UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-Accelerated filer |
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Smaller reporting company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The registrant had
BURLINGTON STORES, INC.
INDEX
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(All amounts in thousands, except per share data)
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Three Months Ended |
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April 29, |
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April 30, |
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2023 |
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2022 |
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REVENUES: |
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$ |
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$ |
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Other revenue |
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Total revenue |
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COSTS AND EXPENSES: |
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Cost of sales |
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Selling, general and administrative expenses |
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Depreciation and amortization |
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Impairment charges - long-lived assets |
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Other income - net |
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( |
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( |
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Loss on extinguishment of debt |
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Interest expense |
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Total costs and expenses |
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Income before income tax expense |
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Income tax expense |
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Net income |
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$ |
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$ |
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Net income per common share: |
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Common stock - basic |
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$ |
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$ |
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Common stock - diluted |
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$ |
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$ |
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Weighted average number of common shares: |
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Common stock - basic |
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Common stock - diluted |
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See Notes to Condensed Consolidated Financial Statements.
3
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(All amounts in thousands)
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Three Months Ended |
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April 29, |
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April 30, |
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2023 |
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2022 |
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Net income |
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$ |
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$ |
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Other comprehensive income, net of tax: |
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Interest rate derivative contracts: |
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Net unrealized gain arising during the period |
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Net reclassification into earnings during the period |
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( |
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Other comprehensive income, net of tax |
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Total comprehensive income |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
4
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(All amounts in thousands, except share and per share data)
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April 29, |
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January 28, |
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April 30, |
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2023 |
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2023 |
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2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Restricted cash and cash equivalents |
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Accounts receivable—net |
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Merchandise inventories |
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Assets held for disposal |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment—net |
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Operating lease assets |
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Tradenames |
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Goodwill |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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$ |
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Current operating lease liabilities |
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Other current liabilities |
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Current maturities of long term debt |
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Total current liabilities |
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Long term debt |
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Long term operating lease liabilities |
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Other liabilities |
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Deferred tax liabilities |
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(Note 11) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Authorized: |
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Issued: |
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Outstanding: |
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Additional paid-in-capital |
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Accumulated earnings |
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Accumulated other comprehensive income |
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Treasury stock, at cost |
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( |
) |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
5
BURLINGTON STORES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(All amounts in thousands)
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Three Months Ended |
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April 29, |
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April 30, |
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2023 |
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2022 |
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OPERATING ACTIVITIES |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash used in operating activities |
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Depreciation and amortization |
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Impairment charges—long-lived assets |
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Amortization of deferred financing costs |
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Accretion of long term debt instruments |
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Deferred income taxes |
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Loss on extinguishment of debt |
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Non-cash stock compensation expense |
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Non-cash lease expense |
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( |
) |
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( |
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Cash received from landlord allowances |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
) |
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( |
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Merchandise inventories |
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( |
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( |
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Prepaid and other current assets |
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( |
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Accounts payable |
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( |
) |
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( |
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Other current liabilities |
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( |
) |
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( |
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Other long term assets and long term liabilities |
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Other operating activities |
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( |
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Net cash used in operating activities |
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( |
) |
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( |
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INVESTING ACTIVITIES |
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Cash paid for property and equipment |
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( |
) |
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( |
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Lease acquisition costs |
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( |
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— |
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Proceeds from sale of property and equipment and assets held for sale |
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— |
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Other investing activities |
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— |
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( |
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Net cash used in investing activities |
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( |
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( |
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FINANCING ACTIVITIES |
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Principal payments on long term debt—Term B-6 Loans |
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( |
) |
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( |
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Principal payment on long term debt—Convertible Notes |
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( |
) |
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( |
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Purchase of treasury shares |
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( |
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( |
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Proceeds from stock option exercises |
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Other financing activities |
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( |
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Net cash used in financing activities |
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( |
) |
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( |
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Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents |
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( |
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( |
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Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period |
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Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Interest paid |
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$ |
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$ |
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Income tax payments (refund) - net |
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$ |
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$ |
( |
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Non-cash investing and financing activities: |
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Accrued purchases of property and equipment |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
BURLINGTON STORES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 29, 2023
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
As of April 29, 2023, Burlington Stores, Inc., a Delaware corporation (collectively with its subsidiaries, the Company), through its indirect subsidiary Burlington Coat Factory Warehouse Corporation (BCFWC), operated
These unaudited Condensed Consolidated Financial Statements include the accounts of Burlington Stores, Inc. and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. The Condensed Consolidated
6
Financial Statements are unaudited, but in the opinion of management reflect all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of operations for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (Fiscal 2022 10-K). The balance sheet at January 28, 2023 presented herein has been derived from the audited Consolidated Financial Statements contained in the Fiscal 2022 10-K. Because the Company’s business is seasonal in nature, the operating results for the three month period ended April 29, 2023 are not necessarily indicative of results for the fiscal year.
Accounting policies followed by the Company are described in Note 1, “Summary of Significant Accounting Policies,” included in Part II, Item 8 of the Fiscal 2022 10-K.
Fiscal Year
The Company defines its fiscal year as the 52- or 53-week period ending on the Saturday closest to January 31. Fiscal 2023 is defined as the 53-week year ending February 3, 2024 and Fiscal 2022 is defined as the 52-week year ended January 28, 2023. The first quarter of Fiscal 2023 and Fiscal 2022 each consist of 13 weeks.
Recently Adopted Accounting Standards
There were no new accounting standards that had a material impact on the Company’s Condensed Consolidated Financial Statements and notes thereto during the three month period ended April 29, 2023, and there were no new accounting standards or pronouncements that were issued but not yet effective as of April 29, 2023 that the Company expects to have a material impact on its financial position or results of operations upon becoming effective.
2. Stockholders’ Equity
Activity for the three month periods ended April 29, 2023 and April 30, 2022 in the Company’s stockholders’ equity are summarized below:
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(in thousands, except share data) |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Treasury Stock |
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Shares |
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Amount |
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Capital |
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Earnings |
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(Loss) Income |
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Shares |
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Amount |
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Total |
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Balance at January 28, 2023 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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— |
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Shares used for tax withholding |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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( |
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Shares purchased as part of publicly announced program, inclusive of $ |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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( |
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Vesting of restricted shares |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gains on interest rate derivative contracts, net of related taxes of $ |
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— |
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— |
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— |
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— |
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— |
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— |
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Amount reclassified from accumulated other comprehensive income into earnings, net of related tax benefit of $ |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance at April 29, 2023 |
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$ |
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$ |
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$ |
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$ |
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( |
) |
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$ |
( |
) |
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$ |
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7
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(in thousands, except share data) |
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Common Stock |
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Additional |
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Accumulated (Deficit) |
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Accumulated |
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Treasury Stock |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Shares |
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Amount |
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Total |
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Balance at January 29, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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— |
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Shares used for tax withholding |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
Shares purchased as part of publicly announced program |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
Vesting of restricted shares, net of forfeitures of |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gains on interest rate derivative contracts, net of related taxes of $ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Amount reclassified from accumulated other comprehensive income into earnings, net of related taxes of $ |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at April 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
3. Lease Commitments
The Company’s leases primarily consist of stores, distribution facilities and office space under operating and finance leases that will expire principally during the next
The following is a schedule of the Company’s future lease payments:
|
|
(in thousands) |
|
|||||
Fiscal Year |
|
Operating |
|
|
Finance |
|
||
2023 (remainder) |
|
$ |
|
|
$ |
|
||
2024 |
|
|
|
|
|
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
|
|
|
|
|
||
Amount representing interest |
|
|
( |
) |
|
|
( |
) |
Total lease liabilities |
|
|
|
|
|
|
||
Less: current portion of lease liabilities |
|
|
( |
) |
|
|
( |
) |
Total long term lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Weighted average discount rate |
|
|
|
|
% |
|||
Weighted average remaining lease term (years) |
|
|
|
|
|
|
||
The above schedule excludes approximately $
The following is a schedule of net lease costs for the periods indicated:
8
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
||
Finance lease cost: |
|
|
|
|
|
|
||
Amortization of finance lease asset (a) |
|
$ |
|
|
$ |
|
||
Interest on lease liabilities (b) |
|
|
|
|
|
|
||
Operating lease cost (c) |
|
|
|
|
|
|
||
Variable lease cost (c) |
|
|
|
|
|
|
||
Total lease cost |
|
|
|
|
|
|
||
Less gain on sale and leaseback transaction (d) |
|
|
( |
) |
|
|
— |
|
Less all rental income (e) |
|
|
( |
) |
|
|
( |
) |
Total net rent expense (f) |
|
$ |
|
|
$ |
|
||
Supplemental cash flow disclosures related to leases are as follows:
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, 2023 |
|
|
April 30, 2022 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Cash payments arising from operating lease liabilities (a) |
|
$ |
|
|
$ |
|
||
Cash payments for the principal portion of finance lease liabilities (b) |
|
$ |
|
|
$ |
|
||
Cash payments for the interest portion of finance lease liabilities (a) |
|
$ |
|
|
$ |
|
||
Supplemental non-cash information: |
|
|
|
|
|
|
||
Operating lease liabilities arising from obtaining right-of-use assets |
|
$ |
|
|
$ |
|
||
4. Long Term Debt
Long term debt consists of:
|
|
(in thousands) |
|
|||||||||
|
|
April 29, |
|
|
January 28, |
|
|
April 30, |
|
|||
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|||
Senior secured term loan facility (Term B-6 Loans), LIBOR (with a floor of |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Convertible senior notes, |
|
|
|
|
|
|
|
|
|
|||
ABL senior secured revolving facility, SOFR plus spread based on average outstanding balance, matures on |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Unamortized deferred financing costs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total debt |
|
|
|
|
|
|
|
|
|
|||
Less: current maturities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Long term debt, net of current maturities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Term Loan Facility
The Term Loan Facility is collateralized by a first lien on the Company's favorable leases, real estate and property & equipment and a second lien on the Company's inventory and receivables. Interest rates for the Term Loan Facility are based on: (i) for LIBOR rate loans for any interest period, at a rate per annum equal to the greater of (x) the LIBOR rate, as determined by the Term Loan Facility Administrative Agent, for such interest period multiplied by the Statutory Reserve Rate (as defined in the Term Loan Credit Agreement), and (y)
9
annum equal to the highest of (a) the variable annual rate of interest then announced by JPMorgan Chase Bank, N.A. at its head office as its “prime rate,” (b) the federal reserve bank of New York rate in effect on such date plus
On May 11, 2023, the Company amended the Term Loan Credit Agreement to, effective as of July 1, 2023, change one of the
reference interest rates for borrowings under the Term Loan Facility from the Term Loan Adjusted LIBOR Rate to the Adjusted Term
SOFR Rate (as defined in the Term Loan Credit Agreement). The Adjusted Term SOFR Rate includes a credit spread adjustment of
an interest period of six-months’ duration, with a floor of
At April 29, 2023 and April 30, 2022, the interest rate related to the Term Loan Facility was
Convertible Notes
On April 16, 2020, the Company issued $
During the first quarter of Fiscal 2022, the Company entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $
During the first quarter of Fiscal 2023, the Company entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $
Prior to the close of business on the business day immediately preceding January 15, 2025, the Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The Convertible Notes have an initial conversion rate of
Holders of the Convertible Notes may require the Company to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a purchase price equal to
10
ABL Line of Credit
On July 20, 2022, BCFWC entered into a Fourth Amendment to the Second Amended and Restated Credit Agreement (the Amendment).
At April 29, 2023, the Company had $
At April 30, 2022, the Company had $
5. Derivative Instruments and Hedging Activities
The Company accounts for derivatives and hedging activities in accordance with ASC 815, “Derivatives and Hedging” (ASC 815). As required by ASC 815, the Company records all derivatives on the balance sheet at fair value and adjusts to market on a quarterly basis. In addition, to comply with the provisions of ASC 820, “Fair Value Measurements” (ASC 820), credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential nonperformance risk. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts, and guarantees. In accordance with ASC 820, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. There is no impact of netting, because the Company has only
On December 17, 2018, the Company entered into an interest rate swap, which hedged $
The amount of loss deferred for the previous interest rate swap was $
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
As of April 29, 2023, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk:
Interest Rate Derivative |
|
Number of |
|
Notional Aggregate |
|
Interest Swap Rate |
|
Maturity Date |
Interest rate swap contract |
|
|
$ |
|
|
11
Tabular Disclosure
The table below presents the fair value of the Company’s derivative financial instruments on a gross basis as well as their classification on the Company’s Condensed Consolidated Balance Sheets:
|
|
(in thousands) |
|
|||||||||||||||
|
|
Fair Values of Derivative Instruments |
|
|||||||||||||||
|
|
April 29, 2023 |
|
|
January 28, 2023 |
|
|
April 30, 2022 |
|
|||||||||
Derivatives Designated as Hedging Instruments |
|
Balance |
|
Fair |
|
|
Balance |
|
Fair |
|
|
Balance |
|
Fair |
|
|||
Interest rate swap contracts |
|
Other assets |
|
$ |
|
|
Other assets |
|
$ |
|
|
Other assets |
|
$ |
|
|||
The following table presents the unrealized gains deferred to accumulated other comprehensive income resulting from the Company’s derivative financial instruments for each of the reporting periods.
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
Interest Rate Derivatives: |
|
April 29, 2023 |
|
|
April 30, 2022 |
|
||
Unrealized gains, before taxes |
|
$ |
|
|
$ |
|
||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
Unrealized gains, net of taxes |
|
$ |
|
|
$ |
|
||
The following table presents information about the reclassification of gains and losses from accumulated other comprehensive income into earnings related to the Company’s derivative instruments for each of the reporting periods.
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
Component of Earnings: |
|
April 29, 2023 |
|
|
April 30, 2022 |
|
||
Interest (benefit) expense |
|
$ |
( |
) |
|
$ |
|
|
Income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
Net reclassification into earnings |
|
$ |
( |
) |
|
$ |
|
|
The Company estimates that approximately $
6. Fair Value Measurements
The Company accounts for fair value measurements in accordance with ASC 820, which defines fair value, establishes a framework for measurement and expands disclosure about fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price), and classifies the inputs used to measure fair value into the following hierarchy:
Level 1: Quoted prices for identical assets or liabilities in active markets.
Level 2: Quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3: Pricing inputs that are unobservable for the assets and liabilities and include situations where there is little, if any, market activity for the assets and liabilities.
The inputs into the determination of fair value require significant management judgment or estimation.
The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments.
Refer to Note 5, “Derivative Instruments and Hedging Activities,” for further discussion regarding the fair value of the Company’s interest rate swap contract.
12
Financial Assets
The fair values of the Company’s financial assets and the hierarchy of the level of inputs as of April 29, 2023, January 28, 2023 and April 30, 2022 are summarized below:
|
|
(in thousands) |
|
|||||||||
|
|
Fair Value Measurements at |
|
|||||||||
|
|
April 29, |
|
|
January 28, |
|
|
April 30, |
|
|||
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|||
Level 1 |
|
|
|
|
|
|
|
|
|
|||
Cash equivalents (including restricted cash equivalents) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Long-lived assets are measured at fair value on a non-recurring basis for purposes of calculating impairment using the fair value hierarchy of ASC 820. The fair value of the Company’s long-lived assets is calculated using a discounted cash-flow model that used level 3 inputs. In calculating future cash flows, the Company makes estimates regarding future operating results and market rent rates, based on its experience and knowledge of market factors in which the retail location is located.
Impairment charges on long-lived assets were $
Financial Liabilities
The fair values of the Company’s financial liabilities are summarized below:
|
|
(in thousands) |
|
|||||||||||||||||||||
|
|
April 29, 2023 |
|
|
January 28, 2023 |
|
|
April 30, 2022 |
|
|||||||||||||||
|
|
Principal |
|
|
Fair |
|
|
Principal |
|
|
Fair |
|
|
Principal |
|
|
Fair |
|
||||||
Term B-6 Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Convertible Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ABL Line of Credit (a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total debt (b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The fair values presented herein are based on pertinent information available to management as of the respective period end dates. The estimated fair values of the Company’s debt are classified as Level 2 in the fair value hierarchy, and are based on current market quotes received from inactive markets.
7. Income Taxes
Income tax expense was $
Net deferred taxes are as follows:
|
|
(in thousands) |
|
|||||||||
|
|
April 29, |
|
|
January 28, |
|
|
April 30, |
|
|||
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|||
Deferred tax asset |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Deferred tax liability |
|
|
|
|
|
|
|
|
|
|||
Net deferred tax liability |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net deferred tax assets relate to Puerto Rico deferred balances that have a future net benefit for tax purposes. Net deferred tax liabilities primarily relate to intangible assets and depreciation expense where the Company has a future obligation for tax purposes.
13
As of April 29, 2023, the Company had a deferred tax asset related to net operating losses of $
As of April 29, 2023, the Company had a deferred tax asset related to tax credit carry-forwards of $
As of April 29, 2023, January 28, 2023 and April 30, 2022, valuation allowances amounted to $
8. Capital Stock
Treasury Stock
The Company accounts for treasury stock under the cost method.
During the three month period ended April 29, 2023, the Company acquired
Share Repurchase Program
On February 16, 2022, the Company's Board of Directors authorized the repurchase of up to $
During the first quarter of Fiscal 2023, the Company repurchased
9. Net Income Per Share
Basic net income per share is calculated by dividing net income by the weighted-average number of common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average number of common shares and potentially dilutive securities outstanding during the period using the treasury stock method for the Company’s stock option, restricted stock and restricted stock unit awards, and the if-converted method for the Convertible Notes.
|
|
(in thousands, except per share data) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
|
|
April 29, |
|
|
April 30, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Basic net income per share |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Weighted average number of common shares – basic |
|
|
|
|
|
|
||
Net income per common share – basic |
|
$ |
|
|
$ |
|
||
Diluted net income per share |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Shares for basic and diluted net income per share: |
|
|
|
|
|
|
||
Weighted average number of common shares – basic |
|
|
|
|
|
|
||
Assumed exercise of stock options and vesting of restricted stock |
|
|
|
|
|
|
||
Assumed conversion of convertible debt |
|
|
— |
|
|
|
— |
|
Weighted average number of common shares – diluted |
|
|
|
|
|
|
||
Net income per common share – diluted |
|
$ |
|
|
$ |
|
||
14
Approximately 5
Approximately
During the three months ended April 29, 2023, shares of common stock issuable upon conversion of the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive, since the conversion price of $
10. Stock-Based Compensation
As of April 29, 2023, there were
Non-cash stock compensation expense is as follows:
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, |
|
|
April 30, |
|
||
Type of Non-Cash Stock Compensation |
|
2023 |
|
|
2022 |
|
||
Restricted stock and restricted stock unit grants (a) |
|
$ |
|
|
$ |
|
||
Stock option grants (a) |
|
|
|
|
|
|
||
Performance stock unit grants (a) |
|
|
|
|
|
|
||
Total (b) |
|
$ |
|
|
$ |
|
||
Stock Options
Stock option transactions during the three month period ended April 29, 2023 are summarized as follows:
|
|
Number of |
|
|
Weighted |
|
||
Options outstanding, January 28, 2023 |
|
|
|
|
$ |
|
||
Options granted |
|
|
|
|
|
|
||
Options exercised (a) |
|
|
( |
) |
|
|
|
|
Options forfeited |
|
|
( |
) |
|
|
|
|
Options outstanding, April 29, 2023 |
|
|
|
|
$ |
|
||
The following table summarizes information about the stock options vested and expected to vest during the contractual term, as well as options exercisable, as of April 29, 2023:
|
|
Options |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Options vested and expected to vest |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Options exercisable |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
15
The fair value of each stock option granted during the three month period ended April 29, 2023 was estimated using the Black Scholes option pricing model using the following assumptions:
|
|
|
Three Months Ended |
|
|
|
April 29, |
|
|
|
2023 |
Risk-free interest rate |
|
|
|
Expected volatility |
|
|
|
Expected life (years) |
|
|
|
Contractual life (years) |
|
|
|
Expected dividend yield |
|
|
|
Weighted average grant date fair value of options issued |
|
$ |
The expected dividend yield was based on the Company’s expectation of not paying dividends in the near term. To evaluate its volatility factor, the Company uses the historical volatility of its stock price, as well as the historical volatility of the stock price of peer companies that are publicly traded over the expected life of the options. The risk free interest rate was based on the U.S. Treasury rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. For grants issued during the three month period ended April 29, 2023, the expected life of the options was calculated using the simplified method. The simplified method defines the life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. This methodology was utilized due to the relatively short length of time the Company’s common stock has been publicly traded.
Restricted Stock
Prior to May 1, 2019, the Company granted shares of restricted stock. Grants made on and after May 1, 2019 are in the form of restricted stock units.
|
|
Number of |
|
|
Weighted |
|
||
Non-vested awards outstanding, January 28, 2023 |
|
|
|
|
$ |
|
||
Awards granted |
|
|
|
|
|
|
||
Awards vested (a) |
|
|
( |
) |
|
|
|
|
Awards forfeited |
|
|
( |
) |
|
|
|
|
Non-vested awards outstanding, April 29, 2023 |
|
|
|
|
$ |
|
||
The fair value of each restricted stock unit granted during the three month period ended April 29, 2023 was based upon the closing price of the Company’s common stock on the grant date.
Performance Stock Units
The Company grants performance-based restricted stock units to its senior executives. Vesting of the performance stock units granted in Fiscal 2020 and Fiscal 2021 is based on continued service and the achievement of pre-established adjusted EBIT margin expansion and sales compounded annual growth rate (CAGR) goals (each weighted equally) over a
16
Performance stock unit transactions during the three month period ended April 29, 2023 are summarized as follows:
|
|
Number of |
|
|
Weighted |
|
||
Non-vested awards outstanding, January 28, 2023 |
|
|
|
|
$ |
|
||
Awards granted |
|
|
|
|
|
|
||
Awards vested (a) |
|
|
( |
) |
|
|
|
|
Awards forfeited |
|
|
( |
) |
|
|
|
|
Non-vested awards outstanding, April 29, 2023 |
|
|
|
|
$ |
|
||
11. Commitments and Contingencies
Legal
In the course of business, the Company is party to class or collective actions alleging violations of federal and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property and other claims. Actions against us are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties. While no assurance can be given as to the ultimate outcome of these matters, the Company believes that the final resolution of these actions will not have a material adverse effect on the Company’s results of operations, financial position, liquidity or capital resources.
Letters of Credit
The Company had letters of credit arrangements with various banks in the aggregate amount of $
Purchase Commitments
The Company had $
17
BURLINGTON STORES, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report and the Consolidated Financial Statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (Fiscal 2022 10-K).
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions. Our actual results or other events may differ materially from those anticipated in these forward-looking statements due to various factors, including those discussed under the section of this Item 2 entitled “Safe Harbor Statement.”
Executive Summary
Introduction
We are a nationally recognized off-price retailer of high-quality, branded merchandise at everyday low prices. We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear. Since then, we have expanded our store base to 933 stores as of April 29, 2023 in 46 states and Puerto Rico. We have diversified our product categories by offering an extensive selection of in-season, fashion-focused merchandise at up to 60% off other retailers’ prices, including: women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts and coats. We sell a broad selection of desirable, first-quality, current-brand, labeled merchandise acquired directly from nationally-recognized manufacturers and other suppliers.
Fiscal Year
Fiscal 2023 is defined as the 53-week year ending February 3, 2024. Fiscal 2022 is defined as the 52-week year ended January 28, 2023.
Store Openings, Closings, and Relocations
During the three month period ended April 29, 2023, we opened 13 new stores, inclusive of four relocations, and permanently closed three stores, exclusive of the aforementioned relocations, bringing our store count as of April 29, 2023 to 933 stores.
Ongoing Initiatives for Fiscal 2023
We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability. These initiatives include, but are not limited to:
We intend to continue to increase comparable store sales through the following initiatives:
18
We intend to expand and enhance our retail store base through the following initiatives:
We intend to increase our operating margins through the following initiatives:
Uncertainties and Challenges
As we strive to increase profitability, there are uncertainties and challenges that we face that could have a material impact on our revenues or income. Some of these uncertainties and challenges are summarized below. For a further discussion, please refer to the description under the heading “Risk Factors” in the Fiscal 2022 10-K.
General Economic Conditions. Consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing global economic conditions, inflation, including the costs of basic necessities and other goods, levels of employment, salaries and wage rates, prevailing interest rates, housing costs, energy costs, commodities pricing, income tax rates and policies, consumer confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers’ disposable income, credit availability and debt levels.
19
A broad, protracted slowdown or downturn in the U.S. economy, an extended period of high unemployment or inflation rates, an uncertain domestic or global economic outlook or a financial crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis. Consumer confidence is also affected by the domestic and international political situation. Our financial condition and operations could be impacted by changes in government regulations in areas including, but not limited to, taxes and healthcare. Ongoing international trade and tariff negotiations could have a direct impact on our income and an indirect impact on consumer prices. The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the U.S., or public health issues such as pandemics or epidemics, including the continuing COVID-19 pandemic, could lead to a decrease in spending by consumers. In addition, natural disasters, public health issues, industrial accidents and acts of war in various parts of the world, such as the current war in Ukraine, could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S. economies and lead to a downturn in consumer confidence and spending.
We closely monitor our net sales, gross margin and expenses. We have performed scenario planning such that if our net sales decline for an extended period of time, we have identified variable costs that could be reduced to partially mitigate the impact of these declines. If we were to experience adverse economic trends and/or if our efforts to counteract the impacts of these trends are not sufficiently effective, there could be a negative impact on our financial performance and position in future fiscal periods.
Seasonality of Sales and Weather Conditions. Our business, like that of most retailers, is subject to seasonal influences. In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income.
Weather continues to be a contributing factor to the sale of our merchandise. Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring. Sales of cold weather clothing are increased by early cold weather during the Fall, while sales of warm weather clothing are improved by early warm weather conditions in the Spring. Although we have diversified our product offerings, we believe traffic to our stores is still driven, in part, by weather patterns.
Competition and Margin Pressure. We believe that in order to remain competitive with retailers, including off-price retailers and discount stores, we must continue to offer brand-name merchandise at a discount to prices offered by other retailers as well as an assortment of merchandise that is appealing to our customers.
