (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

 

(d)           As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)           (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Senior Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in clauses (ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Notwithstanding the foregoing, in the case of an applicable Borrower or any applicable Loan Party that, in each case, is not a U.S. Person, the applicable Lender will not be subject to the requirements on this Section 2.17(e)(i) unless it has received written notice from such Borrower or such other Loan Party advising it of the availability of an exemption or reduction of withholding Tax under the laws of the jurisdiction in which such Borrower or such other Loan Party is located and containing all applicable documentation (together, if requested by such Lender, with a certified English translation thereof) required to be completed by such Lender in order to receive any such exemption or reduction, and such Lender is reasonably satisfied that it is legally able to provide such documentation to such Borrower or such other Loan Party.

 

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(ii)       Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

 

(A)           any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;

 

(B)           any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

 

(1)           in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Senior Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Senior Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

(2)           executed copies of IRS Form W-8ECI;

 

(3)           in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E; or

 

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(4)           to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner.

 

(C)           Any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient), on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.

 

(D)           If a payment made to a Lender under any Senior Loan Document (or a payment made to a Participant pursuant to a participation granted by any Lender) would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender (or Participant) were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender who granted the participation only) at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent (or, in the case of a Participant, the Lender who granted the participation) such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent (or, in the case of a Participant, the Lender who granted the participation) as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Each Lender (or Participant) agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent (or, in the case of the Participant, the Lender who granted the participation) in writing of its legal inability to do so. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

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(f)           Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Senior Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Senior Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 2.17(f).

 

(g)           If any Agent, Lender or Issuing Bank determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 2.17(g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.17(g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 2.17(g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This Section 2.17(g) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

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(h)           Each Party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Senior Loan Document.

 

(i)           For purposes of this Section, the term “Lender” includes any Issuing Bank and the term “applicable law” includes FATCA.

 

SECTION 2.18.                 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.

 

(a)           The Borrower shall make each payment required to be made by it hereunder or under any other Senior Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Senior Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m. on the date when due), in immediately available funds, free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its office for payments from time to time notified in writing to the Borrower, except payments to be made directly to an Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Senior Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof, in the same form received. If any payment under any Senior Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Senior Loan Document shall be made in dollars.

 

(b)           If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

 

(c)           If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate principal amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate relative amounts of principal of and accrued interest on their Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this Section 2.18(c) shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements and Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 2.18(c) shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

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(d)           Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders, the Issuing Banks of the Swingline Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, an Issuing Bank or the Swingline Lender, as the case may be, the amount due. With respect to any payment that the Administrative Agent makes for the account of the Lenders, any Issuing Bank or the Swingline Lender hereunder as to which the Administrative Agent determines (which determination shall be conclusive absent manifest error) that any of the following applies (such payment referred to as the “Rescindable Amount”) and: (i) the Borrower or any other Loan Party has not in fact made such payment; (ii) the Administrative Agent has made a payment in excess of the amount so paid by the Borrower or any other Loan Party (whether or not then owed); or (iii) the Administrative Agent has for any reason otherwise erroneously made such payment; then each of the Lenders, the Issuing Banks and the Swingline Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount so distributed to such Lender, such Issuing Bank, or the Swingline Lender, as the case may be, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this Section 2.18(d) shall be conclusive, absent manifest error.

 

(e)           If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(d), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

 

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(f)           To the extent not paid by the Borrower when due, the Administrative Agent, without any request being made by, and without notice to or consent from, the Borrower, may advance any interest, fee, or other payment required under any Senior Loan Document to which any Senior Loan Secured Party is entitled and may charge the same to the Administrative Agent’s loan account for the Revolving Facility notwithstanding any failure to satisfy the conditions set forth in Section 4.02; provided that such charges do not cause the Total Revolving Outstandings to exceed the Total Revolving Commitments. Such action on the part of the Administrative Agent shall not constitute a waiver of the Administrative Agent’s rights and the Borrower obligations, if any, under Section 2.11(b). Any amount which is added to the principal balance of the Administrative Agent’s loan account for the Revolving Facility as provided in this Section 2.18(f) shall bear interest at the interest rate then and thereafter applicable to ABR Revolving Loans.

