Contract analysis

ARTICLE I — DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 — Defined Terms As used in this Agreement, the following terms shall have the meanings set forth below: "Adjusted Term SOFR" means, for any Interest Period, an interest rate per annum equal to the sum of (a) Term SOFR for such Interest Period plus (b) the SOFR Adjustment; provided that if Adjusted Term SOFR as so determined would be less than the SOFR Floor, Adjusted Term SOFR shall be deemed to be the S

Section 1.02 — Other Interpretive Provisions (a) 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 constr

Section 1.03 — Accounting Terms (a) All accounting terms not specifically defined herein shall be construed in accordance with GAAP. [C&H Comment: A GAAP freeze date provision is standard borrower-side protection against adverse GAAP changes that could affect covenant calculations. The adoption of new accounting standards — for example, changes in lease accounting under ASC 842 — can materially alter the calculation

Section 1.04 — Rounding Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein, and rounding the result up or down to the nearest number. [C&H Comment: No changes.]

Section 1.05 — References to Agreements and Laws Unless otherwise expressly provided herein, (a) references to any agreement, instrument, or other document shall include all subsequent amendments, restatements, supplements, and other modifications thereto, but only to the extent that such amendments, restatements, supplements, and other modifications are not prohibited by any Loan Document, and (b) references to any

Section 1.06 — Times of Day Unless otherwise specified, all references herein to times of day shall be references to New York City time (Eastern Time). [C&H Comment: No changes.]

Section 1.07 — Letter of Credit Amounts Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of Credit at such time. [C&H Comment: No changes.]

Section 1.08 — Rates; SOFR Notification The Administrative Agent does not warrant or accept responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of, or any other matter related to SOFR, Term SOFR, Adjusted Term SOFR, or any component definition thereof, or any alternative, successor, or replacement rate therefor, or (b) the effect

ARTICLE II — THE COMMITMENTS AND BORROWINGS

Section 2.01 — Revolving Commitments Subject to the terms and conditions set forth herein, each Lender severally agrees to make Revolving Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount at any time outstanding that will not result in (a) such Lender's Revolving Exposure exceeding such Lender's Commitment or (b) the Total Revolving Outstandings exceeding the les

Section 2.02 — Borrowings, Conversions and Continuations of Revolving Loans (a) Each Revolving Borrowing, each conversion of Revolving Loans from one Type to the other, and each continuation of SOFR Loans shall be made upon the Borrower Representative's irrevocable notice to the Administrative Agent, which may be given by (i) telephone or (ii) a Loan Notice. Each such notice must be received by the Administrative Age

Section 2.03 — Letters of Credit (a) General. Subject to the terms and conditions set forth herein, the Borrowers may request the issuance of Letters of Credit for their own account or for the account of any Subsidiary, in a form reasonably acceptable to the Issuing Bank, at any time and from time to time during the Availability Period. Letters of Credit issued hereunder shall constitute usage of the Commitments for

Section 2.04 — Swingline Loans (a) General. Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Availability Period in an aggregate principal amount at any time outstanding not to exceed the Swingline Sublimit ($25,000,000); provided that the making of any Swingline Loan shall not result in the Total Revolving Outstand

Section 2.05 — Prepayments (a) Optional Prepayments. The Borrowers may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans and Swingline Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 1:00 p.m. (x) three Business Days prior to any date of prepayment of SOFR Loans a

Section 2.06 — Termination or Reduction of Commitments (a) The Borrowers may, upon not less than 3 Business Days' prior irrevocable written notice to the Administrative Agent, terminate the Commitments or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such reduction shall be in an amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof, (ii) the Borrowers shall

Section 2.07 — Repayment of Loans The Borrowers shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Revolving Loans and Swingline Loans outstanding on such date. [C&H Comment: No changes. All outstanding Revolving Loans and Swingline Loans are due and payable on the Maturity Date (anticipated to be May 19, 2028).]

Section 2.08 — Interest (a) SOFR Loans. Each SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Term SOFR for such Interest Period plus the Applicable Rate (300 basis points); provided that if Adjusted Term SOFR is less than the SOFR Floor (0.00%), Adjusted Term SOFR shall be deemed to be the SOFR Floor. (b) Base Rate Loans. Eac

Section 2.09 — Fees (a) Unused Line Fee. The Borrowers shall pay to the Administrative Agent, for the ratable benefit of the Revolving Lenders, an unused line fee equal to 37.5 basis points (0.375%) per annum on the average daily unused amount of the Aggregate Commitments (calculated as the Aggregate Commitments minus the average daily Total Revolving Outstandings) during the applicable period, payable quarterly in a

Section 2.10 — Computation of Interest and Fees All computations of interest and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) elapsed. [C&H Comment: No changes.]