The U.S. retail apparel and home furnishings markets are highly fragmented and competitive. We compete for business with department stores, off-price retailers, internet retailers, specialty stores, discount stores, wholesale clubs, and outlet stores as well as with certain traditional, full-price retail chains that have developed off-price concepts. At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our Burlington Stores. We anticipate that competition will increase in the future. Therefore, we will continue to look for ways to differentiate our stores from those of our competitors.
The U.S. retail industry continues to face increased pressure on margins as overall challenging retail conditions have led consumers to be more value conscious. Additionally, lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living. Our strategy to chase the sales trend allows us the flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically. It also provides us with the flexibility to shift purchases between suppliers and categories. This enables us to obtain better terms with our suppliers, which we expect to help offset any rising costs of goods.
Industry-wide supply chain issues have led to increased freight and labor costs compared to historical levels. There remains significant uncertainty around the impact of these costs going forward.
We have also experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods, as well as in occupancy and other operating costs. There can be no assurance that we will be able to offset inflationary pressure in the future by increasing prices or through other means, or that our business will not be negatively affected by continued inflation in the future.
Key Performance and Non-GAAP Measures
We consider numerous factors in assessing our performance. Key performance and non-GAAP measures used by management include net income, Adjusted Net Income, Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, store payroll and liquidity.
Net income. We earned net income of $32.7 million during the three month period ended April 29, 2023 compared with net income of $16.2 million during the three month period ended April 30, 2022. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
20
Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT: Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT are non-GAAP financial measures of our performance.
We define Adjusted Net Income as net income, exclusive of the following items, if applicable: (i) net favorable lease costs; (ii) loss on extinguishment of debt; (iii) impairment charges; (iv) amounts related to certain litigation matters; and (v) other unusual, non-recurring or extraordinary expenses, losses, charges or gains, all of which are tax effected to arrive at Adjusted Net Income.
We define Adjusted EBITDA as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense; (v) depreciation and amortization; (vi) net favorable lease costs; (vii) impairment charges; (viii) amounts related to certain litigation matters; and (ix) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
We define Adjusted EBIT as net income, exclusive of the following items, if applicable: (i) interest expense; (ii) interest income; (iii) loss on extinguishment of debt; (iv) income tax expense; (v) impairment charges; (vi) net favorable lease costs; (vii) amounts related to certain litigation matters; and (viii) other unusual, non-recurring or extraordinary expenses, losses, charges or gains.
We present Adjusted Net Income, Adjusted EBITDA and Adjusted EBIT, because we believe they are useful supplemental measures in evaluating the performance of our business and provide greater transparency into our results of operations. In particular, we believe that excluding certain items that may vary substantially in frequency and magnitude from what we consider to be our core operating results are useful supplemental measures that assist investors and management in evaluating our ability to generate earnings and leverage sales, and to more readily compare core operating results between past and future periods.
We believe that these non-GAAP measures provide investors helpful information with respect to our operations and financial condition. Other companies in the retail industry may calculate these non-GAAP measures differently such that our calculation may not be directly comparable.
Adjusted Net Income has limitations as an analytical tool, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Among other limitations, Adjusted Net Income does not reflect the following items, net of their tax effect:
During the three months ended April 29, 2023, Adjusted Net Income increased $18.9 million to $55.0 million compared to the same period in the prior year. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
21
The following table shows our reconciliation of net income to Adjusted Net Income for the three months ended April 29, 2023 compared with the three months ended April 30, 2022:
|
|
(unaudited) |
|
|||||
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, |
|
|
April 30, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Reconciliation of net income to Adjusted Net Income: |
|
|
|
|
|
|
||
Net income |
|
$ |
32,748 |
|
|
$ |
16,174 |
|
Net favorable lease costs (a) |
|
|
4,064 |
|
|
|
4,702 |
|
Loss on extinguishment of debt (b) |
|
|
24,644 |
|
|
|
14,657 |
|
Impairment charges - long-lived assets |
|
|
844 |
|
|
|
2,543 |
|
Litigation matters (c) |
|
|
— |
|
|
|
5,000 |
|
Tax effect (d) |
|
|
(7,302 |
) |
|
|
(7,017 |
) |
Adjusted Net Income |
|
$ |
54,998 |
|
|
$ |
36,059 |
|
Adjusted EBITDA has limitations as an analytical tool, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Among other limitations, Adjusted EBITDA does not reflect:
During the three months ended April 29, 2023, Adjusted EBITDA increased $31.9 million to $157.3 million compared to the same period in the prior year. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
22
The following table shows our reconciliation of net income to Adjusted EBITDA for the three months ended April 29, 2023 compared with the three months ended April 30, 2022:
|
|
(unaudited) |
|
|||||
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, |
|
|
April 30, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Reconciliation of net income to Adjusted EBITDA: |
|
|
|
|
|
|
||
Net income |
|
$ |
32,748 |
|
|
$ |
16,174 |
|
Interest expense |
|
|
19,345 |
|
|
|
14,606 |
|
Interest income |
|
|
(5,459 |
) |
|
|
(119 |
) |
Net favorable lease costs (a) |
|
|
4,064 |
|
|
|
4,702 |
|
Loss on extinguishment of debt (b) |
|
|
24,644 |
|
|
|
14,657 |
|
Impairment charges - long-lived assets |
|
|
844 |
|
|
|
2,543 |
|
Litigation matters (c) |
|
|
— |
|
|
|
5,000 |
|
Depreciation and amortization |
|
|
70,529 |
|
|
|
66,304 |
|
Income tax expense |
|
|
10,570 |
|
|
|
1,533 |
|
Adjusted EBITDA |
|
$ |
157,285 |
|
|
$ |
125,400 |
|
Adjusted EBIT has limitations as an analytical tool, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Among other limitations, Adjusted EBIT does not reflect:
During the three months ended April 29, 2023, Adjusted EBIT increased $27.7 million to $86.8 million compared to the same period in the prior year. This increase was primarily driven by higher sales, as well as increased gross margin rate. Refer to the section below entitled “Results of Operations” for further explanation.
23
The following table shows our reconciliation of net income to Adjusted EBIT for the three months ended April 29, 2023 compared with the three months ended April 30, 2022:
|
|
(unaudited) |
|
|||||
|
|
(in thousands) |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, |
|
|
April 30, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Reconciliation of net income to Adjusted EBIT: |
|
|
|
|
|
|
||
Net income |
|
$ |
32,748 |
|
|
$ |
16,174 |
|
Interest expense |
|
|
19,345 |
|
|
|
14,606 |
|
Interest income |
|
|
(5,459 |
) |
|
|
(119 |
) |
Net favorable lease costs (a) |
|
|
4,064 |
|
|
|
4,702 |
|
Loss on extinguishment of debt (b) |
|
|
24,644 |
|
|
|
14,657 |
|
Impairment charges - long-lived assets |
|
|
844 |
|
|
|
2,543 |
|
Litigation matters (c) |
|
|
— |
|
|
|
5,000 |
|
Income tax expense |
|
|
10,570 |
|
|
|
1,533 |
|
Adjusted EBIT |
|
$ |
86,756 |
|
|
$ |
59,096 |
|
Comparable Store Sales. Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of a prior year. The method of calculating comparable store sales varies across the retail industry. As a result, our definition of comparable store sales may differ from other retailers.
We define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations. If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable stores sales for any such month, as well as during the month(s) of their grand re-opening activities. The change in our comparable store sales was as follows:
|
|
Three Months Ended |
April 29, 2023 |
|
4% |
April 30, 2022 |
|
-18% |
Various factors affect comparable store sales, including, but not limited to, weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition, and the success of marketing programs.
Gross Margin. Gross margin is the difference between net sales and the cost of sales. Our cost of sales and gross margin may not be comparable to those of other entities, since some entities may include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales. We include certain of these costs in the line items “Selling, general and administrative expenses” and “Depreciation and amortization” in our Condensed Consolidated Statements of Income. We include in our “Cost of sales” line item all costs of merchandise (net of purchase discounts and certain vendor allowances), inbound freight, distribution center outbound freight and certain merchandise acquisition costs, primarily commissions and import fees.
Gross margin as a percentage of net sales increased to 42.3% during the three month period ended April 29, 2023, compared with 41.0% during the three month period ended April 30, 2022, driven primarily by decreased freight, partially offset by lower merchandise margins, which was primarily due to higher markdowns. Product sourcing costs, which are included in selling, general and administrative expenses, increased approximately 60 basis points as a percentage of net sales.
Inventory. Inventory at April 29, 2023 decreased to $1,231.1 million compared with $1,257.1 million at April 30, 2022. The decrease was attributable primarily to decreased reserve inventory, which was 44% of total inventory as of April 29, 2023, compared with 50% as of April 30, 2022, partially offset by a 10% increase in comparable store inventory and 67 net new stores opened since the end of the first quarter of Fiscal 2022.
24
Reserve inventory includes all inventory that is being stored for release either later in the season, or in a subsequent season. We intend to use our reserve merchandise to effectively chase sales trends.
Inventory at January 28, 2023 was $1,182.0 million. The increase in inventory from January 28, 2023 reflects the seasonality of our business, as well as the inventory required for our 6 net new stores opened during the three month period ended April 29, 2023.
In order to better serve our customers and maximize sales, we continue to refine our merchandising mix and inventory levels within our stores. By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers.
Store Payroll as a Percentage of Net Sales. Store payroll as a percentage of net sales measures our ability to manage our payroll in accordance with increases or decreases in net sales. The method of calculating store payroll varies across the retail industry. As a result, our store payroll as a percentage of net sales may differ from other retailers. We define store payroll as regular and overtime payroll for all store personnel as well as regional and territory personnel, exclusive of payroll charges related to corporate and warehouse employees. Store payroll as a percentage of net sales was 8.1% during the three month period ended April 29, 2023, compared with 8.1% during the three month period ended April 30, 2022.
Liquidity. Liquidity measures our ability to generate cash. Management measures liquidity through cash flow, which is the measure of cash generated from or used in operating, financing, and investing activities. Cash and cash equivalents, including restricted cash and cash equivalents, decreased $340.2 million during the three months ended April 29, 2023, compared with a decrease of $464.0 million during the three months ended April 30, 2022. Refer to the section below entitled “Liquidity and Capital Resources” for further explanation.
Results of Operations
The following table sets forth certain items in the Condensed Consolidated Statements of Income as a percentage of net sales for the three months ended April 29, 2023 and the three months ended April 30, 2022.
|
|
Percentage of Net Sales |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
April 29, |
|
|
April 30, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Other revenue |
|
|
0.2 |
|
|
|
0.2 |
|
Total revenue |
|
|
100.2 |
|
|
|
100.2 |
|
Cost of sales |
|
|
57.7 |
|
|
|
59.0 |
|
Selling, general and administrative expenses |
|
|
35.4 |
|
|
|
35.3 |
|
Depreciation and amortization |
|
|
3.3 |
|
|
|
3.4 |
|
Impairment charges - long-lived assets |
|
|
0.0 |
|
|
|
0.1 |
|
Other income - net |
|
|
(0.4 |
) |
|
|
(0.2 |
) |
Loss on extinguishment of debt |
|
|
1.2 |
|
|
|
0.8 |
|
Interest expense |
|
|
0.9 |
|
|
|
0.8 |
|
Total costs and expenses |
|
|
98.1 |
|
|
|
99.2 |
|
Income before income tax expense |
|
|
2.1 |
|
|
|
1.0 |
|
Income tax expense |
|
|
0.5 |
|
|
|
0.1 |
|
Net income |
|
|
1.6 |
% |
|
|
0.9 |
% |
Three Month Period Ended April 29, 2023 Compared With the Three Month Period Ended April 30, 2022
Net sales
Net sales improved approximately $207.2 million, or 10.8%, to $2,132.8 million during the first quarter of Fiscal 2023, primarily driven by an increase in incremental sales from new stores and a 4% increase in comparable stores sales during the first quarter of Fiscal 2023.
Cost of sales
Cost of sales as a percentage of net sales decreased to 57.7% during the first quarter of Fiscal 2023, compared to 59.0% during the first quarter of Fiscal 2022. This decrease is driven by decreased freight, partially offset by a decrease in merchandise margins. On a dollar basis, cost of sales increased $94.7 million, or 8.3%, primarily driven by our overall increase in sales. Product sourcing costs,
25
which are included in selling, general and administrative expenses, increased approximately 60 basis points as a percentage of net sales.
Selling, general and administrative expenses
The following table details selling, general and administrative expenses for the three month period ended April 29, 2023 compared with the three month period ended April 30, 2022. Prior year amounts have been reclassified to conform to the current period presentation.
|
|
(in millions) |
|
|||||||||||||||||||||
|
|
Three Months Ended |
|
|||||||||||||||||||||
|
|
April 29, |
|
|
Percentage |
|
|
April 30, |
|
|
Percentage |
|
|
|
|
|
|
|
||||||
|
|
2023 |
|
|
Net Sales |
|
|
2022 |
|
|
Net Sales |
|
|
$ Variance |
|
|
% Change |
|
||||||
Store related costs |
|
$ |
446.3 |
|
|
|
20.9 |
% |
|
$ |
407.6 |
|
|
|
21.2 |
% |
|
$ |
38.7 |
|
|
|
9.5 |
% |
Product sourcing costs |
|
|
186.9 |
|
|
|
8.8 |
|
|
|
156.8 |
|
|
|
8.2 |
|
|
|
30.1 |
|
|
|
19.2 |
|
Corporate costs |
|
|
80.7 |
|
|
|
3.8 |
|
|
|
78.0 |
|
|
|
4.0 |
|
|
|
2.7 |
|
|
|
3.5 |
|
Marketing and strategy costs |
|
|
14.5 |
|
|
|
0.7 |
|
|
|
14.0 |
|
|
|
0.7 |
|
|
|
0.5 |
|
|
|
3.6 |
|
Other selling, general and administrative expenses |
|
|
27.2 |
|
|
|
1.2 |
|
|
|
23.9 |
|
|
|
1.2 |
|
|
|
3.3 |
|
|
|
13.8 |
|
Selling, general and administrative expenses |
|
$ |
755.6 |
|
|
|
35.4 |
% |
|
$ |
680.3 |
|
|
|
35.3 |
% |
|
$ |
75.3 |
|
|
|
11.1 |
% |
The increase in selling, general and administrative expenses as a percentage of net sales was primarily driven by increased product sourcing costs, mostly offset by leverage in occupancy and litigation costs in the prior year that did not repeat. On a dollar basis, the increase in selling, general and administrative expenses was primarily driven by increases in product sourcing costs, store payroll, and occupancy costs.
Depreciation and amortization
Depreciation and amortization expense amounted to $70.5 million during the first quarter of Fiscal 2023 compared with $66.3 million during the first quarter of Fiscal 2022. The increase in depreciation and amortization expense was primarily driven by capital expenditures related to our supply chain, as well as new and non-comparable stores.
Impairment charges – long-lived assets
Impairment charges on long-lived assets were $0.8 million during the first quarter of Fiscal 2023, related to store-level assets at seven stores. Impairment charges on long-lived assets were $2.5 million during the first quarter of Fiscal 2022, related to one owned store selling below carrying value and two additional store relocations.
The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses and other assumptions. We base these estimates upon our past and expected future performance. We believe our estimates are appropriate in light of current market conditions. However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store. Refer to Note 6, “Fair Value Measurements,” for further discussion regarding impairment charges.
Other income - net
Other income - net improved $5.6 million to $9.0 million during the first quarter of Fiscal 2023. The improvement in other income was primarily driven by increased interest income as well as the gain on sale of real estate related assets.
Loss on extinguishment of debt
During the first quarter of Fiscal 2023 we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.
During the first quarter of Fiscal 2022, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $64.6 million in aggregate principal
26
amount of Convertible Notes held by them for $78.2 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $14.7 million.
Interest expense
Interest expense increased $4.7 million during the first quarter of Fiscal 2023 to $19.3 million, compared to the same period in the prior year. The increase was driven by the increase in LIBOR rates on our Term Loan Facility, partially offset by the partial repurchase of the Convertible Notes.
The average interest rates and average balances related to our variable rate debt for the first quarter of Fiscal 2023 compared with the first quarter of Fiscal 2022, are summarized in the table below:
|
|
|
Three Months Ended |
|
||||||
|
|
|
April 29, |
|
|
|
April 30, |
|
||
|
|
|
2023 |
|
|
|
2022 |
|
||
Average balance – ABL Line of Credit (in millions) |
|
$ |
|
— |
|
|
$ |
|
— |
|
Average interest rate – ABL Line of Credit |
|
|
|
— |
|
|
|
|
— |
|
Average balance – Term Loan Facility (in millions) (a) |
|
$ |
946.2 |
|
|
$ |
955.8 |
|
||
Average interest rate – Term Loan Facility |
|
|
6.7% |
|
|
|
2.3% |
|
||
(a) Excludes original issue discount.
Income tax expense
Income tax expense was $10.6 million during the first quarter of Fiscal 2023 compared with $1.5 million during the first quarter of Fiscal 2022. The effective tax rate for the first quarter of Fiscal 2023 was 24.4% compared with 8.7% during the first quarter of Fiscal 2022. The increase in income tax expense in the current year was a result of higher pre-tax income. The lower effective tax rate in the prior period is due to favorable permanent items having a greater impact as a result of lower pretax income.
At the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. Use of this methodology during the first quarter of Fiscal 2023 resulted in an annual effective income tax rate of approximately 28% (before discrete items) as our best estimate.
Net income
We earned net income of $32.7 million for the first quarter of Fiscal 2023 compared with $16.2 million for the first quarter of Fiscal 2022. This increase was primarily driven by higher sales, as well as increased gross margin rate.
Liquidity and Capital Resources
Our ability to satisfy interest payment and future principal payment obligations on our outstanding debt will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service interest payment and future principal payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed on terms similar to our current financing agreements, or at all.
We believe that cash generated from operations, along with our existing cash and our ABL Line of Credit, will be sufficient to fund our expected cash flow requirements and planned capital expenditures for at least the next twelve months as well as the foreseeable future. However, there can be no assurance that we would be able to offset declines in our comparable store sales with savings initiatives in the event that the economy declines.
As market conditions warrant, we may, from time to time, repurchase our outstanding debt securities in the open market, in privately negotiated transactions, by tender offer, by exchange transaction or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity and other factors and may be commenced or suspended at any time. The amounts involved and total consideration paid may be material.
Cash Flow for the Three Month Period Ended April 29, 2023 Compared With the Three Month Period Ended April 30, 2022
We used $340.2 million of cash during the three month period ended April 29, 2023 compared with a use of $464.0 million during the three month period ended April 30, 2022.
27
Net cash used in operating activities amounted to $78.0 million during the three month period ended April 29, 2023, compared with $172.3 million during the three month period ended April 30, 2022. The improvement in our operating cash flows was primarily driven by improved sales and margin in Fiscal 2023 and changes in working capital.
Net cash used in investing activities was $86.2 million during the three month period ended April 29, 2023 compared with $107.0 million during the three month period ended April 30, 2022. This change was primarily the result of proceeds from the sale of one owned store as well as a decrease in capital expenditures related to our stores (new stores, remodels and other store expenditures).
Net cash used in financing activities was $176.1 million during the three month period ended April 29, 2023 compared with $184.8 million during the three month period ended April 30, 2022. This change was primarily driven by fewer share repurchases, partially offset by increased debt repayments.
Changes in working capital also impact our cash flows. Working capital equals current assets (exclusive of restricted cash) minus current liabilities. We had working capital at April 29, 2023 of $265.4 million compared with $445.2 million at April 30, 2022. The decrease in working capital was primarily due to a decrease in cash and cash equivalents due to payments on the Convertible Notes and share repurchases, as well as decreased tax receivables, an increase in other current liabilities and decreased inventory. These decreases to working capital were partially offset by decreased payables. We had working capital at January 28, 2023 of $365.3 million.
Capital Expenditures
For the three month period ended April 29, 2023, cash spend for capital expenditures, net of $4.3 million of landlord allowances, amounted to $95.9 million.
We estimate that we will spend approximately $560 million, net of approximately $15 million of landlord allowances, in capital expenditures during Fiscal 2023, including approximately $285 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures). In addition, we estimate that we will spend approximately $120 million to support our supply chain initiatives, with the remaining capital used to support our information technology and other business initiatives.
Share Repurchase Program
On February 16, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of common stock, which is authorized to be executed through February 2024.
During the first quarter of Fiscal 2023, we repurchased 245,414 shares of common stock for $51.4 million under this repurchase program. As of April 29, 2023, we had $295.9 million remaining under our share repurchase authorization.
We are authorized to repurchase shares of our outstanding common stock from time to time on the open market or in privately negotiated transactions under our repurchase program. The timing and amount of stock repurchases will depend on a variety of factors, including the market conditions as well as corporate and regulatory considerations. Our share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common stock under the program.
Dividends
We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of the Company's capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives. Therefore, at this time, we do not anticipate paying cash dividends in the near term. Our ability to pay dividends on our common stock will be limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions under the terms of current and any future agreements governing our indebtedness. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to compliance with covenants in our current and future agreements governing our indebtedness, and will depend upon our results of operations, financial condition, capital requirements and other factors that our Board of Directors deems relevant.
In addition, since we are a holding company, substantially all of the assets shown on our Condensed Consolidated Balance Sheets are held by our subsidiaries. Accordingly, our earnings, cash flow and ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.
28
Operational Growth
During the three month period ended April 29, 2023, we opened 13 new stores, inclusive of four relocations, and closed three stores, exclusive of the aforementioned relocations, bringing our store count as of April 29, 2023 to 933 stores. During Fiscal 2023, we plan to open approximately 70-80 net new stores, which includes approximately 90-100 gross new stores.
Debt and Hedging
As of April 29, 2023, our obligations, inclusive of original issue discount, include $939.8 million under our Term Loan Facility, $397.4 million of Convertible Notes and no outstanding borrowings on our ABL Line of Credit. Our debt obligations also include $32.5 million of finance lease obligations as of April 29, 2023.
Term Loan Facility
On May 11, 2023, we amended the Term Loan Credit Agreement to, effective as of July 1, 2023, change one of the
reference interest rates for borrowings under the Term Loan Facility from the Term Loan Adjusted LIBOR Rate to the Adjusted Term
SOFR Rate (as defined in the Term Loan Credit Agreement). The Adjusted Term SOFR Rate includes a credit spread adjustment of
0.11% for an interest period of one-month’s duration, 0.26% for an interest period of three-months’ duration and 0.43% for
an interest period of six-months’ duration, with a floor of 0.00%.
At April 29, 2023, our borrowing rate related to the Term Loan Facility was 7.0%.
ABL Line of Credit
At April 29, 2023, we had $839.8 million available under the ABL Line of Credit. There were no borrowings on the ABL Line of Credit during the three month period ended April 29, 2023.
Convertible Notes
On April 16, 2020, we issued $805.0 million of Convertible Notes. The Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of the Company’s common stock), subject to adjustment if certain events occur.
The Convertible Notes are general unsecured obligations of the Company. The Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears on April 15 and October 15 of each year, beginning on October 15, 2020. The Convertible Notes will mature on April 15, 2025, unless earlier converted, redeemed or repurchased.
During the first quarter of Fiscal 2022, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $64.6 million in aggregate principal amount of Convertible Notes held by them for $78.2 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $14.7 million.
During the first quarter of Fiscal 2023 we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes. Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of Convertible Notes held by them for $133.3 million in cash. These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.
Hedging
On June 24, 2021, the Company terminated its previous interest rate swap and entered into a new interest rate swap. The new interest rate swap, which hedges $450 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028. Refer to Note 5, “Derivative Instruments and Hedging Activities,” for further discussion regarding our derivative transactions.
Certain Information Concerning Contractual Obligations
We had $1,341.2 million of purchase commitments related to goods that were not received as of April 29, 2023, and had $3,965.1 million of future minimum lease payments under operating leases as of April 29, 2023. Additionally, during the first quarter of Fiscal 2023, we repurchased $110.3 million in aggregate principal amount of the Convertible Notes. See Note 4, “Long Term
29
Debt,” for additional information related to our debt transactions. There were no other significant changes regarding our obligations to make future payments under current contracts from those included in our Fiscal 2022 10-K.
Critical Accounting Policies and Estimates
Our Condensed Financial Statements have been prepared in accordance with GAAP. We believe there are several accounting policies that are critical to understanding our historical and future performance as these policies affect the reported amounts of revenues and other significant areas that involve management’s judgments and estimates. The preparation of our Consolidated Financial Statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities; (ii) the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements; and (iii) the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventories, long-lived assets, intangible assets, goodwill, insurance reserves and income taxes. Historical experience and various other factors that are believed to be reasonable under the circumstances form the basis for making estimates and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods. A critical accounting estimate meets two criteria: (1) it requires assumptions about highly uncertain matters and (2) there would be a material effect on the Consolidated Financial Statements from either using a different, although reasonable, amount within the range of the estimate in the current period or from reasonably likely period-to-period changes in the estimate.
Our critical accounting policies and estimates are consistent with those disclosed in Note 1, “Summary of Significant Accounting Policies,” to the audited Consolidated Financial Statements, included in Part II, Item 8 of the Fiscal 2022 10-K.