 

SECTION 2.19.                 Mitigation Obligations; Replacement of Lenders.

 

(a)           If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

 

(b)           If (i) any Lender requests compensation under Section 2.15, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, (iii) any Lender has become a Defaulting Lender or (iv) any Lender refuses to consent to any amendment or waiver of any Senior Loan Document requested by the Borrower that requires the consent of all Lenders (or all Lenders within a specified Class), and such amendment or waiver is consented to by the Required Lenders (or the requisite majority of Lenders with respect to a specified Class), then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Banks and the Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

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SECTION 2.20.                 Borrowing Base Advance Rates; Reserves.

 

(a)           As of the Closing Date, (i) with respect to determination of the ABL Borrowing Base Amount, (1) the Accounts Receivable Advance Rate will be 85%, (2) the Pharmaceutical Inventory Advance Rate will be 90%, (3) the Other Inventory Advance Rate will be 90%, (4) the Script Lists Advance Rate will be 45% and (v) the Credit Card Receivable Advance Rate will be 90% and (ii) with respect to determination of the FILO Borrowing Base Amount, (1) the Accounts Receivable Advance Rate will be 5%, (2) the Pharmaceutical Inventory Advance Rate will be 5%, (3) the Other Inventory Advance Rate will be 5%, (4) the Script Lists Advance Rate will be 15% and (5) the Credit Card Receivable Advance Rate will be 5%. After the Closing Date, upon application of Net Cash Proceeds of a Specified Elixir Sale or an Elixir Monetization Event (a) in an amount greater than or equal to $100,000,000 but less than $200,000,000 (in the aggregate for all such transactions), the Script Lists Advance Rate for purposes of the FILO Borrowing Base Amount shall be reduced by an amount equal to 500 basis points and (b) in an amount greater than or equal to $200,000,000 (in the aggregate for all such transactions), the Script Lists Advance Rate for purposes of the FILO Borrowing Base Amount shall be reduced by an amount equal to 1,000 basis points; provided that if a Specified Elixir Sale has not been consummated prior to March 1, 2024, then on such date, there shall be a reduction in the Script Lists Advance Rate for purposes of the FILO Borrowing Base Amount by an amount equal to 500 basis points.

 

(b)           The establishment or increase of any reserve against the ABL Borrowing Base Amount or the FILO Borrowing Base Amount based on the Borrowing Base Factors will be limited to the exercise by the Administrative Agent of its commercially reasonable judgment, and shall be made upon at least two (2) Business Days’ prior written notice (which may be made by e-mail) to the Borrower (which written notice will include a reasonably detailed description of the reserve being established or increased); provided that, notwithstanding the foregoing to the contrary, no such prior written notice shall be required for changes to any reserves resulting solely by virtue of mathematical calculations of the amount of the reserves in accordance with the methodology of calculation previously utilized or if an Event of Default is continuing; provided further that, during such two (2) Business Day period, (i) the Borrower agrees that the Borrower shall not be entitled to borrow Loans or request any issuance or increase of any Letters of Credit (A) to the extent the making of any such Loans or issuance or increase of any such Letters of Credit, would cause the Total Revolving Outstandings to exceed the ABL Borrowing Base Amount (determined as if such new or modified reserves were in effect) or (B) to the extent a Default under Section 6.12 (compliance therewith being determined as if such new or modified reserves were in effect) would immediately result, and (ii) the Administrative Agent shall be available to discuss any such reserve or modification to a reserve with the Borrower, and the Borrower may take any action that may be required so that the event, condition or matter that is the basis for such reserve or modification no longer exists or exists in a manner that would result in the establishment of a lower reserve or result in a lesser increase in any existing reserve, in each case, in a manner and to the extent reasonably satisfactory to the Administrative Agent. Notwithstanding anything to the contrary herein, (x) the amount of any reserve or change established in connection with the Borrowing Base Factors shall have a reasonable relationship to the event, condition or other matter that is the basis for such reserve or such change and (y) no reserves or changes shall be duplicative of reserves or changes already accounted for through eligibility criteria or advance rates.