Section 2.11 — Evidence of Indebtedness The Revolving Loan Notes to be executed by the Borrowers and delivered to each Lender shall evidence the Revolving Loans made by such Lender: Revolving Loan Note — Crescent Harbor Bank, N.A.: $135,000,000 Revolving Loan Note — Northgate Capital Bank: $90,000,000 Revolving Loan Note — Bridgevale Financial Corporation: $75,000,000 Swingline Note — Crescent Harbor Bank, N.A.: $25,

Section 2.12 — Payments Generally; Administrative Agent's Clawback All payments to be made by the Borrowers hereunder shall be made to the Administrative Agent at its office located at 780 Park Avenue, 30th Floor, New York, NY 10021 (or such other office as the Administrative Agent may designate by written notice to the Borrower Representative), in immediately available funds, not later than 2:00 p.m. New York City t

Section 2.13 — Sharing of Payments 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 Revolving Loan or Swingline Loan, or in respect of any other Obligation, that results in such Lender receiving payment of a proportion of the aggregate amount of its Revolving Loans, Swingline Loans, and participations in LC Obligation

Section 2.14 — Borrowing Base (a) Formula. The Borrowing Base shall be calculated as the sum of (i) 85% of the face amount of Eligible Receivables, plus (ii) the lesser of (x) 65% of the NOLV of Eligible Inventory and (y) 75% of the net book value of Eligible Inventory, minus (iii) Availability Reserves. (b) Borrowing Base Certificate Delivery. (i) The Borrower Representative shall deliver to the Administrative Agent

Section 2.15 — Cash Management; Cash Dominion (a) Deposit Account Control Agreements. Each Loan Party shall maintain deposit account control agreements ("DACAs") in favor of the Collateral Agent with respect to each deposit account maintained by such Loan Party, in form and substance satisfactory to the Collateral Agent. (b) Cash Dominion Event. (i) Upon the occurrence and during the continuance of a Cash Dominion Ev

Section 2.16 — Benchmark Replacement Setting In the event that the Administrative Agent determines that Term SOFR has been permanently or indefinitely discontinued or is no longer representative, the benchmark replacement provisions set forth in this Section 2.16 shall apply. The benchmark replacement waterfall, conforming changes, and related administrative provisions are accepted as drafted by WGH. [C&H Comment: No

ARTICLE III — TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01 — Taxes (a) All payments made by or on account of any obligation of the Loan Parties under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law requires the deduction or withholding of any Tax from any such payment by a Loan Party, then the applicable Loan Party shall be entitled to make such deduction or withholding a

Section 3.02 — 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 to make, maintain, or fund SOFR Loans, such Lender shall promptly notify the Borrower Representative and the Administrative Agent, and the obligation of such Lender to make or continue SOFR Loans shall be suspended. [C&H Comment: No changes.]

Section 3.03 — Inability to Determine Rates If the Administrative Agent determines that adequate and reasonable means do not exist for ascertaining Adjusted Term SOFR for any requested Interest Period, the Administrative Agent shall promptly notify the Borrower Representative and the Lenders, and all subsequent Borrowings shall be made as Base Rate Loans until the Administrative Agent revokes such notice. [C&H Commen

Section 3.04 — Increased Costs; Reserves on SOFR Loans (a) If any Change in Law shall (i) impose, modify, or deem applicable any reserve, special deposit, compulsory loan, insurance charge, or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or Issuing Bank, (ii) subject any Recipient to any Taxes on its loans, loan principal, letters of

Section 3.05 — Compensation for Losses Upon demand of any Lender, the Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost, or expense incurred by it as a result of (a) any continuation, conversion, payment, or prepayment of any SOFR Loan on a day other than the last day of the Interest Period for such Loan, (b) any failure by the Borrowers to prepay, borrow, continue,

Section 3.06 — Mitigation Obligations; Replacement of Lenders (a) If any Lender requests compensation under Section 3.04, or requires the Borrowers to pay any Indemnified Taxes or additional amounts under Section 3.01, or any Lender's obligation to make or continue SOFR Loans has been suspended pursuant to Section 3.02, then such Lender shall use reasonable efforts to designate a different lending office or to take s

ARTICLE IV — CONDITIONS PRECEDENT

Section 4.01 — Conditions of Initial Credit Extension (Closing) The obligation of each Lender to make the initial Revolving Loan hereunder and of the Issuing Bank to issue the initial Letter of Credit hereunder is subject to satisfaction (or waiver in accordance with Section 11.01) of the following conditions precedent: (a) Credit Agreement. The Administrative Agent shall have received counterparts of this Agreement