Safe Harbor Statement
This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs and assumptions and other statements regarding matters that are not historical facts. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Such statements may include, but are not limited to, future impacts of current macroeconomic conditions, proposed store openings and closings, proposed capital expenditures, ongoing strategic initiatives and the intended results of those initiatives, future performance or results, the effect of the adoption of recent accounting pronouncements on our consolidated financial position, results of operations and cash flows, and the outcome of contingencies such as legal proceedings. Our forward-looking statements are subject to risks and uncertainties. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual events or results to differ materially from those we expected include: general economic conditions, such as inflation, and the domestic and international political situation and the related impact on consumer confidence and spending; the impact of the COVID-19 pandemic and actions taken to slow its spread and the related impacts on economic activity, financial markets, labor markets and the global supply chain; competitive factors, including pricing and promotional activities of major competitors and an increase in competition within the markets in which we compete; seasonal fluctuations in our net sales, operating income and inventory levels; the reduction in traffic to, or the closing of, the other destination retailers in the shopping areas where our stores are located; our ability to identify changing consumer preferences and demand; unseasonable weather conditions caused by climate change or otherwise adversely impacting demand; natural and man-made disasters, including fire, snow and ice storms, flood, hail, hurricanes and earthquakes; our ability to successfully implement one or more of our strategic initiatives and growth plans; our ability to execute our opportunistic buying and inventory management process; the availability of desirable store locations on suitable terms; the availability, selection and purchasing of attractive merchandise on favorable terms; our ability to attract, train and retain quality employees and temporary personnel in appropriate numbers; labor costs and our ability to manage a large workforce; the solvency of parties with whom we do business and their willingness to perform their obligations to us; import risks, including tax and trade policies, tariffs and government regulations; domestic and international events affecting the delivery of merchandise to our stores; unforeseen cyber-related problems or attacks; payment-related risks; our ability to effectively generate sufficient levels of customer awareness and traffic through our advertising and marketing programs; damage to our corporate reputation or brand; issues with merchandise safety and shrinkage; lack of or insufficient insurance coverage; the impact of current and future laws and the interpretation of such laws; the impact of increasingly rigorous privacy and data security regulations; any unforeseen material loss or casualty or the existence of adverse litigation; use of social media in violation of applicable laws and regulations; our substantial level of indebtedness and related debt-service obligations; consequences of the failure to comply with covenants in our debt agreements; possible conversion of our 2.25% Convertible Notes due 2025; the availability of adequate financing; and other risks discussed from
30
time to time in our filings with the Securities and Exchange Commission (SEC), including those under the heading “Risk Factors” in the Fiscal 2022 10-K.
Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law, even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.
Recent Accounting Pronouncements
Refer to Note 1, “Summary of Significant Accounting Policies,” to our Condensed Consolidated Financial Statements in Part I, Item 1 for a discussion of recent accounting pronouncements and their impact on our Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes to our quantitative and qualitative disclosures about market risk from those included in the Fiscal 2022 10-K.
Item 4. Controls and Procedures.
Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the last day of the fiscal period covered by this report, April 29, 2023. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of April 29, 2023.
During the quarter ended April 29, 2023, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
In the course of business, the Company is party to class or collective actions alleging violations of federal and state wage and hour and other labor statutes, representative claims under the California Private Attorneys’ General Act and various other lawsuits and regulatory proceedings from time to time including, among others, commercial, product, employee, customer, intellectual property and other claims. Actions against us are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties. Refer to Note 11 to our Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for further detail.
Item 1A. Risk Factors.
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Fiscal 2022 10-K.
31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table provides information regarding our purchases of common stock during the three fiscal months ended April 29, 2023:
Month |
|
Total Number |
|
|
Average Price |
|
|
Total Number |
|
|
Approximate |
|
||||
January 29, 2023 through February 25, 2023 |
|
|
46,391 |
|
|
$ |
227.46 |
|
|
|
46,381 |
|
|
$ |
336,776 |
|
February 26, 2023 through April 1, 2023 |
|
|
140,763 |
|
|
$ |
210.35 |
|
|
|
140,602 |
|
|
$ |
307,200 |
|
April 2, 2023 through April 29, 2023 |
|
|
58,431 |
|
|
$ |
193.48 |
|
|
|
58,431 |
|
|
$ |
295,895 |
|
Total |
|
|
245,585 |
|
|
|
|
|
|
245,414 |
|
|
|
|
||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
32
Item 6. Exhibits.
Exhibit |
|
Incorporated by Reference |
||
Number |
Exhibit Description |
Form |
Exhibit No. |
Filing Date |
10.1† |
|
|
|
|
31.1† |
|
|
|
|
31.2† |
|
|
|
|
32.1† |
|
|
|
|
32.2† |
|
|
|
|
101.INS† |
Inline XBRL Instance Document – the instance document does not appear in Interactive Data File, because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH† |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL† |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF† |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB† |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE† |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104† |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
† Filed or furnished herewith.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BURLINGTON STORES, INC. |
|
/s/ Michael O’Sullivan |
Michael O’Sullivan Chief Executive Officer (Principal Executive Officer) |
|
/s/ Kristin Wolfe |
Kristin Wolfe Chief Financial Officer (Principal Financial Officer) |
Date: May 25, 2023
34
Exhibit 10.1
Execution Version
AMENDMENT No. 10, dated as of May 11, 2023 (this “Amendment”), to the Credit Agreement, dated as of February 24, 2011, as amended by that certain Amendment No. 1, dated as of May 16, 2012, as further amended by that certain Amendment No. 2, dated as of February 15, 2013, as further amended by that certain Amendment No. 3, dated as of May 17, 2013, as further amended by that certain Amendment No. 4, dated as of August 13, 2014, as further amended by that certain Amendment No. 5, dated as of July 29, 2016, as further amended by that certain Amendment No. 6, dated as of November 17, 2017, as further amended by that certain Amendment No. 7, dated as of November 2, 2018, as further amended by that certain Amendment No. 8, dated as of February 26, 2020, and as further amended by that certain Amendment No. 9, dated as of June 24, 2021, among BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a Florida corporation (the “Borrower”), the several banks and other financial institutions or entities from time to time party to the Credit Agreement (the “Lenders”), JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such capacity, the “Administrative Agent”) and Collateral Agent, and the other parties thereto (as amended, restated, modified and supplemented from time to time prior to the effectiveness of this Amendment, the “Credit Agreement”), by and among the Borrower, the Facility Guarantors party hereto and the Administrative Agent. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
WHEREAS, certain loans, commitments and/or other extensions of credit (the “Loans”) under the Credit Agreement denominated in dollars incur or are permitted to incur interest, fees or other amounts based on the London Interbank Offered Rate as administered by the ICE Benchmark Administration (“LIBOR”) in accordance with the terms of the Credit Agreement;
WHEREAS, pursuant to Section 2.10(b) of the Credit Agreement, the Administrative Agent has determined in accordance with the Credit Agreement that a Benchmark Replacement Event has occurred with respect to LIBOR, with a Benchmark Replacement Date of July 1, 2023;
WHEREAS, on July 1, 2023, without further action under the Credit Agreement, a Benchmark Replacement under clause (1) of such definition shall occur and Adjusted Term SOFR (as defined in the Amended Credit Agreement) shall automatically replace LIBOR as the Benchmark for all purposes under the Loan Documents; and
WHEREAS, pursuant to Section 2.10(d) of the Credit Agreement, the Administrative Agent, in consultation with the Borrower, has determined that certain Benchmark Replacement Conforming Changes are appropriate to reflect the adoption and implementation of Adjusted Term SOFR as the Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice, and such changes shall become effective on July 1, 2023 (the “Amendment No. 10 Effective Date”), without any further consent of any other party to the Credit Agreement or any other Loan Document.
-2-
NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
-3-
-4-
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AMENDMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY); AND WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.
[Remainder of page left intentionally blank]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION,
as Borrower
By: /s/ David Glick
Name: David Glick
Title: Group Senior Vice President of Investor Relations and Treasurer
BURLINGTON COAT FACTORY HOLDINGS, LLC,
as a Facility Guarantor
By: /s/ David Glick
Name: David Glick
Title: Group Senior Vice President of Investor Relations and Treasurer
BURLINGTON COAT FACTORY
INVESTMENTS HOLDINGS, INC.,
as a Facility Guarantor
By: /s/ David Glick
Name: David Glick
Title: Group Senior Vice President of Investor Relations and Treasurer
EACH OF THE SUBSIDIARIES LISTED ON ANNEX A HERETO,
as Facility Guarantors
By: /s/ David Glick
Name: David Glick
Title: Group Senior Vice President of Investor Relations and Treasurer
[Signature Page to Burlington Coat Factory Amendment No. 10]
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: /s/ James A. Knight
Name: James A. Knight
Title: Executive Director
[Signature Page to Burlington Coat Factory Amendment No. 10]
ANNEX A
Subsidiary Facility Guarantors
Burlington Coat Factory of Texas, L.P.
Burlington Coat Factory of Kentucky, Inc.
Burlington Coat Factory Warehouse of Edgewater Park, Inc.
Burlington Coat Factory Warehouse of New Jersey, Inc.
Burlington Coat Factory of Puerto Rico, LLC
Burlington Coat Factory Warehouse of Baytown Inc
Burlington Coat Factory of Pocono Crossing, LLC
Burlington Coat Factory Of Texas, Inc.
Burlington Coat Factory Realty Of Edgewater Park, Inc.
Burlington Coat Factory Realty Of Pinebrook, Inc.
Burlington Coat Factory Warehouse Of Edgewater Park Urban Renewal Corp.
BCF Florence Urban Renewal, L.L.C.
BCF Florence Urban Renewal II, LLC
Burlington Merchandising Corporation
Burlington Distribution Corp.
[Signature Page to Burlington Coat Factory Amendment No. 10]
EXHIBIT A
Exhibit A
CREDIT AGREEMENT
dated as of February 24, 2011
and as Amendedamended by Amendment No. 1 on May 16, 2012
and as further Amendedamended by Amendment No. 2 on February 15, 2013
and as further Amendedamended by Amendment No. 3 on May 17, 2013
and as further Amendedamended by Amendment No. 4 on August 13, 2014
and as further Amendedamended by Amendment No. 5 on July 29, 2016
and as further Amendedamended by Amendment No. 6 on November 17, 2017
and as further Amendedamended by Amendment No. 7 on November 2, 2018
and as further amended by Amendment No. 8 on February 26, 2020
and as further amended by Amendment No. 9 on June 24, 2021
and as further amended by Amendment No. 10 on May 11, 2023
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION,
as Borrower
THE FACILITY GUARANTORS NAMED HEREIN
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Collateral Agent
THE LENDERS NAMED HEREIN
and
JPMORGAN CHASE BANK, N.A.,
BofA Securities, Inc.,
BOFA SECURITIES, INC.,
Goldman Sachs BankGOLDMAN SACHS BANK USA, and
Wells Fargo Securities LLC,WELLS FARGO SECURITIES LLC,
as Joint Lead Arrangers and Joint Book Runners
for Amendment No. 9
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01 Definitions 1
SECTION 1.02 Terms Generally 4846
SECTION 1.03 Accounting Terms 4947
SECTION 1.04 Rounding 4948
SECTION 1.05 Times of Day 4948
SECTION 1.06 Certifications 4948
SECTION 1.07 Compliance with Article VI; Calculation of Baskets 5048
SECTION 1.08 Timing of Payment or Performance 5048
SECTION 1.09 Limited Condition Transactions 5049
SECTION 1.10 Interest Rates; LIBORBenchmark Notification 5149
ARTICLE II
Amount and Terms of Credit
SECTION 2.01 Commitment of the Lenders 5250
SECTION 2.02 [Reserved] 5250
SECTION 2.03 Procedure for Term Loan Borrowing 5250
SECTION 2.04 Repayment of Term Loans 5351
SECTION 2.05 Incremental Term Loans 5351
SECTION 2.06 Extended Term Loans 5453
SECTION 2.07 Notes 5554
SECTION 2.08 Interest on Term Loans 5654
SECTION 2.09 Conversion and Continuation of Term Loans 5654
SECTION 2.10 Alternate Rate of Interest for Term Loans 5755
SECTION 2.11 Change in Legality 5857
SECTION 2.12 Default Interest 5957
SECTION 2.13 [Reserved] 5957
SECTION 2.14 Increased Costs 5957
SECTION 2.15 [Reserved] 6058
SECTION 2.16 Optional Prepayment of Term Loans; Reimbursement of Lenders 6058
SECTION 2.17 Mandatory Prepayment 6361
SECTION 2.18 [Reserved] 6463
SECTION 2.19 Fees 6463
SECTION 2.20 Maintenance of Loan Account; Statements of Account 6563
SECTION 2.21 Payments 6563
SECTION 2.22 [Reserved] 6664
SECTION 2.23 Taxes 6664
SECTION 2.24 Mitigation Obligations; Replacement of Lenders 6867
SECTION 2.25 Permitted Debt Exchanges 6967
ARTICLE III
Representations and Warranties
SECTION 3.01 Organization; Powers 7068
SECTION 3.02 Authorization; Enforceability 7069
SECTION 3.03 Governmental and Other Approvals; No Conflicts 7169
-i-
Page
SECTION 3.04 Financial Condition 7169
SECTION 3.05 Properties 7169
SECTION 3.06 Litigation and Environmental Matters 7270
SECTION 3.07 Compliance with Laws and Agreements 7270
SECTION 3.08 Investment Company Status 7270
SECTION 3.09 Taxes 7271
SECTION 3.10 ERISA 7271
SECTION 3.11 Disclosure 7371
SECTION 3.12 Subsidiaries 7371
SECTION 3.13 Insurance 7371
SECTION 3.14 Labor Matters 7371
SECTION 3.15 Security Documents 7372
SECTION 3.16 Federal Reserve Regulations 7472
SECTION 3.17 Solvency 7472
SECTION 3.18 Anti-Corruption Laws and Sanctions 7473
SECTION 3.19 Affected Financial Institutions 7473
SECTION 3.20 Certain ERISA Matters 7473
ARTICLE IV
[Reserved]
ARTICLE V
Affirmative Covenants
SECTION 5.01 Financial Statements and Other Information 7573
SECTION 5.02 Notices of Material Events 7775
SECTION 5.03 Information Regarding Collateral 7775
SECTION 5.04 Existence; Conduct of Business 7876
SECTION 5.05 Payment of Obligations 7876
SECTION 5.06 Maintenance of Properties 7876
SECTION 5.07 Insurance 7876
SECTION 5.08 Books and Records; Inspection and Audit Rights; Appraisals; Accountants 7977
SECTION 5.09 [Reserved] 7977
SECTION 5.10 Compliance with Laws 7978
SECTION 5.11 Use of Proceeds 8078
SECTION 5.12 Additional Restricted Subsidiaries 8078
SECTION 5.13 Further Assurances 8078
SECTION 5.14 [Reserved] 8079
SECTION 5.15 Maintenance of Ratings 8179
SECTION 5.16 Designation of Subsidiaries 8179
ARTICLE VI
Negative Covenants
SECTION 6.01 Indebtedness and Other Obligations 8179
SECTION 6.02 Liens 8280
SECTION 6.03 Fundamental Changes 8280
SECTION 6.04 Investments, Guarantees and Acquisitions 8280
SECTION 6.05 Asset Sales 8280
SECTION 6.06 Restricted Payments; Certain Payments of Indebtedness 8281
SECTION 6.07 Transactions with Affiliates 8584
SECTION 6.08 Restrictive Agreements 8684
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Page
SECTION 6.09 Amendment of Material Documents 8785
SECTION 6.10 Fiscal Year 8785
ARTICLE VII
Events of Default
SECTION 7.01 Events of Default 8785
SECTION 7.02 Remedies on Default 9089
SECTION 7.03 Application of Proceeds 9189
ARTICLE VIII
The Agents
SECTION 8.01 Appointment and Administration by Administrative Agent 9189
SECTION 8.02 Appointment of Collateral Agent 9189
SECTION 8.03 Sharing of Excess Payments 9290
SECTION 8.04 Agreement of Applicable Lenders 9290
SECTION 8.05 Liability of Agents 9290
SECTION 8.06 Notice of Default 9391
SECTION 8.07 Credit Decisions 9391
SECTION 8.08 Reimbursement and Indemnification 9392
SECTION 8.09 Rights of Agents 9492
SECTION 8.10 Notice of Transfer 9492
SECTION 8.11 Successor Agents 9492
SECTION 8.12 Relation Among the Lenders 9492
SECTION 8.13 Reports and Financial Statements 9493
SECTION 8.14 Agency for Perfection 9593
SECTION 8.15 Authority to Enter Into Intercreditor Agreements 9593
SECTION 8.16 Collateral Matters 9594
SECTION 8.17 Arranger 9795
SECTION 8.18 Withholding Taxes 9795
SECTION 8.19 Acknowledgements of Lenders 9795
SECTION 8.20 Certain ERISA Matters 9896
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices 9997
SECTION 9.02 Waivers; Amendments 9998
SECTION 9.03 Expenses; Indemnity; Limitation of Liability; Etc 103101
SECTION 9.04 Successors and Assigns 105103
SECTION 9.05 Survival 109108
SECTION 9.06 Counterparts; Integration; Effectiveness 110108
SECTION 9.07 Severability 110109
SECTION 9.08 Right of Setoff 111109
SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process 111109
SECTION 9.10 WAIVER OF JURY TRIAL 111109
SECTION 9.11 Press Releases and Related Matters 112110
SECTION 9.12 Headings 112110
SECTION 9.13 Interest Rate Limitation 112110
SECTION 9.14 Additional Waivers 112110
SECTION 9.15 Confidentiality 113111
SECTION 9.16 Patriot Act 114112
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Page
SECTION 9.17 [Reserved] 114112
SECTION 9.18 Intercreditor Agreements 114112
SECTION 9.19 No Advisory or Fiduciary Responsibility 114112
SECTION 9.20 Acknowledgement and Consent to Bail-In of Affected Financial Institutions 115113
SECTION 9.21 Acknowledgement Regarding any Supported QFCs 115113
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EXHIBITS
Exhibit A: Form of Assignment and Acceptance
Exhibit B-1: Borrowing Request
Exhibit B-2: Conversion/Continuation Notice
Exhibit C: Form of Note
Exhibit D: Form of Joinder Agreement
Exhibit E: Form of Compliance Certificate
Exhibit F: Closing Agenda
Exhibit G: Pari Passu Lien Intercreditor Agreement
Exhibit H: Discounted Prepayment Option Notice
Exhibit I: Lender Participation Notice
Exhibit J: Discounted Voluntary Prepayment Notice
Exhibit K: Affiliated Lender Assignment and Acceptance
Exhibit L-1: Form of Tax Status Certificate
Exhibit L-2: Form of Tax Status Certificate
Exhibit L-3: Form of Tax Status Certificate
Exhibit L-4: Form of Tax Status Certificate
SCHEDULES
Schedule 1.1(a): Lenders and Commitments
Schedule 1.1(b): Pending Real Estate Dispositions
Schedule 3.01: Organization Information
Schedule 3.05(a): Title Exceptions
Schedule 3.05(b): Intellectual Property
Schedule 3.05(c)(i): Owned Real Estate
Schedule 3.05(c)(ii): Leased Real Estate
Schedule 3.06(a): Disclosed Matters
Schedule 3.06(b): Environmental Matters
Schedule 3.06(c): Superfund Sites
Schedule 3.06(d): Real Estate Liens
Schedule 3.10: ERISA Matters
Schedule 3.12: Subsidiaries; Joint Ventures
Schedule 3.13: Insurance
Schedule 3.14: Collective Bargaining Agreements
Schedule 5.14: Post Closing Covenants
Schedule 6.01: Existing Indebtedness
Schedule 6.02: Existing Encumbrances
Schedule 6.04: Existing Investments
Schedule 6.05: Asset Sales
Schedule 6.07: Affiliate Transactions
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CREDIT AGREEMENT dated as of February 24, 2011 (as amended on May 16, 2012, February 15, 2013 and May 17, 2013, August 13, 2014, July 29, 2016, November 17, 2017, November 2, 2018, February 26, 2020 and2020, June 24, 2021 and May 11, 2023) among:
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION (in such capacity, the “Borrower”), a corporation organized under the laws of the State of Florida, with its principal executive offices at 2006 Route 130 North, Burlington, New Jersey 08016;
The FACILITY GUARANTORS from time to time party hereto;
JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative Agent”), and as collateral agent (in such capacity, the “Collateral Agent”), for its own benefit and the benefit of the other Secured Parties; and
The LENDERS party hereto;
in consideration of the mutual covenants herein contained and benefits to be derived herefrom, the parties hereto agree as follows:
Definitions
“ABL Agreement” means that certain second amended and restated credit agreement dated September 2, 2011 by and among the Borrower, as the lead borrower, the other borrowers named therein, Bank of America, N.A., as administrative agent and as collateral agent as replaced by any successor agent, and the lenders identified therein, as amended, restated, supplemented, modified, refinanced, extended, restructured, replaced or renewed from time to time.
“ABL Borrowings Amount” means, as of any date (the “Reference Date”), an amount equal to (a) the sum of the aggregate amount of Revolving Credit Loans of the Borrower and its Subsidiaries outstanding as of the Reference Date and the last day of each of the eleven months ending immediately prior to the Reference Date divided by (b) twelve.
“ABL Facility” means the revolving credit loan facility established pursuant to the ABL Agreement, as amended, restated, amended and restated, modified, supplemented, refinanced, extended, restructured, renewed or replaced from time to time.
“ABL Intercreditor Agreement” means that certain Intercreditor Agreement dated as of April 13, 2006 by and among Bear Stearns Corporate Lending Inc., as predecessor administrative agent and collateral agent to the Term Agent (as defined in the ABL Intercreditor Agreement) thereunder, Bank of America, N.A., as administrative agent and as collateral agent (or any successor or other administrative agent or collateral agent) under the ABL Facility, and the Loan Parties, as amended, restated, supplemented or otherwise modified from time to time.
“Acceptable Discount” has the meaning provided in Section 2.16(d)(iii).
“Acceptance Date” has the meaning provided in Section 2.16(d)(ii).
“Account(s)” means “accounts” as defined in the UCC, and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, or (c) 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 (a) rights
to payment evidenced by chattel paper or an instrument, (b) commercial tort claims, (c) deposit accounts, (d) investment property, or (e) letter-of-credit rights or letters of credit.
“Acquired EBITDA” means, with respect to any entity or business acquired in a Permitted Acquisition or Person, business unit or business division or other Acquisition or any Unrestricted Subsidiary redesignated as a Restricted Subsidiary (any of the foregoing, an “Acquired Entity”), for any period, the amount of Consolidated EBITDA of such Acquired Entity for such period (determined using such definition as if references to BCF Holdings and its Restricted Subsidiaries therein were to such Acquired Entity and its Restricted Subsidiaries), all as determined on a Consolidated basis for such Acquired Entity in accordance with GAAP.
“Acquired Entity” has the meaning provided in the definition of “Acquired EBITDA.”
“Acquisition” means, with respect to a specified Person, (a) an Investment in or a purchase of a 50% or greater interest in the Capital Stock of any other Person, (b) a purchase or acquisition of all or substantially all of the assets of any other Person, (c) a purchase or acquisition of a Real Estate portfolio or Stores from any other Person, or (d) any merger or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a 50% or greater interest in the Capital Stock of, any Person, in each case in any transaction or group of transactions which are part of a common plan.
“Additional Term B-6 Commitment” means, with respect to the Additional Term B-6 Lender, its commitment to make a Term B-6 Loan on the Amendment No. 9 Effective Date in an amount equal to $961,415,000.00 minus the aggregate principal amount of all Converted Term B-5 Loans.
“Additional Term B-6 Lender” means JPMorgan Chase Bank, N.A., in its capacity as such.
“Additional Term B-6 Loans” means the Term B-6 Loan made by the Additional Term B-6 Lender on the Amendment No. 9 Effective Date pursuant to Section 2.01(d).
“Adjusted LIBOTerm SOFR Rate” means, with respect to any LIBO Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of one percent) equal to the greater of (i) the product ofequal to (a) the LIBOTerm SOFR Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate and (ii)(a) prior to the Amendment No. 7 Effective Date, 0.75% or (b) on and following the Amendment No. 7 Effective Date, 0.00% . At any time the Adjusted LIBO Rate is determined pursuant to clause (i) of the preceding sentence, the Adjusted LIBO Rate will be adjusted automatically as to all LIBO Borrowings then outstanding as of the effective date of any change in the Statutory Reserve Rate, plus (b) 0.11448% (11.448 basis points) for an Interest Period of one-month’s duration, 0.26161% (26.161 basis points) for an Interest Period of three-months’ duration and 0.42826% (42.826 basis points) for an Interest Period of six-months’ duration; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Administrative Agent” means JPMorgan Chase Bank, N.A. (or any of its designated branch offices or affiliates), in its capacity as administrative agent for the Lenders hereunder.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent.
“Advisory Fees” means all fees and expense reimbursement paid by Parent and its Subsidiaries to the Sponsor Group prior to August 13, 2014.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified.
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“Agents” means collectively, the Administrative Agent and the Collateral Agent.
“Agreement” means this Credit Agreement, as modified, amended, supplemented or restated, and in effect from time to time.
“Agreement Value” means for each Hedge Agreement, on any date of determination, an amount equal to:
(a) In the case of a Hedge Agreement documented pursuant to an ISDA Master Agreement, the amount, if any, that would be payable by any Loan Party to its counterparty to such Hedge Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination and (ii) such Loan Party was the sole “Affected Party” (as therein defined);
(b) In the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss, if any, on such Hedge Agreement to the Loan Party which is party to such Hedge Agreement, based on the settlement price of such Hedge Agreement on such date of determination; or
(c) In all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss, if any, on such Hedge Agreement to the Loan Party that is party to such Hedge Agreement as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party exceeds (ii) the present value of the future cash flows to be received by such Loan Party, in each case pursuant to such Hedge Agreement.
“Amendment No. 7” means Amendment No. 7 to this Agreement, dated as of November 2, 2018, by and among the Loan Parties, the Administrative Agent, the Collateral Agent and the Lenders party thereto.
“Amendment No. 7 Effective Date” has the meaning specified in Amendment No. 7.
“Amendment No. 8” means Amendment No. 8 to this Agreement, dated as of February 26, 2020, by and among the Loan Parties, the Administrative Agent, the Collateral Agent and the Lenders party thereto.
“Amendment No. 9” means Amendment No. 9 to this Agreement, dated as of June 24, 2021, by and among the Loan Parties, the Administrative Agent, the Collateral Agent, the Additional Term B-6 Lender, and the Amendment No. 9 Consenting Lenders.
“Amendment No. 9 Consenting Lender” means each Lender that provided the Administrative Agent with a counterpart to Amendment No. 9 executed by such Lender.
“Amendment No. 9 Effective Date” has the meaning specified in Amendment No. 9.