 

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SECTION 2.21.                 Incremental Loans. Subject to the last sentence of this Section 2.21, at any time after the Closing Date and prior to the Latest Maturity Date, the Borrower may, by notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request the addition to this Agreement of (i) an incremental revolving credit facility in the form of an increase in the Revolving Facility effected pursuant to either (x) additional commitments under any existing Class of the Revolving Commitments (any such increase in such Revolving Commitments (including in respect of any existing Other Revolving Commitment of any Other Revolving Commitment Series), an “Incremental Revolving Commitment”) or (y) the addition of a new tranche of revolving commitments with pricing, maturity and/or other terms different from then existing Revolving Commitments as provided in this Section 2.21 (any such additional tranche of revolving commitments, “Other Incremental Revolving Commitments”), (ii) [reserved], or (iii) one or more new tranches of term loans (collectively “Incremental Refinancing Term Loans”) constituting Refinancing Indebtedness in respect of Permitted First Priority Debt (an “Incremental Senior Debt Refinancing Facility”), or any combination thereof (such Incremental Revolving Commitments, Other Incremental Revolving Commitments, Incremental Refinancing Term Loans (in the form of an Incremental Senior Debt Refinancing Facility), collectively, the “Incremental Facilities”); provided that no Split-Priority Term Loan Debt may be incurred as an Incremental Facility hereunder. The Incremental Facilities shall (i) be in an aggregate principal amount not in excess of $0, (ii) rank pari passu in right of payment and of security with the other Loans, and (iii) (A) if such Incremental Facility is an increase in the Revolving Facility pursuant to any Incremental Revolving Commitment, such Incremental Facility shall be made on the same terms (including interest, payment and maturity terms), and shall be subject to the same conditions as the applicable existing Class of Revolving Commitments to which such Incremental Revolving Commitments relate (it being understood that customary arrangement or commitment fees payable to Arrangers or one or more Lenders or Additional Lenders participating in such increase, as the case may be, may be different from those paid with respect to the existing Revolving Commitments of the existing Revolving Lenders on or prior to the Closing Date or with respect to any other Lender in connection with any other Incremental Facility), and (B) if such Incremental Facility is an increase in the Revolving Facility pursuant to Other Incremental Revolving Commitments or if such Incremental Facility is in the form of Incremental Refinancing Term Loans, (x) such Incremental Facilities have such pricing as may be agreed by the Borrower and the Administrative Agent, (y) in the case of any such Incremental Refinancing Term Loans, shall amortize in a manner, and be subject to mandatory prepayments (if any) on terms, acceptable to the Administrative Agent, and mature no earlier than the Latest Maturity date of the FILO Facility and any other then existing Incremental Refinancing Term Loans and (z) otherwise be treated hereunder no more favorably than, in the case of Other Incremental Revolving Commitments, the Revolving Loans and Revolving Commitments (other than any Revolving Loan under Other Revolving Commitments of any Revolving Commitment Series), and in the case of Incremental Refinancing Term Loans, the outstanding FILO Loans and the FILO Facility and any other Incremental Refinancing Term Loans; provided that the terms and provisions applicable to any Other Incremental Revolving Commitments or Incremental Refinancing Term Loans may provide for additional or different financial or other covenants applicable only during periods after the Latest Maturity Date that is in effect on the date of effectiveness of such Incremental Facility. At no time shall (i) the Total ABL Outstandings at such time exceed (ii) the ABL Borrowing Base Amount in effect at such time, and the proceeds of the Incremental Facilities shall be used solely for the purposes set forth in Section 5.10, and the proceeds of any Incremental Senior Debt Refinancing Facility shall be used solely to repay Permitted First Priority Debt and interest and other amounts relating thereto that can be financed with Refinancing Indebtedness relating to such Permitted First Priority Debt. Such notice shall set forth the requested amount and Class of Incremental Facilities, and shall offer each Lender the opportunity to offer a commitment (the “Incremental Commitment”) to provide a portion of the Incremental Facility by giving written notice of such offered commitment to the Administrative Agent and the Borrower within a time period (the “Offer Period”) to be specified in the Borrower’s notice; provided, however, that no existing Lender will be obligated to subscribe for any portion of such commitments. In the event that, at the expiration of the Offer Period, Lenders shall have provided Commitments in an aggregate principal amount greater than the total amount of the Incremental Facility initially requested by the Borrower, the commitments of the Lenders to the Incremental Facility shall be allocated ratably among the Lenders as agreed to among the Borrower and the Administrative Agent. In the event that, at the expiration of the Offer Period, Lenders shall have provided commitments in an aggregate principal amount less than the total amount of the Incremental Facility initially requested by the Borrower, the Borrower may request that Incremental Facility commitments be made in a lesser amount equal to such commitments and/or shall have the right to arrange for one or more Additional Lenders to extend commitments to provide a portion of the Incremental Facility in an aggregate principal amount equal to the unsubscribed amount of the initial request; provided that the Additional Lenders shall be offered the opportunity to provide the Incremental Facility only on terms previously offered to the existing Lenders pursuant to the immediately preceding sentence. Commitments in respect of Incremental Facilities will become Commitments under this Agreement pursuant to an amendment to this Agreement (such an amendment, an “Incremental Facility Amendment”) executed by each of the Borrower, each Subsidiary Loan Party, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the Administrative Agent. The effectiveness of any Incremental Facility Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.02 of this Agreement as in effect on the Closing Date, such Incremental Facility (assuming that it is fully drawn) being permitted under each indenture or other agreement governing any Material Indebtedness (giving pro forma effect to all prepayments, repayments, defeasances and discharges of Indebtedness to be effected with the proceeds of such Loans as certified in writing by a Responsible Officer of the Borrower) and such other conditions as are specified in the applicable Incremental Facility Amendment. Notwithstanding anything to the contrary in this Agreement or in any other Senior Loan Document, no Incremental Facilities may be incurred or established at any time on or after the Closing Date, unless the Administrative Agent and the Required Lenders shall otherwise consent thereto in writing.