“Amendment No. 10” means Amendment No. 10 to this Agreement, dated as of May 11, 2023, by and among the Loan Parties and the Administrative Agent.
“Amendment No. 10 Effective Date” has the meaning specified in Amendment No. 10.
“Amendment Transactions” means the entry into Amendment No. 9 executed and delivered on the Amendment No. 9 Effective Date, the borrowings of the Additional Term B-6 Loans and the prepayments of the Non-Converted Term B-5 Loans and the payment of fees and expenses in connection with the foregoing and the related transactions in connection therewith.
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Discount” has the meaning provided in Section 2.16(d)(iii).
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“Applicable Law” means as to any Person: (a) all laws, statutes, rules, regulations, orders, codes, ordinances or other requirements having the force of law; and (b) all court orders, decrees, judgments, injunctions, enforceable notices, binding agreements and/or rulings, in each case of or by any Governmental Authority which has jurisdiction over such Person, or any property of such Person.
“Applicable Lenders” means the Required Lenders or all Lenders, as applicable.
“Applicable Margin” means 2.00%, in the case of Term B-6 Loans which are LIBOTerm Benchmark Loans, and 1.00%, in the case of Term B-6 Loans which are Prime Rate Loans. The Incremental Term Loans and Extended Term Loans shall have Applicable Margins as set forth in the applicable Incremental Term Loan Amendment or Term Loan Extension Amendment; provided that in the event that the Yield applicable to any Incremental Term Loans (other than Refinancing Term Loans) of any Class would be more than 0.50% greater than the Yield for the Term B-6 Loans, the Applicable Margins set forth above for the Term B-6 Loans shall be increased from those provided above so that the Yield for the Term B-6 Loans is equal to (x) the Yield for such Incremental Term Loans minus (y) 0.50%.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” means each of JPMorgan Chase Bank, N.A., Bank of America, N.A., Goldman Sachs Bank USA and Wells Fargo Securities LLC, each in its capacity as a joint lead arranger and joint bookrunner for Amendment No. 9.
“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 substantially the form of Exhibit A or any other form (including electronic records generated by the use of an electronic platform) approved by the Administrative Agent and the Borrower.
“Auction Manager” means any Person appointed by the Borrower to manage any Discounted Voluntary Prepayment.
“Available Amount” means, on any date (the “Specified Date”), an amount equal at such time to (a) the sum of (i) the excess, if positive, of (x) an amount, not less than zero, equal to the cumulative amount of Excess Cash Flow for all full Fiscal Years commencing after August 13, 2014 and prior to the Specified Date minus (y) the portion of such Excess Cash Flow that has been after August 13, 2014 and on or prior to the Specified Date applied to the prepayment of Term Loans in accordance with Section 2.17(d) plus (ii) $366,000,000 plus (iii) the aggregate net cash proceeds (excluding any proceeds that were relied upon as the basis for taking any other action under Article VI the permissibility of which was conditioned on the application of such proceeds for such purpose) received by the Borrower following August 13, 2014 from the issuance and sale (other than to a Loan Party or a Subsidiary) of its Capital Stock (other than Disqualified Capital Stock) or contributions to the capital of the Borrower plus (iv) all Declined Amounts plus (v) the aggregate amount received by the Borrower or any Restricted Subsidiary after August 13, 2014 from cash (or Cash Equivalents) dividends and distributions made by any Unrestricted Subsidiary or any joint venture and returns of principal, cash repayments and similar payments made by any Unrestricted Subsidiary or joint venture in respect of Investments made by the Borrower or any Restricted Subsidiary to any Unrestricted Subsidiary or joint venture, and the Net Proceeds in connection with the sale, transfer or other disposition of assets or the Capital Stock of any Unrestricted Subsidiary or joint venture of the Borrower to any Person other than the Borrower or a Restricted Subsidiary after August 13, 2014; plus (vi) in the event that the Borrower redesignates any Unrestricted Subsidiary as a Restricted Subsidiary after August 13, 2014 (which, for purposes hereof, shall be deemed to also include (A) the merger, consolidation, liquidation or similar amalgamation of any Unrestricted Subsidiary into the Borrower or any Restricted Subsidiary, so long as the Borrower or such Restricted Subsidiary is the surviving Person, and (B) the transfer of all or substantially all of the assets of an Unrestricted Subsidiary to the Borrower or any Restricted Subsidiary), the fair market value (as determined in good faith by the Borrower) of the Investment in such Unrestricted Subsidiary at the time of such redesignation; plus (vii) net cash proceeds received by the Borrower or any of its Restricted Subsidiaries from Indebtedness or Disqualified Capital Stock of the Borrower or any of its Restricted Subsidiaries issued after August 13, 2014 (other than to a Loan Party or a Subsidiary) that is subsequently converted into Capital Stock (other than Disqualified Capital Stock)
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of the Borrower or any of its direct or indirect parent companies; minus (b) the sum of (i) the aggregate amount of Investments made in reliance on clause (t) of the definition of “Permitted Investments” after August 13, 2014 (net of any cash return on such Investments received by any Loan Party or Restricted Subsidiary from such Investments (including in connection with any disposition thereof) after August 13, 2014 and in the case of any Investment in any Person that was an Unrestricted Subsidiary from the Available Amount, net of the fair market value of any such Investment at the time, if any such Unrestricted Subsidiary was redesignated as a Restricted Subsidiary) plus (ii) the aggregate amount of payments in respect of Specified Indebtedness made pursuant to Section 6.06(b)(v) after August 13, 2014 plus (iii) the aggregate amount of Restricted Payments made pursuant to Section 6.06(a)(viii) after August 13, 2014.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.10 (f).
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11, U.S.C., as now or hereafter in effect, or any successor thereto.
“BCF Holdings” means Burlington Coat Factory Holdings, LLC.
“Benchmark” means, initially, the LIBOwith respect to any Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event, an Early Opt-in Election or an Other Rate Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred with respect to LIBOthe Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) or clause (c) of Section 2.10.
“Benchmark Replacement” means for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date; provided that, in the case of an Other Rate Early Opt-in Election, “Benchmark Replacement” shall mean the alternative set forth in (3) below:
(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment;(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;
(32) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment;provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a screen or other information service that publishes such rate from
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time to time as selected by the Administrative Agent in its reasonable discretion; provided further that, in the case of clause (3), when such clause is used to determine the Benchmark Replacement in connection with the occurrence of an Other Rate Early Opt-in Election, the alternate benchmark rate selected by the Administrative Agent and the Borrower shall be the term benchmark rate that is used in lieu of a LIBO based rate in the relevant other Dollar-denominated syndicated credit facilities; provided further that, notwithstanding anything to the contrary in this Agreement or in any other Loan Document other than in the case of an Other Rate Early Opt-in Election, upon the occurrence of a Term SOFR Transition Event, and the delivery of a Term SOFR Notice, on the applicable Benchmark Replacement Date the “Benchmark Replacement” shall revert to and shall be deemed to be the sum of (a) Term SOFR and (b) the related Benchmark Replacement Adjustment, as set forth in clause (a)(1) of this definition (subject to the first proviso above).
If the Benchmark Replacement as determined pursuant to clause (1), or (2) or (3) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement:
(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first alternative set forth in the order below that can be determined by the Administrative Agent:
(a) the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that has been selected or recommended by the Relevant Governmental Body for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for the applicable Corresponding Tenor;
(b) the spread adjustment (which may be a positive or negative value or zero) as of the Reference Time such Benchmark Replacement is first set for such Interest Period that would apply to the fallback rate for a derivative transaction referencing the ISDA Definitions to be effective upon an index cessation event with respect to such Benchmark for the applicable Corresponding Tenor; and
(2) for purposes of clause (32) of the definition of “Benchmark Replacement,” the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero), that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities;provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by the Administrative Agent in its reasonable discretion.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Prime Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion (in consultation with the Borrower) may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible for syndicated loans administered by the Administrative Agent
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or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein; or
(3) in the case of a Term SOFR Transition Event, the date that is thirty (30) days after the date a Term SOFR Notice is provided to the Lenders and the Borrower pursuant to Section 2.10(c); or (4) in the case of an Early Opt-in Election or Other Rate Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election or Other Rate Early Opt-in Election is provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Early Opt-in Election or Other Rate Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election or Other Rate Early Opt-in Election from Lenders comprising the Required Lenders.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
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(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.10 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.10.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. § 1841(k)) of such party.
“Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Borrower” has the meaning set forth in the Preamble to this Agreement.
“Borrowing” means the incurrence of Term Loans of a single Class and Type having, in the case of LIBOTerm Benchmark Loans, a single Interest Period.
“Borrowing Base” means, as of any date, an amount equal to the sum of (x) 95% of the face value of all accounts receivable of the Loan Parties and their Restricted Subsidiaries and (y) 65% of the net book value of all inventory owned by the Loan Parties and their Restricted Subsidiaries, in each case, calculated on a consolidated basis; provided, however, that if Indebtedness is being incurred to finance an Acquisition pursuant to which any accounts receivable or inventory will be acquired (whether through the direct acquisition of assets or the acquisition of Capital Stock of a Person), the Borrowing Base shall be calculated to give appropriate pro forma effect to any increase in the amount of the Loan Parties’ and their Restricted Subsidiaries’ accounts receivable and inventory resulting from such Acquisition.
“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.
“Breakage Costs” has the meaning provided in Section 2.16(b).
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain closed; provided, however, that when used in connection with a LIBO Loan, the term “ that, in addition to the foregoing, a Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market shall be, in relation to Loans referencing the Adjusted Term SOFR Rate and any interest rate settings, fundings, disbursements, settlements or payments of any such Loans referencing the Adjusted Term SOFR Rate or any other dealings of such
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Loans referencing the Adjusted Term SOFR Rate, any such day that is only a U.S. Government Securities Business Day.
“Capital Expenditures” means, with respect to BCF Holdings and its Restricted Subsidiaries for any period, the additions to property, plant and equipment and other capital expenditures of BCF Holdings and its Restricted Subsidiaries that are (or would be) set forth in a Consolidated statement of cash flows of BCF Holdings and its Restricted Subsidiaries for such period prepared in accordance with GAAP; provided that “Capital Expenditures” shall not include (i) any additions to property, plant and equipment and other capital expenditures made with (A) the proceeds of any equity securities issued or capital contributions received by any Loan Party or any Subsidiary in connection with such capital expenditures, (B) the proceeds from any casualty insurance or condemnation or eminent domain, to the extent that the proceeds therefrom are utilized for capital expenditures within twelve months of the receipt of such proceeds or (C) the proceeds or consideration received from any sale, trade in or other disposition of assets (other than assets constituting Collateral consisting of Inventory and Accounts), to the extent that the proceeds and/or consideration therefrom are utilized for capital expenditures within twelve months of the receipt of such proceeds (or, in the case of any disposition of Real Estate committed to be reinvested within 12 months of receipt of such proceeds and actually reinvested within 18 months of such receipt), (ii) any such expenditures which constitute a Permitted Acquisition and (iii) any expenditures which are contractually required to be, and are, reimbursed to the Loan Parties in cash by a third party (including landlords) during such period of calculation.
“Capital Lease Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required (or if such lease or other arrangement conveying the right to use had been in effect, would have been required) to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP as in effect on August 13, 2014; for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP (except for temporary treatment of construction related expenditures under EITF 97-10, “The Effects of Lessee Involvement in Asset Construction” which will ultimately be treated as operating leases upon a sale-leaseback transaction).
“Capital Stock” means, as to any Person that is a corporation, the authorized shares of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person, including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise Control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise acquire, and all other instruments convertible into or exchangeable for, any of the foregoing; provided, that any instrument evidencing Indebtedness convertible or exchangeable for Capital Stock shall not be deemed to be Capital Stock, unless and until any such instruments are so converted or exchanged.
“Cash Equivalents” means Permitted Investments set forth in clauses (a) through (k) in the definition thereof.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.
“CFC” means a “controlled foreign corporation” within the meaning of Section 957 of the Code.
“CFC Holding Company” means a domestic Subsidiary substantially all of whose assets consist of the Capital Stock or debt of one or more Foreign Subsidiaries or other CFC Holding Companies.
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“Change in Control” means, at any time:
(a) any person or “group” (within the meaning of the Securities and Exchange Act of 1934, as amended), other than any one or more of the Sponsor Group, is or becomes the beneficial owner (within the meaning of Rule 13d-3 or 13d-5 of the Securities and Exchange Act of 1934, as amended, except that such person shall be deemed to have “beneficial ownership” of all Capital Stock that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more (on a fully diluted basis) of the total then outstanding Capital Stock of Burlington Stores, Inc. entitled to vote for the election of directors of Burlington Stores, Inc. or
(b) Burlington Stores, Inc. fails at any time to own, directly or indirectly, 100% of the Capital Stock of the Borrower.
“Change in Law” means (a) the adoption of any Applicable Law after the Amendment No. 9 Effective Date, (b) any change in any Applicable Law or in the interpretation or application thereof by any Governmental Authority after the Amendment No. 9 Effective Date or (c) compliance by any Credit Party (or, for purposes of Section 2.14, by any lending office of such Credit Party or by such Credit Party’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Amendment No. 9 Effective Date; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives 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 regulatory authorities (or foreign regulatory authorities having jurisdiction over the applicable Lender), in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.
“Charges” has the meaning provided in Section 9.13.
“Charter Document” means as to any Person, its partnership agreement, certificate of incorporation, certificate of formation, operating agreement, membership agreement or similar constitutive document or agreement or its by-laws.
“Class” refers to (a) the Term B-5 Loans, (b) the Term B-6 Loans, (c) any particular Series of Incremental Term Loans and (d) any particular Extension Series of Extended Term Loans, each as an individual Class of Term Loans hereunder.
“Closing Date” means February 24, 2011.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).
“Code” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated thereunder, as amended from time to time.
“Collateral” means any and all “Collateral,” “Pledged Collateral” or words of similar intent as defined in any applicable Security Document.
“Collateral Agent” has the meaning provided in the preamble to this Agreement.
“Commitment” means, as to any Lender, the obligation of such Lender to make a Term Loan to the Borrower in a principal amount not to exceed the amount set forth opposite its name on Schedule 1.1(a).
“Compliance Certificate” has the meaning provided in Section 5.01(d).
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“Consolidated” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Restricted Subsidiaries.
“Consolidated Current Assets” means, at any date, all amounts (other than cash, Cash Equivalents and the current portion of deferred income taxes) that would, in conformity with GAAP, be included in the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date (for the avoidance of doubt, Consolidated Current Assets shall exclude any (i) assets held for sale, (ii) loans (permitted) to third parties, (iii) pension plan assets, (iv) deferred bank fees and (v) derivative financial instruments).
“Consolidated Current Liabilities” means, at any date, all amounts that would, in conformity with GAAP, be included in the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at such date, but excluding (a) the current portion of any Funded Debt of the Borrower and its Restricted Subsidiaries, (b) without duplication of clause (a) above, all Indebtedness consisting of Revolving Credit Loans and Swingline Loans (as defined in the ABL Agreement, or similar term as defined in the ABL Facility) to the extent otherwise included therein, (c) the current portion of deferred income taxes, (d) any liability in respect of net obligations pursuant to Hedge Agreements related solely to interest rate protection, and (e) accruals of any costs or expenses related to restructuring reserves and (f) the current portion of pension liabilities.
“Consolidated EBITDA” means, with respect to any Person for any period, (i) the sum (without duplication) of (a) Consolidated Net Income for such period, plus in each case without duplication and to the extent deducted in determining Consolidated Net Income for such period (other than in the case of clause (r)), (b) depreciation, amortization, and all other non-cash charges, non-cash expenses or non-cash losses, (c) provisions for Consolidated Taxes based on income, (d) Consolidated Interest Expense, (e) Advisory Fees whether accrued or paid in cash, (f) all transactional costs, expenses and charges in connection with, the consummation of the Transactions, the “Amendment Transactions” (as defined in this Agreement prior to July 29, 2016), the Amendment Transactions, any amendment, waiver or modification of any Loan Document or other Indebtedness and any transaction related to any Investment, Restricted Payment, Permitted Acquisition, Permitted Disposition, issuance of Permitted Indebtedness or issuance of Capital Stock, in each case whether or not consummated, (g) to the extent not already included in Consolidated Net Income, proceeds from business interruption insurance, (h) to the extent not already included in Consolidated Net Income and actually indemnified or reimbursed, or so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be indemnified or reimbursed (and such amount is in fact reimbursed within 365 days of the date of such charge or payment (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days)), any expenses and charges that are covered by indemnification or reimbursement provisions in connection with any Permitted Acquisition, Permitted Investment or any Permitted Disposition, (i) cash receipts (or reduced cash expenditures) in respect of income received in connection with subleases to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDA pursuant to clause (ii)(b) below for any previous period, (j) the amount of any restructuring charge, reserve, integration cost or other business optimization expense or cost (including charges directly related to implementation of cost-savings initiatives) that is deducted (and not added back) in such period in computing Consolidated Net Income including, without limitation, those related to severance, retention, signing bonuses, relocation, recruiting and other employee related costs, future lease commitments, contract and lease termination expenses and costs related to the opening and closure and/or consolidation of facilities, (k) unusual, nonrecurring, exceptional, extraordinary or nonrecurring expenses, losses or charges, (l) any after-tax effect of income (loss) from the early retirement, extinguishment or cancellation of Indebtedness or Swap Obligations or other derivative instruments shall be excluded, (m) gains and losses on the sale, exchange or other disposition of assets outside the ordinary course of business or abandonment of assets and from discontinued operations, (n) the amount of any minority interest expense consisting of Subsidiary income attributable to minority equity interests of third parties in any non-wholly owned Subsidiary deducted in calculating Consolidated Net Income (and not added back in such period to Consolidated Net Income), (o) any other charges, write-downs, expenses, losses or items reducing Consolidated Net Income for such period, including any impairment charges or the impact of purchase accounting, or other items classified by the BCF Holdings as special items, (p) any costs or expense incurred by the Loan Parties or any Subsidiary pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, to the extent that such cost or expenses are funded with cash proceeds contributed to the capital of BCF Holdings or net
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cash proceeds of an issuance of Capital Stock (other than Disqualified Capital Stock) of BCF Holdings or any parent of BCF Holdings to the extent contributed to the Borrower’s Capital Stock (other than Disqualified Capital Stock), (q) costs related to the implementation of operational and reporting systems and technology initiatives and (r) all items described in Pro Forma Adjustments, minus (ii) the sum of (a) non-cash gains for such period to the extent included in Consolidated Net Income, (b) cash payments made during such period on account of non-cash charges added back in the calculation of Consolidated EBITDA pursuant to clause (i)(b) above for any previous period and (c) all cash payments made during such period to the extent made on account of non-cash reserves and other non-cash charges added back to Consolidated Net Income pursuant to clause (i)(l) above in a previous period (it being understood that this clause (ii)(c) shall not be utilized in reversing any non-cash reserve or charge added to Consolidated Net Income).
“Consolidated Interest Coverage Ratio” means, on the last day of any Fiscal Quarter, the ratio of (a) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended on and prior to such date, taken as one accounting period, to (b) Consolidated Interest Expense of the Borrower and its Restricted Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended on and prior to such date, taken as one accounting period.
“Consolidated Interest Expense” means, with respect to any Person for any period, total interest expense (including that attributable to Capital Lease Obligations in accordance with GAAP but excluding any imputed interest as a result of purchase accounting) of such Person on a Consolidated basis with respect to all outstanding Indebtedness of such Person, including, without limitation, the Obligations and all commissions, discounts and other fees and charges owed with respect thereto, but excluding amortization or write-off of deferred financing costs and bridge facility fees, all as determined on a Consolidated basis in accordance with GAAP and reduced by interest income received or receivable in cash for such period. For purposes of the foregoing, interest expense of any Person shall be determined after giving effect to any net payments made or received by such Person with respect to interest rate Hedge Agreements.
“Consolidated Leverage Ratio” means, as of any date, the ratio of (a) the sum of (i) Consolidated Total Debt (other than any portion of such Consolidated Total Debt that is attributed to Revolving Credit Loans of the Borrower and its Restricted Subsidiaries outstanding at such date) plus (ii) the ABL Borrowings Amount on such date less (iii) unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries on such date to (b) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended on or prior to such date, taken as one accounting period.
“Consolidated Net Income” means, with respect to any Person for any period, the net income (or loss) of such Person on a Consolidated basis for such period taken as a single accounting period determined in accordance with GAAP; provided, however, that there shall be excluded the income (or loss) of any Person that is not a Restricted Subsidiary, except to the extent of the amount of dividends or other distributions actually paid in cash to such Person and its Restricted Subsidiaries by such Person during such period.
“Consolidated Secured Leverage Ratio” means, as of any date, the ratio of (a) the sum of (i) Consolidated Total Debt (other than any portion of such Consolidated Total Debt that is (x) attributed to Revolving Credit Loans of the Borrower and its Restricted Subsidiaries outstanding at such date or (y) not secured by any Liens on any assets of the Borrower or any of its Restricted Subsidiaries) plus (ii) the ABL Borrowings Amount on such date less (iii) unrestricted cash and Cash Equivalents of the Borrower and its Restricted Subsidiaries on such date to (b) Consolidated EBITDA of the Borrower and its Restricted Subsidiaries for the period of four consecutive Fiscal Quarters most recently ended on or prior to such date, taken as one accounting period.
“Consolidated Taxes” means, as of any date for the applicable period ending on such date with respect to the Borrower and its Restricted Subsidiaries on a Consolidated basis, the aggregate of all income, withholding, franchise and similar taxes and foreign withholding taxes, as determined in accordance with GAAP, to the extent the same are paid or accrued during such period.
“Consolidated Total Assets” means, as of any date of determination, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on the most recent consolidated
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balance sheet of the Parent and its Restricted Subsidiaries and that is attributable to assets of the Borrower and its Restricted Subsidiaries at such date or, for the period prior to the time any such statements are so delivered.
“Consolidated Total Debt” means, at any date, the aggregate principal amount of all funded Indebtedness for borrowed money and Capital Lease Obligations of the Borrower and its Restricted Subsidiaries on a Consolidated basis outstanding at such date in the amount that would be reflected on a balance sheet prepared on such date in accordance with GAAP.
“Consolidated Working Capital” means, at any date, the excess of Consolidated Current Assets on such date over Consolidated Current Liabilities on such date.
“Control” means the possession, directly or indirectly, of the power (a) to vote 50% or more of the securities having ordinary voting power for the election of directors (or any similar governing body) of a Person, or (b) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power or by contract. The terms “Controlling” and “Controlled” have meanings correlative thereto.
“Converted Term B-5 Loan” means each Term B-5 Loan held by an Amendment No. 9 Consenting Lender on the Amendment No. 9 Effective Date that has consented to its Term B-5 Loans being converted to Term B-6 Loans (or, if less, the amount notified to such Lender by the Administrative Agent) immediately prior to the effectiveness of Amendment No. 9.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning provided in Section 9.21.
“Credit Party” means (a) the Lenders, (b) the Agents and their respective Affiliates and branches, (c) the Arrangers and (d) the successors and permitted assigns of each of the foregoing.
“Credit Party Expenses” means, all of the following to the extent incurred in connection with this Agreement and the other Loan Documents: (a) all reasonable and documented out-of-pocket expenses incurred by the Agents and their Affiliates, (which in the case of legal expenses shall be limited to the reasonable and documented fees, charges and disbursements of one counsel for the Agents and their Affiliates (plus one local counsel in each other jurisdiction to the extent reasonably necessary)), in connection with the preparation and administration of the Loan Documents, the syndication of the credit facilities provided for herein, or any amendments, modifications or waivers requested by a Loan Party of the provisions hereof or thereof (whether or not any such amendments, modifications or waivers shall be consummated) and (b) all reasonable and documented out-of-pocket expenses incurred by the Arrangers, Agents or, subject to the proviso below any Lender and their respective Affiliates and branches, including the reasonable and documented fees, charges and disbursements of one counsel for the Arrangers, the Agents and their Affiliates (plus one local counsel in each other jurisdiction to the extent reasonably necessary) in connection with the enforcement and protection of their rights in connection with the Loan Documents, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or related negotiations in respect of such Term Loans; provided that the Lenders who are not
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the Arrangers or Agents shall be entitled to reimbursement for no more than one counsel representing all such Lenders who shall be selected by the Agent (absent a conflict of interest in which case each group of similarly situated Lenders, taken as a whole, may engage and be reimbursed for one additional counsel to the affected party). Credit Party Expenses shall not include the allocation of any overhead expenses of any Credit Party or expenses of third-party advisors (other than counsel as provided above) absent the prior written consent of the Borrower; provided that the Borrower’s prior written consent shall not be required for expenses of third-party advisors retained following the occurrence and during the continuance of an Event of Default in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to the enforcement of any rights hereunder or under any Loan Document.
“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which may include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion. (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Default” means any event or condition described in Section 7.01 that constitutes an Event of Default or that upon notice, lapse of any cure period set forth in Section 7.01, would, unless cured or waived, become an Event of Default.
“Default Rate” has the meaning provided in Section 2.12.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Designated Non-Cash Consideration” means the fair market value (as determined in good faith by the Borrower) of non-cash consideration received by the Loan Parties or one of their Restricted Subsidiaries in connection with a Permitted Disposition that is so designated as Designated Non-Cash Consideration pursuant to an officer’s certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent payment, redemption, retirement, sale or other disposition of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with Section 6.05.
“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed on Schedule 3.06(a) and Schedule 3.06(b).
“Discount Range” has the meaning provided in Section 2.16(d)(ii).
“Discounted Prepayment Option Notice” has the meaning provided Section 2.16(d)(ii).
“Discounted Voluntary Prepayment” has the meaning provided in Section 2.16(d)(i).
“Discounted Voluntary Prepayment Notice” has the meaning provided in Section 2.16(d)(v).
“Disqualified Capital Stock” means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) is mandatorily redeemable in whole or in part prior to the Maturity Date of any Class of Term Loans outstanding on the date such
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Capital Stock is issued, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) Indebtedness or any Capital Stock referred to in (a) above prior to the Maturity Date of any Class of Term Loans outstanding on the date such Capital Stock is issued, or (c) contains any mandatory repurchase obligation which comes into effect prior to the Maturity Date of any Class of Term Loans outstanding on the date such Capital Stock is issued, provided, that Capital Stock shall not constitute Disqualified Capital Stock to the extent (i) such redemption or conversion is (x) upon payment in full of the Obligations (other than contingent obligations for which no claim has been made) or (y) upon a “change in control,” asset sale or similar event or (ii) such Capital Stock is issued pursuant to a plan for the benefit of employees of Parent (or any parent entity), the Borrower or the Restricted Subsidiaries or by any such plan to such employees, and such plan requires such Capital Stock to be repurchased by the Borrower or its Restricted Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Disqualified Institution” means (x) (i) any Person listed on Schedule II to Amendment No. 9, (ii) any Lender that has made an incorrect representation or warranty or deemed representation or warranty with respect to not being a Net Short Lender as provided in Section 7.01, or (iii) any Person that is a direct competitor of the Borrower or any of its Restricted Subsidiaries, identified in writing by the Borrower to the Administrative Agent and the Lenders from time to time by e-mail to JPMDQ_Contact@jpmorgan.com and (y) any Affiliate thereof (excluding any Affiliate that is a bona fide debt fund, bank or institutional investor) that is either (I) identified in writing by the Borrower to the Administrative Agent and the Lenders from time to time by e-mail to JPMDQ_Contact@jpmorgan.com or (II) readily identifiable as such on the basis of its name. Any change in the list of Disqualified Institutions pursuant to clauses (x) or (y)(I) shall become effective on the third Business Day following the receipt of such e-mail; provided that (A) the Administrative Agent shall have no duty to monitor the list of Disqualified Institutions and shall have no liability in connection therewith and (B) no designation of a Person as a Disqualified Institution shall operate retroactively to any Person that was a Lender or a party to a pending trade at the time of such designation.
“Documents” has the meaning assigned to such term in the Security Agreement.
“dollars” or “$” refers to lawful money of the United States of America.
“Early Opt-in Election” means, if the then-current Benchmark is LIBO Rate, the occurrence of:
(1) a notification by the Administrative Agent to (or the request by the Borrower to the Administrative Agent to notify) each of the other parties hereto that at least five currently outstanding Dollar-denominated syndicated credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such syndicated credit facilities are identified in such notice and are publicly available for review), and
(2) the joint election by the Administrative Agent and the Borrower to trigger a fallback from LIBO Rate and the provision by the Administrative Agent of written notice of such election to the Lenders.
“Earn-Out Obligations” means the maximum amount of all obligations incurred or to be incurred in connection with any Acquisition of a Person pursuant to a Permitted Acquisition or other Permitted Investment under non-compete agreements, consulting agreements, earn-out agreements and similar deferred purchase agreements.
“ECF Percentage” means, with respect to any Fiscal Year of the Borrower ending on or after January 31, 2015, 50%; provided that the ECF Percentage shall be reduced to (i) 25%, if the Consolidated Secured Leverage Ratio as of the last day of such Fiscal Year is less than or equal to 3.00 to 1.00 and greater than 2.75 to 1.00 or (ii) 0%, if the Consolidated Secured Leverage Ratio as of the last day of such Fiscal Year is less than or equal to 2.75 to 1.00.
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“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.
“Eligible Assignee” means any Lender, Affiliate of a Lender or Fund (including, without limitation, any Investment Fund or Approved Fund); provided that in any event, “Eligible Assignee” shall not include any natural person or any Disqualified Institution.
“Environmental Laws” means all Applicable Laws issued, promulgated or entered into by or with any Governmental Authority, relating in any way to (a) the protection of the environment, (b) the handling, treatment, storage, disposal of Hazardous Materials, (c) exposure of any Person to Hazardous Materials, or the Release or threatened Release of any Hazardous Material to the environment, (d) the assessment or remediation of any such Release or threatened Release of any Hazardous Material to the environment or (e) occupational health or safety matters to the extent relating to Hazardous Materials.
“Environmental Liability” means any liability, contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party directly or indirectly resulting from or based upon (a) violation of 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 or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement to the extent liability is assumed or imposed with respect to any of the foregoing.
“Equipment” has the meaning set forth in the Security Documents.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated and rulings issued thereunder.
“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 of the Code.
“ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) with respect to any Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any ERISA Affiliate 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 ERISA Affiliate of any liability in excess of $75,000,000 (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) with respect to the withdrawal or partial withdrawal from any Plan (including any liability under Section 4062(e) of ERISA) or Multiemployer Plan; or (g) the receipt by the Borrower or any
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ERISA Affiliate of any notice, concerning the imposition on it of Withdrawal Liability in excess of $75,000,000 (or such lesser amount as would reasonably be expected to result in a Material Adverse Effect) or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
“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 provided in Section 7.01.
“Excess Cash Flow” means, for any Fiscal Year of the Borrower, the excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such Fiscal Year, (ii) the amount of all non-cash charges (including Consolidated depreciation and amortization) deducted in arriving at such Consolidated Net Income to the extent such non-cash charges do not result in a cash payment in a future period, (iii) decreases in Consolidated Working Capital for such Fiscal Year, and (iv) the aggregate net amount of non-cash loss on the sale, transfer or other disposition of any assets by the Borrower and its Subsidiaries during such Fiscal Year outside the ordinary course of business, to the extent deducted in arriving at such Consolidated Net Income over (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such Fiscal Year on account of unfinanced Capital Expenditures, Permitted Acquisitions or Permitted Investments constituting an Acquisition, (or, at the election of the Borrower, otherwise committed to be spent within 180 days of the end of the fiscal year), (iii) the aggregate amount of all regularly scheduled principal payments of the Term Loans during such Fiscal Year, (iv) the aggregate amount of all regularly scheduled, mandatory or optional principal payments of Funded Debt (other than the Term Loans) of the Borrower and its Subsidiaries made during such Fiscal Year (other than (x) in respect of any revolving credit facility to the extent there is not an equivalent permanent reduction in commitments thereunder and (y) any such principal prepayments financed with the proceeds of other Indebtedness), (v) increases in Consolidated Working Capital for such Fiscal Year, (vi) the aggregate net amount of non-cash gain on the sale, transfer or other disposition of any assets by the Borrower and its Subsidiaries during such Fiscal Year outside the ordinary course of business, to the extent included in arriving at such Consolidated Net Income, (vii) the aggregate amount of cash payments made in respect of (x) long-term liabilities of the Borrower and its Subsidiaries other than Indebtedness and (y) Restricted Payments pursuant to clauses (ii), (iii), (iv), (v), (vi), (vii), (x), (xi), (xii), (xiii), (xiv), (xvi), and, to the extent relating to the foregoing, (xviii) of Section 6.06(a) paid to any Person other than the Borrower or any Restricted Subsidiary, except, in each case, to the extent financed with the proceeds of Indebtedness of the Borrower or the Restricted Subsidiaries (other than revolving loans or intercompany loans) and (viii) the aggregate amount of any premium, make-whole or penalty payments actually paid in cash by the Borrower and the Restricted Subsidiaries during such period that are made in connection with any prepayment of Indebtedness to the extent that such payments are not deducted in calculating Consolidated Net Income.
“Excess Cash Flow Application Date” has the meaning provided in Section 2.17(d).
“Excluded Taxes” means, with respect to the Agents, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on or measured by such recipient’s net income or overall gross income or receipts (however denominated), franchise Taxes imposed on it (in lieu of such income Taxes) and branch profits (or similar) Taxes imposed on it, in each case, by any jurisdiction (or any political subdivision thereof) as a result of the recipient being organized or having its principal office or, in the case of any Lender, its applicable lending office, in such jurisdiction or as a result of any other present or former connection of such recipient with the jurisdiction imposing such Taxes (other than any such connection arising solely from this Agreement or any other Loan Documents or any transactions contemplated thereunder), (b) Taxes imposed pursuant to FATCA, and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.24(a)), any United States federal withholding tax that is imposed on amounts payable to such Foreign Lender (i) under any law in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office other than at the request of the Borrower under Section 2.24), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, immediately prior to designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.23(a) or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.23(e).
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“Existing Term Loan Class” has the meaning provided in Section 2.06(a).
“Extended Term Loans” has the meaning provided in Section 2.06(a).
“Extending Term Lender” has the meaning provided in Section 2.06(c).
“Extension Election” has the meaning provided in Section 2.06(c).
“Extension Request” has the meaning provided in Section 2.06(a).
“Extension Series” has the meaning provided in Section 2.06(b).
“Facility Guarantee” means any Guarantee of the Obligations executed by BCF Holdings and its Restricted Subsidiaries which are or hereafter become Facility Guarantors in favor of the Agents and the other Secured Parties.
“Facility Guarantors” means any Person executing a Facility Guarantee.
“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 any current or future Treasury regulations with respect thereto or official governmental interpretations thereof, and any intergovernmental agreements or FFI agreements implementing the foregoing.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate.
“Federal Reserve Bank of New York’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“Fee Letter” means the Amended and Restated Fee Letter dated April 30, 2012 by and between the Borrower and the Administrative Agent.
“Financial Officer” means, with respect to any Loan Party, the chief financial officer, chief accounting officer, treasurer, assistant treasurer, controller or assistant controller of such Loan Party.
“Fitch” means Fitch Ratings, Inc., and any affiliate thereof and any successor thereto.
“Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally consist of (i) in the case of the first, third, fourth, sixth, seventh, ninth and tenth Fiscal Months of each Fiscal Year, four calendar weeks, (ii) in the case of the second, fifth, eighth and eleventh Fiscal Months of each Fiscal Year, five calendar weeks and (iii) in the case of the twelfth Fiscal Month of each Fiscal Year, the period from the first day following the eleventh Fiscal Month of such Fiscal Year through the last day of such Fiscal Year, in accordance with the fiscal accounting calendar of BCF Holdings and its Subsidiaries.
“Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarter shall generally end on (i) in the case of the first three Fiscal Quarters of each Fiscal Year, on the date that is 13 weeks after the last day of the preceding Fiscal Quarter and (ii) in the case of the last Fiscal Quarter of each Fiscal Year, on the last day of such Fiscal Year, in accordance with the fiscal accounting calendar of BCF Holdings and its Subsidiaries.
“Fiscal Year” means any period of twelve consecutive Fiscal Months ending on the Saturday closest to January 31 of any calendar year.
“Fixed Amounts” has the meaning provided in Section 1.07(b).
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“Flood Insurance Laws” means, collectively, (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 as now or hereafter in effect or any successor statute thereto, (iv) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto and (v) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to LIBO Rate.the Adjusted Term SOFR Rate. For the avoidance of doubt, the initial Floor for the Adjusted Term SOFR Rate shall be zero.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.
“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
“Funded Debt” means, as to any Person, all Indebtedness for borrowed money of such Person that matures more than one year from the date of its creation or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all current maturities and current sinking fund payments in respect of such Indebtedness whether or not required to be paid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Term Loans and Revolving Credit Loans.
“Funding Office” means the office of the Administrative Agent specified in Section 9.01 or such other office as may be specified from time to time by the Administrative Agent as its funding office by written notice to the Borrower and the Lenders.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America which are consistent with those promulgated or adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made.
“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, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“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 of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business or customary and reasonable indemnity obligations, including but not limited to, those in effect on the Closing Date or entered into in connection with any
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Permitted Acquisition, Permitted Investment or Permitted Disposition (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, toxic mold, and all other substances or wastes of any nature regulated pursuant to any Environmental Law, including any material listed as a hazardous substance under Section 101(14) of CERCLA.
“Hedge Agreement” means any derivative agreement, or any interest rate protection agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.
“Holdco Notes” means the 9.00%/9.75% Senior Notes due 2018 issued by Burlington Stores, Inc. outstanding immediately prior to August 13, 2014.
“Immaterial Subsidiary” means a Restricted Subsidiary of BCF Holdings (other than the Borrower) for which (a) the assets of such Restricted Subsidiary constitute less than or equal to 3% of the total assets of BCF Holdings and its Restricted Subsidiaries on a consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to 5% of the total assets of BCF Holdings and its Restricted Subsidiaries on a consolidated basis, and (b) the revenues of such Restricted Subsidiary account for less than or equal to 3% of the total revenues of BCF Holdings and its Restricted Subsidiaries on a consolidated basis and collectively with all Immaterial Subsidiaries, less than or equal to 5% of the total revenues of BCF Holdings and its Restricted Subsidiaries on a consolidated basis.
“Impacted Interest Period” has the meaning assigned to it in the definition of “LIBO Rate.”
“Incremental Effective Date” has the meaning provided in Section 2.05(a).
“Incremental Term Lender” has the meaning provided in Section 2.05(b).
“Incremental Term Loan” has the meaning provided in Section 2.05(a).
“Incremental Term Loan Amendment” has the meaning provided in Section 2.05(c).
“Incurrence-Based Amounts” has the meaning provided in Section 1.07(b).
“Indebtedness” of any Person means, without duplication:
(a) all obligations of such Person for borrowed money (including any obligations which are without recourse to the credit of such Person);
(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;
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(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 or is limited in recourse;
(f) all Guarantees by such Person of Indebtedness of others described in clauses (a) - (e), and (g) - (l) hereof;
(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;
(j) the Agreement Value of all Hedge Agreements;
(k) the principal and interest portions of all rental obligations of such Person under any Synthetic Lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance with GAAP; and
(l) all mandatory obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock of such Person (including, without limitation, Disqualified Capital Stock) to the extent required by GAAP to be accounted for as indebtedness.
Notwithstanding the foregoing, Indebtedness shall not include (A) any sale-leaseback transactions to the extent the lease or sublease thereunder is not required to be recorded under GAAP as a Capital Lease Obligation, (B) any obligations relating to overdraft protection, netting services, and other cash management services, (C) any preferred stock required to be included as Indebtedness in accordance with GAAP, (D) items that would appear as a liability on a balance sheet prepared in accordance with GAAP as a result of the application of EITF 97-10, “The Effects of Lessee Involvement in Asset Construction,” (E) trade accounts payable, deferred revenues, liabilities associated with customer prepayments and deposits and any such obligations incurred under ERISA, and other accrued obligations (including transfer pricing), in each case incurred in the ordinary course of business, (F) operating leases, (G) customary obligations under employment agreements and deferred compensation, (H) deferred revenue and deferred tax liabilities and (I) contingent post-closing purchase price adjustments, non-compete or consulting obligations or earn-outs to which the seller in an Acquisition or Investment may become entitled. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.
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 all Taxes other than Excluded Taxes.
“Indemnitee” has the meaning provided in Section 9.03(b).
“Information” has the meaning provided in Section 9.15.
“Instruments” has the meaning assigned to such term in the Security Agreement.
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“Intellectual Property” means all present and future: trade secrets, know-how and other proprietary information; trademarks, Internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing), indicia and other source and/or business identifiers, all of the goodwill related thereto, and all registrations and applications for registrations thereof; works of authorship and other copyrighted works (including copyrights for computer programs), and all registrations and applications for registrations thereof; inventions (whether or not patentable) and all improvements thereto; patents and patent applications, together with all continuances, continuations, continuations-in-part, divisions, revisions, extensions, reissuances, and reexaminations thereof; industrial design applications and registered industrial designs; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; all other intellectual property and intellectual property rights; all rights to sue and recover at law or in equity for any past, present or future infringement, dilution or misappropriation, or other violation thereof; and all common law and other rights throughout the world in and to all of the foregoing.
“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date among the Loan Parties and the Collateral Agent for its own benefit and for the benefit of the other Credit Parties, granting a Lien in the Intellectual Property of the Loan Parties, as amended, restated, supplemented or otherwise modified and in effect from time to time.
“Intercreditor Agreement” means, collectively, the ABL Intercreditor Agreement and, following the effectiveness thereof, any Pari Passu Lien Intercreditor Agreement and any Second Lien Intercreditor Agreement.
“Interest Payment Date” means (a) with respect to any Prime Rate Loan, the last day of each Fiscal Quarter and (b) with respect to any LIBOTerm Benchmark Loan, on the last day of the Interest Period applicable to the Borrowing of which such LIBO Loan is a part, and, in addition, if such LIBO Loan has an Interest Period of greater than three months, on the last day of every third month of such Interest Period; provided that the Amendment No. 9 Effective Date shall constitute an Interest Payment Date for the Term B-5 Loans (including the Converted Term B-5 Loans).
“Interest Period” means, with respect to any LIBOTerm Benchmark Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one (1), three (3), or six (6) months, and, if agreed to by all applicable Lenders, twelve (12) months thereafter (or such shorter period, to the extent available to all Lenders and as to which the Administrative Agent may reasonably consent) (or with respect to the initial interest periods commencing on the Amendment No. 9 Effective Date, such other periods of less than three (3) months as to which the Administrative Agent may reasonably consent thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Commitment) as the Borrower may elect by notice to the Administrative Agent in accordance with the provisions of this Agreement; provided, however, that (a) 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, (b) any Interest Period of one month or more 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 during which such Interest Period ends) shall end on the last Business Day of the last calendar month of such Interest Period and (c, (c) no tenor that has been removed from this definition pursuant to Section 2.10(f) shall be available for specification in such Borrowing Request or Interest Election Request and (d) any Interest Period that would otherwise end after the Maturity Date for any Class of Term Loans shall end on the Maturity Date for such Class of Term Loans. 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.
“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest period (for which that LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time.
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“Inventory” has the meaning assigned to such term in the Security Agreement.
“Investment” means with respect to any Person, any direct or indirect acquisition or investment by such Person, whether by means of:
(a) any Capital Stock of another Person, evidence of Indebtedness or other security of another Person, including any option, warrant or right to acquire the same;
(b) any loan, advance, contribution to capital, extension of credit (except for current trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business) to, or guaranty of Indebtedness of, another Person; and
(c) any Acquisition;
in all cases whether now existing or hereafter made. For purposes of calculation, the amount of any Investment outstanding at any time shall be the aggregate cash Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends and distributions) received by such Person.
“Investment Fund” means (i) Sankaty Advisors, LLC and any affiliate of Sankaty Advisors, LLC that Sankaty Advisors, LLC manages, makes investment decisions for or controls and (ii) any affiliate of the Sponsors that is a bona fide diversified debt fund or a bona fide diversified investment vehicle that is engaged in, or advises funds and other investment vehicles that are engaged in, the making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course.
“ISDA Master Agreement” means the form entitled “2002 ISDA Master Agreement” or such other replacement form then currently published by the International Swap and Derivatives Association, Inc., or any successor thereto.
“Joinder Agreement” means an agreement, in substantially the form attached hereto as Exhibit D, pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as a Facility Guarantor.
“LCT Election” has the meaning provided in Section 1.09(a).
“LCT Test Date” has the meaning provided in Section 1.09(a).
“Lease” means any agreement pursuant to which a Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time.
“Lender Participation Notice” has the meaning provided in Section 2.16(d)(iii).
“Lenders” means the Lenders having Commitments or Term Loans from time to time or at any time, and each assignee that becomes a party to this Agreement as set forth in Section 9.04(b).
“LIBO Borrowing” means a Borrowing comprised of LIBO Loans.
“LIBO Loan” means any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.
“LIBO Rate” means, with respect to any LIBO Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBO Rate shall be the Interpolated Rate.
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“LIBO Screen Rate” means, for any day and time, with respect to any LIBO Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion, provided that if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien (statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, 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.
“Limited Condition Transaction” means (i) any Permitted Acquisition or other similar Investment permitted hereunder whose consummation is not conditioned on the availability of, or on obtaining, third party financing, (ii) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment, (iii) any asset sale or other disposition, or (iv) any declaration of a Restricted Payment in respect of, or irrevocable advance notice of, or any irrevocable offer to, purchase, redeem or otherwise acquire or retire for value, any Capital Stock of Burlington Stores Inc. or any of its Subsidiaries.
“Loan Account” has the meaning provided in Section 2.20.
“Loan Documents” means this Agreement, the Notes, the Security Documents, the Facility Guarantees, the Intercreditor Agreements, and any other instrument or agreement now or hereafter executed and delivered in connection herewith, and identified as a “Loan Document.”
“Loan Party” or “Loan Parties” means the Borrower and the Facility Guarantors.
“Margin Stock” has the meaning assigned to such term in Regulation U.
“Material Adverse Effect” means any event, facts, or circumstances, which has a material adverse effect on (i) the business, assets or financial condition of the Loan Parties taken as a whole or (ii) the validity or enforceability of this Agreement or the other Loan Documents, taken as a whole, or the rights or remedies of the Secured Parties hereunder or thereunder, taken as a whole.
“Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties, individually or in the aggregate, having an aggregate principal amount exceeding $75,000,000.
“Maturity Date” means (i) for Term B-6 Loans, June 24, 2028, (ii) for Incremental Term Loans of any Series, the date specified as the “Maturity Date” for such Incremental Term Loans in the applicable Incremental Term Loan Amendment and (iii) for the Extended Term Loans of any Extension Series, the date specified as the “Maturity Date” for such Extended Term Loans in the applicable Term Loan Extension Amendment.
“Maximum Incremental Amount” means the sum of:
(a) $500,000,000, plus
(b) the aggregate amount of voluntary prepayments of Term Loans (including purchases of the Loans by the Parent or any Loan Party at or below par, in which case the amount of voluntary prepayments of Loans shall be deemed not to exceed the actual purchase price of such Loans below par), other than from proceeds of long term Indebtedness (other than revolving Indebtedness), after giving effect to the incurrence of any Incremental Term Loans (other than Refinancing Term Loans) and the aggregate
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principal amount of Qualifying Secured Debt and Qualifying Other Debt issued pursuant to clause (v)(ii) of the definition of “Permitted Indebtedness” pursuant to clause (a) above on a Pro Forma Basis (excluding the cash proceeds to the Borrower of any Incremental Term Loans, treating all Qualifying Other Debt issued pursuant to clause (v)(ii) of the definition of “Permitted Indebtedness” as secured (whether or not secured) and without giving effect to any simultaneous incurrence of any Incremental Term Loans or Qualifying Secured Debt made pursuant to clauses (a) or (c), plus
(c) the maximum aggregate principal amount that can be incurred without causing the Consolidated Secured Leverage Ratio as of the last day of the most recently ended Fiscal Quarter for which financial statements have been or are then required to have been delivered hereunder, after giving effect to the incurrence of any Incremental Term Loans (other than Refinancing Term Loans) and the aggregate principal amount of Qualifying Secured Debt and Qualifying Other Debt issued pursuant to clause (v)(ii) of the definition of “Permitted Indebtedness” on a Pro Forma Basis (excluding the cash proceeds to the Borrower of any Incremental Term Loans, treating all Qualifying Other Debt issued pursuant to clause (v)(ii) of the definition of “Permitted Indebtedness” as secured (whether or not secured) and without giving effect to any simultaneous incurrence of any Incremental Term Loans or Qualifying Secured Debt made pursuant to the foregoing clauses (a) and (b), to exceed 3.5 to 1.0, at the Borrower’s option, either (A) at the time of the effectiveness of such Incremental Term Loans or Qualifying Secured Debt (as applicable) or (B) at any earlier time permitted in accordance with Section 1.09 (it being understood and agreed that the Borrower may redesignate any Indebtedness originally designated as incurred under clauses (a) or (b) above as having been incurred under clause (c), so long as at the time of such redesignation, the Borrower would be permitted to incur under clause (c) the aggregate principal amount of Indebtedness being so redesignated (for purposes of clarity, with any such redesignation having the effect of increasing the Borrower’s ability to incur such Indebtedness as of the date of such redesignation by the amount of such Indebtedness so redesignated)).
“Maximum Rate” has the meaning provided in Section 9.13.
“Minority Lenders” has the meaning provided in Section 9.02(c)(i).
“MNPI” means, on any date, material non-public information within the meaning of the U.S. Federal securities laws with respect to any Loan Party or their Restricted Subsidiaries or their respective securities or the Term Loans.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Mortgaged Property” means all Real Estate listed on Schedule 5.14.
“Mortgages” means the mortgages and deeds of trust and any and all other security documents, including any amendments thereto, granting a Lien on Mortgaged Property between the Loan Party owning, leasing or otherwise holding the Mortgaged Property encumbered thereby and the Collateral Agent for its own benefit and the benefit of the other Secured Parties which shall be in form reasonably satisfactory to the Collateral Agent and the Borrower.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event, including (i) any cash received in respect of any non-cash proceeds or amounts escrowed pursuant to clause (iv) of this definition, but only as and when received, (ii) in the case of a casualty, cash insurance proceeds, and (iii) in the case of a condemnation or similar event, cash condemnation awards and similar payments, in each case net of (b) the sum of (i) all fees and out-of-pocket fees and expenses (including appraisals and brokerage, legal, title and recording or transfer tax expenses, underwriting discounts and commissions) paid by any Loan Party or a Restricted Subsidiary to third parties in connection with such event, and (ii) in the case of a sale or other disposition of an asset (including pursuant to a casualty or condemnation), the amount of all payments required to be made by any Loan Party or any of their respective Restricted Subsidiaries as a result of such event to repay (or to establish an escrow
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for the repayment of) any Indebtedness (other than the Obligations and other obligations secured by Liens ranking pari passu with the Obligations pursuant to a Pari Passu Lien Intercreditor Agreement) secured by a Permitted Encumbrance on the assets disposed of that is senior to the Lien of the Collateral Agent; provided that to the extent any Qualifying Secured Debt with a Lien ranking pari passu with the Liens securing the Obligations pursuant to the terms of a Pari Passu Lien Intercreditor Agreement requires a prepayment from the proceeds of any disposition or casualty event, then the amount of Net Proceeds otherwise actually required to be applied to prepay Term Loans pursuant to Section 2.17(a) or (b), as applicable, shall be the product of (x) the amount of such Net Proceeds as determined above and (y) a fraction (A) the numerator of which is the aggregate principal amount of Term Loans and (B) the denominator of which is the aggregate principal amount of Term Loans and such other Qualifying Secured Debt requiring such prepayment, (iii) capital gains or other income taxes paid or payable as a result of any such sale or disposition (after taking into account any available tax credits or deductions) and (iv) any funded escrow established pursuant to the documents evidencing any such sale or disposition to secure any indemnification obligations or adjustments to the purchase price associated with any such sale or disposition.