 

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SECTION 2.22.                 Defaulting Lenders.

 

(a)           Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

 

(i)        Waivers and Amendments. The Commitments, FILO Loans, Term Loans and Revolving Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders or any other requisite Lenders have taken or may take any action hereunder or under any other Senior Loan Document (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided that any amendment, waiver or other modification requiring the consent of all Lenders or all Lenders affected thereby shall, except as otherwise provided in Section 9.02, require the consent of such Defaulting Lender in accordance with the terms hereof.

 

(ii)       Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to each Issuing Bank or the Swingline Lender; third, to Cash Collateralize each Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.05(n); fourth, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.05(n); sixth, to the payment of any amounts owing to the Lenders or the Issuing Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Letters of Credit and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.22(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.22(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

 

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(iii)           Certain Fees.

 

(A)           No Defaulting Lender shall be entitled to receive any fee pursuant to Section 2.12(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

 

(B)           Each Defaulting Lender shall be entitled to receive fees in respect of Letters of Credit pursuant to Section 2.12(b) in respect of its participations in Letters of Credit for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.05(n).

 

(C)           With respect to any participation fee in respect of Letters of Credit not required to be paid to any Defaulting Lender pursuant to clauses (A) or (B) above, the Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letters of Credit that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Bank, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to the Issuing Bank’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.