“Net Short Lender” has meaning provided in Section 7.01.
“New Lending Office” has the meaning provided in Section 2.23(f).
“Non-Converted Term B-5 Loans” means each Term B-5 Loan (or portion thereof) other than a Converted Term B-5 Loan.
“Note” means any promissory note of the Borrower substantially in the form of Exhibit C, payable to the applicable Lender, evidencing the Term Loan(s) made by such Lender to the Borrower.
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Obligations” means (a) (i) the principal of, and interest (including all interest that accrues after the commencement of any case or proceeding by or against the Borrower or any Facility Guarantor under the Bankruptcy Code or any state or federal bankruptcy, insolvency, receivership or similar law, whether or not allowed in such case or proceeding) on the Term Loans and Facility Guarantees and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise, of the Loan Parties to the Secured Parties under this Agreement and the other Loan Documents and (b) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of each Loan Party under or pursuant to this Agreement and the other Loan Documents.
“Other Rate Early Opt-in Election” means the Administrative Agent and the Borrower have elected to replace the LIBO Rate with a Benchmark Replacement other than a SOFR-based rate pursuant to (a) an Early Opt-in Election under clause (2) of such definition (without regard to clause (1) of such definition) and (b) Section 2.10(b)(y) and clause (3) of the definition of “Benchmark Replacement”.
“Other Taxes” means any and all current or future stamp or documentary Taxes or any other excise or property Taxes arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.
“Outstanding Securitization Amount” means, at any time with respect to any Qualified Securitization Financing or Receivables Facility, the amount advanced or received (in the case of a sale) at such time in respect of Receivables Assets that are not yet due in accordance with their payment terms.
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“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings denominated in dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the Federal Reserve Bank of New York’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).
“Parent” means Burlington Coat Factory Investments Holdings, Inc.
“Pari Passu Lien Intercreditor Agreement” means an agreement substantially in the form of Exhibit G to this Agreement entered into by the Collateral Agent, the Administrative Agent and the agents for the holders of any Qualifying Secured Debt that is intended to be secured by a Lien on the Collateral ranking pari passu with the Lien of the Security Documents.
“Participant” has the meaning provided in Section 9.04(c)(i).
“Participant Register” has the meaning provided in Section 9.04(c)(i).
“Payment” has the meaning assigned to it Section 8.19(a).
“Payment Notice” has the meaning assigned to it in Section 8.19(b).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Permitted Acquisition” means an Acquisition in which each of the following conditions are satisfied:
(a) no Specified Default then exists or would arise from the consummation of such Acquisition;
(b) if the Acquisition is an Acquisition of Capital Stock, the Person whose Capital Stock is acquired shall become a Restricted Subsidiary; provided that the aggregate amount expended by Loan Parties in connection with all Permitted Acquisitions with respect to the assets that are not owned by a Loan Party immediately after giving effect to the applicable Permitted Acquisition and compliance with Section 5.12 shall not exceed the greater of (x) $150,000,000 and (y) 6.0% of Consolidated Total Assets, except as otherwise permitted by the definition of “Permitted Investments”; and
(c) any material assets acquired shall be utilized in, and if the Acquisition involves a merger, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by the Borrower under this Agreement.
“Permitted Disposition” means any of the following:
(a) licenses of Intellectual Property of a Loan Party or any of its Restricted Subsidiaries entered into in the ordinary course of business;
(b) licenses for the conduct of licensed departments within the Loan Parties’ or any of their Restricted Subsidiaries’ Stores in the ordinary course of business;
(c) dispositions of Securitization Assets in connection with Qualified Securitization Financings and Receivables Facilities permitted by clause (bb) of the definition of “Permitted Indebtedness”;
(d) dispositions of assets, including abandonment of or failure to maintain Intellectual Property, that are worn, damaged, obsolete, uneconomical or, in the judgment of a Loan Party or its Restricted Subsidiary, no longer used or useful or necessary in, or material to, its business or that of any Restricted Subsidiary;
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(e) sales, transfers and dispositions, including by means of a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law, among the Loan Parties and their Restricted Subsidiaries;
(f) any disposition in a single transaction or series of related transactions that does not result in more than $5,000,000 Net Proceeds;
(g) sales, discounting or forgiveness of Accounts in the ordinary course of business or in connection with the collection or compromise thereof;
(h) leases, subleases, licenses and sublicenses of real or personal property (other than Intellectual Property) entered into by Loan Parties and their Restricted Subsidiaries in the ordinary course of business at arm’s length or on market terms;
(i) sales of non-core assets acquired in connection with Permitted Acquisitions or other Permitted Investment;
(j) sales or other dispositions of Permitted Investments described in clauses (a) through and including (k) of the definition thereof;
(k) any disposition of Real Estate to a Governmental Authority as a result of a condemnation of such Real Estate;
(l) the making of Permitted Investments and payments permitted under Section 6.06;
(m) sales, transfers and dispositions as set forth on Schedule 6.05;
(n) leasing of Real Estate no longer used or useful in the business of the Loan Parties and their Restricted Subsidiaries to the extent not otherwise prohibited hereunder;
(o) forgiveness of Permitted Investments;
(p) exchanges or swaps, including, but not limited to, transactions covered by Section 1031 of the Code, of Leases and other Real Estate of the Loan Parties and their Restricted Subsidiaries so long as such exchange or swap is made for fair market value and on an arm’s-length basis,
(q) other dispositions of assets as long as (A) no Specified Default then exists or would arise therefrom and (B) in the case of any assets with a fair market value in excess of $20,000,000, such sale or transfer is made for fair market value and the consideration received for such sale or transfer is at least (i) 75% cash, (ii) Cash Equivalents, (iii) the assumption by the transferee of Indebtedness or other liabilities contingent or otherwise of the Borrower or any of its Restricted Subsidiaries (other than liabilities that are expressly subordinated to the Obligations) and the valid release of the Borrower or such Restricted Subsidiary, by all applicable creditors in writing, from all liability on such Indebtedness or other liability in connection with such disposition, (iv) securities, notes or other obligations received by the Borrower or any of its Restricted Subsidiaries from the transferee that are converted by the Borrower or any of its Restricted Subsidiaries into cash or Cash Equivalents within 180 days following the closing of such Disposition, (v) Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Disposition, to the extent that the Borrower and each other Restricted Subsidiary are released from any Guarantee of payment of such Indebtedness in connection with such disposition, (vi) in connection with an asset swap, any assets used or useful in a Loan Parties’ or Restricted Subsidiaries business, all of which shall be deemed “cash,” or (vii) Designated Non-Cash Consideration to the extent that all Designated Non-Cash Consideration at such time does not exceed the greater of (x) $35,000,000 and (y) 1.5% of Consolidated Total Assets as of the Applicable Date of Determination (with the fair market value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect
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to subsequent changes in value); provided that all Net Proceeds, if any, received in connection with any such sales are applied to the Term Loans if then required in accordance with Section 2.17(a).
(r) any issuance, sale (including by means of a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law) or pledge of Capital Stock in, or Indebtedness, or other securities of, an Unrestricted Subsidiary;
(s) condemnation or any similar action on assets or casualty or insured damage to assets;
(t) the Company and any Restricted Subsidiary may surrender or waive contractual rights and settle or waive contractual or litigation claims;
(u) dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is promptly purchased or (ii) the proceeds of such disposition are promptly applied to the purchase price of such replacement property (which replacement property is actually promptly purchased);
(v) the disposition of assets that do not constitute Collateral in an amount not to exceed $100,000,000 from and after August 13, 2014; and
(w) the incurrence of Permitted Liens, sales, transfers and other dispositions constituting any permitted Restricted Payment.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not required to be paid pursuant to Section 5.05;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by Applicable Law, (i) arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days, (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, or (iii) the existence of which would not reasonably be expected to result in a Material Adverse Effect;
(c) Liens provided in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
(d) Liens to secure or relating to the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance bonds (and Liens arising in accordance with Applicable Law in connection therewith), and other obligations of a like nature, in each case in the ordinary course of business;
(e) judgment Liens in respect of judgments that do not constitute an Event of Default under Section 7.01(k);
(f) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, other land use laws, rights-of-way, development, site plan or similar agreements 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 materially detract from the value of the affected property when used in a manner consistent with current usage or materially interfere with the ordinary conduct of business of a Loan Party as currently conducted and such other minor title defects, or survey matters that are disclosed by current surveys, but that, in each case, do not interfere with the current use of the property in any material respect;
(g) any Lien on any property or asset set forth on Schedule 6.02;
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(h) Liens on fixed or capital assets acquired by any Loan Party or any of its Restricted Subsidiaries to secure Indebtedness permitted under clause (e) of the definition of Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within two hundred seventy (270) days after such acquisition or the completion of the construction or improvement thereof (other than refinancings thereof permitted hereunder) and (ii) such Liens shall not extend to any other property or assets of the Loan Parties or any of their Restricted Subsidiaries (other than any replacements of such property or assets and additions and accessions thereto and the proceeds and the products thereof and customary security deposits in respect thereof and in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender);
(i) Liens in favor of the Collateral Agent, for its own benefit and the benefit of the other Secured Parties;
(j) landlords’ and lessors’ Liens in respect of rent not in default for more than sixty (60) days or the existence of which, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect;
(k) possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the date hereof and other Permitted Investments, provided that such Liens (a) attach only to such Investments or other Investments held by such broker or dealer and (b) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;
(l) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries;
(m) Liens on Real Estate; provided that such Liens shall only secure obligations with respect to a Permitted Real Estate Financing;
(n) Liens (i) attaching solely to cash advances and earnest money deposits in connection with any letter of intent or purchase agreement in connection with a Permitted Acquisition, Permitted Investment or Investment that will be consummated in connection with refinancing the Terms Loans or (ii) consisting of an agreement to Dispose of any property in a Disposition permitted hereunder (or to be reasonably expected to be permitted hereunder);
(o) Liens arising from precautionary UCC filings regarding “true” operating leases or the consignment of goods to a Loan Party;
(p) any Lien existing on any property or asset prior to the acquisition thereof by a Loan Party or any Restricted Subsidiary or existing on any property or asset of any Person that became or becomes a Restricted Subsidiary (including as a result of any Unrestricted Subsidiary being redesignated as a Restricted Subsidiary) after the Closing Date prior to the time such Person became or becomes a Restricted Subsidiary; provided that (i) such Lien is not created in contemplation of such acquisition or such Person becoming a Restricted Subsidiary as the case may be, (ii) such Lien shall not apply to any other property or asset of a Loan Party or any Restricted Subsidiary (other than any replacements of such property or assets and additions and accessions thereto, after-acquired property subjected to a Lien securing Indebtedness and other obligations incurred prior to such time, a pledge of after-acquired property, and the proceeds and the products thereof and customary security deposits in respect thereof and in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender) and (iii) such Lien shall secure only those obligations and unused commitments (and to the extent such obligations and commitments constitute Indebtedness, such Indebtedness is permitted hereunder) that it secures on the date of such acquisition or the date such Person becomes a Restricted Subsidiary, as the case may be, and extensions, renewals and replacements thereof so long as the principal amount of such extensions, renewals and replacements does not exceed the principal amount of the obligations being extended, renewed or
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replaced (plus any accrued but unpaid interest (including any portion thereof which is payable in kind in accordance with the terms of such extended, renewed or replaced Indebtedness) and premium payable by the terms of such obligations thereon and fees and expenses associated therewith);
(q) Liens in favor of customs and revenues authorities imposed by Applicable Law 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, (ii) (A) that are being contested in good faith by appropriate proceedings, (B) the applicable Loan Party or Restricted 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, or (iii) the existence of which would not reasonably be expected to result in a Material Adverse Effect;
(r) Liens granted by the Loan Parties or any of their Restricted Subsidiaries to the secured parties under the ABL Facility and any refinancings thereof permitted hereunder so long as such Liens are subject to the terms of the ABL Intercreditor Agreement;
(s) any interest or title of a licensor, sublicensor, lessor or sublessor under any license or operating or true lease agreement;
(t) leases or subleases granted to third Persons in the ordinary course of business;
(u) licenses or sublicenses of Intellectual Property granted in the ordinary course of business;
(v) the replacement, refinancing, extension or renewal of any Permitted Encumbrance; provided that such Lien shall at no time be extended to cover any assets or property other than such assets or property subject thereto on the Closing Date or the date such Lien was incurred, as applicable (other than any replacements of such property or assets and additions and accessions thereto and the proceeds and the products thereof and customary security deposits in respect thereof and in the case of multiple financings of equipment provided by any lender, other equipment financed by such lender or Liens otherwise permitted hereunder);
(w) Liens on insurance policies and insurance proceeds incurred in the ordinary course of business in connection with the financing of insurance premiums;
(x) Liens on securities which are the subject of repurchase agreements incurred in the ordinary course of business;
(y) Liens arising by operation of law under Article 4 of the UCC in connection with collection of items provided for therein;
(z) Liens arising by operation of law under Article 2 of the UCC in favor of a reclaiming seller of goods or buyer of goods;
(aa) Liens on deposit accounts or securities accounts in connection with overdraft protection netting services, other cash management services, automatic clearinghouse arrangements, overdraft protections and similar arrangements or otherwise in connection with securities accounts and deposit accounts, in each case, in the ordinary course of business;
(bb) security given to a public or private utility or any Governmental Authority as required in the ordinary course of business;
(cc) Liens in the nature of the right of setoff in favor of counterparties to contractual agreements with the Loan Parties or any of their Restricted Subsidiaries in the ordinary course of business;
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(dd) other Liens securing obligations in an amount not to exceed the greater of (x) $75,000,000 and (y) 3.0% of Consolidated Total Assets (measured at the time such Liens are created) in the aggregate at any time outstanding;
(ee) Liens in favor of customs and revenue authorities to secure payment of customs duties in connection with the importation of goods;
(ff) purchase options, call and similar rights of, and restrictions for the benefit of, a third party with respect to Capital Stock held by the Borrower or any Restricted Subsidiary in joint ventures;
(gg) Liens disclosed as exceptions to coverage in the final title policies and endorsements issued to the Collateral Agent with respect to any Mortgaged Properties;
(hh) Liens on assets of any Restricted Subsidiary that is not a Loan Party to the extent such Liens secure Indebtedness of such Restricted Subsidiary permitted by Section 6.01;
(ii) Liens securing Indebtedness permitted under clause (v)(iii) of “Permitted Indebtedness” provided that the pro forma Consolidated Secured Leverage Ratio as of the last day of the most recently ended Fiscal Quarter for which financial statements have been or are then required to have been delivered hereunder is equal to or less than 3.5 to 1.0 and, to the extent such Indebtedness is secured by Liens on Collateral, such Indebtedness is subject to either (i) the terms of the Pari Passu Lien Intercreditor Agreement as “Additional First Lien Obligations” or (ii) the terms of the Second Lien Intercreditor Agreement as obligations secured by Liens ranking junior to the Liens securing the Obligations;
(jj) Liens securing any Hedge Agreement so long as the fair market value of the collateral securing such Hedge Agreement does not exceed $25,000,000 at any time;
(kk) Liens on Collateral securing Qualifying Secured Debt issued pursuant to clause (v)(i) or (v)(ii) of the definition of “Permitted Indebtedness”; and
(ll) Liens on (i) Securitization Assets arising in connection with a Qualified Securitization Financing or (ii) the Receivables Assets arising in connection with a Receivables Facility, in each case securing Indebtedness permitted under clause (bb) of “Permitted Indebtedness.”
“Permitted Indebtedness” means each of the following:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness set forth on Schedule 6.01;
(c) Indebtedness of (i) any Loan Party to any other Loan Party, (ii) any Loan Party to any Restricted Subsidiary that is not a Subsidiary Guarantor and (iii) any Restricted Subsidiary that is not a Subsidiary Guarantor to any Restricted Subsidiary that is not a Subsidiary Guarantor;
(d) Guarantees by any Loan Party or any of its Restricted Subsidiaries of Indebtedness or other obligations arising in the ordinary course of business of any other Loan Party or any of its Restricted Subsidiaries;
(e) Indebtedness of any Loan Party or any of its Restricted Subsidiaries to finance the improvement, acquisition, development, construction, restoration, replacement, rebuilding, maintenance, upgrade or improvement of any fixed or capital assets (including Real Estate), including Capital Lease Obligations (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted under clause (k) of this definition), and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, provided that the aggregate principal amount of Indebtedness permitted by this clause (e) outstanding at
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any time, when aggregated with the amount of Permitted Refinancings in respect thereof pursuant to clause (bb) below, shall not exceed the greater of (x) $75,000,000 and (y) 3.0% of Consolidated Total Assets (measured at the time of incurrence);
(f) Indebtedness under Hedge Agreements, other than for speculative purposes, entered into in the ordinary course of business;
(g) contingent liabilities under surety bonds, customs and appeal bonds, governmental contracts and leases or similar instruments incurred in the ordinary course of business;
(h) [Reserved];reserved];
(i) Indebtedness under the ABL Facility; provided that in no event shall the aggregate principal amount of loans and the face amount of letters of credit and bank guaranties issued under the ABL Facility exceed the greater of (x) $900,000,000 and (y) the Borrowing Base as of the time such Indebtedness is incurred;
(j) Indebtedness with respect to the deferred purchase price for any Permitted Acquisition or Permitted Investment, provided that such Indebtedness does not require the payment in cash of principal (other than in respect of working capital adjustments and Indebtedness described in clause (p)) prior to the Maturity Date, has a maturity which extends beyond the Maturity Date, and is subordinated to the Obligations on terms customary for senior subordinated high yield debt securities (as determined in good faith by the Borrower);
(k) Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder;
(l) Subordinated Indebtedness in an amount, when aggregated with the amount of Permitted Refinancing in respect thereof pursuant to clause (bb), not to exceed $200,000,000 in the aggregate; and provided that, in each case, such Subordinated Indebtedness (i) shall not have a maturity date or be subject to amortization, mandatory repurchase or redemption (except pursuant to customary asset sale, and similar event, and similar events and change of control provisions and AHYDO payments) prior to the date that is three months after the Maturity Date of each then outstanding Class of Term Loans, and (ii) shall not be exchangeable or convertible into any other Indebtedness (other than any Indebtedness that is otherwise permitted to be incurred under this Agreement at the time of such exchange or conversion);
(m) Indebtedness incurred in the ordinary course of business in connection with the financing of insurance premiums;
(n) Indebtedness of any Loan Party or any of its Restricted Subsidiaries incurred or assumed in connection with a Permitted Acquisition or other Acquisition permitted hereunder; provided; that on a Pro Forma Basis the Consolidated Interest Coverage Ratio for the most recent four Fiscal Quarter period for which financial statements have been or are required to be delivered hereunder would either be (x) at least 2.0 to 1.0 or (y) not less than the Consolidated Interest Coverage Ratio for such period immediately prior to such acquisition;
(o) Indebtedness relating of performance bonds, bid bonds, appeal bonds, surety bonds, performance and completion guarantees, workers’ compensation claims, letters of credit, bank guarantees and banker’s acceptances, warehouse receipts or similar instruments and similar obligations (other than in respect of other Indebtedness for borrowed money) including, without limitation, those incurred to secure health, safety and environmental obligations, in each case provided in the ordinary course of business or consistent with past practice;
(p) Indebtedness constituting the obligation to make purchase price adjustments for working capital, indemnities and similar obligations (including earnouts) in connection with Permitted Acquisition, Permitted Investments and Permitted Dispositions;
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(q) Guarantees and letters of credit and surety bonds (other than Guarantees of, or letters of credit and surety bonds related to, Indebtedness) issued in connection with Permitted Acquisitions, Permitted Investments and Permitted Dispositions;
(r) without duplication of any other Indebtedness, non-cash accruals of interest, accretion or amortization of original issue discount and payment-in-kind interest with respect to Indebtedness permitted hereunder;
(s) Indebtedness due to any landlord in connection with the financing by such landlord of leasehold improvements;
(t) without duplication of, or accumulation with, other categories of Indebtedness permitted hereunder, other Indebtedness of any Loan Party or Restricted Subsidiary in an aggregate principal amount not to exceed the greater of $150,000,000 and 6.0% of Consolidated Total Assets at any time outstanding;
(u) Indebtedness under Permitted Real Estate Financings;
(v) Qualifying Other Debt or Qualifying Secured Debt (i) that is either (x) issued solely for cash consideration, the net proceeds of which are applied solely to the prepayment (in whole or in part) of Term Loans in accordance with Section 2.17 or (y) issued in exchange for Term Loans pursuant to Section 2.25, or (ii) in the case of Qualifying Secured Debt and, at the option of the Borrower, Qualifying Other Debt, so long as (x) no Specified Default has occurred and is continuing or would result therefrom and (y) the aggregate principal amount of such Qualifying Secured Debt and Qualifying Other Debt, when aggregated with the aggregate principal amount of all Incremental Term Loans, would not exceed the Maximum Incremental Amount or (iii) in the case of Qualifying Other Debt, so long as on a Pro Forma Basis (x) no Event of Default has occurred or is continuing or would result therefrom and (y) the Consolidated Interest Coverage Ratio as of the last day of the most recently ended Fiscal Quarter for which financial statements have been or are then required to have been delivered hereunder is at least 2.0 to 1.0 for the most recent four Fiscal Quarter period;
(w) Indebtedness of any Restricted Subsidiary that is not a Loan Party; provided that the aggregate amount of Indebtedness outstanding at any time pursuant to this clause (w) shall not exceed the greater of $25,000,000 and 1.0% of Consolidated Total Assets;
(x) Indebtedness with respect of treasury, depositary, cash management and netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements or otherwise in connection with securities accounts and deposit accounts, in each case, in the ordinary course of business;
(y) Indebtedness consisting of take or pay obligations contained in supply arrangements, in each case, in the ordinary course of business or consistent with past practice;
(z) Indebtedness incurred in connection with the repurchase of Capital Stock pursuant to Section 6.06; provided that the original principal amount of any such Indebtedness incurred pursuant this clause (z) shall not exceed the amount of such Capital Stock so repurchased with such Indebtedness (or with the proceeds thereof);
(aa) Indebtedness in an amount equal to 100% of the aggregate Net Proceeds received by Parent after August 13, 2014 from the issue or sale of Capital Stock (other than Disqualified Capital Stock) plus cash contributed to Parent and to the extent such Net Proceeds or cash have been contributed as common equity to the Borrower and have not been applied pursuant to Section 6.06(a)(xiv), clause (gg) of the definition of “Permitted Investment” or utilized to increase the Available Amount;
(bb) Indebtedness of (i) any Securitization Subsidiary arising under any Securitization Facility or (ii) the Borrower or any Restricted Subsidiary arising under any Receivables Facility; provided that the
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Outstanding Securitization Amount permitted by this clause (bb) shall not exceed $150,000,000 at any time outstanding;
(cc) Indebtedness of any Loan Party or of any Restricted Subsidiary that is not a Loan Party to the Specified Captive Insurance Company, in an aggregate principal amount outstanding at any time not to exceed the aggregate amount of Restricted Payments made pursuant to Section 6.06(a)(xxi); and
(dd) extensions, renewals, refinancings, and replacements of any such Indebtedness described in clauses (b), (e), (f), (j), (k), (m), (n), (r), (s), (u), (v), (z) and (aa) above and this clause (dd); provided that such Indebtedness constitutes a Permitted Refinancing.
“Permitted Investments” means each of the following:
(a) Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America) or any state or state agency thereof, in each case maturing within one (1) year from the date of acquisition thereof;
(b) Investments in commercial paper maturing within one (1) year from the date of acquisition thereof and having, at the date of acquisition, the highest or next highest credit rating obtainable from S&P, Moody’s or Fitch;
(c) Investments in certificates of deposit, banker’s acceptances and time deposits maturing within one (1) year from the date of acquisition thereof which are issued or guaranteed by, or placed with, and demand deposit and money market deposit accounts issued or offered by, any Lender or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $100,000,000;
(d) Master demand notes and fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above or with any primary dealer;
(e) readily marketable direct obligations issued by any state, commonwealth or territory of the United States of America, any province of Canada, any member of the European Union, any other foreign government or any political subdivision or taxing authority thereof, in each case, having one of the two highest rating categories obtainable from Moody’s, S&P or Fitch (or, if at the time, no such nationally recognized statistical rating organization is issuing comparable ratings, then a comparable rating of another nationally recognized statistical rating organization) with maturities of not more than two years from the date of acquisition;
(f) Indebtedness or preferred stock issued by Persons with a rating of “BBB-” or higher from S&P, “Baa3” or higher from Moody’s or “BBB-“ or higher from Fitch (or, if at the time, no such nationally recognized statistical rating organization is issuing comparable ratings, then a comparable rating of another nationally recognized statistical rating organization) with maturities of 12 months or less from the date of acquisition;
(g) bills of exchange issued in the United States, Canada, or a member state of the European Union for rediscount at the relevant central bank and accepted by a bank (or any dematerialized equivalent);
(h) instruments and investments of the type and maturity described in clause (a) through (g) denominated in any foreign currency or of foreign obligors, which investments or obligors are, in the reasonable judgment of the Borrower, comparable in investment quality to those referred to above;
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(i) solely with respect to any Restricted Subsidiary that is a Foreign Subsidiary, investments of comparable tenor and credit quality to those described in the foregoing clauses (a) through (h) customarily utilized in countries in which such Foreign Subsidiary operates for short term cash management purposes.
(j) (i) dollars, Euro, or any national currency of any member state of the European Union; or (ii) any other foreign currency held by a Loan Party or any of its Restricted Subsidiaries in the ordinary course of business (notwithstanding the foregoing, cash equivalents shall include amounts denominated in currencies other than set forth in this clause; provided that such amounts are converted into currencies listed in this clause within ten Business Days following the receipt of such amounts).
(k) shares of any money market or mutual fund that has substantially all of its assets invested in the types of investments referred to in clauses (a) through (i), above;
(l) Investments existing on the Closing Date and set forth on Schedule 6.04;
(m) capital contributions, loans or other Investments made by (i) (x) any Loan Party to any other Loan Party and (y) any Restricted Subsidiary that is not a Subsidiary Guarantor to any other Restricted Subsidiary that is not a Subsidiary Guarantor or (ii) so long as no Specified Default then exists or would arise therefrom, any Loan Party to any Restricted Subsidiary or Affiliate of any Loan Party in an aggregate amount not to exceed the greater of $125,000,000 and 5.0% of Consolidated Total Assets at any time outstanding; provided that the aggregate amount of all Investments of the type described in this clause (m)(ii) and clause (x) of this definition may not exceed the greater of $125,000,000 and 5.0% of Consolidated Total Assets in the aggregate outstanding at any time;
(n) Guarantees constituting Permitted Indebtedness;
(o) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(p) loans or advances to employees for the purpose of travel, entertainment or relocation in the ordinary course of business, provided that all such loans and advances to employees shall not exceed $5,000,000 in the aggregate at any time outstanding, and determined without regard to any write-downs or write-offs thereof;
(q) Investments received from purchasers of assets pursuant to dispositions permitted pursuant to Section 6.05, including, for the avoidance of doubt, in connection with a “plan of division” under the Delaware Limited Liability Company Act or any comparable transaction under any similar law;
(r) Permitted Acquisitions and existing Investments of the Persons acquired in connection with Permitted Acquisitions or other Acquisition permitted hereunder so long as such Investment was not made in contemplation of such Permitted Acquisition;
(s) Hedge Agreements entered into in the ordinary course of business for non-speculative purposes;
(t) to the extent permitted by Applicable Law, notes from officers and employees in exchange for equity interests of BCF Holdings (or any direct or indirect parent) purchased by such officers or employees pursuant to a stock ownership or purchase plan or compensation plan;
(u) earnest money required in connection with Permitted Acquisitions and other Permitted Investments;
(v) Investments in deposit accounts opened in the ordinary course of business;
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(w) Capital Expenditures;
(x) Guarantee of Indebtedness under clause (m)(ii) above of Restricted Subsidiaries that are not Loan Parties not in excess of the greater of $125,000,000 and 5.0% of Consolidated Total Assets in the aggregate at any time outstanding; ; provided that the aggregate amount of all Investments of the type described in this clause (x) and clause (m) (ii) of this definition may not exceed the greater of $125,000,000 and 5.0% of Consolidated Total Assets in the aggregate outstanding at any time;
(y) other Investments in an amount not to exceed the greater of (x) $100,000,000 and (y) 4.0% of Consolidated Total Assets (measured as of the time any such Investment is made) in the aggregate outstanding at any time;
(z) Investments out of the portion of the Available Amount that any Loan Party or any Restricted Subsidiary elects to apply pursuant to this clause (z);
(aa) so long as (x) no Event of Default has occurred and is continuing or would result therefrom and (y) on a Pro Forma Basis, the Consolidated Leverage Ratio as of the last day of the most recently ended Fiscal Quarter for which financial statements have been or are then required to have been delivered hereunder would be less than or equal to 3.5 to 1.0, any Loan Party or any Restricted Subsidiary may make any Investment;
(bb) Investments made by a Loan Party or any Restricted Subsidiary in any joint venture or any Unrestricted Subsidiary in an aggregate amount of such Investments made after the Closing Date pursuant to this clause (bb) by (x) Loan Parties and Restricted Subsidiaries in joint ventures and (y) the Loan Parties and their Restricted Subsidiaries in Unrestricted Subsidiaries shall not exceed the greater of (A) $25,000,000 and (B) 1.0% of Consolidated Total Assets at any time;
(cc) Investments resulting from Permitted Liens;
(dd) Investments solely to the extent such Investments reflect an increase in the value of Investments otherwise permitted under Section 6.04;
(ee) Investments consisting of or resulting from Indebtedness, Liens, Restricted Payments, fundamental changes and Permitted Dispositions;
(ff) Term Loans repurchased by the Borrower or a Restricted Subsidiary pursuant to and in accordance with Section 2.16(d);
(gg) Investments to the extent that payment for such Investments is made solely with Capital Stock (other than any Disqualified Capital Stock) of the Borrower (or any direct or indirect parent) or proceeds of an equity contribution initially made to BCF Holdings in each case to the extent contributed to the Qualified Capital Stock of the Borrower and have not been applied pursuant to Section 6.06(a)(xiv), clause (aa) of the definition of “Permitted Indebtedness” or utilized to also increase the Available Amount;
(hh) loans and advances to BCF Holdings (or any direct or indirect parent entity) in lieu of, and not in excess of the amount of (after giving effect to any other such loans or advances or Restricted Payments in respect thereof), Restricted Payments to the extent permitted to be made in accordance with Section 6.06;
(ii) Investments consisting of purchases and acquisitions of inventory, supplies, material, equipment, or other similar assets in the ordinary course of business;
(jj) cash or property distributed from any Restricted Subsidiary that is not a Loan Party (i) may be contributed to other Restricted Subsidiaries that are not Loan Parties, and (ii) without duplication of amounts that increase the amount available under to any other clause above, may pass through the
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Borrower and/or any intermediate Restricted Subsidiaries, so long as all part of a series of related transactions and such transaction steps are not unreasonably delayed and are otherwise permitted hereunder; and
(kk) (i) Investments in any Receivables Facility or any Securitization Subsidiary in order to effectuate a Qualified Securitization Financing, including the ownership of Capital Stock in such Securitization Subsidiary and (ii) distributions or payments of Securitization Fees and purchases of Securitization Assets or Receivables Assets pursuant to a Securitization Repurchase Obligation in connection with a Qualified Securitization Financing or a Receivables Facility;
provided, however, that for purposes of calculation, the amount of any Investment outstanding at any time shall be the aggregate cash Investment less all cash returns, cash dividends and cash distributions (or the fair market value of any non-cash returns, dividends and distributions) received by such Person and less all liabilities expressly assumed by another Person in connection with the sale of such Investment.
“Permitted Real Estate Financing” means any financing by one or more Loan Parties or Restricted Subsidiaries that is secured solely by Real Estate of such Loan Parties or such Restricted Subsidiaries, as the case may be; provided that (a) the Indebtedness incurred in connection with such financing shall not be directly or indirectly Guaranteed by, or directly or indirectly collateralized or secured by, or otherwise have any recourse to, such Loan Party or any such Restricted Subsidiary or any of the assets of such Loan Party or such Restricted Subsidiary, other than (i) the Real Estate that is the subject of such financing and/or (ii) except for the security described in clause (i), unsecured Guarantees by such Loan Parties and such Restricted Subsidiaries, and by their direct or indirect parent companies, (b) none of the Loan Parties or any of their Restricted Subsidiaries shall provide any other direct or indirect credit support of any kind in respect of such Indebtedness (other than the security interest on the Real Estate that is the subject of such financing and the guarantees as described in clause (a) above, and as provided in clause (c) below), (c) such Loan Parties and Restricted Subsidiaries may be subject to customary representations, warranties, covenants and indemnities in connection with such facilities, (d) such Loan Parties and Restricted Subsidiaries, as the case may be, shall have received proceeds with respect to such financing in an amount equal to not less than 75% of the fair market value of the Real Estate that is the subject of such financing, (e) the Indebtedness incurred in connection with such financing shall have a final maturity that is no sooner than the date that is three months following the Maturity Date and a weighted average life to maturity that is no shorter than the Term Loans and (f) all Net Proceeds received in connection therewith are applied to repay Term Loans.
“Permitted Refinancing” means any Indebtedness that replaces, renews, extends or refinances any other Permitted Indebtedness, as long as, after giving effect thereto (i) the principal amount of the Indebtedness outstanding at such time is not increased (except by the amount of any accrued interest, closing costs, expenses, fees, and premium paid in connection with such extension, renewal or replacement plus an amount equal to any unused commitment thereunder), (ii) the result of such refinancing of or replacement shall not be an earlier maturity date or decreased weighted average life, (iii) the obligor or obligors under any such refinancing Indebtedness and the collateral, if applicable, granted pursuant to any such refinancing Indebtedness are the same as or less than the obligor(s) and collateral under the Indebtedness being extended, renewed or replaced, (iv) the subordination, to the extent applicable, of the refinancing Indebtedness are not materially less favorable to the Lenders than those subordination terms of the Indebtedness being refinanced (as determined by the Borrower in good faith) and (v) the refinancing Indebtedness is not exchangeable or convertible into any other Indebtedness which does not comply with clauses (i) through (iv) above.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee pension benefit plan (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 is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.
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“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date among the Loan Parties party thereto and the Collateral Agent for its own benefit and the benefit of the other Secured Parties.
“Post-Acquisition Period” means, with respect to any Permitted Acquisition or Investment the period beginning on the date such Permitted Acquisition is consummated and ending 18 months following the date on which such Permitted Acquisition or Investment is consummated.
“Prepayment Event” means the occurrence of any of the events described in Sections 2.17(a) through (c).
“Prime Rate” means, for any day, a rate per annum equal to the greatest of (a) the Published Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the LIBOAdjusted Term SOFR Rate for a one month Interest Period onas published two U.S. Government Securities Business Days prior to such day (or if such day is not a U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day) plus 1%, provided that, subject to the applicable minimum rates specified in the definition of “LIBOAdjusted Term SOFR Rate,” the LIBOAdjusted Term SOFR Rate for any day shall be based on the LIBOTerm SOFR Reference Rate at approximately 11:00 a.m. London time on such day5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology); provided further that, if the Prime Rate shall at any time be less than 1.00% per annum, such rate shall be deemed to be 1.00% per annum for the purposes of this Agreement. Any change in the Prime Rate due to a change in the Published Prime Rate, the NYFRB Rate or the LIBOAdjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Published Prime Rate, the NYFRB Rate or the LIBOAdjusted Term SOFR Rate, respectively.
“Prime Rate Loan” means any Term Loan bearing interest at a rate determined by reference to the Prime Rate in accordance with the provisions of Article II.
“Pro Forma Adjustments” means, for any applicable period that includes all or any part of a Fiscal Quarter included in any Post-Acquisition Period, with respect to the Acquired EBITDA of the applicable Acquired Entity or the Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, the pro forma increase or decrease in such Acquired EBITDA or such Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, as the case may be, projected by the Borrower in good faith as a result of (a) actions taken (or commenced) during such Post-Acquisition Period for the purposes of realizing reasonably identifiable cost savings, operating expense reductions, other operating improvements and initiatives and synergies projected by the Borrower in good faith or (b) any additional costs incurred during such Post-Acquisition Period, in each case in connection with the combination of the operations of such Acquired Entity with the operations of the Borrower and its Restricted Subsidiaries; provided that (i) so long as such actions are taken (or commenced) during such Post-Acquisition Period or such costs are incurred (or commenced) during such Post-Acquisition Period, as applicable, the cost savings, operating expense reduction, other operating improvements and initiatives and synergies related to such actions or such additional costs, as applicable, it may be assumed, for purposes of projecting such pro forma increase or decrease in such Acquired EBITDA or such Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, as the case may be, that such costs savings, operating expense reductions, other operating improvements and initiatives and synergies will be realizable during the entirety of such period, or such additional costs, as applicable, will be incurred during the entirety of such period and (ii) any such pro forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, as the case may be, shall be without duplication for cost savings or additional costs already included in such Acquired EBITDA or such Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, as the case may be, for such period; and provided further that any such increase, decrease and other adjustments of such Acquired EBITDA or such Consolidated EBITDA of the Borrower and its Restricted Subsidiaries, as the case may be, either (x) would be permitted to be included in pro forma financial statements prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, or (y) shall have been certified by the chief financial officer of the Borrower as having been calculated in good faith and in compliance with the requirements of this definition; provided that any such adjustment pursuant to this clause (y) does not exceed 20% of the most recently calculated Consolidated EBITDA of the Borrower and its Restricted Subsidiaries (prior to giving effect to the adjustments pursuant to this subclause (y)).
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“Pro Forma Basis” and “Pro Forma Effect” means, with respect to compliance with any test or covenant hereunder, that (A) to the extent applicable, the Pro Forma Adjustments shall have been made and (B) all Specified Transactions and the following transactions in connection therewith shall be deemed to have occurred as of the first day of the applicable period of measurement in such test or covenant: (a) income statement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, (i) in the case of a disposition of all or substantially all equity interests in any Subsidiary of the Borrower or any division, product line, or facility used for operations of the Borrower or any of its Subsidiaries, shall be excluded, and (ii) in the case of a Permitted Acquisition or Investment described in the definition of “Specified Transaction,” shall be included, (b) any retirement of Indebtedness, and (c) any Indebtedness incurred or assumed by the Borrower or any of the Restricted Subsidiaries in connection therewith and if such Indebtedness has a floating or formula rate, shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination; provided that, without limiting the application of the Pro Forma Adjustments pursuant to (a) above, the foregoing pro forma adjustments may be applied to any such test or covenant solely to the extent that such adjustments are consistent with the definition of Consolidated EBITDA and give effect to events (including operating expense reductions and operating initiatives) that are consistent with the definition of Pro Forma Adjustment.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction.
“Proposed Discounted Prepayment Amount” has the meaning provided in Section 2.16(d)(ii).
“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-Sider” means a Lender that elects not to receive MNPI whose representatives may trade in securities of the Borrower or its controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement that do not constitute MNPI.
“Published Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent in its reasonable discretion) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent in its reasonable discretion). Each change in the Published Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.
“Qualified Securitization Financing” means any Securitization Facility of a Securitization Subsidiary that meets the following conditions: (i) the Borrower shall have determined in good faith that such Securitization Facility (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Borrower and its Restricted Subsidiaries; (ii) all sales of Securitization Assets and related assets by the Borrower or any Restricted Subsidiary to the Securitization Subsidiary or any other Person are made at fair market value (as determined in good faith by the Borrower); (iii) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Borrower) and may include Standard Securitization Undertakings; and (iv) the obligations under such Securitization Facility are non-recourse (except for customary representations, warranties, covenants and indemnities made in connection with such facilities) to the Borrower or any of its Restricted Subsidiaries (other than a Securitization Subsidiary).
“Qualifying Lender” has the meaning provided in Section 2.16(d)(iv).
“Qualifying Loans” has the meaning provided in Section 2.16(d)(iv).
“Qualifying Other Debt” means any Indebtedness, no part of the principal of which is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to
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the date that is six months after the Maturity Date of each Class of Term Loans outstanding on the date on which such Indebtedness is incurred other than (i) any required (x) offer to purchase or (y) prepayment obligation in respect of such Indebtedness as a result of a change of control, similar event or asset sale or AHYDO payment or (ii) amortization no greater than 1% per annum.
“Qualifying Secured Debt” means any secured Indebtedness of any Loan Party, no part of the principal of which is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to the Maturity Date of each Class of Term Loans outstanding on the date on which such Indebtedness is incurred other than (i) any required (x) offer to purchase or (y) prepayment obligation in respect of such Indebtedness as a result of a change of control, similar event or asset sale or AHYDO payment or (ii) amortization no greater than 1% per annum and which is subject to either (i) the terms of the Pari Passu Lien Intercreditor Agreement as “Additional First Lien Obligations” or (ii) the terms of the Second Lien Intercreditor Agreement as obligations secured by Liens ranking junior to the Liens securing the Obligations.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. § 5390(c)(8)(D).
“QFC Credit Support” has the meaning provided in Section 9.21.
“Real Estate” means all interests in real property now or hereafter owned or held by any Loan Party or Restricted Subsidiary, including all leasehold interests held pursuant to Leases and all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned by any Loan Party or Restricted Subsidiary, including all easements, rights-of-way, appurtenances and other rights relating thereto and all leases, tenancies, and occupancies thereof.
“Receivables Assets” means (a) any accounts receivable owed to the Borrower or a Restricted Subsidiary subject to a Receivables Facility and the proceeds thereof and (b) all collateral securing such accounts receivable, all contracts and contract rights, guarantees or other obligations in respect of such accounts receivable, all records with respect to such accounts receivable and any other assets customarily transferred together with accounts receivable in connection with a non-recourse accounts receivable factoring arrangement and which are sold, conveyed, assigned or otherwise transferred or pledged by the Borrower or a Restricted Subsidiary to a commercial bank or an Affiliate thereof in connection with a Receivables Facility.
“Receivables Facility” means an arrangement between the Borrower or a Restricted Subsidiary and a commercial bank or an Affiliate thereof pursuant to which (a) the Borrower or such Restricted Subsidiary, as applicable, sells (directly or indirectly) to such commercial bank (or such Affiliate) accounts receivable owing by customers, together with Receivables Assets related thereto, at a maximum discount, for each such account receivable, not to exceed 5.0% of the face value thereof, (b) the obligations of the Borrower or such Restricted Subsidiary, as applicable, thereunder are non-recourse (except for Securitization Repurchase Obligations) to the Borrower and such Restricted Subsidiary and (c) the financing terms, covenants, termination events and other provisions thereof shall be on market terms (as determined in good faith by the Borrower) and may include Standard Securitization Undertakings, and shall include any guaranty in respect of such arrangement.
“Reduced Lenders” has the meaning provided in Section 9.02(c)(i).
“Reduced Term Loans” has the meaning provided in Section 9.02(c)(i).
“Regulated Bank” means (x) a banking organization with a consolidated combined capital and surplus of at least $5.0 billion that is (i) a U.S. depository institution the deposits of which are insured by the Federal Deposit Insurance Corporation; (ii) a corporation organized under section 25A of the U.S. Federal Reserve Act of 1913; (iii) a branch, agency or commercial lending company of a foreign bank operating pursuant to approval by and under the supervision of the Board of Governors of the Federal Reserve System under 12 CFR part 211; (iv) a non-U.S. branch of a foreign bank managed and controlled by a U.S. branch referred to in clause (iii); or (v) any other U.S. or non-U.S. depository institution or any branch, agency or similar office thereof supervised by a bank regulatory authority in any jurisdiction or (y) any Affiliate of a Person set forth in clause (x) to the extent that (1) all of the
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equity interests of such Affiliate is directly or indirectly owned by either (I) such Person set forth in clause (x) or (II) a parent entity that also owns, directly or indirectly, all of the equity interests of such Person set forth in clause (x) and (2) such Affiliate is a securities broker or dealer registered with the SEC under Section 15 of the Exchange Act.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is LIBOthe Term SOFR Rate, 115:00 a.m. (LondonChicago time) on the day that is two London banking daysU.S. Government Securities Business Days preceding the date of such setting, and (2) if such Benchmark is not LIBOthe Term SOFR Rate, the time determined by the Administrative Agent in its reasonable discretion.
“Refinancing Term Loans” means Incremental Term Loans that are designated as Refinancing Term Loans in the applicable Incremental Term Loan Amendment.
“Register” has the meaning provided in Section 9.04(b)(iv).
“Regulation U” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.
“Reinvestment Deferred Amount” means, with respect to a Prepayment Event described in Section 2.17(a) or (b), the aggregate Net Proceeds received by any Loan Party in connection therewith that are not applied to prepay the Term Loans in accordance with the provisos in Sections 2.17(a) or (b), as applicable.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents, trustees and advisors of such Person and such Person’s Affiliates.
“Related Person” has the meaning assigned to it in Section 9.03(c).
“Release” has the meaning provided in Section 101(22) of CERCLA.
“Relevant Governmental Body” means the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Replaced Lenders” has the meaning provided in Section 9.02(c)(i).
“Replaced Term Loans” has the meaning provided in Section 9.02(c)(i).
“Replacement Lender” has the meaning provided in Section 9.02(c)(i).
“Reports” has the meaning provided in Section 8.13(a).
“Required Class Lenders” means, at any time and subject to Section 9.04(f), with respect to each Class of Term Loans, Lenders whose percentage of the outstanding Term Loans of such Class aggregate more than 50% of all then outstanding Term Loans of such Class.
“Required Lenders” means, at any time and subject to Section 9.04(f), Lenders whose percentage of the outstanding Term Loans aggregate more than 50% of all then outstanding Term Loans.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
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“Responsible Officer” of any Person shall mean any executive officer or financial officer of such Person and any other officer or similar official thereof with responsibility for the administration of the obligations of such Person in respect of this Agreement.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any class of Capital Stock of a Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Capital Stock of a Person or any option, warrant or other right to acquire any Capital Stock of a Person or on account of any return of capital to the Person’s stockholders, partners or members, provided that “Restricted Payments” shall not include any dividends payable solely in Capital Stock of a Loan Party.
“Restricted Subsidiary” means each Subsidiary of BCF Holdings that is not an Unrestricted Subsidiary.
“Revolver Priority Collateral” has the meaning set forth in the ABL Intercreditor Agreement.
“Revolving Credit Loans” has the meaning set forth in the ABL Facility for such term or any similar term.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.
“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (as of the Amendment No. 9 Effective Date, Cuba, Iran, North Korea, Syria and Crimea).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b).
“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Second Lien Intercreditor Agreement” means an intercreditor agreement in form and substance reasonably satisfactory to the Administrative Agent providing that the Liens securing the Obligations rank prior to the Liens securing Qualifying Secured Debt which is intended to be secured by Liens ranking junior to the Liens securing the Obligations.
“Secured Party” means (a) each Credit Party, (b) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document, and (c) the successors and, subject to any limitations contained in this Agreement, assigns of each of the foregoing.
“Securitization Asset” means (a) any accounts receivable or related assets and the proceeds thereof, in each case subject to a Securitization Facility and (b) all collateral securing such receivable or asset, all contracts and contract rights, guaranties or other obligations in respect of such receivable or asset, lockbox accounts and records with respect to such account or asset and any other assets customarily transferred (or in respect of which security interests are customarily granted), together with accounts or assets in a securitization financing and which in the case of clause (a) and (b) above are sold, conveyed, assigned or otherwise transferred or pledged by the Borrower or a Restricted Subsidiary in connection with a Qualified Securitization Financing.
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“Securitization Facility” means any transaction or series of securitization financings that may be entered into by the Borrower or any of its Restricted Subsidiaries pursuant to which the Borrower or any of its Restricted Subsidiaries may sell, convey or otherwise transfer, or may grant a security interest in, Securitization Assets to either (a) a Person that is not a Restricted Subsidiary or (b) a Securitization Subsidiary that in turn sells such Securitization Assets to a Person that is not a Restricted Subsidiary, or may grant a security interest in, any Securitization Assets of the Borrower or any of its Subsidiaries.
“Securitization Fees” means distributions or payments made directly or by means of discounts with respect to any Securitization Asset or participation interest therein issued or sold in connection with, and other fees and expenses (including reasonable fees and expenses of legal counsel) paid to a Person that is not a Restricted Subsidiary in connection with, any Qualified Securitization Financing or a Receivables Facility.
“Securitization Repurchase Obligation” means any obligation of a seller (or any guaranty of such obligation) of Securitization Assets or Receivables Assets in a Qualified Securitization Financing or a Receivables Facility to repurchase Securitization Assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including, without limitation, as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, offset or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
“Securitization Subsidiary” means any Subsidiary the Borrower in each case formed for the purpose of and that solely engages in one or more Qualified Securitization Financings and other activities reasonably related thereto or another Person formed for the purposes of engaging in a Qualified Securitization Financing in which the Borrower or any Subsidiary of the Borrower makes an Investment and to which the Borrower or any Subsidiary of the Borrower transfers Securitization Assets and related assets.
“Security Agreement” means the Security Agreement dated as of the Closing Date among the Loan Parties and the Collateral Agent for its benefit and for the benefit of the other Secured Parties, as amended, restated, supplemented or otherwise modified and in effect from time to time.
“Security Documents” means the Security Agreement, the Mortgages, the Intellectual Property Security Agreement, the Pledge Agreement, the Facility Guarantee, and each other security agreement or other instrument or document executed and delivered pursuant to this Agreement or any other Loan Document that creates a Lien in favor of the Collateral Agent to secure any of the Obligations.
“Senior Notes” means the $450,000,000 10% Senior Notes due 2019 issued by the Borrower and outstanding immediately prior to August 13, 2014.
“Series” has the meaning provided in Section 2.05(b).
“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day publishedas administered by the SOFR Administrator on the SOFR Administrator’s Website on the immediately succeeding Business Day.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR.”
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR.”
“Software” has the meaning assigned to such term in the Security Agreement.
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“Solvent” means, with respect to any Person on a particular date, that on such date (a) at fair valuation on a going concern basis, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets of such Person on a going concern basis is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and generally pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to generally pay as such debts mature, and (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged.
“Specified Captive Insurance Company” means a captive insurance company that is subject to regulation as a captive insurance company and is a direct or indirect Subsidiary of Burlington Stores, Inc.
“Specified Default” means the occurrence of any Event of Default specified in Section 7.01(a), (b), (h) or (i).
“Specified Indebtedness” means Indebtedness that is subordinated in right of payment to the Obligations.
“Specified Representations” means the representations and warranties made by the Borrower in the first and second sentences of Section 3.01 and Sections 3.02, 3.08, 3.15 (subject to customary limitations on the perfection of Liens on the Collateral in financing commitments obtained in connection with Limited Condition Transactions), 3.16, 3.17 and 3.18.
“Specified Transaction” means any (a) disposition of all or substantially all the assets or Capital Stock of any Subsidiary or of any division or product line of the Borrower or any of the Subsidiaries, (b) Permitted Acquisition or Acquisition constituting a Permitted Investment, (c) the Amendment Transactions, (d) proposed incurrence of Indebtedness in respect of which compliance with a financial ratio are by the terms of this Agreement required to be calculated on a Pro Forma Basis or giving Pro Forma Effect to any such transaction or event, and (e) any other event that by the terms of this Agreement requires a test or covenant hereunder to be calculated on a Pro Forma Basis or giving Pro Forma Effect to any such transaction or event.
“Sponsor Group” means the Sponsors and the Sponsor Related Parties.
“Sponsor Related Parties” means, with respect to any Person, (a) any Controlling stockholder or partner (including in the case of an individual Person who possesses Control, the spouse or immediate family member of such Person provided such Person retains Control of the voting rights, by stockholders agreement, trust agreement or otherwise of the Capital Stock owned by such spouse or immediate family member) or 80% (or more) owned Subsidiary, or (b) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding a 51% or more Controlling interest of which consist of such Person and/or such Persons referred to in the immediately preceding clause (a) or (b) the limited partners of the Sponsors.
“Sponsors” means collectively, Bain Capital Fund VIII, L.P. and its Affiliates.
“SPV” has the meaning assigned to such term in Section 9.04(e).
“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Borrower or any Subsidiary of the Borrower which the Borrower has determined in good faith to be customary in a Securitization Facility, including, without limitation, those relating to the servicing of the assets of a Securitization Subsidiary, it being understood that any Securitization Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking or, in the case of a Receivables Facility, a non-credit related recourse accounts receivable factoring arrangement.
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“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBO Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Store” means any retail store (which includes any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.
“Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations on terms reasonably acceptable to the Agents.
“Subsequent Transaction” has the meaning provided in Section 1.09.
“Subsidiary” means with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity (a) of which Capital Stock 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, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“Supported QFC” has the meaning provided in Section 9.21.
“Synthetic Lease” means any lease or other agreement for the use or possession of property creating obligations which do not appear as Indebtedness on the balance sheet of the lessee thereunder but which, upon the insolvency or bankruptcy of such Person, may be characterized as Indebtedness of such lessee without regard to the accounting treatment.
“Taxes” means all current or future taxes, levies, imposts, duties (including stamp duties), deductions, charges (including ad valorem charges) or withholdings imposed by any Governmental Authority, and all interest, additions to tax and penalties related thereto.
“Term B-5 Loan” means all Term Loans outstanding under this Agreement immediately prior to the Amendment No. 9 Effective Date.
“Term B-6 Loan” has the meaning provided in Section 2.01(d).
“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate.
“Term Loan Extension Amendment” has the meaning provided in Section 2.06(d).
“Term Loans” means Term B-5 Loans, Term B-6 Loans, Incremental Term Loans and Extended Term Loans.
“Term Priority Collateral” has the meaning set forth in the ABL Intercreditor Agreement.
“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body. Determination Day” has the meaning assigned to it under the definition of “Term SOFR Reference Rate.”
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“Term SOFR Notice” means a notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term SOFR Transition Event. Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.
“Term SOFR Transition Event” means the reasonable determination by the Administrative Agent (after consultation with the Borrower) that (a) Term SOFR has been recommended for use by the Relevant Governmental Body, (b) the administration of Term SOFR is administratively feasible for the Administrative Agent and (c) a Benchmark Transition Event or an Early Opt-in Election (but not in the case of an Other Rate Early Opt-in Election), as applicable, has previously occurred resulting in a Benchmark Replacement in accordance with Section 2.10 that is not Term SOFR.Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.
“Transactions” means the entry into this Agreement and the other Loan Documents executed and delivered on the Closing Date, the repayment in full of the Loan Parties’ term loans under the existing term loan agreement, dated as of April 13, 2006, between the Loan Parties, Bear Sterns Corporate Lending Inc. and the other parties thereto, the repurchase or redemption of all of the Borrower’s existing 11⅛% senior unsecured notes due 2014 and all of Parent’s 14½% senior discount notes due 2014, the dividend payment paid in connection with entering into this Agreement and the payment of fees and expenses in connection with the foregoing.
“Type,” when used in reference to any Term Loan or Borrowing, refers to whether the rate of interest on such Term Loan, or on the Term Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOTerm SOFR Rate or the Prime Rate, as applicable.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York provided, however, that if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment; provided that, if the Unadjusted Benchmark Replacement as so determined would be less than zero, the Unadjusted Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.
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“Unrestricted Subsidiary” means (i) any Subsidiary of the Borrower designated by the board of directors of the Borrower as an Unrestricted Subsidiary pursuant to Section 5.16 subsequent to the Closing Date and (ii) any Subsidiary of an Unrestricted Subsidiary.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Special Resolution Regimes” has the meaning provided in Section 9.21.
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof (excluding in each case prepayments thereof) by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (2) the then outstanding principal amount of such Indebtedness.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or a 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 obligations 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.
“Yield” for any Term Loan on any date of determination will be the internal rate of return on such Term Loan determined by the Administrative Agent utilizing (a) the greater of (i) if applicable, any “LIBORSOFR floor” applicable to such Term Loan on such date and (ii) the forward LIBORSOFR curve (calculated on a quarterly basis) as calculated by the Administrative Agent in accordance with its customary practice during the period from such date to the Maturity Date of such Term Loan; (b) the Applicable Margin for such Term Loan on such date; and (c) the issue price of such Term Loan (after giving effect to any original issue discount of upfront fees paid to the market in respect of such Term Loan) (it being understood that the “issue price” of (x) the Term B-6 Loans shall be 99.50% of the principal amount thereof and (y) any Extended Term Loan shall be deemed to be the issue price of the Term B-6 Loan (as determined above) minus any upfront fees paid to the Lenders providing such Extended Term Loans).
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Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, the effects of FASB ASC 825 (Financial Instruments) and ASC 470-20 (Debt with Conversion and Other Options) on financial liabilities shall be disregarded.
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in each case, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), the date of determination of whether any such action is permitted hereunder shall be deemed to be the date the definitive agreement for such Limited Condition Transaction is entered into, the date an irrevocable repayment or prepayment notice is given with respect thereto, or at the time of declaration thereof, as applicable (the “LCT Test Date”), and if, after giving Pro Forma Effect to the Limited Condition Transaction, the Borrower or any of its Restricted Subsidiaries would have been permitted to take such action on the relevant LCT Test Date in compliance with such ratio, test, representations, warranties, defaults, specified defaults, events of default, or basket, such ratio, test, representations, warranties, defaults, specified defaults, events of default, or basket shall be deemed to have been complied with. For the avoidance of doubt, if the Borrower has made an LCT Election and any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would have failed to have been satisfied as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in Consolidated EBITDA, Consolidated Total Assets, Consolidated Total Debt, Consolidated Interest Expense, or Consolidated Net Income, at or prior to the consummation of the relevant transaction or action, such baskets, tests or ratios will not be deemed to have failed to have been satisfied as a result of such fluctuations. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, if the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any event or transaction occurring after the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement or date for disposition, redemption, repurchase, defeasance, satisfaction and discharge or repayment specified in an irrevocable notice for such Limited Condition Transaction is terminated, expires or passes, as applicable, without consummation of such Limited Condition Transaction (a “Subsequent Transaction”) in connection with which a ratio, test or basket availability calculation must be made on a Pro Forma Basis or giving Pro Forma Effect to such Subsequent Transaction, for purposes of determining whether such ratio, test or basket availability has been complied with under this Agreement, any such ratio, test or basket shall be required to be satisfied on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated until such time as the applicable Limited Condition Transaction has actually closed or the definitive agreement with respect thereto has been terminated; provided, that for purposes of any Restricted Payment, such ratio, basket or compliance with any other provision hereunder shall also be tested as if such Limited Condition Transaction and other transactions in connection therewith (including any incurrence or issuance of Indebtedness and the use of proceeds thereof) had not been consummated.
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Amount and Terms of Credit
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Notwithstanding the foregoing, (x) the amounts required to be paid with respect to the Term Loans of any Class shall be reduced in connection with any prepayment of the Term Loans of such Class in accordance with Section 2.16 or 2.17, as applicable; and (y) the Term Loans of each Class, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Maturity Date.
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then the Administrative Agent shall give written notice thereof to the Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the applicable Lenders that the circumstances giving rise to such notice no longer exist (which notice the Administrative Agent shall deliver promptly upon obtaining knowledge of the same), (i) any Borrowing Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a LIBOTerm Benchmark Borrowing for such Interest Period shall be ineffective and (ii) if any Borrowing Request requests a LIBOTerm Benchmark Borrowing for such Interest Period, such Borrowing shall be made as a Borrowing of Prime Rate Loans unless withdrawn by the Borrower.
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and the result of any of the foregoing shall be to increase the cost in any material amount in excess of those incurred by similarly situated lenders to such Lender of making or maintaining any Loan or to increase the cost in any material amount in excess of those incurred by similarly situated lenders to such Lender or to reduce the amount in any material respect of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
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Without limiting the generality of the foregoing:
Each Lender shall, from time to time after the initial delivery by such Lender of the forms described above, whenever a lapse in time or change in such Lender’s circumstances renders such forms, certificates or other evidence so delivered expired, obsolete or inaccurate, promptly (1) deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) renewals, amendments or additional or successor forms, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish such Lender’s status or that such Lender is entitled
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to an exemption from or reduction in U.S. federal withholding tax or (2) notify Administrative Agent and the Borrower of its legal ineligibility to deliver any such forms, certificates or other evidence.
Notwithstanding any other provision of this clause (e), a Lender shall not be required to deliver any documentation or information that such Lender is not legally eligible to deliver.
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Representations and Warranties
To induce the Credit Parties to enter into this Agreement and make the Term Loans, the Loan Parties executing this Agreement or a Joinder Agreement hereto, jointly and severally, make the following representations and warranties to each Credit Party with respect to each Loan Party on the Closing Date, and in each case as of the date such representation and warranty is made unless an earlier date is specified:
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[Reserved]
Affirmative Covenants
Until (i) the Commitments have expired or been terminated and (ii) the principal of and interest on the Term Loans and all fees and other Obligations (other than contingent indemnity obligations with respect to then unasserted claims) shall have been paid in full, each Loan Party covenants and agrees with the Credit Parties that:
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Notwithstanding the foregoing, the obligations in paragraphs (a), and (b) of this Section 5.01 may be satisfied with respect to financial information of the Borrower and its Subsidiaries by furnishing (A) the applicable consolidated financial statements of any direct or indirect parent of the Borrower that, directly or indirectly, holds all of the Capital Stock of the Borrower or (B) the Borrower’s (or any direct or indirect parent thereof, as applicable) Form 10-K or 10-Q or other filings, as applicable, filed with the SEC; provided that this paragraph shall not limit the obligation to deliver the reconciliation required, if any, by Section 5.01(c) above.
Any financial statement or other document, reports, proxy statements or other materials (to the extent any such financial statement or document, reports, proxy statements or other materials included in materials otherwise filed with the SEC) required to be delivered pursuant to this Section 5.01 or Section 5.02 may be satisfied with respect to such financial statements or other documents, reports, proxy statements or other materials by the filing of the Borrower’s (or its direct or indirect parent of the Borrower that, directly or indirectly, holds all the Capital Stock of the Borrower) Form 8-K, 10-K, 10-Q or other filing, as applicable, with the SEC. All financial statements and other documents, reports, proxy statements or other materials required to be delivered pursuant to this Section 5.01 or Section 5.02 may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) such financial statements and/or other documents are posted on the SEC’s website on the Internet at www.sec.gov, (ii) on which the Borrower posts such documents, or provide a link thereto, on the Borrower’s website or (iii) on which such documents are posted on the Borrower’s behalf on an Internet or Intranet website, if any, to which the Administrative Agent and each Lender has access (whether a commercial third-party website or a website sponsored by the Administrative Agent).
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The Borrower hereby (i) authorizes the Administrative Agent to make the financial statements to be provided under Section 5.01(a) and (b) above along with the Loan Documents and the list of Disqualified Institutions available to Public-Siders and (ii) agrees that at the time any such financial statements are provided hereunder, they shall already have been, or are concurrently being, made available to holders of its (and its parent companies’) securities (and that either such list of Disqualified Institutions does not include MNPI or has been, or is concurrently being, made available to holders of its (and its parent companies’) securities). No other material shall be posted to Public-Siders without the Borrower expressly representing and warranting to the Administrative Agent in writing that such materials do not constitute MNPI or that the Borrower has no outstanding publicly traded securities, including 144A securities (the “Public-Sider Representation”). Notwithstanding anything herein to the contrary, in no event shall the Administrative Agent make available to Public-Siders budgets or any certificates, reports or calculations with respect to the Borrower’s compliance with the covenants contained herein unless the Borrower (x) requests that such material be made available and (y) expressly makes the Public-Sider Representation or ensures that material that would otherwise constitute MNPI contained in such budgets, certificates, reports or calculations is publicly disclosed in accordance with U.S. Federal securities laws.
Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and, if applicable, any action taken or proposed to be taken with respect thereto.
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Negative Covenants
Until (i) the Commitments have expired or been terminated and (ii) the principal of and interest on each Term Loan and all fees and other Obligations (other than contingent indemnity obligations with respect to then unasserted claims) shall have been paid in full, each Loan Party covenants and agrees with the Credit Parties that:
For purposes of determining compliance with this Section 6.01, in the event that an item of Indebtedness (or any portion thereof) at any time meets the criteria of more than one of the categories described in “Permitted Indebtedness” or is entitled to be incurred pursuant to multiple clauses in the definition of “Permitted Indebtedness,” the Borrower, in its sole discretion, may classify or reclassify (or later divide, classify or reclassify) such item of Indebtedness (or any portion thereof) and shall only be required to include the amount and type of such Indebtedness in one of such clauses. Accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount and the payment of interest, premium, fees or expenses, in the form of additional Indebtedness, Disqualified Capital Stock or preferred stock shall not be deemed to be an incurrence of Indebtedness for purposes of this Section 6.01.
For purposes of determining compliance with any restriction on the incurrence of Indebtedness, the principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being
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extended, replaced, refunded, refinanced, renewed or defeased, plus the amount of any premium paid, and fees and expenses incurred, in connection with such extension, replacement, refunding refinancing, renewal or defeasance (including any fees and original issue discount incurred in respect of such resulting Indebtedness).
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Events of Default
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then, and in every such event (other than an event with respect to the Borrower described in Section 7.01(h) or Section 7.01(i)), and at any time thereafter during the continuance of such event the Administrative Agent at the request of the Required Lenders, shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (a) require each of the following to become immediately due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party to the extent permitted under Applicable Law: (i) the unpaid principal amount of and accrued interest on the Term Loans and (ii) all other Obligations; and (b) subject to the Intercreditor Agreements, cause the Collateral Agent to enforce any and all Liens and security interests created pursuant to the Security Documents. In the case of any event with respect to the Borrower described in Section 7.01(h) or Section 7.01(i), (a) each of the following shall automatically become immediately due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Loan Party to the extent permitted under Applicable Law: (i) the unpaid principal amount of and accrued interest on the Term Loans and (ii) all other Obligations, and (b) Administrative Agent may, subject to the Intercreditor Agreements, cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents.
Notwithstanding anything to the contrary herein, in connection with any determination as to whether the requisite Lenders have (A) consented (or not consented) to any amendment or waiver of any provision of this Agreement or any other Loan Document or any departure by any Loan Party therefrom, (B) otherwise acted on any matter related to any Loan Document, or (C) directed or required the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) with respect to or under any Loan Document, any Lender (other than a Regulated Bank or an Arranger) that, as a result of its interest in any total return swap, total rate of return swap, credit default swap or other derivative contract (other than any such total return swap, total rate of return swap, credit default swap or other derivative contract entered into pursuant to bona fide market making activities), has a net short position with respect to the Term Loans and/or Commitments (each, a “Net Short
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Lender”) shall have no right to vote any of its Term Loans and Commitments and shall be deemed to have voted its interest as a Lender without discretion in the same proportion as the allocation of voting with respect to such matter by Lenders who are not Net Short Lenders (in each case unless otherwise agreed to in writing by the Borrower in its sole discretion). For purposes of determining whether a Lender has a “net short position” on any date of determination: (i) derivative contracts with respect to the Term Loans and Commitments and such contracts that are the functional equivalent thereof shall be counted at the notional amount thereof in Dollars, (ii) notional amounts in other currencies shall be converted to the dollar equivalent thereof by such Lender in a commercially reasonable manner consistent with generally accepted financial practices and based on the prevailing conversion rate (determined on a mid-market basis) on the date of determination, (iii) derivative contracts in respect of an index that includes any of the Borrower or other Loan Parties or any instrument issued or guaranteed by any of the Borrower or other Loan Parties shall not be deemed to create a short position with respect to the Term Loans and/or Commitments, so long as (x) such index is not created, designed, administered or requested by such Lender and (y) the Borrower and other Loan Parties and any instrument issued or guaranteed by any of the Borrower or other Loan Parties, collectively, shall represent less than 5% of the components of such index, (iv) derivative transactions that are documented using either the 2014 ISDA Credit Derivatives Definitions or the 2003 ISDA Credit Derivatives Definitions (collectively, the “ISDA CDS Definitions”) shall be deemed to create (1) a short position with respect to the Term Loans and/or Commitments if such Lender is a protection buyer or the equivalent thereof for such derivative transaction or (2) a long position with respect to the Term Loans and/or Commitments if such Lender is a protection seller or the equivalent thereof for such derivative transaction and, in the case of clauses (1) and (2), (x) the Term Loans or the Commitments are a “Reference Obligation” under the terms of such derivative transaction (whether specified by name in the related documentation, included as a “Standard Reference Obligation” on the most recent list published by Markit, if “Standard Reference Obligation” is specified as applicable in the relevant documentation or in any other manner), (y) the Term Loans or the Commitments would be a “Deliverable Obligation” under the terms of such derivative transaction or (z) any of the Loan Parties(or any of their successors) is designated as a “Reference Entity” under the terms of such derivative transactions and (v) credit derivative transactions or other derivatives transactions not documented using the ISDA CDS Definitions shall be deemed to create (x) a short position with respect to the Term Loans and/or Commitments if such transactions are functionally equivalent to a transaction that offers the Lender protection in respect of the Term Loans or the Commitments, or as to the credit quality of any of the Loan Parties and (y) a long position with respect to the Term Loans and/or Commitments if such transactions are functionally equivalent to a transaction pursuant to which the Lender provides protection in respect to the Term Loans or the Commitments, or as to the credit quality of any of the Loan Parties, other than, in each case, as part of an index so long as (1) such index is not created, designed, administered or requested by such Lender and (2) the Loan Parties and any instrument issued or guaranteed by any of the Loan Parties collectively, shall represent less than 5% of the components of such index.
In connection with any such determination, each Lender (other than a Regulated Bank or an Arranger) shall promptly notify the Administrative Agent in writing that it is a Net Short Lender, or shall otherwise be deemed to have represented and warranted to the Borrower and the Administrative Agent that it is not a Net Short Lender (it being understood and agreed that the Borrower and the Administrative Agent shall be entitled to conclusively rely on each such representation and deemed representation and shall have no duty to (x) inquire as to or investigate the accuracy of any such representation or deemed representation, (y) verify any statements in any officer’s certificates delivered to it or (z) otherwise ascertain or monitor whether any Lender or prospective Lender is a Net Short Lender or make any calculations, investigations or determinations with respect to any derivative contracts and/or net short positions). Without limiting the foregoing, the Administrative Agent shall not (A) be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to the Net Short Lenders or (B) have any liability with respect to or arising out of any assignment or participation of Term Loans to any Net Short Lender.
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The Agents
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Miscellaneous
Notwithstanding the foregoing, any notice hereunder sent by e-mail shall be solely for the distribution of (i) routine communications such as financial statements and (ii) documents and signature pages for execution by the parties hereto, and for no other purpose. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
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(x) each Lender making such assignment to a member of the Sponsor Group acknowledges and agrees that in connection with such assignment, (1) such member of the Sponsor Group then may have and later may come into possession of MNPI, (2) such Lender has independently, and without reliance on any Loan Party, the Administrative Agent or any of their respective Affiliates, made its own analysis and determination to enter into such assignment notwithstanding such Lender’s lack of knowledge of the MNPI and (3) none of the Loan Parties, the Administrative Agent or any of their respective Affiliates shall have any liability to such Lender, and such Lender hereby waives and releases, to the extent permitted by Applicable Law, any claims such Lender may have against any Loan Party, the Administrative Agent, and their respective Affiliates, under Applicable Law or otherwise, with respect to the nondisclosure of the MNPI; each Lender entering into such an assignment further acknowledges that the MNPI may not be available to the Administrative Agent or the other Lenders;
(y) the assigning Lender or the Lender to whom such assignment is being made, as the case may be, and the member of the Sponsor Group (other than any Investment Fund) purchasing such Lender’s Term Loans or assigning Term Loans to such Lender, as applicable, shall execute and deliver to the Administrative Agent an assignment agreement substantially in the form of Exhibit K hereto (an “Affiliated Lender Assignment and Acceptance”) in lieu of an Assignment and Acceptance; and
(z) no Term Loan may be assigned to a member of the Sponsor Group (other than any Investment Fund) pursuant to this Section 9.04(f), if after giving effect to such assignment, the members of the Sponsor Group (other than any Investment Fund) in the aggregate would own (or hold participations in) in excess of 20% of all Term Loans of any Class then outstanding at the time of assignment.
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In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as a sealed instrument as of the day and year first above written.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION,
as Borrower
By:
Name:
Title:
BURLINGTON COAT FACTORY HOLDINGS, LLC,
as a Facility Guarantor
By:
Name:
Title:
BURLINGTON COAT FACTORY INVESTMENT HOLDINGS, INC.,
as a Facility Guarantor
By:
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON ANNEX A HERETO,
as Facility Guarantors
By:
Name:
Title:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, as Collateral Agent and as
a Lender
By:
Name:
Title:
ANNEX A
Facility Guarantors
Burlington Coat Factory Holdings, LLC
Burlington Coat Factory Investments Holdings, Inc.
Burlington Coat Factory of Texas, L.P.
Burlington Coat Factory of Kentucky, Inc.
Burlington Coat Factory Warehouse of Edgewater Park, Inc.
Burlington Coat Factory Warehouse of New Jersey, Inc.
Burlington Coat Factory of Puerto Rico, LLC
Cohoes Fashions Of Cranston, Inc.
Burlington Coat Factory Warehouse of Baytown Inc
Burlington Coat Factory of Pocono Crossing, LLC
Burlington Coat Factory Of Texas, Inc.
Burlington Coat Factory Realty Of Edgewater Park, Inc.
Burlington Coat Factory Realty Of Pinebrook, Inc.
Burlington Coat Factory Warehouse Of Edgewater Park Urban Renewal Corp.
BCF Florence Urban Renewal, L.L.C.
BCF Florence Urban Renewal II, LLC
Burlington Merchandising Corporation
Burlington Distribution Corp.
EXHIBIT B
EXHIBIT B-1 TO CREDIT AGREEMENT
FORM OF BORROWING REQUEST
Date: ______________, ____
To: JPMorgan Chase Bank, N.A., as Administrative Agent
270 Park Avenue, Floor 44
New York, NY 10017-2014
Attention: Ms. Jennifer Heard
Re: Credit Agreement, dated as of February 24, 2011 (as modified, amended, supplemented or restated and in effect from time to time, the “Credit Agreement”), by and among, among others, Burlington Coat Factory Warehouse Corporation, as borrower (the “Borrower”), the guarantors party thereto, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent,” and collectively with the Administrative Agent, the “Agents”) for its own benefit and the benefit of the other Secured Parties, and Goldman Sachs Lending Partners LLC, as Syndication Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Ladies and Gentlemen:
The Borrower refers to the above described Credit Agreement and hereby irrevocably notifies you of the Borrowing requested below:
I. The Business Day of the proposed Borrowing is _______, _____.
II. The aggregate amount of the proposed Borrowing is $_________, comprised of _________ (Type of Loan Requested).
III. [Pursuant to Section 2.03 of the Credit Agreement, the Borrower desires to elect the following Interest Periods with respect to such Term Benchmark Loans:
(i) _________]1
Such elections are to be effective as of the Borrowing Date.
[If any Borrowing of a Term Benchmark Loan is not made as a result of a withdrawn Borrowing Request, the Borrower shall, after receipt of a written request by any Lender (which request shall set forth in reasonable detail the basis for requesting such amount), pay to the applicable Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any actual losses, costs or out-of-pocket expenses that such Lender will incur (or has incurred) as a result of such failure to borrow funds, including any actual loss, cost or out-of-pocket expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund such Term Benchmark Loan].2
[Signature page to follow]
___________________________________
1 To be added only for Term Benchmark Loans.
2 Only include for Initial Credit Event.
BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION,
As Borrower
By:
Name:
Title:
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EXHIBIT C
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EXHIBIT B-2
CONVERSION/CONTINUATION NOTICE
Reference is made to the Credit Agreement dated as of February 24, 2011 (as modified, amended, supplemented or restated and in effect from time to time, the “Credit Agreement”) by and among, among others, Burlington Coat Factory Warehouse Corporation, as borrower (the “Borrower”), the guarantors party thereto, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the “Collateral Agent,” and collectively with the Administrative Agent, the “Agents”) for its own benefit and the benefit of the other Secured Parties, and Goldman Sachs Lending Partners LLC, as Syndication Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.
Pursuant to Section 2.09 of the Credit Agreement, the Borrower desires to convert or to continue the following Term Loans, each such conversion and/or continuation to be effec tive as of [mm/dd/yy]:
1. Term Loans:
$[___,___,___] Term Benchmark Loans to be continued with Interest Period of
____ month(s)
$[___,___,___] Prime Rate Loans to be converted to Term Benchmark Loans with Interest Period of ____ month(s)
$[___,___,___] Term Benchmark Loans to be converted to Prime Rate Loans
The Borrower hereby certifies that as of the date hereof, no event has occurred and is continuing or would result from the consummation of the conversion and/or continuation contemplated hereby that would constitute an Event of Default or a Default.
Date: [mm/dd/yy] BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION
By:
Title:
Exhibit 31.1
I, Michael O’Sullivan, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Burlington Stores, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 25, 2023 |
|
/s/ Michael O’Sullivan |
Michael O’Sullivan |
Chief Executive Officer |
(Principal Executive Officer) |
Exhibit 31.2
I, Kristin Wolfe, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Burlington Stores, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 25, 2023 |
|
/s/ Kristin Wolfe |
Kristin Wolfe |
Chief Financial Officer |
(Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Burlington Stores, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended April 29, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael O’Sullivan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial position and results of operations of the Company.
Date: May 25, 2023 |
|
/s/ Michael O’Sullivan |
Michael O’Sullivan |
Chief Executive Officer |
(Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Burlington Stores, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended April 29, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kristin Wolfe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial position and results of operations of the Company.
Date: May 25, 2023 |
|
/s/ Kristin Wolfe |
Kristin Wolfe |
Chief Financial Officer |
(Principal Financial Officer) |